How to make distribution centers work for everyone
Right approach can lead to a much smoother permitting process
MANY CONSUMERS prefer the convenience of making purchases online with the expectation of having deliveries land on their doorstep the next day. Far fewer people, however, want the distribution center that processes their goods to be located in their hometown. This contradiction is the crux of the challenge in siting warehouse and distribution facilities: the demand for the merchandise is enormous, yet local opposition to these facilities is often fierce.
As a land use attorney who works on the permitting of these sites, I have often been witness to a heated reaction to proposed distribution centers that no amount of discussion or reason could dislodge. Too often, the opposition is rooted in a lack of understanding about the various types of e-commerce, warehouse, and other distribution facilities, and the varying level of traffic that each may generate. Too little attention is given to the immense benefits they bring, such as enabling e-commerce, creating good local jobs, and filling municipal coffers with new tax revenue.
Demand for distribution networks has surged over the past decade, accelerated by consumer expectations, advanced robotics, COVID-19, overseas supply chain disruptions, and other factors. This has fueled competition for the relatively small number of development sites, and resulted in a focus on larger, high-bay warehouses and the vertical expansion of traditionally horizontal facilities.
To look at the e-commerce model closely is to realize that there is no way the supply chain works without an integrated network of varying types of logistics centers, each having different roles and impacts. As a result, one cannot assume that a smaller warehouse results in less traffic; it all depends on the facility’s particular function. In fact, some municipalities have taken to rezoning to reduce the size of warehouses, but by doing so, they may have unknowingly rezoned for a type of facility that may actually result in greater impacts than a larger building. When local residents push for a smaller facility, they may be unintentionally advocating for more traffic.
One certainty is that even with reports of Amazon slowing the pace of warehouse construction – following a massive buildout during the pandemic – more communities will face requests from developers for an e-commerce distribution facility, as many other businesses try to enhance their respective supply chains. As that volume of permitting escalates, so, too, will the anti-development rhetoric.
While there is no one simple approach that guarantees success, I would suggest that e-commerce companies and their development partners, as well as municipalities, keep in mind the following themes:
Realize every community is different. Just because local opposition tends to look similar does not mean communities are the same. It is important to understand the community, its past experience with warehouses, and its sensitivity to future development. The New England landscape, for example, tends to be dense, so it is almost a sure bet that a warehouse facility will have some form of effect on a community, both positive and negative. It is important to anticipate where the flashpoints are going to be and have a plan to mitigate them.
Be transparent. Buying property and permitting a facility without some level of public disclosure prior to the public hearing process will create immediate ill will with future neighbors. Even if the warehouse or distribution center is a permitted use, there is no substitute for a detailed outreach plan that is implemented very early in the process to get ahead of speculation and misinformation that could spark opposition. Developers that are forthcoming about potential impacts and mitigation plans have the best shot at permitting success. If a tax break or other incentives are going to be sought, be clear about that upfront, whenever possible. Introducing major terms down the road is a recipe for discord and accusations of “bait and switch.”
Consider a development agreement. When developers negotiate large facilities with municipalities, particularly where rezoning is involved, a development agreement represents an opportunity to partner with local officials on the project scope, community benefits, and concessions that the community will provide in return for the project. Teaming with a community can open doors to other funding opportunities that can help the developer’s bottom line and to mitigate project impacts through water, sewer, or other infrastructure. It also enables municipalities to fund long-term improvements or unmet needs, such as furniture for a new senior center. Using an agreement, even though many communities do not require them, will help to manage expectations and avoid surprises.
Like so many things in life, a developer of an e-commerce company that has the right approach and attitude can often have a relatively smooth permitting process. In fact, if done correctly and in accordance with the tenets above, local opponents might even become a band of loyal supporters.
John T. Smolak is a partner and co-founder of Smolak & Vaughan LLP. Over the past 2½ years, he has represented developers in the rezoning, permitting, or development of over 9 million square feet of warehouse, e-commerce, and distribution facilities in Massachusetts and New Hampshire.