Urban Development Tips

By Cindy Higbee | Redevelopment & Revitalization | Aug 9th

While certainly challenging, urban residential development can be very rewarding. For several years now DCI has been doing residential redevelopment in the Martindale on the Monon neighborhood in Indianapolis.  So far we have built nearly 40 new homes for dozens of families and have helped to kick start the revitalization of a once forgotten neighborhood. In the process, we have gained some firsthand knowledge of the pitfalls to urban development. To assist anyone considering a similar endeavor, we thought it might be helpful to pass our insights along.

The Top 10 Urban Development Tips

1. My house is zoned what?

Make sure you know the zoning of individual parcels you have purchased in your neighborhood. Don’t assume that because you are developing in a residential neighborhood it was always zoned as such. This is especially true for neighborhoods near former commercial and industrial areas or adjacent to active or inactive rail lines. You may need to rezone these properties for a residential use before you can begin construction. Contact your local planning department for the rezoning procedures in your municipality.

2. Design Guidelines????

Many cities have some sort of residential infill design guidelines for new construction. Take the time to research these guidelines before you begin designing your homes. These guidelines may suggest or require specific amenities (such as porches), building massings, or architectural styles. It may be helpful to meet with the local planning staff regarding your home plans and these guidelines.

3. Remediation – Contamination’s expensive friend

Urban neighborhoods commonly have environmental issues that must be remediated before you can begin construction or rehabilitation. Older homes must be inspected for asbestos and lead-based paint, which most will have. Urban lots should be checked for soil contamination. You should especially watch out for lots near railroad tracks and former industrial uses (gas stations, dry cleaners, etc).

4. Not all appraisals are created equally

The market dynamics in redeveloping urban areas are much different than in more established neighborhoods and the suburbs. Work with you lender and request appraisers who are familiar with urban neighborhoods. If possible, educate your appraiser on your project and the efforts of others near your project. If your development is based on presale homes, provide comparables of homes in your project to the appraiser, since they won’t show up on the BLS. Your appraiser’s familiarity and experience with redeveloping urban areas can vastly affect the appraised value of your homes, which ultimately can affect the mortgage amounts your buyers can obtain.

5. Special Funding and Mortgages don’t always mix

Many urban infill housing projects are able to take advantage of grant funding and down payment assistance for their buyers. When working with these programs, it is important to make sure your buyer’s mortgage company accepts these programs. Not all mortgage companies are familiar with these grant funds and will require special approvals to utilize these programs.

6. Taxes, reassessments, and property values, oh my!

After purchasing property, be sure to pay special attention to your property tax bills. The boarded home that you own may have been occupied the last time property taxes were assessed and that vacant lot you just purchased may have had a structure on its last assessment. Don’t assume property tax assessments are always up to date. Although a very labor intensive time consuming process, requesting a reassessment can save you lots of money in the long run.

7. Lien on me

Don’t be surprised if old liens show up on your property after you have closed. Sometimes it can take several years for liens and unpaid utility bills to appear on a property tax bill. If these liens show up after you have purchased the property, you may be responsible to pay them before you can sell the property.

8. While you’re here to build houses, others see a dumping ground

Urban lots are often the first choice for people to dump their trash. While you may see a future home, others see a new place to unload their trash. Be sure to keep an eye on all of your lots. If possible, keep these lots well maintained and lit at night to increase visibility. Unfortunately this isn’t always enough. In some cases you may need to fence or block off properties until you are ready to build. This may sound expensive, but it is more affordable and less of a hassle than constantly clearing trash and garbage from your lots in order to stay out of Environmental Court.

9. Get to know your neighbors

Take the time to get to know the existing residents in the neighborhood where you plan to build; let them know your plans and seek their input. By involving them in your redevelopment, instead of keeping them in the dark, they are much more likely to support your efforts. While not all may greet you with open arms right away, an open line of communication can go a long way to ease neighborhood concerns.

10. Get to know your Not-for-profits too

When possible work with non-profits, neighborhood organizations, churches, CDC’s, and City officials.  Forming partnerships with these types of organizations allow you to do more for the neighborhood than you could do alone. Public-Private Partnerships have long been used to make tremendous improvements in our cities.

Do you have your own urban development tips? Share them with us in the comments.

Tags: Appraisals, Mortgages, Neighborhood Redevelopment, Property Taxes, public-private partnership