Site Selection for Land Developers

What is the Site Selection Process and Why is it Important?

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The site selection process involves examining potential options for land development by assessing their relative advantages and disadvantages. Site selection is a critical step in the success of a development project, the long-term investment, and the property owner’s operating costs. Selecting land that is not ideal for a project could lead to unanticipated constraints, limitations to development hidden in zoning codes, or obtaining additional environmental approvals due to engineering design changes.

When Should the Site Selection Process Begin?

The site selection process starts after the development project is defined and before purchasing or leasing the land. These early-stage location decisions impact the life cycle of the property by factoring in the following:

•  The initial cost of the property

•  The cost to develop the property

•  The cost of operating the property

•  The impact toward the local, state, and regional communities towards acquisition's success.

Every development is unique and may have specific site selection criteria. However, there generally is an economic incentive to achieve some level of due diligence during the site selection process. All developers and decision-makers should incorporate general best practices into their site selection process to help navigate the possible pitfalls of picking a potential site.

General Site Selection Best Practices

Process 1: Initial Project Plan

Before vetting sites, clear project criteria and plans should be put together to guide the site selection process. This plan should include:

•  Project requirements

•  Site acquisition budget

•  Project schedule

•  Project financing

During this time, a site selection team of subject matter experts and stakeholders needs to be organized to help minimize the risks of project delays and other consequences due to poor site selection. Creating and following the outlined criteria will help determine the starting point of any site selection process. Typically, the site selection process is done by project planners, developers, or other in-house employees, but site selection consultants can also be employed. 

Process 2: Zoning Research

The site selection team should familiarize themselves with a potential site’s zoning. Zoning governs how pieces of land can or cannot be developed and what purposes the zoned land can serve. A site can appear to have massive development potential but be in an unsuitable zone. Understanding the possibilities and limitations of a potential site’s zone can help developers determine development feasibility during the decision-making process.

If possible, developers may want to avoid sites with zoning restrictions. The Board of Zoning Appeals grants a zoning variance as a waiver for developers who would face unnecessary hardships in using a property fully compliant with a zoning ordinance. The process of seeking and being granted a zoning variance can add time and uncertainty to development efforts. For a project that requires zoning approvals or discretionary action by a local planning board or commission, the site selection team should work closely with a municipality's planning staff during the due diligence process to identify what discretionary actions will be needed and how long the process will take.

Process 3: Permit Research

Almost every type of development requires permits that can vary depending upon a project type and a site location. Developers should know the permits necessary for a potential project during site selection. Knowing the permits needed for a site and the anticipated costs and timelines of obtaining said permits could help the site selection team determine a site's feasibility related to the project's proposed schedule and budget.

Process 4: Due Diligence

Due diligence should begin once the site selection team has shortlisted some potential sites. Without reviewing and investigating potential sites, including relevant records, the site selection team could select a site that may not align with their project needs. The following can be identified through careful due diligence investigation, review, and analysis:

• Environmental constraints

• Contractual requirements

• Survey irregularities

• Problems with titleship

• Zoning and building violations

• Deficiencies in the geotechnical makeup

• Defects or weaknesses in the structure

During due diligence, the site selection team should reevaluate project requirements, technical and financial factors, environmental due diligence studies, appraisal reports, and any other data the project team can gather from available resources. Expensive errors, pitfalls, red tape, and litigation can be limited if not avoided entirely during development with thorough due diligence during the site section process. For a competitive advantage, land developers can use automated due diligence software to streamline this process and use these findings as part of the initial location strategy.

Process 5: Legal

As the shortlist is narrowed down to one site, the site selection team can prepare for acquisition, and legal actions can begin, which include:

•  Draft and review contingent purchase agreements or option contracts

•  Perform contract and lease negotiations

•  Obtain zoning approval from the appropriate governmental jurisdiction

•  Procuring economic incentives from the proper governmental or economic development   agencies

•  Obtain a title commitment to begin the title review process

•  Perform environmental reviews

A legal team specializing in site selection may be added, if not during the initial project plan, to the site selection team during this time. The legal team can help ensure that any potential legal issues and economic considerations are adequately evaluated and ensure negotiations are fully and adequately represented, ultimately saving time and money for development.

