With plans for a $264 million shopping center in Glendale, Calif., at stake this year, Caruso Affiliated Holdings retained three separate law firms in its ongoing fight to win development approvals for the project.
Elsewhere in the nation, large retailers like Wal-Mart are meeting grass-roots opposition to proposed stores in several communities, while municipal governments in Austin, Dallas, San Francisco and other markets enact ordinances prohibiting new big-box retail construction in all or part of those cities. And in Florida, multifamily developers in some cities are pitted against neighborhoods opposed to the additional strain new apartments may bring to existing roads and utility systems.
At the center of all these conflicts is the land-use attorney, a legal hybrid combining the skills of a planner with those of a litigator and negotiator. This niche practitioner of real estate law may champion either side of a development battle as communities struggle to reconcile a developer's aspirations with the collective rights of a community to shape its future.
“This is not traditional real estate law,” says Donald Hall, chair of the land-use practice group of Ft. Lauderdale, Fla.-based Gunster Yoakley & Stewart PC. “Our land-use practice group is a multi-disciplinary strike force, because you never know where the problems are going to come from in land use.”
Land of Opportunity
While the number of land-use lawyers isn't tracked on the national level, experts in the field indicate that there are only a smattering of full-time land-use specialists in any given market. Out of more than 10,000 attorneys in metro Atlanta, for example, fewer than 35 specialize in land use and zoning, according to Michael Tennant, a partner at Alston & Bird LLP.
Not surprisingly, many firms view this burgeoning niche as a potential growth area for their businesses. “We see land-use issues increasing in every jurisdiction,” says Whayne Quin, who leads the mid-Atlantic land-use and government practice group of Holland & Knight from his office in Washington, D.C.
Quin's firm is one of a handful attempting to establish a national practice in land-use specialization. “It's an unmet need right now,” he explains.
Several of the 26 attorneys in Quin's mid-Atlantic group moved with him to Holland & Knight in 2001 from Wilkes Artis Chartered, another D.C.-based law firm, and many others have been hired from other firms in the region. Holland & Knight's Chicago office houses a similar number of attorneys in the land-use niche, and the Boston office is building its team.
Local Knowledge Is Key
But many experts say that a national land-use practice, at best, will likely be a coalition of local-level teams rather than a group of professionals who practice in more than one region. That's because state laws and municipal rules govern most issues pertaining to development rights.
California attorney Linda Bozung believes that the wide-ranging knowledge of environmental regulation and government procedure required to effectively handle a land-use case in her state makes it a difficult area for outsiders to crack. “There would be no way you could train [new attorneys in land-use law] without that expertise already in-house,” says Bozung, a partner in the Los Angeles office of Piper Rudnick LLP.
A former chairwoman of the American Bar Association's land-use committee agrees that expertise in this line is generally tied to specific markets. “You almost have to be part of a homegrown Chicago law firm to practice in Chicago, because it's so political and so local in its scope,” emphasizes Donna Pugh of Chicago-based Vedder Price Kaufman & Kammholz PC.
Pugh says she meets almost daily with attorneys trying to break into land-use law, but despite the high interest level, she says a law firm would have a hard time establishing a national practice in land use because knowledge of the local market is so critical.
Florida's Gunster Yoakley & Stewart has been able to grow a strong niche practice by sticking to the Florida region. Its land-use team includes attorneys who specialize in zoning and permitting, environmental regulation, and litigation in addition to several lawyers versed in more conventional real estate transaction work such as leases and acquisitions. Most of them entered the practice area by way of litigation or government rather than through the more prevalent form of real estate law — transactions.
Even with a regional focus, however, firms attempting to grow in this field find it challenging to identify available attorneys with the necessary education or experience. That's because the work requires those in this niche to be less a specialist and more of a jack-of-all-trades.
“It is a growth area if firms are willing to invest in the talent, but there's only a handful of us who know how to do this in California at the level a major development requires,” says Piper Rudnick's Bozung. “It is a very difficult area of law.”
Risks and Rewards
The large sums at stake in many zoning cases provide ample opportunities for attorneys to demonstrate value. Tennant's Atlanta law firm, Alston & Bird, recently secured $63 million in additional mining rights on a mining company's existing land. “Clients are grateful for an enhancement of value like that,” Tennant says.
Law firms are finding the niche particularly lucrative. While legal fees for land-use matters are generally comparable to the hourly rates paid for other legal services, the volume of land-use work in major markets provides an appealingly steady stream of business for firms like Holland & Knight.
“We are blessed with a very hot market, so we have lots of business; we're all extremely busy and we're all extremely efficient,” Quin says. “That's a benefit to the client, too, that no one wants to linger over any case more than is necessary.”
Lawyers concede that some markets won't support a land-use practice. This business thrives on the interactions between existing communities and new development, so there is little to occupy the specialist's time absent new projects.
Even a lull in current development levels may put a dent in a specialty law firm's workload. “Like so many other practice areas, it twists and turns on the economy and the economic development of a particular geographical area,” Tennant says.
Most firms building a land-use practice aren't worried about a slowdown because most urban areas are increasingly embroiled in land-use issues. From water rights to the disposal of industrial wastes, any land use that requires government approval amounts to potential business for zoning lawyers.
