Property Development - What's an Entitlement and Why Do I Need it to Build?

What is An Entitlement?

The definition of entitlement with regard to land development is the legal method of obtaining approvals for the right to develop property for a particular use. The entitlement process is complicated, time consuming and can be costly, but know what you can and can't do with a piece of property is vital to determining the real estate feasibility of your project. Some examples of entitlements are as follows:

Entitlement Examples:

1. Zoning and zoning variances for building heights, number of parking spaces, setbacks. Your land use attorneys and zoning experts come into play here. My advice is to heavily rely on their expertise and follow their directions to avoid unnecessary delays in your approval process.

2. Rezoning. Depending on the current use allowed for the property, you might need to have the site rezoned which is a complicated process and sometimes cannot be done.

3 Use Permits. You may need to obtain conditional use permits and this goes hand in hand with zoning and zoning variances.

4. Road approvals. Do you need to put in existing roads? Who maintains the roads? Are there shared roads via easements? These are all questions that you need to have the answers to and be prepared to comply with in the regulatory process.

5 Utility approvals. Are utilities available to the site? Do you need to donate land to the city in exchange for utility entitlements? Again, you will need to comply with the municipality regulations and standards.

6. Landscaping approvals. The city planning and development agencies must also approve your design and landscaping. Your architect and engineers will be most helpful in this area.

Hire an Experienced Development Team:

The best advise is to hire an experienced development team of architects, developers, lawyers, project consultants, civil, soil, landscape and structural engineers and consultants at the onset to help you analyze, review, interpret and advise you regarding design studies, applicable zoning and code requirements, and maximum development potential of the property. Without an experienced team, it is extremely difficult and a lot of time will be wasted in trying to complete the regulatory process because the very nature of the regulatory process is so complicated.

Here is how the process works. First, remember to keep in mind that the process is very slow and frustrating and can take approximately 3 to 12 months or sometimes years depending on how complicated the project is. Part of the reason is that each city planner has different interpretations of their local rules. Today, approvals involve jurisdictions overlapping such as city, county and state and these jurisdictions do not communicate with each other. It is extremely crucial that you establish good working relationships with these planners to obtain your approvals. Again, this is why you need to work with a development team that has already built these relationships with local staff of the local jurisdiction where your property will be developed. These relationships will streamline and help to expedite your approval process. Your experienced team of experts will be able to negotiate issues for you and eliminate additional requests by the local jurisdiction to avoid further delays in obtaining your approvals.

Regulatory Process:

Majority of development projects must go through certain aspects of the entitlement process and some projects will be required to go through several public hearing processes for approval depending on each jurisdiction's rules. To begin, commercial development of land requires a review and approval from the local Development Review Board or Planning Department Review Division. Each municipality has a different name but the functions are similar.

The process starts with obtaining site approval from the local Planning and Development Department. By contacting the local Planning and Development Department Review Division, your expert team will then put together a land use pre-application which complies with the codes of that particular jurisdiction. By complying with the codes, this will eliminate additional requests by the jurisdiction, further review and extension and unnecessary delays of the approval process.
Next a meeting date will be set. You and/or your representatives will meet with the Planning Department to discuss the proposed project and review process. The process includes approval of your site plan, elevations, colors, landscaping, vicinity map, etc. Environmental information will need to be submitted also. There is usually a fee that accompanies the application. The fees vary from jurisdiction to jurisdiction.
If for some reason your site plan is denied, you can appeal to the City Council. The appeal process varies from each jurisdiction.
Once you obtain site approval, then you will need design approval, master use permits. The design approval process is where your architect will design the building shell, core layout, exterior appearance, building height, site layout, landscaping concepts, traffic impact, site access and utility layouts and submit them for approval.
Neighborhood hearings are generally required for all general plan conditional use permits. You may be required to send out written notice or post information on the site. Normally the City will send notices to the neighbors also. Signs should be placed on the property, and an open house meeting is generally held. Your development team will be instrumental in advising and assisting you so that you have a higher probability of achieving success in obtaining neighborhood approval. Be prepared, even if you comply with the regulatory process codes and regulations, there is always the possibility that the neighborhood may have their own agenda and that the hearings and decisions may not be favorable to your project going forward. This is where your attorneys and the rest of your development team's expertise and participation are crucial.

