Miller: In addition to the foregoing, politics can come into play in getting the required approvals from planning commissions and city councils or county boards of supervisors. Depending on the level of public support or opposition, these hearings can be completed within four to six months or drag on for years, costing in excess of $1 million.

GlobeSt.com: What can residential property owners who are thinking about this entitlement process do to make it go more smoothly?

Miller: There are three courses of action the property owner must consider: 1. Avoid entitling and sell the property “as is.” Typically, this option results in the lowest sale price, but costs the least for the owner and requires the shortest period of time to dispose of the property. In rare occasions, the land may be worth more in an unentitled state. 2. Enter into a long-term agreement with a home builder to process a

tract map at the builder's expense. The most utilized option, usually this process takes between 2.5 and five years and requires the buyer to periodically release nonrefundable deposits to the seller after the buyer's approval of their contingencies. The closing of escrow generally occurs after approval of tentative or final maps. 3. The owner entitles the property at the owner's expense. This alternative is similar to the second alternative, except the owner has full control of the processing of the map and bears all expenses. Before making any decision as to which alternative to select, the property owner should weigh the ramifications of each alternative very carefully.

GlobeSt.com: How can owners determine the best alternative?

Miller: An owner should retain a competent engineer to determine the optimal number of lots that can realistically be obtained and approved and the costs to do so, which can be obtained from contractors specializing in residential subdivisions. Unfortunately, many owners who choose not to seek advice make the decision to process a map only to find out later that the number of achievable lots is not financially viable for their project.

When an engineer is retained for a project, that engineer should provide actual and timely cost estimates for their services as well as a schedule of all regulatory fees and an estimated timeline to obtain tentative and final map approvals. They should review all possible land uses, and existing intrinsic values should be identified. For example, the property may have already been divided through previous lot splits, parcel maps, tract maps, boundary adjustments, records of survey and/or deed(s) prior to February 1972 and the implementation of the State of California Subdivision Map Act.

In addition to the above, it is very important to consider market and cost trends, interest rates, absorption rates and the overall business climate.

This cumbersome, complex, and costly process is not for the faint-of heart. There are many factors to be considered in making this decision, and one should always consult a professional advisor first before taking any action to entitle their land.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

SAN DIEGO—The process to entitle a residentially zoned property to higher densities is long and can be expensive, Lee & Associates broker Patrick Miller tells GlobeSt.com. We spoke exclusively with Miller about the ins and outs of this process and how to make it go more smoothly if you decide to take that route.

GlobeSt.com: What are the concerns with entitling residentially zoned properties to higher densities?

Miller: Many property owners in the Southern California region face multiple challenges in deciding whether to entitle their residentially zoned properties to higher densities. The process to entitle lots is a long one—approximately two to five years or more—and it can be expensive. Parcel maps of five lots or less and tract maps of more than five lots can cost between $100,000 and $500,000 or more, respectively. The potential size and number of the lots are determined by zoning and general plan, slope, health-department requirements and biology. The costs include regulatory and processing fees, engineering fees and various studies and reports such as traffic, noise, biology, soils, agricultural, archeology and anthropology, storm-water treatment and conditions of approval costs. If a final map is approved and recorded, additional fees include annual bonding fees, fire fees and physical secondary access, parks and recreation fees, school fees, on- and offsite mitigation land (open space), drainage and retention basins, potential greenhouse-gas studies and more.

GlobeSt.com: What are some of the other issues involved in this process?

Miller: In addition to the foregoing, politics can come into play in getting the required approvals from planning commissions and city councils or county boards of supervisors. Depending on the level of public support or opposition, these hearings can be completed within four to six months or drag on for years, costing in excess of $1 million.

GlobeSt.com: What can residential property owners who are thinking about this entitlement process do to make it go more smoothly?

Miller: There are three courses of action the property owner must consider: 1. Avoid entitling and sell the property “as is.” Typically, this option results in the lowest sale price, but costs the least for the owner and requires the shortest period of time to dispose of the property. In rare occasions, the land may be worth more in an unentitled state. 2. Enter into a long-term agreement with a home builder to process a

tract map at the builder's expense. The most utilized option, usually this process takes between 2.5 and five years and requires the buyer to periodically release nonrefundable deposits to the seller after the buyer's approval of their contingencies. The closing of escrow generally occurs after approval of tentative or final maps. 3. The owner entitles the property at the owner's expense. This alternative is similar to the second alternative, except the owner has full control of the processing of the map and bears all expenses. Before making any decision as to which alternative to select, the property owner should weigh the ramifications of each alternative very carefully.

GlobeSt.com: How can owners determine the best alternative?

Miller: An owner should retain a competent engineer to determine the optimal number of lots that can realistically be obtained and approved and the costs to do so, which can be obtained from contractors specializing in residential subdivisions. Unfortunately, many owners who choose not to seek advice make the decision to process a map only to find out later that the number of achievable lots is not financially viable for their project.

When an engineer is retained for a project, that engineer should provide actual and timely cost estimates for their services as well as a schedule of all regulatory fees and an estimated timeline to obtain tentative and final map approvals. They should review all possible land uses, and existing intrinsic values should be identified. For example, the property may have already been divided through previous lot splits, parcel maps, tract maps, boundary adjustments, records of survey and/or deed(s) prior to February 1972 and the implementation of the State of California Subdivision Map Act.

In addition to the above, it is very important to consider market and cost trends, interest rates, absorption rates and the overall business climate.

This cumbersome, complex, and costly process is not for the faint-of heart. There are many factors to be considered in making this decision, and one should always consult a professional advisor first before taking any action to entitle their land.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.