Steve Novak: Real Estate Lawyer South Salt Lake

If your property has been included in a comprehensive plan, consult an experienced South Salt lake Utah real estate lawyer.

The real goal of a comprehensive plan is to decide where a community wants to go in the future. There is a normative aspect to the comprehensive plan. Good planners will survey their residents and businesses to find out what they want and what they want their community to look like. The real purpose of the comprehensive plan is a needs assessment and chart for the future of a city, town, or a county. It is an effort to answer questions such as: Do we need more housing in the city? Do we need more parks? Is another school needed, or more retail shopping or should we maybe enlarge the tax base by trying to encourage a new factory or business? These are the most general questions that a comprehensive plan tries to address, and the successful plan then tries to make sure that the land use laws for the community reflect the choices that have been made in the comprehensive plan.

Once a comprehensive plan has been developed, it is subject to public debate, hearings, and eventually a vote by a city council or the body adopting it. This plan is often considered a law or an ordinance and in some cases might require more than a simple majority to adopt it. The important point to note is that a good comprehensive plan is subject to long, intense, and open discussion. It permits broad citizen input, and the eventual adoption should not come as a surprise to anyone.

A second major point when it comes to a comprehensive plan is that, once adopted, it does not go onto a shelf or sit in someone’s computer. Comprehensive plans are “alive.” By that, they are meant to be blueprints for everything else a community does. They should be guides for the economic, housing, and other types of development that a community plans for the next five or ten years. Moreover, comprehensive plans are the cornerstone for many other documents and actions undertaken by the government. Once a comprehensive plan has been adopted it is, for example, the basis for a zoning code. This means that in terms of a hierarchy, the comprehensive plan is the most important document, and then after that, the zoning ordinance or code must be in accordance with it. Conflicts between the two generally mean that the comprehensive plan prevails. Or, phrased another way, if the zoning ordinance does not comply with the comprehensive plan, the former is illegal.

Combined, the comprehensive plan and the zoning code are really the master plans for economic development and planning for a community. Together they should set out specific goals and a direction for what a community wants to look like in the future. Together they should state, for example, that a community would like to turn some vacant land into a future home for a mall. Or, perhaps together they might state that land currently zoned industrial should be used in the future as a mixed-use residential area with some shopping and maybe some recreational activities. The hope in doing this is that land comped and zoned for a specific use will attract the appropriate investment and interest to make that happen. A local government, such as a city, can also make that possibility more real by doing things such as making infrastructure investments that will facilitate the development they would like to see. These infrastructure investments might be money for roads, water, or sewer lines, or, they might be resources that make it less costly for a developer to build housing or a shopping mall.

Below the level of a comprehensive plan and a zoning ordinance is the creation of a specific plan for a particular project or parcel or parcels of land. This plan too must be in accordance with the comprehensive plan and zoning. If it is not, either the project cannot be done or the comprehensive plan and the zoning must be changed to accommodate or permit this project. But what type of project is in question here? Almost anything. Reference to a specific project means any type of development or public works project proposed by either a private party or by the government or governmental agency. For the former it could be a project to build housing, or maybe a new store, shopping mall, or even perhaps an industrial park or just about anything else that a private party might want to build. For a governmental agency or unit, it could include any of the above; or it might be a road, park, or cemetery; or the agency might want to clear and develop land that will make it possible for a developer to be able to accomplish some project that needs land. The critical issue here is that there is some parcel or several parcels of land within some community and someone wants to develop them. The assumption here will be that the land aimed to be developed is privately owned and it would need to be acquired in order for the project to happen. This is where the government and eminent domain step in.

Any project where eminent domain is involved, or where some type of government action is required, is going to need to be approved by the local government. This may also be true when no government money or action is required. The purpose of the hearings and approvals is to make sure that the project is compatible with applicable zoning and comprehensive plan requirements, that the proposal meets other housing or building code requirements, or that it otherwise complies with all applicable laws that will affect the proposed use and properties in question. The hearings and governmental approval are often also informational. They are in part to inform public officials about a proposed project, and also to provide information to neighbors and other citizens. Finally, these initial hearings may also be necessary if eminent domain is to be used because they may begin the process of helping the government decide if there is a valid public use associated with the project such that it could take property if necessary. Overall, these hearings on a specific project are important in making it possible to develop some property.

