After losing one subdivision rezoning, homebuilding giant buys another development, pre-entitled
After losing one subdivision rezoning, homebuilding giant buys another development, pre-entitled
HUNTERSVILLE — The only bad part, Tamara Lynch said, is that she won’t get to name the subdivision, one of her favorite parts of being M/I Charlotte’s marketing and sales vice president.
But otherwise it’s a plan that works in a market where lots in saleable areas — and parcels of raw, undeveloped land, too — are growing scarcer by the day.
And it’s a plan the Charlotte market will see more of in the near future, because its supply of desirable, class-A home lots is below market-equilibrium levels, according to a first-quarter 2013 report by the Charlotte division of the Houston-based MetroStudy analytics firm.
The plan goes like this:
Let another homebuilding/development company do the local-government legwork, buy the property pre-entitled. Then, as another homebuilder/developer, put in the infrastructure, develop the lots and build the houses yourself.
That’s how Bellington, a new 99-home subdivision announced last week by the Columbus, Ohio-based M/I, one of the Charlotte market’s busiest builders by permits issued, permit value and closings, will soon come to fruition.
And it will do so fast, thanks to the land being pre-entitled, with lot development and road installation expected to begin in August and finished homes in November, Lynch said.
In the case of M/I’s new development it went like this:
Hopper Communities, a subdivision development and homebuilding company based in Charlotte, in January won a rezoning request from the Huntersville Board of Commissioners allowing Bellington to go forward after reaching an agreement with protesting neighbors that nearly derailed the project from going forward.
That came in handy for M/I, which in January lost its own lengthy rezoning battle for a proposed subdivision in Huntersville called Avery Park to the protests of residents of surrounding existing neighborhoods.
As it happened, the proposed subdivisions were almost exactly the same size: 42 acres.
“We ultimately believe in the Huntersville market and we remain really interested in it,” Lynch said about one of the fastest growing municipalities in the country. Huntersville nearly doubled in population from 28,000 in 2000 to 53,000 in 2010, and is expected to grow to 101,000 by 2030, according to the Lake Norman Economic Development Commission.
“When Avery Park didn’t work out we presented (Hopper) an opportunity to not have to develop it themselves. They intended to bring it all the way through themselves, but we had been talking to them (about a possible deal) all the way through, so we had some influence on what they had entitled. They knew what we wanted to build.”
The three top Hopper officials did not return telephone calls seeking comment. Other residential developers and homebuilders would not speak on the record because they have similar deals pending, both as sellers and buyers.
But they agreed with Lynch’s assertion that deals like the one making Bellington possible are and will likely remain part of their future plans.
“We will definitely find this throughout this market in the future as lots and developable land continue to dwindle,” Lynch said. “When I was in Florida in the mid-2000s, when land was at a premium, all I did was purchase entitled land. It saves you going through what can be a year-long process. You get homes on the market sooner.”
Worth the cost
As Lynch implied, the benefits are pretty simple.
If you get the land pre-entitled — meaning someone else has to go through the more often than not bureaucracy-laden governmental process of getting the parcels zoned, and the storm-water and site-plan approved, and clearing any hurdles posed by local architectural boards — you can start actual development and building work a lot sooner.
Of course, you’ll have to pay a premium price for the land in exchange for those benefits, Lynch said. But, she said, it’s often worth it financially as well temporally.
“Yes, there is a cost associated with entitled land, but it would cost us money to do all that work ourselves,” Lynch said. “Ultimately, we’re getting entitled land; that’s the big benefit.”
All of which sounds like it makes eminent sense to Ralph McMillan, a leading Charlotte real-estate attorney with the McMillan Terry firm, who was not involved in the Bellington deal.
And it has the added benefit of being a legal way to circumvent the usual processes, too.
“It certainly makes sense in this now-busy market,” McMillan said. “And there’s certainly nothing shady about it.”
Another prominent real estate attorney, Collin Brown of Charlotte’s K&L Gates firm — which represented M/I in the Avery Park rezoning case but not in the purchase of Bellington — said such deals were not uncommon before the housing crash, and will likely be seen more often as the Charlotte-area housing market continues to show signs of bouncing back.
“Builders need dirt, and they need it entitled,” Brown said. “So it makes a lot of good business sense in today’s market.”
