Development: Pre-Development Phase Primer Checklist

The pre-development phase of any real estate development project is a multifaceted and critical period that lays the groundwork for the entire venture. This stage encompasses a spectrum of activities each with its own set of challenges and requirements. Successful navigation through this phase sets the tone for the project, impacting timelines, costs, and ultimately, the feasibility of the development. This primer – in a form of a checklist – delves into each component of the pre-development phase, offering a detailed guide to the processes and considerations involved.

1. Locate the Site
   • Note the acreage, address, parcel identification number and jurisdiction governing the property (City or County).
2. Acquire the Site
   • Negotiate basic terms with the Seller or Seller’s broker and send a Letter of Intent (LOI)
   • Draft a Purchase and Sale Agreement (PSA) and further memorialize the terms of the agreement.
   • Once PSA is executed, draft a critical dates memorandum and calendar the dates so that you are reminded of the most important dates such as expiration of Inspection Period, Permitting Period, Closing Date, etc.
   • Make an Earnest Money deposit and begin digging into the project.
3. Preliminary Budget/Pro-Forma
   • Depending on the type of development, whether multi-family, office or retail, run your pro-forma to make sure the project is feasible.
   • Standard pro-forma must include everything from land and construction costs, soft costs such as survey, architectural, engineering, environmental studies such as a Phase I or a geotechnical report, property taxes, broker and legal fees, to several other costs.
   • If you have not discussed rent with the intended user e.g., a retail tenant, then a proforma will determine your return on cost (ROC) and show you if your project is feasible by comparing your overall development costs with the annual rate of return.
4. Engage the Engineer and or Architect
   • Request proposals from civil engineer and architect.
   • Engage the engineer to create a conceptual design.
   • Engage the architect to begin the architectural design once engineer has confirmed that there are no known issues with the site i.e., contamination that cannot be remediated or hurdle that cannot be overcome i.e., zoning prohibiting the development, being too costly, etc.
5. Meeting with City/County
   • Confirm zoning and use by obtaining a zoning confirmation letter from the municipality. There is typically a fee associated.
   • Hold a pre-application meeting with the Department of Transportation to confirm the proposed excess will be granted.
   • Hold a pre-application meeting with the city, and or county. During the meeting, the developer will learn about setbacks, landscaping buffers, access, traffic, study requirements, open space requirements, utilities, stormwater, tree mitigation, permitting process, timelines, impact fees, and other entitlement processes that need to be completed.
   • If needed, hold a separate WMD pre-application meeting to determine and confirm, stormwater i.e. on site versus offsite, and outflow. This meeting will confirm drainage if located on state roads, confirm, road improvements, and confirm the permitting process.
6. Environmental Research
   • Phase I Environmental Site Assessment (ESA) is a comprehensive study conducted to assess the environmental condition of a property. The primary purpose of a Phase I ESA is to identify potential environmental liabilities and recognize any recognized environmental conditions (RECs) that may affect the property. Phase I report includes:
     • Site inspection;
     • Historical records review
     • Interviews with current and past owners; and
     • Database review of federal, state and local environmental databases.
   • Phase II Environmental Site Assessment (ESA) is typically conducted when a Phase I ESA identifies recognized environmental conditions (RECs) or potential areas of concern on a property. The Phase II assessment involves further investigation and soil testing to assess the extent of contamination and provide more detailed information about the environmental conditions of the site.
   • Obtain a wetlands report if there is evidence of area(s) of land that is saturated with water, either permanently or seasonally, and typically characterized by specific vegetation adapted to wet conditions. of
   • Obtain an asbestos analysis if there are structures on the site that will be torn down and or redeveloped.
7. Geotechnical Analysis
   • Geotechnical Report provides essential information about the geological and geotechnical characteristics of a specific site, which is crucial for construction, engineering, and land development projects. The primary purpose of a geotechnical report is to assess the subsurface conditions of the site and provide recommendations for foundation design, slope stability, and other geotechnical aspects.
   • The process includes geotechnical drilling or boring analysis involves bringing a rig on site and punching holes into the soil to extract soil samples which are then tested and classified for things like soil type, clay levels, rock type and quality, moisture levels, and density.
   • Any lender financing the project will require a Phase I and Geotechnical report.
8. Survey
   • American Land Title Association (ALTA) Survey is performed to the standards established jointly by the American Land Title Association and the National Society of Professional Surveyors to provide adequate details of a property or parcel needed to remove the “standard exception” from Title Insurance policies. Since most lenders require that their investment is protected by title insurance coverage, an ALTA survey can be relied upon to depict issues of title and potential disputes.
   • Boundary Survey is a detailed examination and measurement of a property’s boundary lines to determine its precise legal description. The purpose of a boundary survey is to identify and document the exact location and dimensions of the property boundaries, corners, and any improvements or encroachments..  This is the highest level of survey and has the greatest requirements. ALTA Surveys are by definition boundary surveys that have additional requirements beyond that normally required by the State of Florida when preparing a Boundary Survey.
   • Topographic Survey locates all surface features of a property, and depicts all natural features and elevations. In essence it is a 3-dimensional map of a 3-dimensional property showing all natural and man-made features and improvements. Specifically, it shows their location, size, height and any changes in elevation.
