VOICES FROM THE INDUSTRY: More than ever, developers give back to communities

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As cities and towns work to attract businesses and residents that will make a positive impact on their tax bases and improve the quality of life in their communities, plan commissions, city and town councils and other governmental entities aren’t looking at land use the
way they did a decade ago.

Now, when a developer files for a rezoning, government officials look for ways that rezoning can improve a community’s standard of living and economic outlook. They evaluate how proposed architecture fits with the town, what types of owners and tenants are likely to be attracted to a project and how developments will impact residential lifestyles and municipal infrastructure.

They consider everything from the impact on the current sewer lines to the size of trees that will be included in the landscaping plans.

That level of scrutiny can have advantages for communities who want to preserve the look and character of the town and control growth. But it also comes at a price to developers.

More than ever, developers are giving back to communities. In exchange for an approved rezoning, developers often are required to make significant infrastructure improvements.

Traditionally, developers have been asked to make updates based on the impact a development will have on existing infrastructure, such as roads and utility lines, But, increasingly, they are being asked to make larger improvements that will advance the community’s economic growth plans.

That may mean building new roads, expanding or updating sewer systems and even donating land for future public use for parks, schools or municipal buildings, such as fire or police departments. Too often, the community doesn’t realize these improvements are paid for by developers.

For developers, this kind of give-back to a community has become the cost of doing business and has become the expected practice. So, when developers are asked to put in a new street to gain zoning approval, at least a portion of that cost is passed on to future tenants, building owners or homeowners, depending on the type of development. Otherwise, the cost of these improvements would make development economically unfeasible.

Some mandates can discourage business development and investment by increasing expenses and narrowing profit margins for partners involved in a project.

Certainly, city officials have a vested interest in trying to leverage the relationship to benefit their constituents, but there’s also a fine line between utilizing market leverage and discouraging business investment and development.

Let’s face it, communities that have an interest in bringing their residents the type of businesses that will support residential base-grocery stores, drug stores, retail outlets, etc.-and businesses that will increase the community tax base, need developers to help make that possible.

We’re all working toward the same goal-to build better communities. But that goal will be reached more efficiently when developers have the guidelines-which include expectations and fee structures-in advance and when the guidelines are applied equally.

Planning officials are trying to do the right thing for their communities when they use market leverage in making land use and zoning decisions. The evolving and enduring challenge will be for them to use that leverage to the long-term benefit of municipalities and developer partners alike.

That will create an atmosphere of collaboration, and eliminate the adversarial relationships that are all too common.

Mann is managing partner of Mann Properties, a commercial, industrial and residential developer based in Indianapolis. Views expressed here are the writer’s.

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