Five Things That Could Impact Real Estate Developers in Philadelphia County

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in Real Estate on Feb 16, 2017.

If you are a real estate developer or other interested party in Philadelphia County, there are a number of unique programs and zoning regulations that are likely to have an impact on your current/future projects in the county — some positive (i.e., grants, reimbursements, etc.), others negative (i.e., forced community outreach, increased administrative overhead, etc.).

The following is a non-exhaustive list of high-impact regulations in Philadelphia County affecting real estate developers.  As a developer, it’s critical that you remain apprised of new regulation and how it will influence your projects from an administrative, financial, and foundational feasibility perspective.

Developer Services Program for Large Real Estate Projects

The Developer Services Program is a voluntary program available to developers of large-scale real estate projects (e.g. projects involving more than 25 residential units or 50k square feet of floor space).  The Program gives developers the ability to submit early plans to various Planning Commission staff and approval agencies — after a Committee Meeting and preliminary review is conducted, the stakeholders coordinate the project details in order to meet the requirements for approval.

Fundamentally, the Developer Services Program offers developers a means with which to smooth out and quicken the approval process.

Neighborhood Economic Development Grant Program May Open Up New Opportunities

Pursuant to the establishment of the Neighborhood Development Grant Program, the Philadelphia Department of Commerce has made a serious attempt to help encourage development of long-neglected neighborhood commercial areas.

The Neighborhood Development Grant Program enables neighborhood-based organizations to request and be awarded funds for the construction of commercial and mixed-use development in certain underdeveloped neighborhoods.  Real estate developers may find that there are interesting new opportunities for commercial and mixed-use development in low-income neighborhoods where Program funding for real estate development projects has been granted to the local community organization.

Reimbursements Through the Storefront Improvement Program

The Storefront Improvement Program was established by the Philadelphia Department of Commerce to incentivize property owners to upgrade, update, and otherwise improve their commercial storefronts.  The Department of Commerce intends for the improved aesthetics of Program-eligible storefronts to attract shoppers to certain under-appreciated commercial corridors.  If the storefront is improved, then up to 50% of the total cost is reimbursed (up to $8k per commercial property). 

Both property owners and tenant businesses qualify as applicants.  As such, real estate developers may discover opportunities for bulk storefront development with retail associations active in eligible commercial corridors.

Additional Complexity Introduced by The Civic Design Review Process

On August 22, 2012, the revised Philadelphia Zoning Code came into effect, implementing the Civic Design Review Process, which has brought additional first-layer complexity to the review process for covered projects (e.g. projects larger than 100k square feet or involving more than 100 residential units).  As per the review process, covered projects are obligated to give minimum 45-day notice to relevant community stakeholder group(s), who are then obligated to schedule a meeting pursuant to the zoning code.  This process (including the developer/community engagement) is overseen by the Zoning Board of Adjustment.

Initially, many developers believed that forced community outreach would unfairly increase their administrative burden, though some developers have found that Civil Design Review leads to tightening of the early design and planning stages of a project and a smoother overall approval process.

Revised Zoning Code Has Led to Fewer Variances

Despite an increase in permit approvals since the revised zoning code, the city has reduced the number of granted variances and special exceptions — this is partly built into the revised zoning code, as it was intended to be simplify existing regulations and deliver more comprehensive regulation overall.  Third-party industry observers have noted that any post-revision attempt to obtain a variance therefore requires clearly-defined hardship.

Real estate developers are encouraged to be more precise in their requests for variances and special exceptions, as they are less likely to be granted without a fundamental hardship justifying it.

Navigating the complexities of grant programs and zoning regulations in Philadelphia County requires the skills of an experienced real estate attorney.  Call (610) 260-6000 to setup a free consultation with a Philadelphia County real estate lawyer today.  We look forward to speaking with you.