At some point during these hearings, the developer and the jurisdiction or government in question will identify specific properties or parcels needed. This may have already occurred in the early design stage when the initial plan for the project was presented. At that point, the government or the developer might have already owned all the property needed for a project, or it might have already identified the land that it needed or wanted, even if neither of them already owned the property in terms of a fee simple absolute. However, in some cases, no specific parcels of land had been designated. In either case, at some point in the project review the property needs will be determined, including ones that need to be acquired from other owners. This property identification will include showing them on a map, but more important, this stage in the process seeks to determine the official legal description for the properties, as well who the owners are. This means asking who has a legal interest in the property.

Owners may have already been involved or contacted during the preliminary planning stage; they may have attended earlier hearings; or they may in fact be a partner or involved already with the project in some way. But at some point, owners need to be officially notified that their property is being considered for some type of development project. With almost any project that involves a public works project or a private development, the starting point begins with seeking the cooperation of the property owners. While the image may be that “big, bad, ugly developers” come into town and force owners to sell their property or threaten them with eminent domain, the reality is that most of the time efforts are first made to negotiate with property owners in order to convince them to sell their property. Almost no one wants a court fight that will drag out for years and cost both sides tens of thousands of dollars or more. The effort will be to convince owners willingly to sell their property.

If owners agree to sell their property, then the issue is price. How much do owners deserve for their property? Constitutionally, the standard is fair market value. This, of course, makes a lot of sense. If an owner plans to sell her property, she would be a fool (or very generous!) to sell her property for less than the fair market value. The very definition of fair market value that courts often use—what a willing buyer would pay a willing seller—is what owner and developer or local government will try to identify. The two will simply negotiate a price that both parties believe is fair. Three ways to decide what the fair price is are often used to guide negotiations.

First, both sides will look to comparable sales of similar property. By that, both sides will look at other properties that are similar in as many respects as possible in order to determine price. This might mean looking at the price that other homes in similar neighborhoods sold for in the last three or six months. This is the same process that realtors often use when trying to price property. A second way to determine a fair market value is the “replacement cost,” meaning, what it would cost to replace the home, for example, if it had to be built from scratch today. This is similar to a test used by insurance companies when writing policies. Often property owners will purchase policies for the replacement cost of their homes or businesses. Finally, a third test might be to look at the income stream produced by a specific property.

This test is more common with businesses and rental property. Here, one seeks to determine the value of the property as an investment asset. This would be the type of evaluation used most commonly in business negotiations involving the sale of business property.

This preliminary stage when owners and sellers are negotiating the determination of fair market value may be more or less formal. By that, a less formal attempt at determining a price may simply be estimates of value based upon quick estimates of the comparable value, replacement, or income streams. However, in some cases, the appraisal process might be more formal if there is a serious dispute. At this point, outside experts may be brought in to implement a formal appraisal process. Eventually, if the owner and buyer cannot agree on a price and eminent domain is used, a court will hold a hearing regarding what the fair market value is, and formal appraisals will be ordered. Based on those appraisals, a court will fix the fair market value.

As part of negotiating fair market value, an owner may also receive relocation costs or assistance. This assistance might include costs associated with looking for a new home or business location, the costs of moving and relocation, and perhaps any other incidental costs. All of this is subject to negotiation. Additionally, if the property has tenants, they too may be awarded compensation to buy out their leases, to pay for relocation, or to address any expenses they may also have. Or in some situations, buyers may condition a sale that requires owners to deliver to them property that is already free of tenants. This means the owners may have to do their own negotiations with their tenants. This might involve buying out their tenants, or they might have what is called a “condemnation clause” in their leases. A condemnation clause would inform tenants that, in the event that the property is taken by eminent domain, the leases would automatically expire within a certain number of days, weeks, or months.

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