The Real Deal - May 2014

Date: May 9, 2014

Don't Put Off That Development Project
By: John B. Gontrum & Jennifer R. Busse

Years ago a Baltimore County employee told me that no matter how onerous I thought the development regulations might be, if I waited a while they would get worse.

That cautionary statement is applicable to today’s marketplace. The State of Maryland has become very involved in local land use decisions, and the Maryland Department of the Environment, along with numerous non-profit environmental groups, has become very aggressive in planning for and regulating both current pollution levels and future pollution levels.

The stormwater management fees mandated by the State in 2012 and implemented in 2013 were intended to address current pollutant loadings, not new development. There is a significant effort underway to address the various kinds of pollutants present in runoff, which will likely add to the fee structure in future years, and, therefore, must be taken into account for any planned development.

Regulations pertaining to nutrients present in sewage and stormwater which are expected to be issued later this year will address pollutants coming from new development. These regulations will be much more complex than the stormwater fees and will add significant costs to the construction of new housing and new commercial and industrial projects, which could make the existing stormwater management fees pale in comparison.

The concept of the proposed regulations calls for certain types of development in certain locations to purchase credits from a centralized bank. Credits are placed into the bank primarily from farms which adhere to low pollutant loadings. Farmers are then compensated for the credits. A fee in lieu structure in the event bank credits are not available, contemplated to add thousands of dollars to the cost of the smallest residential unit and exponentially more to larger rural units, is also planned. Exemptions may be given to urbanized areas being redeveloped. How this new, regulatory scheme and potentially large increase in development costs will impact the construction of new, affordable housing is yet to be determined.

Plan Maryland

The State is planning on almost 1,000,000 new residents in the next 20 years. Plan Maryland proposes that these residents will be added to the rolls of the most urbanized jurisdictions near employment centers in major redevelopment projects oriented toward mass transit.

Maryland’s Department of Planning is clearly stating that it has no intention of backing away from the concepts enunciated in Plan Maryland, namely to encourage transit oriented, urban redevelopment. Development is being shifted away from rural areas. Richard E. Hall, the Director of the Maryland Department of Planning, in writing about Earth Day, 2014, stated: “Encouraging residents to live and work in developed areas means they won’t need new homes and businesses in the countryside, which planners call greenfield development because, for decades, it occurred on fields… In my view the era of greenfield development should be over. Maryland has enough developed land to service its existing population for decades.”

The Sustainable Growth & Agricultural Preservation Act of 2012 (Senate Bill 236) was approved during the 2012 General Assembly session and established a four tier system to be implemented by the counties, restricting private septic systems to limited designated areas. It is a key measure to directing future development toward urbanized areas. The implementation of the tier systems proposed by the State has superseded more permissive local zoning classifications. Ultimately, far less new development is going to occur in rural areas than in previous decades and that which does occur will have costly fees associated with it.

How our Neighborhoods Will Change

Many jurisdictions have recently rewritten or are in the process of rewriting their land use regulations to conform to the State guidelines and to promote development in certain areas. There will, for example, be a real opportunity in the next year to look at the zoning map process in Baltimore County to address the new “urbanized” thrust of future development.

Years ago, there was tremendous resistance to placing different kinds of development adjacent to each other, and there was tremendous impetus to allowing only single family, detached residences as part of new development. Those days are gone.

The new reality calls for a mix of uses literally on top of each other with much higher densities. Spread-out commercial centers have the opportunity to redevelop as much more compact, commercial/residential/office areas with recreation and passive open space.

Existing communities, however, are justifiably concerned about the impacts of new development on existing public services, traffic, and schools. Redevelopment means change, often from an underutilized site to dynamic and more intense uses. Change, while difficult for any industry to accept, is even more difficult for existing homeowners to accept. Consequently, much more detailed, and much more responsive, communication must occur with local constituencies to address concerns. It also helps to have a thick skin and a sense of humor.

What It All Means for Developers

New development requires much more sophistication than in years past, and if the recession did not knock the unsophisticated developer out of the market, the new regulations most likely will. A team approach to development is more critical now than ever and requires competent, experienced land planners, engineers and environmental and traffic experts, as well as competent legal representation. The thicket of regulation has become much more tangled with state and local government constituencies and with the concerns of far more active community and environmental groups than existed just 10 years ago. All of these constituencies will demand to have their concerns properly addressed in the development process regardless of the local jurisdiction in which the development is occurring.

Just remember – no matter how daunting the process may appear today - tomorrow it won’t be any easier.