Below are some frequently asked questions we hear on a regular basis from land owners seeking to develop their property. Land use in Oregon and Washington is a complicated mix state, regional and local codes that requires a great deal of experience and determination. At Pacific Lifestyle Homes, we have navigated the entire process in both states dozens of times. We offer the best ability to take your property through the development process, leading to you receiving actual value for your land.  If you have additional questions not cited here, please email them to joek@pacificlifestylehomes.com for more details.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Q. What has to happen before my property can develop?

A. Three main things must happen before development can occur on your property.

Q.  What is an Urban Growth Boundary (UGB) and what does it mean if my property is inside the boundary?

A.  An Urban Growth Boundary, or UGB, is an imaginary boundary line drawn on a map around a city or urban area.  Any property inside the boundary may be developed at a higher level of use (urbanized) than property outside the boundary. The intent of a UGB is to constrain development to a twenty (20) year land supply, keeping development from stretching outside the boundary and creating urban sprawl.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Q.  Who decides where the UGB is and how do they decide where to put it?

A.  In Oregon, UGB’s are decided by a public process in each city and confirmed by the State of Oregon. The exception is the Portland metropolitan region, where the process is governed by a separate regional government (known as METRO) for Multnomah, Clackamas and Washington County. It generally takes years to amend a UGB and about the time a city, county or regional government completes the process, it often has to begin the process again soon after. In Oregon, Metro only revisits the UGB every 7 years and other cities in Oregon have experienced UGB processes that have taken 10 years or longer.

In Washington, UGB’s are determined by a given County’s public officials or County Commissioners.  In both states, the process is lengthy, political, technical and eventually litigious. UGB’s are modified on an infrequent basis determined by either state law or local jurisdiction. Prior to Clark County’s 2004 amendment of the UGB, the County had not revisited the UGB for ten years. However, because of the increased growth in Clark County, the County Commission began revisiting the process again almost immediately thereafter. 

Typically, the governing body that controls the UGB will place a zone over property being added to a UGB. The zoning designation will be broad, usually residential, commercial or industrial, but changing the zoning after adoption of the plan is extremely rare.

While the UGB process is difficult, it’s also necessary. Every municipality and state needs to regularly contemplate where growth will occur and when. Once your property is inside the boundary, it can be developed to its highest use consistent with how it has been zoned.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Q.  So if my property is inside the boundary it can be developed however I want?

A.  No. It’s much more complicated. Upon inclusion into the UGB, your property will require:

• Annexation.  Once inside the UGB, your property must be annexed to a city that will provide urban services (with a few exceptions where Counties or special districts will provide service.) This requires a multi-faceted application generally prepared by a professional planner or attorney that outlines where services (sewer, water, transportation etc.) will come from and at what cost. Jurisdictions will typically decide final zoning of your property at this time given any direction they have received from the body who allowed entry into the UGB. This usually takes 6-18 months.

• Preliminary approval. Post annexation, an application for preliminary approval of a subdivision or land division is needed.  Again, using a paid professional to prepare the application is not required but the amount of paperwork and technicality of the code make it nearly impossible for the average person to complete.  Preliminary approval requires the developer/land owner to show how many lots are planned and that the lots meet with current zoning codes or additional "overlay" (environmental, transportation etc.) that might exist. This usually takes 3-6 months.

• Engineering approval. Upon preliminary approval, securing engineering to move forward with construction is required. You must use a state certified engineer to create and sign off on the engineering plans. Engineering will address grading of the land, elevations, location of all utilities and roads. All engineering is reviewed by jurisdictional engineers for mistakes or non-code compliance. 2-4 months.

• Final plat approval. Now that you have an engineers plan for developing the land, its time to finally move the dirt around (actually start building lots). This will include the construction of sewer lines, water lines, roads, street lights, other utilities and the correct grade for each lot. During this period, the jurisdiction monitors your progress and requires the submittal of many documents certifying the completion of work. Once all required documents are accepted by the jurisdiction, the land is recorded and jurisdiction provides an official “ok” to begin building homes. This takes about 2-4 months.

• Certificate of occupancy. The last step in home building, prior to selling the house. Before you get certificate of occupancy, you are required to get a building permit. The submittal of building permits for a new home is very detailed and includes house plans, electrical and plumbing plans, landscaping information and a host of other items.  Also, at this point, the home developer or land owner is required to submit thousands of dollars for System Development Charges or SDC’s. These fees are calculated and assessed on each house against the developer and collected by the ruling jurisdiction. These dollars are then used to build additional roads, waste water facilities etc. that are needed because of new growth. After receiving a building permit, you must build the structure which will take another 3-6 months.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Q. WOW!  That sounds like it takes a long time and costs a lot of money. 
How can a land owner navigate this process?

