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Real Estate Entitlements -- Everything Developers Need to Know

Find out why land entitlements are so important for every real estate development and how to get them.

[Updated: Feb 04, 2021 ] Jun 02, 2020 by Kevin Vandenboss
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Having an idea on how to improve a piece of real estate is the start to every new development. However, the idea can't come to fruition without the proper real estate entitlements. There are various steps you must take to get the green light from the local government to go from the first sketch to screwing in the last lightbulb.

What are real estate entitlements?

Real estate entitlements are a set of approvals needed for the right to develop a piece of land. The term entitlements doesn't refer to any one specific approval. There are a variety of approvals that could be needed based on the specific project and location.

Entitlements aren't given by just one office or department either. There are a variety of different city, county, and state departments a developer might have to get approvals from for different pieces of the real estate development.

Common real estate entitlements include:

  • Use permit.
  • Zoning variances.
  • Rezoning.
  • Site plan approval.
  • Architectural design approval.
  • Landscaping approval.
  • Utility approval.
  • Road approval.

When do you need entitlements?

Real estate entitlements are most commonly required when a vacant piece of land is being developed. However, they're also often required on improved property when the use, appearance, or landscaping is going to change.

The extent of the entitlements needed will depend on the scope of the project. For instance, tearing down an old restaurant to replace it with a new one will be a much simpler process than developing a piece of vacant land into a shopping mall.

The process for getting entitlements

The exact process for entitlements isn't the same for each development project and local municipality.

It's common for cities and townships to have their own master plan. This master plan lays out the local government's plan for growth and development. How a certain project fits into the master plan will determine what the entitlement process will look like.

In general, these are the steps for obtaining each land entitlement:

Project review

While this isn't a formal step, it's wise to discuss the project with the local planning director. The planning director will usually be pretty upfront with you on how the development fits in with the master plan and what you should consider when planning the development.

It's very helpful to know what the planning board is going to want to see -- and what they might object to. It's also helpful to establish a good relationship with the planning director, since they typically make a recommendation to the board.

Zoning variances or rezoning

Hopefully your planned development conforms to the zoning for your desired land use. If so, you won't have to request any changes or approvals.

If the zoning doesn't allow for your development and land use, you'll have to ask the planning board to either change the zoning or approve a variance.

Zoning ordinances are sometimes outdated and can be easy to change. Other times, you may have to present a compelling argument as to how the development will benefit the community and won't have a negative impact on the surrounding neighborhood.

The first stage is to get approval from the planning board. Your local jurisdiction may have a different name for the planning board, like planning commission or planning committee.

You'll present your proposed land use and zoning request to the local board at one of their scheduled meetings. The planning board will ask questions and then vote on whether to approve the change. The results will be passed on to the city council or township board.

If they don't approve the use, they may give you changes that would be required for approval. In this case, you can either make the changes and go back in front of the board or find a new location for the development. It may also just be a hard "no," which means you're not likely to get your land-use entitlement.

If the use is approved by the planning board, it will move on to the city council or township board for a public hearing. Notices of the intended zoning variances or changes and the development will be sent to residents and businesses in the neighborhood so they can be present at the public hearing to give their opinion or ask questions.

You should anticipate the questions and concerns the neighbors will have about the development so you can be prepared to address them at the public hearing.

The city council or township board will take the public's opinions and comments into consideration when they vote on whether to approve the use permit. If it's approved, you can continue in your planning process. If not, you can address the reasons it wasn't approved and appeal the decision.

Use permit

If you had to request rezoning or a zoning variance, there will most likely be conditions that will include the property being used for the specific use you proposed. In this case, you probably won't be required to get a use permit. It will most likely be included in your zoning approval.

If your use conforms with zoning, getting approval for a use permit will be your first step in the approval process. The process is very similar to the process for requesting a zoning change or zoning variance.

It's important to do your due diligence on the local master plan or planned unit development, because some areas might be designated for very specific uses, regardless of what's allowed under the zoning code. For example, an area might be zoned for multifamily housing, but the specific area may be reserved for affordable housing.

You'll start with the planning board and then hopefully get to move forward to the city council or township board. The request for a use permit will also be presented at a public hearing, where local residents and businesses will have the opportunity to state concerns and ask questions.

The use permit may have certain conditions. This may include prohibiting ancillary services or products, making specific improvements to the real estate, or not removing trees.

Project approvals

There are a variety of other approvals that will be required, depending on the jurisdiction and the development project. These land entitlements mostly have to do with construction. These may also have to go in front of the planning board for approval. You may be able to combine these instead of having to go through the same approval process multiple times.

Some of these approvals have to do with the site plan, the architectural design of the structure, and utility hookups.

To obtain these approvals, you may have to meet certain conditions, such as a minimum amount of parking spaces, having a certain percentage of the land kept as green space, or planting a minimum amount of trees.

This isn't an exhaustive list by any means but just some of the common conditions to keep in mind.

The difference between land entitlements and zoning

Zoning ordinances provide general requirements for what types of buildings and uses are allowed in certain areas. They are put in place to control how the different areas of the community are developed.

Restricting developments to certain areas protects the use and enjoyment of the neighborhoods. For example, areas will be zoned to prevent a factory from being built in the middle of a residential neighborhood. They'll also keep warehouses and factories in certain areas so delivery trucks don't interfere with traffic in busy commercial districts.

You can think of zoning ordinances more as restrictions than rights. Most zoning ordinances don't give you the right to build whatever you want as long as it complies with the ordinance. They restrict you from building things that don't conform.

Entitlements, on the other hand, are rights given to real estate developers on specific projects. When you get the entitlements, you have the right to make the land improvements and use the land in the way the local government agreed to.

However, entitlements can't be unreasonably withheld if the project conforms with the zoning ordinances and fits with the master plan.

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