Renewable Energy Site Selection

Many large renewable energy developments are located in sensitive and isolated environments, making vetting for sites difficult. There are specific siting principles that land developers in the renewable space use to search for viable sites, which include:

• Avoid areas of high native biodiversity and high-quality natural communities

• Avoid places that disrupt wildlife connectivity, now and in the face of climate change

• Avoid locations in floodplains and wetlands

• Preferentially site on degraded lands with little vegetation or poor soil quality

Solar Site Selection for Solar Power Plants

While many areas of the United States will practically have the same total daylight, there are different variations of peak sun hours. In solar development, peak sun hours are defined as an hour of sunlight that offers 1,000 watts of photovoltaic power per square mile. The more peak sunlight hours, the more energy production from solar panels. Depending on the project requirements, the amount of peak sun hours a site can offer should be considered.

As a general rule, the flatter a site is, the better it is for solar development. However, it can be beneficial for sites to have a slight slope to the south or east to increase the system's exposure to the sun. Developers have constructed projects on sites with a gentle grade and even rolling hills. In addition, a site selection team can consider doing earthwork and light tree and shrub removal to help prepare a site, but this can add a high cost to the project and may kill its viability.

Whether developers build a project on ten acres or a thousand, they must locate their project near a utility's infrastructure. Developers may prefer to be close to a substation. While a solar project can be remotely far from a substation, there must be ample three-phase distribution line capacity on or near the site. Once a project is constructed, it can tap into the distribution line to transfer the energy generated by the solar project. A site selection team will have to pay for installing lengthy distribution extensions to reach the site if there are no transmission lines near, which can also add high costs to a project and prevent a site from being a possible fit.  

While solar projects are environmentally sound in theory, they can negatively impact the environment and protected species if poorly planned. Evaluating the following environmental factors during solar site selection is critical in determining the suitability of a site:

•  Impacts on the soil, water, and air resources

•  Impacts on vegetation, wildlife, wildlife habitat, and sensitive species

•  Potential effects from hazardous materials

Understanding the developable acreage and any potential environmental hazards allows a site selection team to determine if their project will work on a site or not. The mitigation for these impacts can be detrimental to a company's operating costs and startup schedule- even with supply-chain issues that many in the solar industry are currently experiencing. 

Site Selection for a Wind Power Plant or a Wind Turbine

It is essential for an onshore wind project to identify the wind class and if it aligns with the optimal wind speed for the potential project. It is important to assess if obstacles near the turbine will result in enough turbulence to reduce the turbine's life and limit the site’s airflow. Distancing turbines from large, close-by objects is key to limiting these impacts. If a wind turbine is not two times, the height of an object in close proximity, the turbine, and the nearest obstacle should be at least twice the turbine height. Locations like a valley would not make viable sites for wind turbines as they don't provide enough wind resources. Wind developments do well with ample access to air, such as in an open field, adjacent to a body of water, or on mountains.

Electricity rates are essential when looking at utility-scale or distributed-generation wind project sites. For example, a wind project will likely make more sense financially in California and the Northeast region of the United States than it would in the Southeast region. 

When making wind turbine site decisions, determining whether a location is appropriate for wind project technology should be evaluated. This can include the amount of space required for the development’s equipment, slope, slope direction, soil stability, and access to a close interconnection point. Knowing the site’s present vegetation is important when making location decisions, as it can require pruning and maintenance in the project’s future.

Like solar projects, wind projects can have negative environmental impacts, including the potential to fragment, destroy, or degrade wildlife habitats without proper planning. Wind energy can negatively affect wildlife, leading to delayed wind projects, which makes minimizing environmental impacts and possible permitting problems a high priority during a wind turbine site selection process.