A.  It’s a matter of time, expertise and capital. If a land owner has the time to go through the process (15-36 months), the up front money to pay for engineers, planners and municipal fees (often more than $100,000 and up to $500,000 or more) and the expertise to negotiate a deal with a home building company that is profitable, then this process is for you. However most land owners find the process so confusing, expensive and lengthy that they choose to sell their land to a developer who has the staff and capital to navigate the process.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Q.  Why is the process so long and expensive?

A.  While developers, homebuilders, jurisdictions and land owners will all have different explanations for why the process is long and expensive, the easiest explanation is involves the following factors:

• Safety.  Consumers and citizens demand structures that are safe and will not collapse or in any way put the consumer in an unsafe situation. Modern communities require high standards for housing our families. To ensure our safety, the process has many checks and balances. We all might not agree on what is most important, but safety is certainly the number one concern.

• Proportional Share of Costs.  Homebuilders and developers are required to pay for the increase in infrastructure needed to serve new residences. The time and cost it takes to determine what the proportionate share of the cost of new infrastructure is for a new development is always difficult to determine.

• Organization and Construction.  Building lots and new homes is a time consuming process. Despite many innovations in building materials and new technology for developing lots, the process of constructing a home takes time and a lot of people. This makes the process more expensive.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Q.  Ok, so I want to realize my property’s full value, but I do not want to go through all that. 
What should I do?

A.  Sell your land. If you have made the choice to develop your property, seek a willing buyer who will provide you the best combination of price, service and expertise.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Q.  I can understand why I would want to get the best price for my land, but why do I care about service and expertise from the buyer?

A.  One of the biggest mistakes a land owner will make when selling their property is simply selling to the highest bidder. Typically, land of any size is purchased on a contract. This means, the buyer and seller agree to a contract that includes the buyer “closing” the purchase at a certain time. In order to close on a project, the buyer needs to have the financial ability and proper government approvals to show value to a bank in order to receive a loan. This is where the process gets interesting.

Here is an example:
Bob Landowner has 5 acres of land that can be developed as new homes.  He has consulted with a professional and believes his land has a value of $50,000-$70,000 per acre. Bob has received 2 offers for his land:

Company A is a reputable developer/homebuilder who has built thousands of homes in the area, has navigated the development process dozens of times and is offering $60,000 per acre based on their evaluation of what they will be able to build on the site. They will close the deal upon receiving engineering approval from the local jurisdiction.

Company B is a dynamic new company with only a couple of developments or no discernable reputation. The company is offering $70,000 per acre and they are willing to close in 12 months no matter what approvals they have.

Bob Landowner thinks this is a no-brainer. Company B is offering more money and will pay to keep the property under contract! Who cares whether or not they have experience developing land.

Fast forward to 12 months later. Bob Landowner is excited to see the day he is going to receive his money rapidly approaching. Company B never calls him, never shares any information and he has no idea where they are in the development process. Bob will be glad to get his money and get away from them. He then receives a call from Company B informing him that they cannot close because they cannot receive a loan without approval of their development application and engineering. 

Angrily, Bob Land Owner has to put his property back on the market, no better off than he was before. Now the value of his land has not changed or dropped a little because the housing market has cooled off.  Company A is still interested, but they are only willing to pay $55,000 per acre. Bob has now lost $25,000 just because he only thought of price.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Q.  Does that seriously happen?  What can I do to avoid these types of pitfalls?

A.  It happens everyday. Landowners want the best value for their property, but do not want to think about what will lead to them successfully reaching the best value. The following suggestions can help you avoid the pitfalls of Bob Landowner:

• Always research the company or individual offering to buy your land. Make them show you other projects they have done and provide some examples of their success stories. You are taking a chance dealing with someone who does not have a proven reputation.

• Be suspicious of outrageous money offers. There is no regulating body that prevents any person from offering any amount of money for your property. Once you sign a contract, you are bound to those terms. If the deal sounds too good to be true, it usually is.

• Take your time. Consider the offer(s) you have received, what the developer wants to do with the property and when they plan to develop the land. These are big considerations for you to make. A good offer will give you a little time to make a decision.

• Ask the buyer for a timeline. Make the buyer show you their plan for moving through the government process. Once you have collected the timelines, compare them to one another. Is any one of them proposing to move much faster than the others? Government typically moves slowly and very deliberately. Anyone who promises they can move a project through the process much faster than all the other guys generally is not being honest with you.

• Fear the desperate buyer. Any buyer who seems relentlessly willing to up their price because of their desire to own your land is a big red flag. Most reputable developers will determine a price based on their cost and expected profit margin. They may be willing to move their price some because of competition, but repeated increases denote an unrealistic buyer who will probably not perform on their contract.

• Enjoy the process. Work with people who are easy to work with, have experience and offer a good price. Too many land owners find the process of selling their land horribly difficult and uncomfortable.  Remember, you are selling the land and will receive a good price if you do your homework. It can be fun if you let it be.