06/01/2004
There is no formal strategy landowners can pursue to find the right development partner for a proposed project. But Lisa Weitzman, a principal at Hidalgo & Co., says we would be well served to speak with other trusted advisors, particularly our private banker, who may know both the reputations and financial standings of local developers. Accountants and lawyers also make valuable resources, as do friends and acquaintances who have been through the development process.
Experts in the development field agree that before choosing a
partner, we should compile rudimentary information about our property to guide
our initial discussions. Assuming we already know the basic topography of the
property (Does it border a stream or major road, for example? Is it steep or
flat? Are there extensive wetlands?), and whether there are any existing
structures that must be either demolished or renovated, the first step is to
learn how the property is zoned and what types of development the zoning code
permits. Building condos in an area zoned for light industrial developments
might not prove the ideal strategy, while planning to build a shopping center,
even in an underserved residential neighborhood, will most likely not pass
muster with even the most liberal local zoning boards.
With facts and
figures in hand, we should then compose a short list of those developers who
have good reputations within the township, as well as track records of executing
profitable projects. Don Shapiro of Chicago’s Beitler Group, which has built
over 13 million square feet of space in the last 15 years, makes a number of
suggestions for checking out a developer. First, we should get referrals and
references for lenders the developer has worked with, which should give a good
idea how past projects have performed financially. Then, we should consult
municipal agencies to ensure the developer built to original plans and to code,
and that he or she has good safety record. Finally, we should ask the developer
for four examples of projects that went well and two that did not go well. He
should explain what went wrong and what he learned. All experienced developers
have had a project that has gone awry, Shapiro says. We should beware of those
who claim otherwise.
Even if the credentials and references prove impeccable
and both parties agree on the terms of a joint venture agreement, there must
still be a meeting of the minds. A nearly infinite number of perils can derail a
partnership during a multiyear development: A developer may suffer a capital
crunch, or a zoning board may deny the density of housing initially calculated.
It is critical that we begin this process in concert with an individual we like
and trust—someone whose vision for the property is compatible with our own. In
the case of a West Hartford widow (see main story), says David Hidalgo of
Hidalgo & Co., “she became very comfortable over time with what we had done
in the past, and with our idea of creating a place, or ‘place-making’ as it’s
called.”
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