Planning and environmental issues


Which government authorities regulate planning and zoning for real estate development and use in your jurisdiction and what is the extent of their powers?

Planning and land use issues are largely controlled by states and municipalities through zoning laws adopted by local jurisdictions. In rural and suburban areas, zoning laws focus on master plans for large-scale developments and related infrastructure, with a focus on:

  • controlling density;
  • preserving open space; and
  • ensuring that adequate water, sewer capacity and other necessary utilities are available for developments.

Preservation of wetlands and natural habitats of endangered plant and animal species are controlled by federal laws, in addition to local zoning laws.

In urban areas, zoning laws will prescribe for each specified zoning district:

  • the uses to which real estate can be put (eg, industrial, commercial, residential or institutional);
  • the density of development (eg, number of square feet of building space per unit of land area);
  • the height, setback and overall architectural configuration of individual buildings;
  • the sizes and configurations of yards and open space; and
  • street frontages.

Zoning laws often contain incentives or requirements for developers to provide public goods, including affordable housing, parks and other public amenities in connection with new developments. Legal challenges to land use regulations can be brought in state and federal courts, which set the limits as to how far the government can go in regulating land use without constituting an unconstitutional “taking” of the landowner’s private property. 

What are the eligibility, procedural and documentary requirements to obtain planning permission?

The application process for planning permission varies by jurisdiction. It typically includes:

  • a site survey;
  • a proposed site plan;
  • an environmental site analysis;
  • an environmental impact analysis; and
  • an analysis of supporting infrastructure for the planning action. 

Can planning decisions be appealed? If so, what is the appeal procedure?

Yes, all planning decisions have an appeal process. The first level of appeal is to a public body (eg, a zoning board of appeals) and thereafter to the state courts. Planning bodies are accorded deference by the courts; a court will not generally overturn a planning board decision unless it was “arbitrary or capricious”.

What are the consequences of failure to comply with planning decisions or regulations?

Violations will be imposed by state or local governments for failure to comply with planning decisions or regulations. The penalty for a violation can range from a fine to a court order of injunction to correct the condition, depending on the severity. Extremely hazardous building conditions can result in criminal penalties to property owners. 

What regime governs the protection and development of historic and cultural buildings?

Many localities require preservation of designated landmark buildings, including oversight of alterations and demolition by a local historic preservation body. Federal and state income tax credits are available for historic restoration of significant historic landmarks.

Government expropriation

What regime applies to government expropriation of real estate?

Federal, state and local governments can expropriate private real estate for public use under the federal and state constitution and statutes. There has been a great deal of jurisprudence under the US Constitution and state constitutions as to what the appropriate governmental purposes are for which property can be expropriated. The law is well established that the government can take private property for traditional public uses (eg, roads, schools, public transportation and other public facilities). However, the law varies state by state as to whether the state can also take property for a redevelopment project, where the property being taken is “blighted” and the taking will permit a publicly supported redevelopment project. 

What is the required notice period for expropriation and how is compensation calculated?

Notice periods are established under the laws of each state. Expropriation must be conducted through a court procedure, unless a consensual conveyance is agreed to by the government and the private property owner. A timeframe is typically allowed for the private property owner to object to the government purpose for which the property is being taken, as well as to the compensation being paid. Compensation must be ‘just compensation’ under law, which is defined as fair market value for the highest and best use of the property. Just compensation must be paid by the government as a condition of taking the private property. 

Environmental issues

What environmental certifications are required for the development of real estate and how are they obtained?

If a property has previously been disclosed to a state or federal environmental agency as having been contaminated, the property’s redevelopment must be certified by the applicable agency and a completion or no-further-action certification is required. 

What environmental disclosure obligations apply to real estate sales?

Disclosure obligations vary state by state. As part of the due diligence investigation for a property acquisition, the buyer will conduct a “Phase I” environmental study to determine previous uses of the land and whether any federal or state environmental violations have been noted. If the phase one study indicates possible environmental liability, a “Phase II” study in which soil and groundwater samples are studied will be undertaken before property acquisition. Some states require an approved environmental remediation plan to be in place before the owner can transfer title to any property that was used for industrial use.

What rules and procedures govern environmental clean-up of property? Which parties are responsible for clean-up and what is the extent of their liability?

A landowner’s liability for the contamination of land and water by hazardous substances is governed by both federal and state law, and is enforced concurrently by federal and state governments. The primary federal laws governing hazardous substances liability are:

  • the Comprehensive Environmental Response, Compensation and Liability Act ; and
  • the Resource Conservation and Recovery Act.

Both of these statutes hold the owner and the operator of land financially and legally responsible for hazardous substance contamination of land that they own or operate, as well as any contamination of neighbouring land or water caused by activities on the land that they own or operate. Most states have adopted environmental statutes requiring owners and operators to prepare specific plans for approval by the state environmental agencies for remediation of soil and water contamination caused by hazardous substances. A new property buyer becomes liable for clean-up obligations – even if they have already occurred – although the new owner has the right to claim against the prior owner or operator that caused the contamination. Several insurance products are available to property owners to protect against unknown liabilities for prior pollution and these are becoming the norm in transactions for sophisticated buyers.

Are there any regulations or incentive schemes in place to promote energy efficiency and emissions reductions in buildings?

Yes, most states and the federal tax code provide incentives for the use of alternative energy sources and promotion of energy efficiency in buildings. State and city building codes include an energy code, which requires new construction or renovation to be conducted with up-to-date energy efficiency building methods and materials. A private, voluntary energy efficiency rating system called LEED is also issued through the US Green Building Council, with which many publicly funded buildings and projects must comply. 

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