Commercial Real Estate Investing From A-Z What Are Entitlements?
Devin Lewis is a California Licensed Architect that has spent the last 10 years working with real estate developers determining the highest and best use for properties across the country, and around the world.
You can read this interview here: https://tinyurl.com/uj4bqos
What are entitlements?
Entitlements, in a simplified explanation is what you, as an owner, are promising the city that you or someone that purchases your entitled design will build and it ultimately determines the value of the property. An entitled design is thought out enough to where the city can understand what will be built, what’s propose, what taxes it will receive from any of its operations. And the entitlements are based off of what architects consider a schematic design. So the design of the building will, after entitlements, develop significantly. And development for an architect means something different than development for a real estate developer. But the project will architecturally develop after the project becomes entitled with engineering systems. In order to entitle a project, you need a good idea of the square footage, the functions and what you have planned for that piece of property.
What are some of the best pieces of advice that you can share with us in trying to get a smooth entitlement process as fast as possible in a very difficult city?
As a property owner developing a piece of property, I think the most important thing is to strive to have an understanding of the process. As an owner, you could experience a great deal of frustration if you’re not aware that an architect is your agent and the architect really is there to help you facilitate the process and that process In most cities it looks like this. You’ll get a schematic design, go to the planning department, set up a meeting and you’ll work with different departments like the police department, the fire department, traffic, public works, sometimes the trash management services for the city to really make sure that at a high level, your project will fit in to the city’s fabric, the city’s functions, and the way the city will tie in to what you’re proposing. You’ll work with a staff member and you’ll present to the planning department. The planning department will actually grant you entitlements. If it’s a large project, it’ll be presented to the city council. When the staff member feels that it’s ready, they will recommend the project for approval. During this process, the architect is folding in the requirements and desires of many different parties. The city is going to bring its requirements and you’re going to meet with community members in community meetings, folding in their desires.
Can they give an estimate of more or less how long it would take to get all the approvals from a particular city?
We put together a timeline schedule for each project. Entitlement is a difficult thing to quantify in terms of time, especially in San Francisco, because the neighbors have such huge influence over what becomes approved. And it's a great thing that the neighbors have say in the character of their city. One of the main drivers for the amount of time that a project will take is CEQA, The California Environmental Quality Act which requires an environmental impact report for large projects. It's tough to say how long a project will take to get planning commission approval because the neighbors can form large, powerful groups and create lawsuits that actually will stall projects for a number of reasons such as traffic in their neighborhood, the density, and type of use that is being proposed.
Devin Lewis
dlewis@lpas.com
https://www.linkedin.com/in/devinjameslewis/