Developers want more time in dreary economy

Staff WriterMarch 5, 2009 

Five years out used to be enough time to finish a construction project in the Triangle. But now, developers, who have been halted by a stormy economy, are asking officials for more patience as they wait for the clouds to abate.

Toll Brothers, the luxury-home builder, is asking Raleigh to update its city code to ease extensions of so-called "sunset" dates, deadlines that make sure developers quickly follow through on approved projects.

The rules are in place to protect neighbors from things such as red-clay eyesores created by dillydallying developers. Once a project is approved in Raleigh, builders are required to pull construction permits within two years and finish within five years.

But as the economy has slowed amid tight lending, some yet-to-begin builders are in a precarious position: If they start building just to meet the deadline, they have to hold product few can immediately buy. But if they miss the deadline, they have to pony up cash -- sometimes hundreds of thousands of dollars for lawyers, engineers, architects and fees -- to resubmit a plan that runs the risk of not being re-approved under new zoning rules when the economy rebounds. The process, for some projects, could take years.

Indeed, the city's planning director, Mitchell Silver, has the prerogative to grant certain extensions to delayed developers. But as the code stands now, extensions can be granted only to builders who have pulled permits. About a half-dozen such extensions are granted a year, Silver says.

Current lending tightness may delay several dozen projects in the coming year. And an updated extension could relieve builders from having to get started prematurely.

Put another way, it could prevent builders from pulling a grading permit and clear-cutting land just to become eligible for an extension.

Toll's request may set the stage for similar efforts in municipalities throughout the Triangle.

As home buyers remain sidelined, Toll expects the sun to set late this year on condominiums at Brier Creek in Northwest Raleigh. Asked how much it would cost to resubmit them, and how long it would take, Thomas J. Anhut, president of Toll's Raleigh division, said: "It's not something I'm interested in finding out."

Jason Barron, a lawyer representing Toll, asked the City Council on Tuesday to consider loosening the provision, allowing the city to grant developers' requests for three extra years, beyond the two-year sunset already allowed. It will be discussed at a public hearing April 21.

"Expired approvals may further dampen a recovery and will impose burdens on all stakeholders," Barron told Council members.

Not only would builders have to pay up, but the city would have to spend resources rehashing old business, he says. The extension would offer "a means by which developers and the city can accelerate the development when the economy recovers."

In other words, when the sun comes out again.

Efforts to extend deadlines on a stalled downtown Raleigh office building could get colorful.

Empire Properties, which needs extra time to build the 108,000-square-foot L Building around a new Wake County parking deck, may have to pay to paint the deck if construction doesn't begin by late this year.

The county, which agreed to sell the L Building site to Empire, finished the deck at the corner of Davie and McDowell streets last month. When it was approved, Raleigh planners required that the deck be concealed within 10 months of completion.

The county expected the L Building to rise around the deck as soon as the deck was finished. Wake set development deadlines as a condition of the land sale to Empire, which already has spent about $2 million on the plan.

But the sluggish economy has made it difficult for Empire to meet lenders' pre-leasing requirements. Greg Hatem, Empire's managing partner, this week asked the county to extend its start deadline until May 2010.

That means the deck will have to be painted until then, says Phil Stout, the county's director of facilities and construction.

The job could cost another $300,000, he says. The county is asking Empire to cover the cost as a condition of the extension.

And it's a deal Hatem might want to consider -- especially if Stout's light-hearted suggestion for what Wake might paint on the deck has traction: "A big picture, four stories tall, of him with his pockets pulled out."

jack.hagel@newsobserver.com or 919-829-8917

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