Real estate developers and investors should be aware of two New Hampshire statutes that may be of particular value during the economic slowdown.
RSA C. 676:12, VI; PRE-APPROVAL VESTING
For developers looking beyond the present economic doldrums, now is an excellent time to pursue land use approvals. Municipalities need new revenue sources and many regulatory boards are more flexible and less demanding when considering new projects. When evaluating how best to proceed in permitting a substantial project, developers should be aware of RSA c. 676:12, VI. This statute provides developers with a simple and effective way to “lock-in” current regulations. Historically, a developer needed to prepare and file a full site plan application in order to vest against future changes in zoning and land use regulations. Now the same level of protection can be accomplished by first going through a simpler, less expensive “design review” process. The statute protects a project from future changes in zoning ordinances, site plan regulations and subdivision regulations once a design review application is submitted provided that a formal site plan application is filed within twelve (12) months after the end of the design review process. For “design review” only a simple sketch plan or concept plan is needed showing proposed building layouts and access points. Therefore, for a very small up-front cost, a developer can control what local ordinances will govern a project and eliminate the risk and uncertainty of adverse changes to zoning and land use regulations making the entitlement process much more predictable.
POST APPROVAL VESTING
Once approved, a project is protected against adverse changes in local zoning and land use ordinances provided that construction is started and completed within certain specified deadlines. RSA c. 674:39 provides that approved site plans and subdivision plans are “vested” against future changes in most zoning and land use regulations provided the developer begins active and substantial development within 12 months from date of approval and that the project becomes permanently vested provided the developer substantially completes the project in four (4) years. Recently, these time limits have caused problems in situations where approved projects have not proceeded due to lack of financing, loss of tenants, and other problems related to the economy. These stalled projects are at risk of changes in land use ordinances that could restrict, reduce or otherwise negatively impact the project. This summer, the New Hampshire legislature passed Senate Bill 93 which, for certain projects, extends the above-described vesting deadlines. This amendment provides that for site plans or subdivision plans approved on or after January 1, 2007 and before July 1, 2009, the twelve (12) month period is extended to thirty-six (36) months; and for site plans or subdivision plans approved on or after July 1, 2005 and before July 1, 2009, the four (4) year period is extended to six (6) years. In addition, although not expressly stated in the amendment, many municipalities are taking the position that it also operates to automatically extend the expiration dates of approvals that would have otherwise expired within the thirty-six (36) month time period. For projects approved within the above-noted dates that want to take advantage of the extended deadlines, we recommend seeking a confirmatory letter from the relevant planning board.
These two statutes are just some of the tools available to developers and investors seeking to add or preserve value in this economic downturn. Used in tandem, they provide predictability and help protect the investment it takes to complete the entitlement process.