FEATURE ARTICLE, AUGUST 2009

SITE DEVELOPMENT CHALLENGES
Five main issues that face developers in the Lone Star State.
Kurt Overmyer and John Measels

Real estate developers nationwide face hurdles in planning their projects, and Texas is no exception to this rule. Based on corporate experience in site development involving hundreds of projects statewide — including both new development and redevelopment — the challenges developers confront in the Lone Star State can be broadly grouped into five categories. Some of these issues are relatively common to developers nationwide, and some are more common to Texas.

1. Entitlements

In many larger Texas jurisdictions, projects must adhere to planned-use development (PUD) requirements in addition to conventional zoning obligations. PUDs typically place more intensive restrictions on development.

Developers must also often win homeowner association (HOA) approval for projects. This involves the kind of community relations work that real estate executives would typically undertake in localities around the country. HOA approval often becomes a factor with commercial properties adjacent to residential areas. While a developer may not require direct HOA approval, local residents will usually speak up at public hearings. An outspoken citizenry has the potential to block agency approval, so it makes sense to establish a dialogue with community leaders to help ensure their support.

As in most locations around the country, developers must be attentive to rezoning and special zoning districts. In Texas, local zoning codes cover a wide spectrum. The Dallas/Fort Worth suburb of Irving, for example, imposes a multitude of site-specific zoning rules. At the opposite end of the scale is Houston, where there is no zoning.

Another consideration in the entitlement world involves extraterritorial jurisdiction (ETJ), which comes into play in areas likely to be annexed by a jurisdiction. In Texas, it is not uncommon for cities to annex county land, which usually leads to more restrictive zoning. Until annexation formally occurs, existing jurisdictions have limited ability to restrict development. Developers should tailor their projects to the demands of the successor jurisdiction.

Developers, particularly in the Houston area, may have to obtain Municipal Utility District (MUD) approvals. This typically involves a utility approval process that is separate from conventional zoning approvals sought from municipalities.

As in any locality, developers must understand and conform to local entitlement rules. For example, a district may require concurrent or separate reviews for replatting, rezoning and permitting. In Texas, the acquisition process requires platting.

Finally, communities with populations exceeding 20,000 may require irrigation plans, which may obligate a developer to hire a licensed irrigator for design services.

2. Soils

Texas soil tends to be of poor quality and consists of clay-type material; wet-dry weather cycles exacerbate the native soils’ expansive character. Therefore, developers generally need to budget for some kind of soil stabilization program or paving upgrade.

One common strategy involves the use of lime stabilization after a site has been graded. Once the lime absorbs moisture, it hardens and effectively functions as an added layer of cement, which limits further moisture infiltration. A common alternative to lime stabilization involves foundation upgrades with added concrete
paving.

3. Utilities

Texas communities receive energy through a range of deregulated utility providers called energy services companies. Developers need to make well-informed decisions about selecting their supplier. They should confirm the identity of their local provider and be sure to adhere to local service delivery requirements.

In some jurisdictions, utility providers will extend service to a new development without charging for infrastructure work. In more developed areas, developers may pay extra fees for this work. During the planning process, developers should determine whether such fees will be imposed.

Real estate entrepreneurs should also carefully calculate the time it takes to get utility service and match that against potentially short zoning permit timetables. It can often take longer to be hooked up than to be approved for zoning. If a site is situated far from the nearest gas line, zoning may come through before the power arrives. Developers must tailor their schedules accordingly.

For example, projects in Houston and the Gulf area face lead times in transformer availability that can run 6 months or more. Developers there should order service and equipment early. The San Antonio Water System makes projects undergo a review and approval process that can consume a lot of time. Applicants must also submit to water quality permitting.

4. Road Improvements

Developers should get to know their designated district engineer with the Texas Department of Transportation (DOT). The real estate company is inevitably going to work closely with this individual for multiple approvals. Any project near a right-of-way requires DOT approval. Even small encroachments and driveways require permits.

Similarly, developers need to coordinate utility permits. Any project touching a utility’s right-of-way will require DOT approval.

State officials may also require a developer to conduct a traffic impact analysis to determine whether adjacent roads can accommodate added traffic generated by development.

5. Aquifers and Water Quality

As in any state, the development sector needs to carefully adhere to local, state and federal guidelines relating to water quality permits. 

Developers should note restrictions that exist in regions containing the Edwards Aquifer, a major groundwater system in Texas serving approximately 1.7 million people. The 180-mile-long aquifer extends from Bracketville in Kinney County to Kyle in Hays County. When development occurs over the aquifer, the project must adhere to various water quality standards based on its particular location.

Finally, many Texas municipalities impose water detention codes designed to restrict flooding. Projects can be required to detain water to levels equal to predevelopment flow. This can be achieved by installing an above-ground detention pond or by installing an underground detention system. 

Kurt Overmyer, AIA, is a senior development coordinator, and John Measels, P.E., is a civil engineer manager with GreenbergFarrow in the firm’s Dallas office.

©2009 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.