BusinessReport.com

Gerald “Chip” Songy has a bone to pick with the Louisiana Department of Transportation and Development.

Songy, the executive vice president of Stirling Properties, is one of a growing number of developers statewide who believe DOTD is hurting residential and commercial development by requiring payment for sins of the past.

“I don’t want to be antagonistic. I want a good transportation system that is as effective and safe as possible,” he says. “I also want reasonable access to that system.”

Rule 70, which became law in 2007, states all new and expanding developments that generate 100 hourly trips, or vehicles on the road per hour, on a state highway must submit a traffic study. That also applies to projects on public or private streets with access within one-fourth of a mile of a state highway.

DOTD traffic engineering division administrator Peter Allain says DOTD has no set impact assessment and only requires developers to pay for improvements that will mitigate the traffic caused by the proposed project.

But the development community tells a different story.

Hardy Swyers, executive director of the Baton Rouge Growth Coalition, paints a grim picture as he lists several commercial developments that have been stalled or killed.

Swyers does not describe the mitigation assessment as a set fee. Instead, prohibitive costs are generated by the improvements DOTD demands in order to access state roads—improvements that sometimes far exceed those set forth in independent traffic-impact studies.

“Because of the shortage of state funds to improve roads, we think they are trying to get these new developments to pay for the cost of fixing a lot of the present problems, not just the additional traffic caused by the development,” Swyers says.

When developers disagree with DOTD, they have three options: accept the changes, appeal or kill the project.

“Unless you do what they say, you are not going to get permission to do your project even though you agree to do the work your certified traffic engineer says needs to be done to accommodate additional traffic,” Swyers says.

Developer Windy Gladney says a city-approved retail center on part of the former Fairwood Country Club at Interstate 12 and Millerville Road has been stalled for almost three years over DOTD requirements for a privately funded westbound on-ramp and service road.

While the project never has been denied, the required impact studies have totaled several hundred thousand dollars and a stack of paper almost six feet high without any construction taking place.

“I want them [DOTD] to know that private industry has an interest in this, but no matter how hard I try to get approved through the system, I get stuck in a hole,” Gladney says. “It’s been three-and-a-half years.”

Stirling builds freestanding Walgreens franchises and Target anchor stores in shopping centers around the state. Songy says the policy has impacted virtually every development for which the company has sought a permit in the past two years—and even killed some contracts because access could not be negotiated.

“Most purchase agreements are finalized only after due diligence is done and you gain all of the necessary permits,” he says. “If DOTD does not release a permit for ingress and egress, the best-case scenario is that the project will be delayed. At worst, it won’t happen at all.”

The appeal process is straightforward. If a developer disagrees with the state ruling, there are three opportunities to appeal the decision. If a resolution cannot be reached with the first two attempts, it is referred to Secretary William Ankner.

Allain says there is no legislative authority for DOTD to create an independent process. Because responsibility for the safety and operation of state roads ultimately belongs to the agency, appeals should remain within their jurisdiction.

Wayne Sledge, president of GWS Engineering Inc., vehemently disagrees. Not only should DOTD have an independent appeals process, he says, at least one person with economic-development experience should be on the board that makes the final decision.

“DOTD does not see the big picture,” he says. “They are all about access management. They don’t care about the superstore or what happens if that development doesn’t get built.”

Mitigation requirements do not negatively impact commercial or residential development, Allain says. In 2008, 36 impact studies were submitted for DOTD approval. Of those, three were appealed. Two were resolved at the first level and one resolved at the second level. Nineteen impact studies have been submitted this year to date with no appeals.

“There’s no evidence to support that,” he says. “Asking for basic safety improvements and reasonable access is not negative because it is part of the normal cost of development.”

Songy’s theory is simple. If developers have no confidence in the appeals process, then why should they bother? That’s not even taking into account how long the effort might take. By the time a decision is reached, it could be far too late to continue with the project.

“By the time you get an answer, the land is no longer under contract,” he says. “There’s not a lot of comfort when the people you are appealing to is the same group that denied the permit.”

Mitigation requirements are not a revenue generator for DOTD, Allain says. The department has gained funds through stimulus and other federal dollars to pay for repairs and preventative care for state roads. Developers that choose to build in highly traveled areas most likely will pay more in improvements because the traffic coming out of their developments will generate more impact.

“You have to start somewhere,” he says. “When you have 10 years of development, you can’t go back and ask those developers to mitigate more traffic. You have to start at some point in time. I’m not sure how to resolve that.”

Safety and access requirements actually encourage development, Allain says, because congested roadways that create an environment prone to accidents are not attractive to businesses.

In Sledge’s experience, the issue is philosophical in nature because DOTD seeks to control access while developers seek to gain it. The reality, however, is that when projects don’t receive permits, economic development stalls.

“DOTD needs a philosophical shakeup,” he says. “We have to come to a consensus. They have to face the economic facts.”

The Growth Coalition met last week to firm up a list of concerns developers would like to see considered as an amendment to the DOTD rule. Swyers hopes to arrange a meeting with DOTD officials by the end of the year.

A value-added assessment, which charges a developer or property owner a fee for value added to the property as a result of having access to a state road, still has a place on that list, though progress has been made on the issue.

Allain says DOTD does not charge value added assessments. While the issue reportedly stymied several projects earlier this year, Swyers says it is not as big of a problem as the mitigation requirements.

For Songy, it’s a question of fairness. While he agrees developers should pay to mitigate the traffic that comes out of their development, it is wrong to force them to pay for pre-existing problems on the road.

“DOTD’s intentions are good because they are focused on traffic safety and that is the argument they use,” he says. “But is it fair? Most developers would say no.”