Real Estate Investing School Podcast - Episode 138:

REAL DEAL: Leveraging Zoning for Maximum Value with Bowman Loo (March 7, 2024)

Episode Overview

This episode dives into a high-level, real-world real estate development deal, emphasizing the immense, often hidden value that zoning strategy and city relationships can unlock. Host Jordan Fossett brings on land developer and consultant Bowman Loo to dissect a massive Southern Utah project, illuminating how public infrastructure financing (PID) can make projects feasible and how understanding and leveraging zoning can give investors a considerable edge—even outside massive developments. Practical advice is peppered throughout, making this a must-listen for investors who want to advance their toolbox and uncover overlooked land value.

Key Discussion Points & Insights

1. Deal Snapshot: Big Picture

[01:52]

• The featured deal: The Tocquerville bypass road, a ~7-mile development in Hurricane Valley, Southern Utah.
• Developer faced multimillion-dollar infrastructure requirements (roads, utilities) from the city.
• Solution: Leveraged Public Infrastructure District (PID) financing—a public bond process utilizing projected property taxes to fund infrastructure, eliminating the need for large up-front capital from the developer.
• Scale: A master-planned community on ~2,000 acres, combining hotels, shopping, and various housing densities.
• Bowman Loo quote [02:35]:
  “The developer had to do, I think he paid for the feasibility study, which was maybe 10, 20 grand, as opposed to paying multi million dollars worth to go towards roads and infrastructure.”

2. Acquisition Tactics: Assembling Land

[05:56]

• The developer acquired the land over 5–8 years, accumulating ~70 parcels via both joint ventures and direct purchases.
• Started buying at ~$20k/acre, with values rising as infrastructure projects progressed.
• The long-term vision is key—actual build-out may take decades, and strategic parcel assembly greatly increases overall value.
• Bowman Loo [06:37]:
  “It’s just really, really thinking very, very big, for sure.”

3. Universal Principles: Parallels to Smaller Deals

[07:07]

• The fundamentals (creative finding, funding, and “forcing” deals) apply, whether working on a 2,000-acre project or a single parcel flip.
• Sweating the details, leveraging connections, and seeking creative financing or value adds are universal tactics.
• Land values can multiply when assembling adjacent parcels or thinking ahead to future zoning/upzoning (“forced appreciation”).
• Jordan Fossett [08:35]:
  “...with each one that I get next door, it becomes more and more valuable and I’m willing to pay way more than anybody else for it.”

4. PID Financing Demystified

[09:21, 18:26]

• PID is a bond-based financing mechanism: A feasibility study predicts tax revenue from future development; bonds are issued to fund infrastructure; homeowners pay back via property tax surcharges over 15–30 years.
• Limits: Cities often restrict the number of concurrent PIDs; ideal for bigger projects but subject to municipal preferences.
• Developers must coordinate with financial advisors and city officials from concept stage.
• Unique opportunity: Rural Utah PIDs can come with especially favorable terms.
• Bowman Loo [19:21]:
  “A portion of their property taxes goes to paying off the bond every month...and basically the way they pull that financing is off of each parcel owner or homeowner’s property taxes.”

5. The Power of Municipal Due Diligence

[09:21, 11:29]

• Essential for all investors: Learn your city/county’s general plan (5–8 year forecast for growth), zoning ordinances, and future land use plans.
• Adjacent parcels with higher zoning increase your odds for upzoning.
• Even basic questions to your agent or city planner can uncover huge value.
• Bowman Loo [11:29]:
  “Get a decent understanding of the general plan, understand the proposed land use...either it’s a policy or it can be actually mapped out GFI map or just simply the zoning...”
• Jordan Fossett [13:03]:
  “...this concept is one of, like, the hidden gems that nobody talks about of strategic real estate investing.”

6. Building Local Government Relationships

[14:16]

• Proactive networking: Take mayors, zoning managers, or council members to lunch; ask what the city’s priorities and pain points are.
• Information is surprisingly accessible—sometimes even the mayor’s direct phone number.
• City council meetings offer public insight and surface off-market opportunities.
• Bowman Loo [14:16]:
  “...understanding which ones are pro-growth and taking them to lunch...just being in the know...you can make a killing.”
• Jordan Fossett [15:36]:
  “I called into the city office and they gave me the mayor’s phone number...it’s so, so foreign...but you’re literally talking to the mayor.”