9. Title
   • Title examination is performed by a title agency or attorney. Title search or title examination involves a thorough investigation and analysis of the historical records related to a property’s ownership and legal status to ensure that the seller has clear and marketable title to the property. The goal is to identify any potential issues or encumbrances that could affect the transfer of ownership or impact the property’s value.
   • Owner’s Title Commitment, also known as a preliminary title report or a title binder, is a document issued by a title insurance company before the actual issuance of a title insurance policy. Title Commitment:
     • Confirms current ownership and outlines he chain of title, detailing the history of ownership transfers;
     • Includes legal description;
     • Specifies who the intended insured parties are;
     • Outlines any conditions or requirements that must be satisfied before the title insurance policy is issued
     • Lists any exceptions to coverage, which are items or issues that the title insurance policy will not cover. Common exceptions may include easements, restrictions, or other encumbrances on the property; and
     • Notes the date on which the title commitment becomes effective is noted. It is typically the date of the commitment issuance.
   • Title Objection Letter is typically issued by a buyer or their legal representative outlining objections, concerns, or issues identified during the title examination or review of the preliminary title report. The primary purpose is to bring attention to any problems with the property’s title that need resolution before the closing of the transaction.
10. Special Considerations
    • At this stage, the developer must consider the following:
      • Restrictions;
      • Unsuitable soils revealed by the geotech;
      • Any shared access and or utility easements;
      • Tree relocations;
      • Impact and government fees;
      • Utility credits, relocation and extension.
    • Once preliminary due diligence has been completed and the developer has a grasp of the overall development costs, potential setbacks, project timelines, etc., then the developer will determine if the project is worth pursuing.
11. Civil and Architectural Design
    • At this stage, the developer will fully engage the civil engineer and architect to begin drawing up the design. Once the design is completed, it will be submitted to the municipality for review and ultimately, permits. Most jurisdictions do not permit a concurent review of civil and architectural drawings.
    • The developer will start the entitlement process to obtain different zoning or a variance.
12. Civil and Architectural Permitting
    • Traffic study or Trip Generation Report may be required as part of the permitting process. The primary objective is to gather data, analyze traffic flows, and make informed recommendations for improvements to enhance safety, efficiency, and overall functionality.
    • Landscaping design may be required.
    • Photometric study is conducted to assess the quality and quantity of lighting in and around buildings and outdoor spaces.
    • Civil engineer will be applying for and receiving necessary approvals relating to waste management, water, sewer, FDOT and may also be submitting a Tree Mitigation Plan if certain species of trees and or animals need to be relocated.
13. Site Plan Approval
    • Site plan approval process typically involves several levels of review by different authorities. The specific approval process can vary based on the location, jurisdiction, and local regulations, but may involve:
      • Local Planning Department
      • Zoning Board of Commission
      • Environmental Review Agencies
      • Engineering and Public Works Departments
      • Health Department
      • Community Input
      • City Council or Planning Commission
    • Engineer will likely have to address several rounds of comments from different departments.
14. Architectural Permitting
    • Some municipalities allow concurrent review of architectural and civil drawings. Others that prohibit concurrent review will review civil drawings first, and once approved, will begin architectural review.
    • The architect will first design a schematic design. In the initial phase, architects work with the client to develop a conceptual design. This includes rough sketches and basic floor plans to illustrate the overall concept and design intent.
    • Once the developer/tenant approves the schematic design, the architect moves into the design development phase. During this stage, the design is refined, and more detailed plans are developed. This includes a more comprehensive understanding of materials, systems, and structural elements.
    • The architect will then design construction documents which are detailed drawings, specifications, and other documents that provide comprehensive information for the construction and implementation of a building project. Construction documents typically include detailed plans, elevations, sections, specifications, and other information necessary for obtaining permits and for the actual construction of the project.
    • Once the construction documents are completed, they are submitted to relevant authorities for permitting.
15. Permitting
    • Permitting involves obtaining approvals from local building departments and other regulatory bodies that grant the developer permission to begin construction.
    • Prior to picking up permits, the developer will be required to pay associated costs, permit and impact fees.
    • Impact fees can include fees associated with tree removal, land clearing and grubbing, water, sewer, police protection, fire protection, parks and recreation, library, government, transportation.
16. Obtain Construction Bids
    • After obtaining permits, the construction documents are used for the bidding process. General contractors and subcontractors review the documents and provide bids for the construction work.
    • Once a contractor is selected, the construction documents serve as the guide for the actual construction of the project. Contractors follow the detailed plans and specifications to build the structure according to the architect’s design.

This list is not exhaustive and should provide a general breakdown of associated steps. Once construction bids are awarded, the general contractor will be the person in charge of making the project a reality.