Peak of the Week - Real Estate Development Terms

For the peak of the week, I look back and peek forward to consider how two real estate development terms are used.

Two terms which over time have crept into our real estate development vocabulary -- entitlement and stakeholder. Both of these terms are now commonly used during the real estate development process.

Entitlement – We used to define entitlements as rezonings, permits and/or approvals.

Stakeholder – We used to define stakeholders as neighbors or community groups.

ENTITLEMENT
From Wikipedia, the free encyclopedia

An entitlement is a guarantee of access to benefits based on established rights or by legislation. A "right" is itself an entitlement associated with a moral or social principle, such that an "entitlement" is a provision made in accordance with legal framework of a society.

Typically, entitlements are laws based on concepts of principle ("rights") which are themselves based in concepts of social equality or enfranchisement.

Zoning decisions must be based on the best interests of the entire community, and not just the interests of a particular property owner or neighboring property owners

From CBS ATLANTA - Celebrity cook Paula Deen might have to part with her beloved chickens if a Georgia county follows through on a zoning crackdown in the Savannah area.


STAKEHOLDER
From BusinessDictionary.com

A person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization's actions, objectives, and policies.

In real estate development back in the ‘80’s, a meeting with adjacent neighbors to present a project was rare. Neighbors let alone community groups were made aware of a project through public notices and public meetings as part of the regulatory process.

In the ‘90’s, it was in the best interest of the developer to hold neighborhood meetings to present the project. Neighbors would voice their opinions and as a developer, decisions were made to either make plan changes based on their input or ignore their suggestions. Developers did not have to agree with the neighbors.

Sometime after 2000, all of the neighbors and community groups turned into stakeholders. Now, developers would not only be required to hold neighborhood meetings, they will also have to meet and consider their input even from “indirect” stakeholders, i.e. environmental groups.

And now local government .............

Charrette
From Wikipedia, the free encyclopedia

Charrettes take place in many disciplines, including land use planning, or urban planning. In planning, the charrette has become a technique for consulting with all stakeholders. This type of charrette (sometimes called an enquiry by design) typically involves intense and possibly multi-day meetings, involving municipal officials, developers, and residents.

A successful charrette promotes joint ownership of solutions and attempts to defuse typical confrontational attitudes between residents and developers.

Charrettes tend to involve small groups, however the residents participating may not represent all the residents nor have the moral authority to represent them.

Residents who do participate get early input into the planning process.

For developers and municipal officials charrettes achieve community involvement, may satisfy consultation criteria, with the objective of avoiding costly legal battles

Entitlements, stakeholders and now charrettes have changed our real estate development industry through local government action.

Today, local government and the general public have the opinion that developers are guilty and must prove their innocence. Meaning their projects should be designed by a community committee or stakeholders and then they are entitled to build it. Costs, price points and markets are secondary to consensus building and government regulation.  

Once we come out of this real estate depression, how far did the local regulatory pendulum swing while we are striving to survive?
Remember, once a regulation or process has been imposed at the local level, government restrictions on land are rarely reversed or overturned.