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Utility Relocations: Hidden Costs Impacting Land Development

Developers often have to relocate existing utilities when building new infrastructure like roads, bridges, and buildings. Utility relocation entails shifting or modifying current utility lines like gas, water, sewer, electricity, or communication cables to accommodate new developments. 

These relocations can have hidden costs that can severely impact land development. Take the case of purchasing vacant land for development: conducting an ALTA survey is vital. It not only helps in preventing boundary disputes, but also in evaluating existing utilities. Essentially, an ALTA survey visually represents the complex easements and encroachments that are typically noted in the title commitment. Acquiring as-built documents is also critical, as they offer detailed information about the depth and exact location of underground utilities. These documents assist engineers in implementing relocations, mitigating unforeseen issues, and allowing for precise planning in the relocation of utilities.

It's common for utility providers to prefer designing their systems internally, typically utilizingtheir own crews for installation of relocations. In such scenarios, a developer may be tasked withfunding these costs. In other circumstances, the developer’s manpower may be required to engineer and relocate the facilities. These distinctions should be ironed out with each utility provider ahead of time.

Public infrastructure upgrades are typically the responsibility of developers and are added to the overall cost of land development. For instance, expenses for installing new sewer or water lines are borne by the developer. Similar charges apply to other offsite infrastructure improvements. Municipalities frequently condition the granting of development permits upon the developer's commitment to improve or relocate roads, water, and sewer systems. These expenses are ultimately transferred to the final consumer, resulting in higher land and home prices.

Most private utility providers recognize the cost-benefit analysis and are open to several options: (i) Installing the infrastructure without charging the developer, (ii) providing incentive packages, or a reciprocal arrangement (meaning, if the developer ensures that the end user will utilize their utility, they might waive the fees), or (iii) engaging in a cost-sharing agreement. In each scenario, the private utility provider employs a model to weigh the immediate expense against the long-term advantage of acquiring long-term customers. In our experience, AT&T stands out as a significant exception to this trend. Developers, take note: If your project involves relocating AT&T utilities, you may incur substantial costs. 

Navigating the challenges in utility relocation demands expertise and adaptability. With various types of utilities to maneuver, each presenting its complexities, relocation efforts require careful coordination and specialized approaches. Addressing potential risks and obstacles—be it unforeseen underground conditions or conflicting utilities—demands agility and collaboration with all parties.   

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