Real estate development projects can be extremely complex and risky, especially in Pennsylvania where laws and regulations vary widely between municipalities. Even experienced developers can run into serious issues if they are not diligent in researching, planning, and mitigating risks. This blog post from a Pennsylvania construction lawyer aims to outline the top 5 risks that real estate developers face in Pennsylvania and provide practical tips on how to avoid or minimize them. 

Understanding and avoiding these common pitfalls can help Pennsylvania real estate developers save significant time, money, and headaches through the development process. Proactively working with a qualified Pennsylvania construction lawyer can also help uncover hidden issues early and craft customized legal strategies when challenges emerge. With this information, developers can pursue opportunities in Pennsylvania with greater confidence.

However, there are steps both general contractors and subcontractors can take to resolve payment issues efficiently while preserving working relationships. The construction lawyers at Davis Bucco & Makara have extensive experience helping contractors navigate payment disputes. Call today at 610-238-0880 for more information.  

Risk #1 - Restrictive Zoning Laws 

One of the biggest risks real estate developers face in Pennsylvania is running into restrictive municipal zoning laws that limit what can be built on a property or parcel of land. Zoning laws in Pennsylvania can vary enormously between townships, boroughs, and cities. What may be permissible in one municipality may be prohibited in a neighboring one. 

For example, many municipalities have strict limits on maximum building heights, mandatory setbacks, allowed densities, permitted uses, parking minimums, landscaping requirements, and more. Developers should thoroughly review zoning codes and connect with local zoning officials early in any potential deal to understand what is allowed or may require special exceptions, variances, or rezoning requests. Navigating restrictive zoning laws is complex and often requires working collaboratively over an extended timeframe with multiple municipal departments, boards, councils, commissions, and potentially the public through hearings.

If restrictive zoning would torpedo or significantly reduce the feasibility and profitability of a development vision for a site, developers should carefully consider whether pursuing the deal makes sense in light of rezoning uncertainty, costs, and timing. Involving a seasoned Pennsylvania construction lawyer early on can help analyze zoning barriers and craft potential strategies to overcome them through variance requests or incentive zoning agreements.

Risk #2 - Burdensome Permitting and Regulatory Requirements  

Beyond restrictive zoning, real estate developers must grapple with a web of permitting and regulatory requirements at the local, county, state, and sometimes federal levels in Pennsylvania. Key approvals span building permits, occupancy permits, environmental permits, conservation district permits, PennDOT highway occupancy permits, and many more. The specific permits and review processes vary based on factors like the location, scope, and components involved in the development plans. 

Pennsylvania’s regulatory environment is decentralized and often complicated for developers to navigate. Making matters more difficult, permit application reviews can be extremely lengthy lasting 3-6 months in some municipalities. Requirements also seem to constantly change and evolve over the lifespan of a multi-year development project, which can lead to unexpected delays and expenses if developments fail to adapt within the required timeframes.

The best way for developers to mitigate permitting and regulatory risks is to retain qualified architects, engineers, consultants, and Pennsylvania construction lawyers to advise on requirements early in the planning process. An experienced team can design plans and submit permits in a strategic fashion and spot potential issues before they arise to threaten budgets or deadlines. They will also maintain compliance as laws and ordinances change through construction.

Risk #3 - Problematic Soil Conditions 

Pennsylvania's varied landscape, geological history, and past land uses lead to diverse and sometimes problematic soil conditions for real estate development projects. Developers may encounter:

• Contaminated soils from previous commercial or industrial activities 

• Unstable soils like fill or loose sediment that require extensive foundations or preparation 

• Acidic or corrosive soils damaging construction materials

• Excessive slopes driving increased mitigation requirements  

• High groundwater tables making basements or underground parking structures infeasible

Soil conditions can add substantial costs to developments or undermine the feasibility of some projects altogether. The risk posed by soils depends heavily on the location, previous uses of the land, and the proposed scope of construction. Extensive testing, remediation plans, skilled foundations, and other mitigations may be required in some areas. Pennsylvania's State Conservation Commission and County Conservation Districts impose additional earth disturbance, drainage, erosion, and sediment control requirements on many projects. 

Developers can mitigate soil-related risks by thoroughly testing conditions early, understanding the impact on budget and schedules, and working collaboratively with local officials on mitigation plans. Engaging qualified geotechnical engineers, environmental consultants and Pennsylvania construction lawyers helps guide technical and regulatory compliance related to soils.

Risk #4 - Historical Preservation Restrictions

Pennsylvania’s long history means real estate developers often encounter historical preservation laws that limit, dictate restoration requirements, or even block some development plans. The Pennsylvania Historical and Museum Commission designates historic structures and districts across the state that trigger oversight and restrictions on modification or demolition. More sites and districts continue getting added over time as appreciation for heritage grows.

Developers must carefully assess whether historical designations existing on sites or nearby could impact plans or require cost prohibitions. Even undocumented sites can undergo historical review if discovered artifacts or architectural remnants are unearthed during due diligence or construction. Strict regulations govern what changes are permissible or mandatory renovations to retain historical integrity. 