7. “Force the Deal” Strategies

[17:06]

• Many landowners will joint venture if you know how to develop and they want to keep partial ownership.
• Build relationships with long-time landowners unused to development—they’ll often split profits.
• These strategies work particularly well in small towns and transitional areas.

8. Negotiating with Cities

[22:49, 23:55]

• Regulations (like infrastructure requirements) are sometimes negotiable; bond or delayed improvements can be offered in place of immediate full buildouts.
• Jordan Fossett [22:49]:
  “That’s another piece that people don’t understand is you can to a certain degree, like, negotiate with the cities and sometimes it’s in form of a bond.”

9. Using the City’s “Playbook”

[24:32]

• Thorough knowledge of a city’s codes, ordinances, and plans gives you leverage—city officials must follow their own rules.
• Framing your project as beneficial and aligned with the city mission can make approval almost automatic.
• Bowman Loo [24:32]:
  “If you take that approach and...make the councilmen and mayors somewhat like you...you’re playing with their playbook, truthfully.”

10. Working With Neighbors and Easing City Approvals

[26:57]

• Preempt community pushback: Proactively meet or door-knock neighbors, address concerns in advance.
• Projects smooth through city council more easily if local residents feel heard.
• Bowman Loo [27:23]:
  “...People want to be heard at the end of the day. Right. Sales 101, being able to communicate.”

11. Takeaways for All Investors

[29:12]

• Always check zoning and city plans for the property you’re buying, even if it’s a small deal.
• Zoning can change—with big impacts (ADUs, increased density, etc.).
• Bowman Loo [29:12]:
  “I would just say literally any deal you even think about doing, at least check the zoning...just making sure to take that extra time, you know, get connected with the cities.”

Notable Quotes & Memorable Moments

• “If you can learn to play by the rules and, like you said, the playbook, I think that’s genius, dude.” – Jordan Fossett [25:40]
• “You’d be surprised...it’s just once again, it’s another tool to have in your tool belt and just being aware.” – Jordan Fossett [03:52]
• “A huge golden nugget...it’s simply understanding the people in your city or county...understanding which ones are pro growth and taking them to lunch.” – Bowman Loo [14:16]
• “People want to be heard at the end of the day. Right? Sales 101.” – Bowman Loo [27:23]

Important Timestamps

• [01:52] Bowman Loo outlines the Tocquerville bypass project and PID strategy
• [05:56] How the developer assembled 70 parcels over 5–8 years
• [09:21] The application of municipal due diligence and PID financing 101
• [11:29] Step-by-step advice for basic zoning due diligence
• [13:03] Hidden real estate investing gems: leveraging zoning strategy
• [14:16] Relationship building with local government
• [18:26] In-depth explanation of PID bond financing structure
• [22:49] Negotiating with cities on bond/infrastructure requirements
• [24:32] Using the city’s “playbook” for frictionless approvals
• [26:57] Proactive neighborhood engagement eases city approvals
• [29:12] Closing advice: Always check zoning, every deal

Actionable Takeaways & Advice

• Do your municipal research: Always check city general plans, zoning, and future land use—even if buying a small property.
• Meet city decision-makers: Proactively network; attend council meetings; find out who’s pro-growth.
• Explore creative financing: PID bonds and similar structures let you lever up on projects with minimal upfront cash.
• Leverage relationships: Engage landowners for profit splits, approach neighbors early, and keep city officials looped in.
• Play by the city’s rules: Thorough knowledge of codes and plans equips you to navigate approvals and even upzone for huge forced appreciation.
• Stay adaptable: Even if you never develop big acreage, these principles apply universally in real estate investing.

Connect with Bowman Loo

• LinkedIn: Bowman Loo
• Instagram: @ikaika_realestate

This summary covers the key insights, memorable moments, and actionable advice from Episode 138 of the Real Estate Investing School Podcast, presenting a practical toolkit for creative and strategic real estate investing.