"Location, Location, Location...NOT!"

The following text is Gil Castle's final draft of the real estate column appearing in Business Geographics, June 1997

Copyright © 1997 GIS World, Inc.

The theme of my real estate columns in 1997 is site selection. The focus of this issue of Business Geographics is regulatory compliance. Let's combine those two topics, to see how the three most important factors in real estate—"location, location, location"—might lead to a site NOT being selected.

An obvious place to start is the use of business geographics by banks for complying with the Community Reinvestment Act (CRA) and the Home Mortgage Disclosure Act (HMDA). These applications certainly affect the site selection options of the real estate industry, and benefit substantially from readily available software and data. They are also well documented elsewhere, so we can move on.

Legislation has been pending to compel insurance companies to conform to CRA and HMDA-like regulations. Given that insurance companies are one of the principal sources of both debt and equity financing of real estate projects, such legislation would undoubtedly have a significant impact on site selection by real estate professionals.

Compliance with environmental regulations frequently makes excellent business sense, regardless of the strength or weakness of federal and state governmental commitments to those regulations at any given time. Especially within the last several years, an unprecedented amount of property losses have been caused by toxic clean-ups, earthquakes, floods, hurricanes, wildfires, hailstorms, etc. Indeed, the insurance industry calculates that it has $2 trillion of potential environmental exposure. Under these circumstances real estate investors, developers, underwriters, users, service providers, and so on should all be carefully scrutinizing any potential environmental hazards encompassed by a candidate site. Business geographics technology is again readily available and directly beneficial for fulfilling these site selection analytic needs; for example, the environmental audits available nationwide from—among others—Environmental Risk Information and Imaging Services (ERIIS, at 800-989-0402) and Environmental Data Resources, Inc. (EDR, at 800-352-0050).

At local level, most important source of regulatory compliance information is of course the zoning map. Most large cities and counties, as well as innumerable small cities and counties, have their zoning map encoded in a Geographic Information System (GIS). Ideally, the zoning map will be available for acquisition in digital form by a real estate organization, to facilitate combining that data with various other site selection data layers in the real estate organization's GIS.

If a city or county has its zoning map in digital form, most likely the jurisdiction has several other important parcel-based maps in its GIS. Among such maps that should be obtained for site selection analyses are:

Some local governments will have their own versions of environmental constraint maps, including not only the earthquake et al. hazards cited above, but also fire department response time zones, rare and endangered species habitat, archaeological sites, scenic easements, noise contours (notably around airports), etc.

Additional, quasi-regulatory compliance issues can arise from the state-of-readiness of local utilities. For the intended land use, does a site under consideration have guaranteed, sufficient water and sewer service? Electricity? Natural gas? Telecommunications? Most major utilities by now have adopted Automated Mapping/Facilities Management/Geographic Information System (AM/FM/GIS) technology, which certainly facilitates obtaining answers to these questions.

In summary, when a site is to be selected, sometimes compliance with all relevant regulations might create too tangled a KNOT.