In some cases, historical significance may entirely rule out demolition needed to enable a developer’s preferred new construction plans. Navigating historical preservation regulations requires careful planning, documentation, negotiation, and patience as reviews by multiple governmental bodies often proceed slowly with input from consulting parties. Engaging experienced Pennsylvania construction attorneys and architects versed in historical requirements can often open creative pathways to align preservation and development goals.

Risk #5 - Litigation from Residents or Groups

Even if a developer does everything by the book, Pennsylvania real estate development projects commonly face litigation risks from unhappy residents, businesses, or advocate groups. Lawsuits aimed at stopping, scaling back, or extracting benefits from developments are becoming more frequent even for projects that meet zoning, permitting, and regulatory guidelines.

Common litigation attempts contemporaries face include:

• Appeals of zoning variances or special exceptions granted  

• Challenges to environmental approvals and permits

• Allegations of sunshine law, open meeting violations  

• Complaints of insufficient traffic, noise, and environmental impact reviews

• Lawsuits regarding displacements of residents or businesses 

• Claims of defects in public bidding or contracting processes

• Discrimination suits regarding affordable housing or access

Defending against lawsuits can add substantial costs, delays, and uncertainty regardless of the merits of cases. Contingencies for legal expenses along with contingency planning for project delays protect budgets. Avoiding shortcuts and thoroughly documenting zoning, community outreach efforts, and regulatory compliance also help defeat claims. Still, legal actions may arise unexpectedly. Engaging an experienced Pennsylvania construction lawyer helps developers anticipate areas of vulnerability, avoid missteps, and transfer litigation risks to insurance policies. Legal counsel can also negotiate settlements or credibly signal a willingness to vigorously defend against unjustified suits early to avoid drawn-out proceedings.

Pennsylvania Construction Lawyer - Critical Partner for Risk Mitigation

The above overview of the top 5 development risks in the Pennsylvania market reflects that legal and regulatory complexity permeates every stage of envisioning, evaluating feasibility, designing, financing, building, and operating a development project. Proactively engaging a Pennsylvania construction lawyer grounds projects in a reality check on what regulations allow while providing creative ideas to overcome barriers. 

On top of mitigating risks, construction lawyers facilitate the speedy resolution of inevitable issues arising during projects to minimize budget and schedule overruns. They also negotiate terms across the myriad of contracts required through engineering, permitting, construction, leasing, financing, and sales processes. Experienced construction lawyers additionally identify tax savings and incentive opportunities while implementing structures to limit liability risks.

Pennsylvania construction lawyers should be considered indispensable partners to development projects seeking to navigate bureaucracy, clear obstacles, resolve disputes, and reach successful outcomes. They play multifaceted roles - strategist, advisor, negotiator, problem-solver, defender, and advocate at different stages. Mitigating risks and overcoming hurdles often hinges on construction lawyers creatively aligning complex policy and business objectives in the Pennsylvania market.

Frequently Asked Questions

1. What Are The Main Risks Faced By Real Estate Developers In Pennsylvania?

The top 5 risks Pennsylvania developers face are restrictive zoning laws, burdensome permitting requirements, problematic soil conditions, historical preservation restrictions, and litigation attempts by unhappy residents, businesses, or groups. The decentralized and complex legal and regulatory landscape creates many pitfalls.

2.  How Can Working With A Pennsylvania Construction Lawyer Help Mitigate Risks? 

Seasoned Pennsylvania construction lawyers help developers navigate complex regulations to understand the feasibility of potential projects early. They facilitate permitting, and zoning exceptions, and creatively align interests when needed to enable approvals. Construction lawyers also advise on compliance, anticipate areas of disputes, and vigorously defend against unjustified lawsuits.

3. What Zoning Barriers Commonly Impact Developers In Pennsylvania?

Restrictive zoning laws governing building heights, densities, setbacks, parking, use, landscaping, and other areas can significantly limit or entirely rule out development plans. Rezoning attempts face uncertainty and can take years to complete while variance requests meet strict hardship tests. 

4. How Can Soil Conditions Affect Feasibility Or Budgets?

Contamination, excessive slopes, poor load-bearing capability, underground springs, or high water tables can require substantial remediation, professional foundations, excavation, or drainage systems that significantly reduce costs. In extreme cases, problematic soils may make projects infeasible to develop.

5. What Historical Preservation Rules Apply To Pennsylvania Developments?

State and federal historical designations trigger regulatory oversight restricting modification which can impact or entirely prohibit demolition plans. Strict rules govern renovation standards to retain historical integrity. Even undiscovered archaeological sites can force work stoppages. Navigating historical requirements is complex and requires experienced local partners.

Selecting a Construction Lawyer to Handle Your Dispute

The construction lawyers at Davis Bucco & Makara have decades of combined experience with contractor payment disputes.

There are always two sides to complex business disagreements, but prompt and thoughtful actions by both general contractors and subcontractors can keep most payment issues from escalating into serious conflicts. When unresolved disputes do arise, experienced construction attorneys can protect your rights and interests as a contractor in Pennsylvania. Reach out today to schedule your initial consultation at 610-238-0880.