If wetlands are located on the property you will need special documentation that states whether the Wetlands Act applies or not. If it does, either it will result in significant or insignificant impact as granted by evidence of a permit. Sometimes it is best to set aside or donate the wetlands portion of the property and avoid development issues. Your development team will be able to advise you on the best course of action once they have assessed all the information and reviewed the reports.

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Which Uranium Development Companies Will Be The First To Commence Operations?

An increasingly popular method of uranium mining has emerged. It is called in situ leach mining (ISL), or solution mining, and about 16 percent of the world's uranium production is mined this way. By injecting carbonated water (sodium bicarbonate is common, although hydrogen peroxide has been used) into a uranium orebody, mining can be done with minimal impact to the environment. They key to a safer, more environmentally friendly uranium mining is keeping the radon gas away from humans. Underground, and even open pit, mining had been hazardous until miners realized the radon gas had to be ventilated out of the mine. ISL mining contains the entire uranium operation, and when all the necessary precautions are followed, eliminates the hazards found in previous uranium mining.

ISL mining was first used in Wyoming, pioneered by Don Snow in 1957, a geologist at the Lucky Mc mine in Wyoming. ISL mining began as a version of heap leach mining, borrowed from gold miners who were eager to mine sub-economic grades of gold more profitably. The same principle applied to uranium mining, and its use was exported to Australia, Slovakia and Kazakhstan, where the geological formations in those countries also make solution mining possible. The sandstones of Wyoming are porous, and can hold economic grades of uranium. Under such geological conditions, ISL mining thrives and is a useful method to provide uranium, which is the fuel source for nuclear reactors. ISL mining costs can drop below $20/pound. Because spot uranium prices have soared to $39.50/pound, the profit margin at the current level is attractive.

Three uranium development companies talked about their initial ISL operations which they hope to commence in the Powder River Basin area: Strathmore Minerals, Energy Metals Corporation, and Uranerz Energy. Each hope to rapidly get an ISL operation into production, possibly within the next 36 to 48 months, if spot uranium prices remain at these levels or go higher. There is tremendous risk between a company's plans to develop any mining operation and the actual establishment of that mine. Because ISL mining is not actually considered "mining," by the die-hard miners, some environmentalsts have embraced it. ISL mining is not conventional mining. Capital costs, which can ran over $100 million (often $200 million), to establish a mine and mill complex, pale when compared to an ISL operation, which can be bootstrapped for as little as $10 million. Realistically, a better operation would cost between $30 and $50 million to establish. Let's look at their properties.

Strathmore Minerals

It appears the first uranium development is likely to be in the Pine Tree-Reno Creek area. Composed of multiple ore bodies (as defined through historical drilling), the Pine Tree-Reno Creek project is located in Wyoming's Campbell County. The Reno Creek-Pine Hills properties are about 20 miles southeast of the formerly producing Christiansen Ranch and about 30 miles north of Cameco's Smith Ranch. The project is comprised of three potentially uranium producing areas located closely to one another.

Strathmore's senior geologist Terrence Osier explained, "The area has been heavily drilled. There are tens of miles of roll fronts under the state lease lands and federal claims." Osier explained there were thousands of exploration drill holes in the 1970s by various exploration companies, including industry giant Kerr McGee, Pathfinder (once owned by General Electric), affiliates of the Tennessee Valley Authority (TVA), and Rocky Mountain Energy. Not exactly small companies, but ones who spent millions of dollars defining the ore bodies.

The two main ore bodies at Reno Creek are said to have an historic resource of about 5 million pounds with an average grade of 0.056 percent U3O8. The depth of the first zone is 230 to 250 feet; the second zone reaches down 318 to 360 feet. Due west and nearly adjacent to the Reno Creek property is the state lease Section 36, which the historic ore body is reportedly about 350 deep. The Tennessee Valley Authority (TVA) affiliates apparently drilled it sufficiently to define an ore body, which may hold 1.3 million pounds grading 0.05 percent. Nearby are the federal Pine Tree claims, where Pathfinder had drilled several hundred holes in the 1970's. According to the research files of Rocky Mountain Energy, there may be 3.4 million pounds with an average grade of 0.07 percent.

Ozier stressed why the Reno Creek area would be excellent for an ISL operation, "A satellite operation with tolling to the present facilities at either the Christiansen Ranch (Cogema) or the Highland-Smith Ranch (Cameco) or the company could make its own processing facility and eventually build satellite operations that feed it." Osier added, "The Powder River Basin is active in methane exploration and production, and coal mining. This means excellent, nearby drilling and operational personnel and equipment."

