Extreme Due Diligence

On today’s show we’re talking about how multiple layers of red tape can kill a project. Today’s show is a real-life story of a project where the additional layers of red tape literally killed an industrial project.

This is a project that should have been able to be built by right. When we say by right, we mean that the zoning lists a number of permitted uses. If your intended use falls within the zoning rules, you don’t need to ask further permission, apart from a building permit.

A building permit is required to make sure that any improvements to the land comply with the building code. The city provides a fairly clear list of what types of improvements require a building permit, and those that don’t.

If you’re building a new structure such as a house, a garage, a warehouse. Any of those things would clearly require a building permit.

In this case, the land in question has multiple zonings. Part of the land is zoned industrial and part of the land is zoned rural. On a portion of the rural land is an environmental protection overlay. Clearly, there are development restrictions in the environmentally protected zone. The industrial zone has a number of permitted uses which include:

· animal hospital

· auto dealer and service station

· Cannabis Production Facility

· kennel,

· light industrial uses

· parking lot

· retail store

· storage yard

· truck transport terminal

· warehouse

Our initial plan for the property is to land bank the property and simply put a storage yard for equipment, boats, and RV’s. This seemed like the lowest possible investment that would allow the land to carry itself while waiting for potential future development opportunities.

The city provide a sample list of items that don’t require a permit. They go onto say that if you’re not sure, to call the building department and to speak with a plans examiner. Projects that don’t require a permit include:

• New flooring
• Fences
• Painting and decorating
• Landscaping

So we thought, great. We have a land that meets zoning. We have a project that doesn’t require a permit. We confirmed that with the city. We should be able to start construction of the fencing and bringing gravel onto the site.

The seller of the land provided copies of old surveys, an old environmental impact study, the previous zoning applications and so on. There was nothing in those reports that gave us cause for concern.  We read the rules that we thought applied to our case. Everything was showing green lights for the project.

We called the environmental consultant who wrote the original reports that the seller provided us. It was at this point that we were made aware of additional rules of which we were unaware. That phone call turned out to be a massive education.

It turns out that the rules also say that if any portion of the land is environmentally protected, no matter how far away you are from the environmentally protected zone, the entire parcel of land is subject to site plan control by the conservation authority. That means that even half a mile away from the environmentally protected zone, you can’t erect a fence without going through the entire conservation authority process.

This story is a lesson in due diligence. It means going a level deeper than just reading the reports. It means talking to the experts in the field to make sure you’re not missing something. I feel like we dodged a bullet on this project. We could have been tied up for a year or more in government bureaucracy just to erect a fence. Not only that, we would have been tied to that bureaucratic process for the entire life of the project. Doing anything on the property would involve going through that process each and every time.