Ready for redevelopment Arming yourself with experts
You’ve just been selected by the Ministry of Health and Long-Term Care (MOHLTC) to re-develop your long-term care facility on a greenfield site. Now what do you do?
Your next step is to find and select the facility location. That may sound easy, but in order to control your development risks, there are several steps you might want to consider along the way, even if you already own or control the site.
Several years ago Bill Bryan, Vice-President of Design & Development for Extendicare, was looking for a new long-term care site. A commercial real estate broker showed him a city map marked with a potential location. The broker was excited because he believed it could be rezoned.
Based on the site’s boundary survey it was approximately seven acres, was well located in the city, and water, sewer, electrical and other utilities were readily available. The best news was that the owner was motivated to sell.
However, when Bryan arrived at the site he immediately saw that it was an insurmountable hill of rock.
Some site challenges are as obvious as the rocks while others are hidden in the details of site development. This may be an extreme scenario in regards to the site selection process but much can be taken away from the experience.
Bryan has learned that the easy-to-develop sites are usually too expensive. Instead, his goal is to find more affordable sites and then work through any challenges while remaining within budget. To do this, he recommends establishing a team of local professionals who have significant site development experience as well as some long-term care experience.
The first individual to join your team should be a commercial real estate broker who knows the area and what is happening in the community. In order to sort out what your commercial real estate broker tells you versus what can actually be accomplished on a site; you also need to add to the team a civil engineer, a geotechnical firm, and a surveyor to handle technical issues. Then, if zoning and site plan issues are expected, a planner might be a good addition.
The goal of your site selection is to reduce development risks and keep the project on schedule and on budget. Of all items that make up the total project costs, the site you select could have the greatest impact on your costs and schedule.
In general, the building design is in the owner’s complete control. The costs can be predicted with a good deal of accuracy if your team has built this type of building before. If you haven’t taken on this type of project, keep in mind that site development costs can vary from one location to another. Considering this, you should ask yourself questions like:
- Will the site require a good deal of soil work?
- Will large quantities of dirt have to be moved offsite or brought in?
- Will the site have utilities or will they have to be constructed to the site?
- Will the city impose restrictions on sanitary use requiring special construction techniques?
To keep such matters in line, Bryan suggests maintaining a running list of items from various job experiences that should be checked before purchasing a site for any project. It is called the Site Due Diligence Checklist and covers everything from protected animal species, to wetlands, to water and sewer availability to the cost of local development fees. Bryan’s list is currently about seven pages long.
It takes time to find the sites and complete the proper due diligence, but the MOHLTC allows six months after the award of a project to get the site under control. That is normally plenty of time if you focus on the task. The risk is investing too much time in a site that involves too many cost hurdles.
As with any major purchase, it’s always a good idea to consider multiple properties and then weigh the pros and cons before making a decision. For site selection, this includes gaining a full understanding about the geotechnical and environmental situation. Simply taking a walk through your site will help determine if a site should be quickly eliminated from the list. For example, if it is swampy or has excessive rock you may want to rule it out and immediately move on to other sites.
Utilities are also very important. The availability of sewers, water, hydro, natural gas, phone and cable will all affect the final development costs of your site. Your team of experts will be able to analyze these issues related to your selected land.
Before spending too much time locating sites, sit down with the local city planners and find out what their thoughts are for a new long-term care project in their community. Ask them if they feel it would be a good fit and where they feel they could and couldn’t support a rezoning. This can save entanglements with them later.
City planners will also share the current zoning regulations that must be followed, such as minimum building setbacks from the property boundaries, maximum allowable building footprint, minimum landscaped areas and parking requirements. They can also connect you with the local city engineering staff so that you get a sense of where water and sewer lines are already available. Long-term care projects are community projects so getting them involved early is always helpful.
While you are determining which site to develop, your building design will weigh into the process. Key variables should be identified and assessed, including the size of the building and property, bed count, and size and number of home areas that would be most efficient – all in an effort to make the building operate in the most efficient manner.
Once you have narrowed in on a location, entering into a fair purchase agreement with the land vendor is critical. While price is always important, it is equally important to determine the conditions that must occur before purchase. Perhaps the owner has to perform some duties, or as the buyer you’ve agreed to handle all the needed steps before purchase.
The big item is rezoning and local site plan approval. Until these are complete, it is too risky to buy the land. Again, the team of experts who have been assembled can help navigate you through both of these processes.
While much expert advice, scrutiny, and research are involved in the site selection stage of redevelopment, arming yourself with a team of experts is the best way to move forward. Not only will you feel assured that you are practicing due diligence, but it will facilitate your collaboration with government and municipal officials.
Furthermore, you can control the potential risk involved, which is a key advantage in moving through this step successfully. Upon completion of this crucial step you will be ready to move on to the third stage of the redevelopment process: construction.