Oil and Gas Site Selection - Midstream Pipelines

Site selection of petroleum pipelines has historically focused on lessening construction costs and increasing transport efficiency. Often site selection criteria are made part of an initial feasibility study. Some variables that matter to the oil and gas development process (this is particularly pertinent to midstream): 

• Maintain a short distance to the market from the source

• Least grading (tree removal, etc)

• "Right of way" expenses

• Terrain's slope

• Amount of road, steam, and railroad crossings

• Substrate

• Applicable rules and regulations

• Accessibility to a city, town, etc

• Utilization of existing utility corridors and easements

Exposed pipelines can sustain damage. Features such as tidal areas or river crossings may contribute to the loss of pipeline cover. Erosion from river flooding, undercutting, or meandering may also contribute to this loss. Additionally, sediment, debris, and suspended soil during peak flows can cause abrasion damage to pipes. Available public data on the following should be considered when making decisions on the site of a petroleum pipeline:

•  Flood information

•  Peak stream flows

•  Areas of urban density

•  Land zoning

•  Land use/land cover

•  Slope

•  Soils

Natural and artificial features should also be identified and avoided during petroleum pipeline site selection. The risk of coming into contact with these features increases depending on the pipeline's potential locations. Encountering Native American or federal lands is more common in the southwestern and western United States, while critical wetlands and Wetland Reserve Program properties are more commonly found in the midwest and the southeastern United States. Artificial structures such as river and hurricane protection levees can require expensive engineering and significant planning before obtaining approval from the appropriate jurisdictions to cross land and features that those authorities own or manage. Highways and railroads also have specific crossing requirements that need to be considered. As nature conservancy programs have increased in numbers and activity level, they can create barriers to pipeline development. They are essential to identify if a pipeline can traverse the properties or determine the site is unviable.

Carelessly planning a pipeline construction can interfere with crucial ecosystems containing endangered species or vegetation. In many instances, regulatory and resource management agencies can dictate the complete avoidance of environmentally sensitive areas in developing a pipeline. However, there are cases when avoiding ecologically sensitive areas is impossible. When this is the case, developers should prioritize offsetting the damage.

Real Estate Development Site Selection

Whether you are building a new shopping mall or a green building, the location selection can make all the difference. Defining the property's boundaries and considering neighboring properties is vital in commercial real estate. Developers should evaluate how a site plan will fit in with surrounding properties, if a site’s land use will be financially sound given surrounding property types and community makeup, and if the site’s value is improved by neighboring properties.

Some properties have “natural geographical boundaries,” like lakes, rivers, and oceans. Say a new facility spans a wide area; a natural boundary may likely appear and put the project at risk. Though these features and vicious geographies can minimize land availability for development, they can improve the value of surrounding properties when adequately leveraged. If potential land with natural boundaries fits into a project's criteria, land developers should evaluate the impact said boundaries will have on development potential and value drivers.

While different real estate development projects can serve other purposes, an area’s topography can significantly impact commercial real estate development. Topography complications such as flooding hazards and runoff can affect the amount of land available for development. For instance, US Midwestern areas have easily developable land consisting of flat, large plots. In contrast, a portion of the west coast has little flat ground because of the mountain ranges and the Pacific Ocean. Due to this, developers must build into the sides of mountains.

The soil present on a particular site can yield various impacts on the suitability and value of a development. A site’s soil classification has considerable implications for future use, development costs, and feasibility. Problems with soil classification are essential because they indicate the hydrology of the site– how water and the soil interact. If the soil does not provide sufficient drainage, mitigation efforts may be required to correct the erosion and runoff due to precipitation. Soil classification also determines if the weight of a structure will cause the land to slip or crack.

A real estate development process should determine the water availability on a site for economic stability and project sustainability. An area without adequate water resources and water quality faces poor economic growth, influencing the overall real estate market analysis and forecasts.

Real estate projects can change the natural interaction between land, water, and wildlife. The regulations and requirements of the environmental impacts are necessary for a real estate market because of feasibility implications and risk mitigation. Compliance with environmental laws could make a proposed use for a site no longer financially feasible.