We’ve seen it time and again: Companies go through a painstaking process of identifying suitable locations for developing new projects. They settle on a location and make a deal with the developer that is initially met with much fanfare — only to have the project eventually scuttled as a result of community opposition or governmental roadblocks.
One need look no further than Amazon’s announcement of plans to locate half its HQ2 in New York City, representing 25,000 jobs, only to find it necessary to withdraw those plans in the face of challenges posed by so-called “community leaders.”
Donald Smith, RIDC
Situations like that arise repeatedly, not only with the Amazons of the world, but also with lesser-known companies working with development partners to build new facilities, whether they be for office, industrial or retail uses.
In many jurisdictions, the public approval process can be challenging to navigate. There is often a cacophony of voices from community residents, community organizations and governmental entities with different — sometimes conflicting agendas — that may or may not be economically viable or even in the community’s best interests. Those voices carry weight and are often enough to ground an ambitious project.
The lessons we’ve learned as a developer working effectively with communities, elected officials and government agencies on varied projects across our region, may be valuable to companies reviewing proposals for locations. Local brokers and representatives who are considering the qualities they need in development partners can also benefit from taking a page from past playbooks.
Here are some considerations to keep in mind.
Does the developer have credibility within the community?
Developer credibility requires more than demonstrating a commitment to the vision behind the project — it’s also about their ability to respect the opinions of local residents and government agencies.
Of course, that doesn’t mean doing everything those groups want. But it does mean that before reaching a conclusion on community requests, brokers and developers need to engage in good faith discussions based on facts, data and market research, to show the community that their opinions are being taken seriously.
Is the developer transparent about decisions to accept or reject community suggestions?
Transparency shows respect and will go a long way toward building a consensus among community members. Even if both sides know that a request is not feasible based on collective knowledge of the market, don’t reject the suggestion outright, especially if significant portions of the community favor it.
Instead, collaborate with the developer to investigate the recommendation. That way, you both can go back to the community with market research showing why their recommendation will or will not work.
Setting realistic expectations from the outset is also important for establishing credibility with community members. For instance, if residents expect you to be filling a property with new jobs within a few months, you may need to explain timing. If it takes several months to receive plan approval and obtain a building permit, additional time to lock in financing and bid out construction, and additional time to actually build the project, it’s going to be a while before anyone other than construction contractors are going to be hiring on that site.
Dealing with government entities can also be challenging. Whether it’s staff members in buildings departments or members of city councils, government officials often misunderstand the nuances of the development process or don’t appreciate the need to move quickly and smoothly through approvals. And they are often under-resourced to meet the scale of demands of potential developments.
Also, cities in growth-mode tend to be more skeptical about development and don’t hesitate to make huge demands while negotiating a deal, adopting the mindset that “the company can afford it, so they should do it.” That mindset can get out of hand very quickly, leading to oversized expectations and red tape that drives up development costs and slows the progress of even the most beneficial, job-creating projects.
Government officials who take that approach fail to recognize how much the project already benefits the community in tax revenue. The relocating company or the owner of the property will pay property taxes. Their employees will pay income and sales taxes – and they will buy homes. The company’s presence will spark new development nearby, which spells out even more tax revenue for the municipality.
Attempts to squeeze concessions like these out of new development projects require responses that provide hard data that clearly show the detrimental impact these add-ons would have. Should government officials or community organizations remain unrealistic, you can go directly back to the community and leverage the support of those who actually live there and will be the most affected by the project.
Reasonable people often end up on the same page when companies hire developers that include them in their plans, take them through the development processes, explain bureaucratic roadblocks and present well-thought-out research. It makes the way going forward much easier and earns companies a reputation as good neighbors who are not just interested in making a profit, but in becoming a great asset for the community and a welcome member.
— By Donald F. Smith, Jr., Ph.D, president, Regional Industrial Development Corporation of Southwestern Pennsylvania.