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Site Certification Is Not a Substitute for Due Diligence

While a good amount of information can be obtained through site certification programs, underlying questions with regard to the end-user’s specific timelines and needs as well as how risks will be mitigated still need to be addressed.

Q1 2017
When a novelist begins his work, it is quite possible the he may know how he wishes to begin and where he wishes to see the characters in the end — but it’s what is penned in the middle that makes the story.

Similar to the creation of a good novel, site selection begins with a theme. This theme involves the identification of a location where a corporate end-user can operate more efficiently and effectively than anywhere else. The hopeful end result is that the decisions made throughout the process lead to a successful company location decision. However, the storyline that develops in the middle — the careful scrutiny of site location attributes — sets the tenor as to whether or not the chosen site will provide for a successful site location story.

To address the nationwide gap in available industrial greenfield sites, many communities have adopted site certification processes for identification and inventory of land assets suitable for primary investment. Site certification programs can range from consultant-driven models to governmentally adopted programs tailored to meet the demands of assumed targeted users within their regions. As popular as site certification programs are in the U.S., these programs should be viewed by the site selection community as a chapter in the location decision process rather than the entire story.

While site selectors can find valuable initial site diligence information in certified sites, a critical eye is necessary to identify lacking or inaccurate information that can drastically impact development capabilities and timelines for the end-user. To achieve a desirable ending to the story of the site selection process, consider the benefits of critically assessing the details provided through certified sites as follows:

Site Diligence
Most site certification programs will request a fairly extensive analysis of existing infrastructure and site diligence conditions. This initial understanding of how a site is served, positioned, and permitted is incredibly important in identifying critical timeline factors that impact an end-user’s ability to develop a site.

What is often not considered within site certification programs is that infrastructure demands vary widely depending upon the individual user type. For example, mission-critical companies often view near-proximity to natural gas, rail, and airport influences as site deficiencies. Assembly operations would conversely view near-proximity to natural gas, rail, and airport influences as assets. Site certification programs that are simply built on minimum site service requirements as compared to total site acreage do not provide an accurate picture of service capabilities or risk. And, because many highly suitable sites are lacking in infrastructure that is deemed a deficit within the certification requirements, but not particularly a deficit as it pertains to an individual user’s needs, it is possible that optimal tracts can be overlooked in the site search process.

In addition, it is common for site certification programs to provide technically affirmative answers to questions about infrastructure service and capabilities that simply are not achievable. For example, an industrial user desiring rail service of four carloads per week was recently seeking a site to accommodate this need. The certified site of interest affirmed that rail service to the site is possible; however, with further investigation, it was found that this rail service could only be achieved if a spur capable of accommodating a unit train (preferably a loop track) were constructed. The costs for overbuilding of this rail extension were not feasible in relation to the development and, therefore, even though the site was certified as rail-served, it could not accommodate the user’s needs. What is often not considered within site certification programs is that infrastructure demands vary widely depending upon the individual user type.

It is important to understand how infrastructure specifically benefits a particular end-user. Unlike what is suggested in typical site certification program requirements, there is not a single “correct” answer as it pertains to infrastructure availability, abundance, and location. Modeling user demands and needs into the site’s service capabilities is critical to ensuring timely identification of any deficiencies so that the site selection process isn’t drastically slowed or halted due to the inaccuracy or inapplicability of site certification information to user needs.

Land Planning
Often, site certification programs will request current and future land use designations as well as zoning for sites as part of their screening criteria. This necessary step helps to ensure that land tracts can become easily occupied by a prospective end-user, eliminating costly permitting and construction time delays.

However, the full story does not exist in this initial chapter. What is often overlooked is that many communities update their comprehensive plans on a regular basis, but don’t always update their corresponding zoning codes. With the ever-changing nuances in industrial facility design, zoning codes that were deemed as acceptable for site certification may not apply to the prospective industrial end-user considering development.

Beyond the minimums of site certification standards, it is imperative that site selectors understand what is allowed within that code as many heavier uses, including industrial, allow for lighter uses such as residential and commercial to freely locate within these land tracts, adjacent to the prospective end-user’s chosen site. Land use laws provide the highest level of protection to residential, commercial, and retail areas with industrial receiving the least protection. Hence, it is critical to dive deeper in understanding not only how a prospective site is zoned, but also what use types are allowed within that zone and within proximity of the site, to ensure ultimate land-use compatibility for the prospective end-user. With the ever-changing nuances in industrial facility design, zoning codes that were deemed as acceptable for site certification may not apply to the prospective industrial end-user considering development.

Site selectors must fully understand the ramifications of a site’s intended land use and zoning code, ensuring that any prospective long-term infringements on the end-user’s ability to effectively and efficiently operate within the chosen site are understood and mitigated.

Master Planning
Many site certification programs will request that a singular pad site be represented, along with associated grading costs, on the property to show how a representative user of an identified industry segment can be accommodated. This form of site planning is effective in representing capacity and accommodation for an anchor end-user. In many instances, site certification programs will require large amounts of “contiguous acreage” to allow for a site to be certified.

An unfortunate reality of site certification programs is that, far too often, excellent industrial sites are overlooked in a search process because they cannot present a “contiguous acreage” coverage that is acceptable to the certification program. This means that all streams, easements, roads, and virtually any encumbrance that may interrupt the ability to place a pad site be completely mitigated to ensure no issues with facilities placement. And while this may seem like a great idea, it often leads to oversight.

Often, site certification programs do not desire to see full master planning of an industrial tract, but rather a simple plan that shows one facility of designated size with a grading plan. This method is not effective in working with natural or built encumbrances that may impact the tract. If a full master plan is developed taking into consideration these features, it is possible to manipulate that master plan to show optimal pad site placement and master planned alignment to the prospective end-user.

To create the story, site selectors must understand the individual user’s site needs and then encourage the alignment of those pad site requirements to the master plan to see how the site may be able to be developed without excessive mitigation. This method saves considerable amounts of money and time in potentially unnecessary mitigation. And if communities and/or developers recognize that it is possible to align pad sites at the request of a site selector into these sites because they have a fully master planned site, they can avoid upfront mitigation costs that they may need to pass onto the prospective end-user in land negotiations.

Certification vs. Information
The site selection community desires “fast track, ready-to-go sites,” and while a good amount of information can be obtained in the first chapter of site identification and diligence through site certification programs, underlying questions exist that require site selectors and end-users to thoroughly understand and ask questions that go beyond site certification requirements.

Solid diligence information that provides assumptions of timelines, mitigates risks, and allows for effective and efficient modeling of user needs is of utmost importance and should not be dependent upon a site’s achievement of certification status.

Understanding the basic services to the site is the first chapter of investigation, but really knowing the full story — i.e., how the site will be used assuming all infrastructure service, development timelines, and how any potential risks will be mitigated — leads to an excellent finale to the site selection story for everyone involved.
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