This would mean that land use tends towards that which large firms (which can sustain the costs easily by self-financing) find useful.
The whole project was several million in expenses before even making a dollar. We aren't huge either, the permitting was not supposed to take that long it but a real strain on the business.
So yeah, you're correct. The current process favors large firms, at least those large enough to absorb the cost for multiple years or however long permitting takes, which in some municipalities can be a very, very long time.
Of course, the businesses should be only one part of the expertise that goes into writing the laws; other experts MUST be involved, or it will indeed be a fox and henhouse situation where the fox designs the legal locks so they can always be opened by foxes...
That can be an example of model legislation but, broadly, model legislation is created by an organization for use as an example for multiple different legislatures (usually states). Everyone from think tanks, busineses, the EFF, the ACLU and PETA draft model legislation.
Often the choices are —
1. Buy land at $/acre that reflects very little premium, based on a short feasibility study, but without any ultimate contingency that permitting will occur. This is your example. But problematically all permitting applications are typically public record, so when you fail, the land can’t be sold on to someone else as if that didn’t happen, any sophisticated buyer will know the exact issues the city/county had with your usage. Land often transacts onward at firesale prices under these circumstances.
2. $/acre for land is bid upon at a substantial premium reflecting the future value as a datacenter, it remains under contract for potentially years pending outcome of approvals, then it transacts. Permitting being denied usually results in either no money changing hands or a small termination fee reflecting the carrying cost of the land during that period. If permitting works out the seller of land walks away very happy as the $/acre was extremely lucrative.
For simple businesses like a retail store in a location that has other retail it’s not too risky to bet that you’ll be approved, too.
For businesses with unique needs or that happen to be in the public crosshairs, you’re putting a lot at risk in the process.
The process favors big companies and developers who have established relationships and “connections” with the planning boards.
The situation is even wilder in some other countries, both more and less corrupt than the average US municipality. In some places you’re not getting a permit at all without a sizable bribe, or having an in with the planning board.
In my city one of the aspiring developers tried to run an expensive political campaign to get a family member into an office that could have helped with their approvals. People caught on and didn’t like it one iota.
Architecture, civil engineering, and other design and permitting fees can easily be 7–10% of the overall cost of smaller projects. Even in large projects they’re often 4-5% or more, and the number of billable hours for complex impervious surface and stormwater management adds up fast, as do engineering stamped plans for structural and other factors.
Most cost here is also incurred fairly early before you have any vertical construction done — Phase 2 in a program after land acquisition. So you feel like you’re spending a ton on paperwork and you can’t see anything yet.
You CAN spend a bit of money even before land acquisition on quick feasibility studies but in U.S. terms for something like a residential, small commercial or light industrial project every parcel you go “I like that, can it work?” you are dropping $15-50k during a 45-120 feasibility period. Should it 100% not work out you are NOT getting reimbursed that by the selling party. You’re out the money. Even within 90 days you may find some uncertainties like SEPA approval won’t close before you have to say deal or no deal on the parcel acquisition. This is quite unlike massive companies doing business where the land may not change hands until essentially every approval is locked in (but should it not work out the buyer may be out millions in engineering fees paid to try and make it work).
Borrowing to buy land and then borrowing more to build something is also treated very differently by most lenders. It carries tremendous uncertainty versus you buying a preexisting lot and structures which they know how to value. That’s fundamentally something that causes unwillingness to lend, or changes the rates and down payment or security terms. In contrast with a conforming mortgage for a SFR (single family residence) at 6%, borrowing to build (a construction loan) can be 10-14% APR, often secured via personal guarantee and other assets you possess, and then you have to convert to a personal or commercial mortgage after you complete building what you wanted.
Borrowing to buy the land is even more complicated again — you very often must be able to pay cash for land, and then just borrow to do the construction. Borrowing for both especially with limited assets to secure against will always be a polite “Sorry; we can’t help.”
It'd be one thing if the requirements were merely onerous, but the discretionary nature adds corruption greatly favoring incumbents, the deep pocketed, and those willing to disregard the rules (start-ups with low capital requirements).
Never mind the timeline of these processes. Permitting can take 18-24 months, as can items like basic utility upgrades (adding 480V service, for instance, to an existing building can be an 18 month ~quarter million dollar endeavor.)
So now, all of it sits abandoned, no construction started, and now its not even worth building as they claim "down town is dead".
This is likely the fate of that land, a write off until its so valuable they can sell it to someone else.
But a seller would probably prefer to sell without contingency, so what terms are available depends on market conditions.
Title insurance for residential real estate may sometimes cover properties that are unbuildable due to unsatisfiable permit requirements.
All told, it's easier as a buyer if you purchase an existing structure that was built under permits and is currently in use under appropriate occupancy permits.
Storage though, yeah, that makes sense.
Neither small or large businesses really have any big advantages here. Got to win over the community. If anything, the small business may be local and the operators more readily able to convince the community for a variance than some corporate lawyer.
It varies from state to state (and city specific laws), but to go from empty land to productive asset can take several years.
Someone buys the plot 30yr later. They can't clear it and farm it without spending a quarter mil on environmental permitting because the government sees it as a pre-existing forest and the drainage ditch farmer Johnson's dad dug back in 1988 is now a stream (i.e. protected wetland) so they want the new owner to get the same permits that someone bulldozing a swamp for a strip mall would.
You see comparable fact patterns on every axis of regulation.
The government will still screw you out of hundreds of thousands (mostly in the form of "pay these other people four figures for study X and plan Y" type requirements) to even get to that point though
I've seen it a decent number of times in my life. The exec gets their hart set on a specific building or parcel, but literally no one else in the entire project cares because they know it doesn't matter. Then the site desired won't work, and half the time the project fails.
I was at one company years ago, the execs were bound and determined the company was going to move the HQ from one building to another a handful of miles away. They saw the floors we were to rent, were completely set on that, and then proceeded to act like the deal was done. They had the credentialing department put in a change of address to MEDICARE before we had even signed the lease! We were 6 weeks from the move day when FINALLY there was a blow up in a meeting where people told the CEO and COO they were delusional and that we had to cancel the plan because we STILL DID NOT HAVE A SIGNED LEASE. There had been major negotiating hurdles between facilities and the building owner, but the C suite acted like none of it was happening for months. They spent 6 figures prepping for a move that in the end never happened. Building owner went bankrupt, we didn't move and instead just rented another suite in our own building.