Win-lose to win-win
The Hopper-M/I land deal for Bellington — which has yet to be recorded with the county, so the purchase price was not available, nor would Lynch disclose it — is a peculiar case because both companies were fighting side-by-side rezoning battles for separate subdivisions in the same venue: Huntersville Town Hall.
The development/building firms wanted the same thing: An increase in density, which would both increase the number of homes and decrease the size of the lots, while keeping the size of the homes about the same.
The density-reduction requests reflect a trend among homebuilders and developers, who say market demand is up for homes with less land to maintain and more common areas maintained by homeowners associations. They also say that the smaller lots allow for the lower price point being driven by the still slow economic recovery.
Hopper won and M/I lost, but the latter ended up with a subdivision while the former got cash. Both companies came out winners.
M/I, one of the largest builders in Charlotte and nationally, in October proposed a development of 110 homes on a 42-acre vacant tract on Gilead Road near Wynfield Creek Parkway. Under that plan, Avery Park’s density would have been higher than that of Wynfield, a neighboring, 1980s-era subdivision.
Town Hall was flooded with 184 official letters of protest. The protesters’ primary concern centered on the proposed density of Avery Park, which would have had more homes per acre than surrounding housing developments.
Even though it won the approval of the town’s planning department in early October, M/I radically altered its plans to appease protesters and presented a new plan to the town’s planning board two weeks later. Despite continued protests at that meeting, the planning board concurred with town planners, approving the altered subdivision plans and recommending that commissioners bless the rezoning.
The revised plan, introduced Oct. 22 at the town planning board meeting, reduced the number of homes to 82, lowering the density from an average of 2.6 units per acre to 1.9, in response to what one of the protesters called the group’s “No. 1 concern.”
The new plan also got rid of homes on narrow, 30-foot lots with alley-loaded garages and increased by fivefold the size of a forested buffer between Avery Park and Wynfield, from 30 feet — which was 10 feet wider than what the town required — to 150 feet, or half the length of a football field.
In other concessions, M/I moved a road to be farther away from a nearby historic property, effectively increasing a buffer, and added a pedestrian pathway to try to address traffic concerns.
After the planning board meeting, M/I asked for and received several deferrals to try to address the protesters’ concerns before the plan went before the town Board of Commissioners in January. But because the neighbors declined to withdraw their official protests, M/I needed a 5-1 supermajority of the town Board, but achieved only a 3-3 tie.
A different outcome
Hopper, on the other hand, almost simultaneously had a far easier road, with only 17 protesters showing up an initial community meeting on the project in September.
Hopper already had approval to build 88 homes on about 42 acres along Huntersville-Concord Road, but sought a rezoning to increase the density of units per acre to accommodate 99 homes.
The original plan called for 62 lots to average 60 feet wide and 26 lots to average 90 feet wide. The new site plan showed 84 homes on the smaller lots, with only 16 on the larger lots.
Despite the protests, Huntersville senior planner David Peete recommended in a staff report to the Planning Board that the altered project go forward as long as Hopper provide adequate open space in the development, and the town planning board also approved Hopper’s modified proposal for an urban greenway.
Peete’s report says that the proposal would increase Bellington’s density from 2.14 homes per acre to 2.4 homes. The report notes that the proposed density in Bellington is not as dense as the nearby Centennial subdivision, which has 2.59 units per acre.
The town board agreed with the planning staff and board and OK’d the density increase in January, just as M/I lost Avery Park.
Now that M/I has Bellington, it will become the third subdivision in the Charlotte market that the company, which is primarily a homebuilder and not a developer, will self-develop.
That is also a new trend among homebuilding companies as lots and land in desirable locations become harder to find.
Bellington, which will be just east of Interstate 77 at exit 23, close to downtown Huntersville and Discovery Place for Kids Museum, will feature homes that are expected to be priced from the mid-$200,000s for basic models, but buyers today tend to want extra features, Lynch said.
M/I plans to build its traditional and cottage collection of plans, ranging from 2,019 to 3,500 square feet in ranch or two-story configurations with three to six bedrooms and two to 3 1/2 baths and two- and three-car garages. Sidings will be HardiePlank with stone and brick accents, Lynch said.
The company will initially build two model homes, one ranch and one two-story, as well as five spec, or “inventory,” homes, Lynch said.
As for the name Bellington, Lynch said she doesn’t know where it comes from. And while she regrets having nothing to do with the name — “I know, and that’s the best part,” she said — Lynch said she was happy to have the land at all.
Besides, she said, she still gets to name the streets.