4A — October 28 - November 10, 2016 — M id A tlantic
Real Estate Journal
www.marejournal.com
M id A tlantic R eal E state J ournal
By Glenn Ebersole, High Concrete Group, LLC Governments and developers need to cooperate to achieve smart development
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it appears progress is made, new and more onerous regula- tions are adopted. The basic questions: Why is the commercial de- velopment paradigm so hard to change in Pennsylvania? What are the most signifi- cant barriers to a better com- mercial development process? Here are some of the major roadblocks: Local regulations often im- pede smart, strategic com- mercial growth. Many times, zoning and subdivision regu- lations are very rigid and do not allow for flexibility that would encourage commercial development.
Time is money in commer- cial development. Innovative developers who propose proj- ects that include businesses with well-paying jobs, provide a good real estate tax base with minor effects on schools and municipalities and pro- vide sustainable and environ- mentally friendly planning and buildings often are sty- mied by inflexible regulations. When the cost and delay are too great, the rigid by-the-book approach often prevails over innovation, resulting in proj- ects being abandoned. Some projects span two or more municipalities. This creates many chal-
lenges, including multiple pro- cesses that may be in conflict with the jurisdictions; lack of cooperation among the juris- dictions; redundant fees and costs because of different and conflicting reviews; and the additional time to go through the land-development process in each municipality. The best and most success- ful commercial developers are committed to smart, strategic commercial development. Un- fortunately, there are many outdated assumptions and perceptions that prevent de- velopers from building projects planned to meet the needs and wants of the demographics of
the multigenerational popula- tion and a diverse economy. There is a tendency to look at commercial developers and make an assumption that “they always do it that way,” rather than realizing that times are changing. Municipal fees and costs for commercial development con- tinue to rise, increasing land and construction costs. One of the major oversights in setting fees and costs is the failure to consider the benefits of smart, strategic development. There also is a shortage of suitable infill sites, making smart, strategic growth more expensive and complicated. Local and state governments need to provide incentives for the reuse of historic struc- tures, brownfield develop- ment, downtown revitaliza- tion and other infill projects. Unfortunately, many state and local laws make smart commercial growth prohibi- tively expensive. Likewise, well-intended but overly rigid building codes deter infill de- velopment. Christopher Leinberger of Brookings Institute said there are only 12 kinds of real es- tate projects that can readily receive bank financing. And each of the 12 kinds is a con- ventional, single-use project (e.g., strip shopping center, mini-storage units, and apart- ment buildings). Leinberger also asserted that mixed-use projects are outside the financial main- stream. Innovative commer- cial developers often have trouble getting financing be- cause of a lack of compara- bles, the secondary financing market and bank procedures that favor so-called low-risk investments. The perception is that bank- ers fund projects with a for- mula which results in only standard developments, with predictable outcomes, receiv- ing funding. The willingness of govern- ments to enter into public private partnerships has been missing for a long time. Recently, significant prog- ress has been achieved, and there needs to be more of these public private partnerships for smart, strategic commercial development. This will result in the revi- talization of existing commu- nities and will facilitate new commercial development on continued on page 6A
here continues to be a great deal of frustra- tion for professionals in
commercial development in Pennsyl- vania. This frustration results from a myriad of barriers to gaining ap- proval for projects.
Glenn Ebersole
There are efforts to change the development paradigm to make it more efficient and “user friendly.” However, this has been a monumental task, and just as
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