Uranerz Energy Corp

One of the biggest strengths a uranium development company can have is its lead geological expert. The more experience he has, the more favorably institutional investors will accept the project. Uranerz Energy Chief Executive Glen Catchpole has got the mandatory credentials. A licensed civil engineer, Catchpole was formerly the Uranium ISL Manager Wyoming's Department of Environmental Quality, having helped write some of the environmental regulations. He has overseen the operations of two large Canadian uranium mines, and was the Corporate Manager for one ISL uranium mine in the United States, Crow Butte (now owned by Cameco). In 1996, he was appointed General Manager and Managing Director of the Inkai mining project in Kazakhstan, spending six years taking the project through feasibility, government licensing, environmental permitting, design, construction and the first phase of start up operations (1996 - 2002).

While extremely knowledgeable, Mr. Catchpole did not reveal his immediate plans of Uranerz Energy. It is unknown whether Uranerz has begun the permitting process on its Powder River Basin ISL-amenable properties. He explained, "We plan to develop an ISL operation in the Powder River Basin area." While he hinted at possible pounds and the annual production level, Catchpole would not further discuss where he planned to establish the initial ISL operation. Catchpole admitted, "We are still putting our package together." During Wyoming's frenzied uranium staking activity, Catchpole wisely would not want to divulge where his company plans to solution mine. As is the nature of the game, a competitor might interfere with his negotiations or stall his development plans. (This was oft-remarked by those interviewed.)

Energy Metals Corporation

During a telephone interview with William Sheriff, Director of Corporate Development for Energy Metals and a successful geologist and prospector in his own right, he talked about the company's flagship Wyoming properties: Moore Ranch, Peterson and Nine Mile Lake properties. Sheriff explained, "We hope to be in production within the next 36 to 48 months. Our five year goal is to produce five to seven million pounds annually through two to three central plants." He said that one is planned in Texas and the other one or two would be located in Wyoming. Those are pretty ambitious plans, entirely dependent upon the sustained price of uranium at these levels.

The Moore Ranch has an historic resource of 5.2 million pounds of U3O8, as delineated by Conoco which drilled the property in the 1970's. The claims cover more than 1800 acres along Highway 387 in Campbell County 23 miles southwest of Wright, Wyoming. Sheriff believes the roll front uranium deposit, grading 0.07 percent, could be mined at a depth of between 200 and 600 feet.

To the south is the Peterson property with an average grade of 0.076 percent, but which hosts a smaller historic resource, 2.5 million pounds. This property, covering more than 3,000 acres, is approximately 12 miles south of the Smith-Highland Ranch in the southern Powder River Basin. It is comprised of Wyoming state leases, federal mining Claims, and leases on private-fee interests. Sheriff thinks the uranium deposits can be found at a depth of 200 to 300 feet.

Finally, for the initial operations, there is the Nine Mile Lake property, which may hold 9 million pounds, grading 0.055 percent, and with an average thickness of 25 feet. Sheriff said the uranium deposit may be found at between 100 and 400 feet deep. This property was drilled and developed by Rocky Mountain Energy, with more than 200 drill holes delineating the roll front uranium occurrences. Sheriff said the deposit extends over a strike length of more than 6,000 meters and may be up to 900 meters wide, at its widest point. It covers more than four square miles. Between November 1976 and November 1980 a test ISL plant operated on the property with mixed results. A total of four well field patterns underwent testing and development. Based on the results from the well field testing, plans were made to build and permit a commercial ISL plant before the uranium price began its twenty-year bear market. And if another bear market arrives, as is often the case with commodity price cycles, then this operation might never see the light of day.

All three uranium development companies seem to hold strong promise during the current uranium bull market. As long as the spot uranium price continues to rise or maintain its current level, it would not surprise us if all three could establish an ISL operation in Wyoming's Powder River Basin. All three are optimistic about moving forward. The general plan is to get a uranium mining operation established, and then lock in a long-term uranium supply contract with a utility, who will need to fuel its nuclear reactors. As long as uranium prices stay at these levels, or rise, then all three uranium development companies should be able to create excitement for their stories. However, should there be a market downturn, and the price of uranium stalls, staggers or declines, then it will be a matter of who has moved forward the furthest and how much cash they have in the bank to keep themselves in business. Very risky business, but with a bright side. As long as the commodity price cycles favors them.

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