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How to Avoid the Fatal Flaws in Site Certification Programs

A “certification” label on a site is meaningless unless all the necessary data has been gathered and thorough due diligence performed with respect to your particular project.

Q3 2019
UC Davis Aggie Square, a planned 25-acre innovation district on UC Davis’ Sacramento campus.
UC Davis Aggie Square, a planned 25-acre innovation district on UC Davis’ Sacramento campus.
Certified used cars, certified organic products, certified wild caught seafood: More than ever before, consumers are obsessed with the idea of purchasing certified goods — goods that we are led to believe are of a higher quality than their non-certified competitors and, therefore, justify a higher price. In the site selection world, the illusion is the same.

In corporate site selection, almost every state in the union has some form of “site certification program,” vehemently pushing their site or “certified product” to you, the corporate location team. As a result, an unwitting selector can easily be led to believe that the “certified site” is of superior quality to an uncertified site. But is this truly the case? Unfortunately, it depends on whom you ask and who is certifying the site.

Since no national standard exists for the certification of a site, certifying agencies — typically state and/or regional EDOs — are left to their own devices to develop their site certification standards. Herein lies the problem.

State, regional and local economic development agencies come in all shapes and sizes and lots of them tend to focus their resources on marketing, branding, and incentives rather than a technical staff to run a certified sites program. This leads to a wide variety of site certification programs that tout “shovel-ready” or “development-ready” sites across the country. Unfortunately, EDOs more focused on marketing and branding may have a site certification program with very little due diligence and/or technical requirements to achieve the certification status. In this case, the certified site may initially resonate with the corporate buyer but will quickly drop out of any serious bid to land a project.

On the other hand, EDOs that have invested the time and effort to develop stringent certification criteria specific to their local geographic, regulatory, and entitlement conditions will typically have readily available all the due diligence and technical data required for the corporate buyer to make a well-informed, timely location decision.

What constitutes a quality “certified site”?
Truly understanding if a site is high quality, or meets your needs, requires several things. First, lots of data. If the EDO can readily produce a site package with recent studies and site due diligence reports addressing topics such as environmental, geotechnical, wetlands, traffic impacts, local land entitlement process, cultural resources, title abstracts, utility service capacities, and infrastructure upgrades, then you know the EDO is prepared and the site certification means something. These technical studies and engineering reports are not cheap and typically require lots of field investigations. Even if you as the corporate buyer could care less about reading or understanding these reports, seeing this level of due diligence should give you comfort in the value of the certification.

What should you look for?
Even though no national standard exists for certification of a site, technically sound certification programs will share some basic key criteria:
  • Site control agreement — Can the EDO readily produce a site control document proving the site is available for purchase for a fixed price?
    Fatal flaw avoided: Sellers suddenly demand a lot higher price once they know a Fortune 500 company is interested.
  • Title review — Does the site have any existing encumbrances or deed restrictions that will preclude use for the intended purposes?
    Fatal flaw avoided: Long-term mineral leases reserving both subsurface and surface rights for drilling will typically preclude any surface use for economic development.
  • Local land entitlement process — Does the site have the proper zoning and land use controls in place for the intended use?
    Fatal flaw avoided: Typically, land entitlement is a political process. For most heavy industries, it is better to have the property entitled correctly before anyone knows the ultimate end-user.
  • Phase I environmental review— Does the site carry any potential environmental liabilities?
    Fatal flaw avoided: When you buy a site, you buy the environmental liability as well. You don’t want to be stuck with a bill to clean up someone else’s toxic waste dump.
  • Jurisdictional wetland determination — Does the site have wetlands? If, so will they conflict with the intended use?
    Fatal flaw avoided: Jurisdictional wetland impacts require extensive permitting and sometimes costly compensatory mitigation. A site with a lot of jurisdictional wetlands, especially within the facility footprint, will add time and money to the project.
  • Geotechnical investigations — Can the site soils support my facility?
    Fatal flaw avoided: Poor soil conditions can lead to costly foundation systems and unwanted long-term facility stability issues.
  • Cultural resources — Is the site free and clear of archeological artifacts?
    Fatal flaw avoided: Uncovering a burial ground or dinosaur fossils will bring your project to a screeching halt, ultimately costing you time and money.
  • Regulatory process — Does the certification address whether the site can receive the necessary federal, state, and local permits?
    Fatal flaw avoided: A site may not be able to obtain a permit you need for your facility for any number of reasons.
  • Utility service capacities — Does the site have utility service readily available?
    Fatal flaw avoided: The site may not have nor be able to acquire the utility capacity for your project.
  • Infrastructure upgrades — Are infrastructure upgrades required?
    Fatal flaw avoided: Offsite and onsite infrastructure improvements will add costs to your project.
Don’t buy on label alone; read the ingredients.
A quick search of most any economic development agency’s website will enable you to find tons of sites with fancy “certified site” labels purporting to be the gold standard for a quality site. Don’t be fooled by the label. Take the time to read the details and ask the EDO questions about the site. With a little effort, you will figure out if you have a quality site or just a site full of fatal flaws with a shiny “certification” seal on it.

As a corporate buyer, you rarely have the time, energy, or breadth of expertise to identify every fatal flaw the potential site may have. Employ an in-house expert with a sufficient technical background in real estate or engineering to head up your site selection team or utilize an outside site selection consultant. Either way will provide you a level of assurance so that you can understand what constitutes the “certified site” label.

As you embark on the search for your next corporate facility, you will find no shortage of “certified sites” for sale across the country. So, remember, don’t buy based just on the label alone. Take the time to truly understand what is in the site package.

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