en·ti·tle·ment
inˈtīdlmənt,enˈtīdlmənt/
noun: the fact of having a right to something.
This is a frequently used word right now, whether in reference to government granted entitlements like Welfare or Social Security, the state of some of our children, and for the purposes of this article: the development rights that come with every parcel of land transferred in this country. While the word “entitlement” can have a negative connotation, that is the actual word used for development rights attached to a property, so unless we want to rewrite the dictionary, we’re going to have to use it.
By definition, an entitlement has value. If you receive a check from the government, whether one time or on a regular basis, that “promise of payment” has a value. The same is true of any entitlement, including the entitlements which come with land. These entitlements, or rights, include the designated land use, zoning designation and Master Plan designation. These designations may dictate the right to build single family homes on 6,000 square foot lots, or the right to build multi-family to a certain density, say for example, up to 36 residential units per acre (that is a maximum density we see referred to in Carson City as HDR or High Density Residential). A particular parcel of land may come with the right to build a shopping center, or a casino. Details matter. For our purposes, knowing and understanding permitted land uses and zoning is incredibly important. This is the first act of a developer, checking the land use and zoning designations to make sure the project the developer is proposing meets the entitlements that run with the property. In other words, is the land the developer is purchasing intended for the use he wishes to build?
If you are concerned with the economic health of your city, get involved and stay involved. The time to get involved is NOT when discussions begin about developing the property next door to your property. Every home in this city sits on property that was once vacant and open. Building the home you now live in didn’t destroy the character of the city, although it may very well have blocked a neighbor’s view or taken away the open space where they walked their dog. Entitlements have value and if you strip them from a property owner or developer they will need to be compensated.
A typical municipality, like Carson City, starts with a “master plan”. The master plan dictates the desired use for land in all areas of a town. For example, if the land south of the racetrack in Carson City is “master-planned” for single family residential, it could be (and will be) difficult to get an alternate use approved. If a developer wished to build a casino at that site, it’s unlikely such a use would be approved. It doesn’t meet the current zoning OR the Master Plan designation. The Master Plan is reviewed annually and updated regularly to ensure that it stays current with economic cycles and market trends.
In addition to considering the Master Plan, land use and zoning, another consideration will be the city or municipality’s development standards, including building codes and architectural preferences. For example, if the development standards for a certain area or neighborhood do not allow garages to be constructed of engineered steel, but rather dictate that wood or stucco construction is required, a homeowner wishing to install a metal garage is asking for a right or privilege to which they are not automatically entitled. They may, in that case, ask for a variance or a special-use permit, which may or may not be granted, depending on the direction of the planning commission. The variance may not be granted if the Planning Commission determines it does not meet the intent of the development standards or would set an undesirable precedent.
If a developer wants to develop a parcel of land in accordance with the master plan, current permitted zoning regulations and land use, and in accordance with the city’s development standards, the developer is asking to use the land in exactly the intended purpose per governmental rules already in place and effect, and if he is denied, he can sue the city for not allowing him use of entitlements which come with the land. These entitlements in large part determine the value of land and if those entitlements are taken from the property owner, compensation is due. This is supported by the “takings clause” of the Fifth Amendment of the Constitution, which states that private property shall not be taken for a public use without just compensation.
This often puts city planning departments, and the planning commission, at odds with well-intentioned residents who don’t understand the quandary: the city does not have the right to randomly strip a property of its entitlements, or rights to development without compensation. In fact, the city puts itself in jeopardy of a lawsuit when they don’t enforce standardized rules for development, allowing some property owners to fully utilize their entitlements, while stripping other property owners of their rights.
If a city can show that there is not sufficient infrastructure capacity to satisfy the needs of a new development, regardless of the entitlements, they may have a case for not permitting “allowed” or “intended” uses. For example, if there is limited water supply or sewage capacity within a city, that may be grounds to stop development without denying the underlying entitlements, at least until the additional supply or capacity is obtained.
The topic of development standards may seem dry, but it is ALWAYS important. When a citizen decides that they care about development standards only because they want to stop a development from going in next door to their property, they’re too late. Development standards aren’t put in place property by property. They are put in place as a guide to development for the entire city and are based on national guidelines and planning designs. We, as commercial brokers, participate in the planning processes for neighborhoods we don’t live in, and many times for neighborhoods we will never sell property in. We participate because planning is always important, for the whole community. There’s a significant difference in the economic vitality you’ll find in a well-planned community as opposed to a poorly planned one.
Brad Bonkowski, CCIM and Andie Wilson, CCIM are owner/brokers of NAI Alliance Carson City, a commercial real estate brokerage. They can be reached at (775) 721-2980.