Wanted: Diverse Skill Sets
Today's land-use lawyer is the modern version of what has historically been called a zoning attorney, but unlike a zoning specialist, a land-use attorney may be called on to argue in court, serve as a spokesperson to the media or oversee an environmental impact review.
“It's got about everything in the world rolled up into it, including public relations, constitutional issues and government affairs,” Tennant says. “And it's within the public hearing process, therefore you get a lot of attention from media, the government and from regulatory agencies.”
Tennant's firm hires recent law school graduates to work in its land-use group, and looks for persons with either architectural undergraduate degrees or perhaps a master's in community planning, preferably both. He compares the desired background to that of an intellectual property attorney with undergraduate degrees in chemistry or biological engineering.
Land use is such a distinct and complicated field that one of the nation's top real estate law schools offers a course in land-use issues. The course fills up every time it is offered, says Celeste Hammond, professor of law and director of the Center for Real Estate Law at John Marshall Law School in Chicago.
“For the most part, real estate law is transactional, not going to court,” Hammond says. “Land-use law is interesting because land-use lawyers have to be ready to go to court if they can't work it out by negotiation with the government regulator.”
A Penchant for Problem-Solving
Attorneys who make a living in land-use law say the payoffs are a steady stream of interesting work and the thrill of bringing resolution to complicated and often high-profile problems.
Holland & Knight's Quin says attorneys receive more complicated cases as they establish a reputation, adding to the challenge and enjoyment of the job. “The complex cases are more challenging and interesting, and, frankly, more fun. It's exciting to see the fabric of a city change and know that you played an instrumental part in it.”
And as Tennant advises law students and young attorneys, land-use issues will grow increasingly complex over time. “All the easy stuff's been done. What's left is the hard stuff, and that's where we come in.”
Matt Hudgins is an Austin-based writer.
CASE STUDY: VISTAS OF NOVI
Project: Vistas of Novi, Novi, Mich.
Developer: Sandstone Associates
Law Firm: Carson Fischer
Summary: Sandstone Associates sued the City of Novi in 1995 for failure to build a road to Sandstone's planned residential development. A circuit court judge sided with the developer in a $70 million judgment. The parties settled the case in 2002, with the city giving the developer a $7.7 million insurance payment and as much as 85 acres in a nearby park. Sandstone sold the park acreage to Pulte Homes of Michigan this year to build approximately 500 condominiums and homes on the site.
CASE STUDY: TOWN CENTER
Project: Town Center (Americana at Brand), Glendale, Calif.
Developer: Caruso Affiliated Holdings LLC
Law Firm: Donfeld, Kelley & Rollman for development agreements; Morrison & Foerster LLP, environmental defense; Nielsen Merksamer Parrinello Mueller & Naylor LLP, election issues.
Summary: Neighboring mall owner General Growth Properties Inc. filed a zoning protest in April, then drove a petition drive that sent the zoning request to a special election on Sept. 14. General Growth also has sued the City of Glendale, finding fault with its environmental impact review.
Land-Use Conflicts on the Rise
Attorneys say conflicts between developers and neighborhood groups are increasing across the nation, raising the demand for lawyers able to either represent or defend against such community activists. And with the advent of e-mail and the Internet, community groups are more organized than they were a decade ago.
“Citizens groups are more aware of their entitlements, they're better educated,” says Celeste Hammond, a law professor who directs the Center for Real Estate Law at John Marshall Law School in Chicago.
Development opponents aren't limited to angry neighborhood associations, however. In the Chicago area, attorneys say labor organizations are pressuring municipal leaders to keep out large national retailers perceived as competition for existing stores. In California, competing landowners are raising opposition to new projects like Caruso Affiliated's Town Center in Glendale, a $264 million, 16-acre mixed-use development that will include 475,000 sq. ft. of retail space.
The chief opponent to Caruso's development is General Growth Properties, owner of the Glendale Galleria across the street from the project. In the period leading up to a special election on Sept. 14 to ratify zoning for Town Center, General Growth contributed $840,000 to the neighborhood group opposing zoning for the project, a campaign disclosure shows. General Growth also is contesting some of the projections contained in the environmental impact review of Town Center.
Californians say most opponents to new construction take issue with specific aspects of the environmental impact assessment required for new construction under the California Environmental Quality Act, or CEQA. Attorneys like Linda Bozung of Piper Rudnick LLP in Los Angeles ensure that a project's CEQA report is based on research that can be defended if the report is questioned.
Florida runs a close second to California in terms of the difficulties involved in piloting a development through the zoning and permitting process. Donald Hall, chair of the land-use practice group at Ft. Lauderdale, Fla.-based Gunster Yoakley & Stewart PC, spends much of his time working on urban infill development in the cities between Florida's east coast and the Everglades. Developers attempting to serve a growing population with commercial space frequently need land-use attorneys to help introduce projects in established areas previously zoned for other uses.
Community resistance to new development may stem from historic preservation efforts. The City of Miami Beach, for example, has designated much of the city as historic sites. A developer seeking to build or modify a structure in those areas beyond designated height limits must win voter approval in a referendum.
Using historic preservation to curtail undesirable development isn't unique to Florida, however. A statute in the District of Columbia allows virtually anyone to halt a redevelopment by filing an application for historical preservation of the subject property.
— Matt Hudgins