Site Selection for Land Developers

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

The site selection process involves examining potential options for land development by accessing 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 bottom line. 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. Site selection impacts 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 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.

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.

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 related documentation and records, the site selection team could select a site that may not ultimately serve their project's best interests or needs. The following can be identified through careful due diligence investigation, review, and analysis:

•  Environmental constraints

•  Contractual liabilities

•  Survey irregularities

•  Title issues

•  Building and zoning code violations

•  Geotechnical deficiencies

•  Structural weaknesses or other latent defects

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. Pitfalls, costly mistakes, and litigation can be avoided during development with thorough due diligence during the site section process.

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 a sites suitability:

•  Impacts to the soil, water, and air resources

•  Impacts to 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 budget and startup schedule.

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 whether it lines up with the cut-in and optimal wind speed for the proposed project. Evaluating whether nearby obstacles will cause turbulence to disrupt airflow access to the site and reduce turbine life. The distance between a turbine and the nearest obstacle should be at least twice the turbine height unless the turbine is more than twice the height of the obstacle, which means the obstruction can be closer Locations like the bottom of a hill or inside a valley would not make viable sites for a wind turbine as they don't provide enough wind resources. High on mountains, in large open fields, or on the edge of bodies of water are essential locations to vet for wind development.

Electricity rates are essential to consider when looking at sites for a utility-scale or distributed-generation wind project. 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. 

During wind turbine site selection, determining whether a location is physically appropriate for the technology used for wind projects should be evaluated. This can include the amount of physical space required for the array and equipment, structural stability of the soil, slope and its direction on the site, and proximity to a nearby interconnection point. Being aware of the current onsite vegetation and whether it will need pruning for construction and maintenance as part of the project in the future should also be considered.

Like solar projects, wind projects can have adverse environmental impacts, including the potential to reduce, fragment, or degrade habitat for wildlife and plants without proper planning. Due to the potential effects of wind power on wildlife and the potential for these impacts to delay or hinder a wind development project, addressing impact minimization and permitting issues is 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): 

•  A short distance from source to market

•  Least grading (removal of trees, etc.)

•  Costs associated with the right of way

•  Slope of terrain

•  Number of stream, road, and railroad crossings

•  Substrate

•  Existing laws and regulations

•  Proximity to population centers

•  Utilization of existing utility corridors and easements

Pipelines are vulnerable to damage when exposed. Pipeline cover may be lost when a pipeline is near water features such as tidal areas or river crossings. Loss of cover may also result from erosion from river meandering, undercutting, or flooding. During peak flows, suspended sediment, soil, and debris can cause damage through abrasion. 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 level of activity, they can create barriers to pipeline development and are essential to identify so 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

Defining the property boundaries and considering neighboring properties is vital in commercial real estate. Developers should evaluate how a site plan will fit in with surrounding properties, will a site be used in a way that makes financial sense given surrounding property types and property mix, and if the neighboring properties add value to the site or not.

Some properties have natural geographical boundaries, such as rivers, lakes, and oceans. While these natural boundaries can limit the availability of land for development, they can also add value to neighboring properties if appropriately utilized. If potential land with natural boundaries fits into a project's criteria, land developers should consider the impact on development options and value drivers.

While different real estate development projects can serve other purposes, the topography of an area can significantly impact commercial real estate development. Topography issues such as runoff and flooding hazards can cause problems with the availability of land for development. For instance, areas in the US Midwest have large, flat plots of land that would be easy to develop. In contrast, some areas on the west coast have little flat ground between the Pacific Ocean and the mountains, so developers are forced to develop into the sides of mountains.

The soil present on a particular site can have a varying degree of impact on the value and suitability for development. A site’s soil classification has considerable implications for future use, development costs, and feasibility. Issues related to soil classification are essential because they determine the site’s hydrology – the soil’s interaction with water. If the soil does not allow for adequate drainage, additional measures may need to be implemented to account for runoff and erosion due to rainfall properly. Soil classification can also determine whether the land can hold the weight of a structure without slipping or cracking.

A real estate development process should determine the water availability on a site for economic stability. 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.