THIS IS MY 15TH POST ON UNDERSTANDING MONEY TOOLS
Land Development Part 3
In this segment we will take the basics of a development
from the purchase to finish of land work to turn to a builder/developer using
my development in Wisconsin as an example. Again, my blogs are meant to be
educational and touch upon the business basics, not in detailed depth. Please go to: www.premierewisconsinland.com
Or follow along as I describe the land and now it’s 4 parcels.
Two of the most important ingredients of land development
are lots of luck and timing!
This aspect will be broken apart so each blog is not too
long.
This project is a major interchange in Oconomowoc, Wis.
about 30 miles west of Milwaukee near I-94 and combines two state highways. The
land was purchased in the 1990s, and was chosen as one of three possible sites
for a large interchange including 4 land highway and over pass; one of the
largest projects in Wisconsin. The State Department of Transportation
(DOT) selected this land over the other two sites. Over a year of work with the Department
of Transportation was completed coordinating my land work with the State
engineers, and then the project was postponed because of funding. This is where staying power is
necessary, as the unexpected seems to always occur.
The land combined two farms. I took advantage of the DOT’s
delays to take down all the barns, out buildings and one old farmhouse, leaving
one farmhouse remaining. The
States will pay more for a house and residential lot than farmland, so best to
leave something remaining on the land. The Department of Natural Resources
(DNR) becomes involved from the onset if you do work on anything over one acre
of land, or do major changes to land. With demolishing of buildings comply with
State and local permits and standards.
I had to have the acidity of the concrete tested before burying the
foundations!
In 2000 the State’s budget was met for the project and the
engineering plans once again began.
I had a great law firm working on my behalf and in May, 2004, the State
purchased the needed land of 60 acres with a mutually agreed upon price, rather
than push the State into eminent domain, where they can take private land for
the betterment of the public.
Now, you want to do several things at once:
-Hire a top civil engineering firm.
-Contract with a good public relations firm.
-Hire a market study to be completed that will help confirm
optimum usage for land.
-Hire a top architectural firm for conceptual layout.
-Contract for soils tests including wetland studies.
-Contact Departments of Natural Resources and Army Corps of
Engineers.
-Contact all utility departments including water, sewer,
telephone, and cable companies for fiber optics.
-Stay in close contact and meetings with the State
engineering department.
-Meet with the contracting company that wins the bid for the
construction of the highway for the State. You want a close relationship with this contracting firm.
Large projects take time. This one took 3 years to finish the highway once ground was
broken. I coordinated a lot of
land work at the same time.
Normally contractors for the State will have extra soil or fill that can
be used for your own development. This may include crushed concrete for berms
and other subsurface layers.
Parcel 1 work:
This is approximately 35 acres and best suited for
retail/commercial. Nice
residential lies to the east.
Neighborhoods are close-knit communities. As soon as construction starts
the people may be up in arms; noise, development, dust, changes to the area.
This is where a good public relations firm comes in. Parcel 1 sloped to the north dropping about 6 feet from one
end to the other. After wetland
studies were completed we were losing a few acres to wetlands, and these acres
cannot be touched. Sometimes this
can be subtle, and not necessarily wet areas. The DNR will look for wetland cabbage, cattails, or do
acidity tests on the soil to make determinations.
If you lose acreage because of wetland designation to the
State, you can use it as a natural green belt as a certain amount of acreage
will need to be dedicated for green belt.
We eventually brought in 130,000 cubic yards of clean fill
to this parcel after removing the topsoil and then graded it to a 0-1% grade. Then, replaced 9-12” of topsoil as
mandated by the DNR. We want to hold this in agricultural zoning until the
economy returns or until the land can be sold to a builder. Farming the land
can keep your taxes low. Prematurely rezoning can be devastating from a real
estate tax and cost standpoint.
We will continue from here with the next blog.
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