Knowing Municipal Regulations Prevents Wasted Development Deals, Here's Why

Written by:

Rudi Davis

Date:

15 Jan 2026

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Larry Gotcher, owner and principal agent at Resource Realty Group, argues that understanding what cannot be done with a development property is often more important than knowing what can. In his experience, state and municipal regulations frequently impose non-negotiable requirements that can halt even the most promising projects before they begin.

Development deals are among the most complex transactions in commercial real estate, not because of financing or shifting market demand, but due to the maze of regulations and government oversight involved. Gotcher says what distinguishes successful developers is their ability to spot regulatory barriers before investing time and money into a deal that will never close.

“It’s our job to know those types of things so that we don’t waste everybody’s time,” Gotcher says, referencing the regulatory constraints that can derail development projects. “If we went under contract with somebody wanting to build a truck stop, for example, we’d be under contract for a year, and it wouldn’t go through.”

The Three-Year Development Timeline

In markets like Ann Arbor, the development process typically takes about three years from the first city meeting to breaking ground. “You’re probably three years or so from the time you start dealing with the city to the time you break ground, and there’s a backlog of projects in downtown Ann Arbor,” Gotcher explains.

This prolonged timeline creates risk for developers, especially if regulatory barriers are discovered late in the process. The cost of uncovering a fatal flaw after going under contract can mean months of wasted effort, legal fees, and lost opportunities. To avoid this, Gotcher’s firm emphasizes regulatory due diligence at the outset to prevent deal waste before it begins.

State Agencies: No Room for Exceptions

A common mistake among developers is underestimating the rigidity of certain regulatory agencies. Gotcher points to the Michigan Department of Transportation (MDOT) as a prime example. “MDOT is extremely non-negotiable on these kinds of items, and they don’t give exceptions,” he says, referring to the department’s strict rules on road access and ingress/egress for development sites.

Gotcher recalls a specific case involving a property on Interstate 94. Multiple buyers were interested in building a truck stop, but MDOT regulations prohibited the two ingress/egress points required for semi-trucks to enter and exit the property safely. “They couldn’t put in a truck stop because you couldn’t have two ingress,” Gotcher says. “You can’t have semis going in and turning around in the parking lot and coming out the same way. They’ve got to be able to drive through. Well, MDOT wouldn’t allow that.”

Knowing these restrictions in advance saved months of negotiation and due diligence on a deal that could never have closed. “Having this knowledge upfront eliminated wasting a lot of time with buyers like that,” Gotcher says. Without that expertise, “we’d be under contract for a year, and it wouldn’t go through.”

Conflicting Guidance from Local Governments

The regulatory environment becomes even more complicated when different agencies provide conflicting instructions. Gotcher notes that disagreements between county and city officials are common, and resolving them can be slow and frustrating. “The county will tell you one thing, and then the city tells you something completely different,” he says. “And getting those guys to cooperate sometimes is difficult.”

He describes a scenario in which the county directed a developer to run an electrical line from a specific location, only for the city to prohibit digging there. “What do you do?” Gotcher asks. Navigating these contradictions requires not just technical understanding, but also familiarity with the political dynamics and decision-making processes of local government.

Gotcher argues that this nuanced expertise is what separates effective development advisors from those who waste time and money chasing projects that cannot be built.

The Advisor’s Role in Development Feasibility

According to Gotcher, development deals are among the least likely to close and require the highest level of involvement from the advisor or agent structuring the transaction. “It’s kind of his job to understand what can be done with the property when you’re developing,” he says.

This responsibility goes beyond knowing what is theoretically possible. Advisors must be able to determine what is realistically achievable, given the specific regulatory environment. “Understanding what the city’s rules and regulations are and understanding what you can and can’t get away with, because there’s always something,” Gotcher says.

This expertise is especially crucial in markets with development backlogs, where municipalities face an overwhelming number of proposals and approval timelines are extended. In these conditions, the ability to quickly identify regulatory deal-breakers is not just helpful, but essential for project success.

Resource Realty Group’s Approach

Resource Realty Group has built its development practice around regulatory expertise, focusing on identifying obstacles before they can threaten a transaction. The firm owns seven related entities, including a development company, and Gotcher says his primary role is to “assemble transactions” by understanding what can and cannot be done with properties before buyers commit significant resources.

As development activity continues in tightly regulated markets such as Ann Arbor, the value of advisors who can navigate municipal requirements is increasing. Whether this expertise is spread across the industry or concentrated among a few specialists may determine which projects move forward and which end up stalled for a year before failing.

In today’s market, where regulatory complexity and long timelines are the norm, Gotcher argues that knowing what cannot be done is as important as any other skill in commercial real estate development. For buyers and developers, the difference between a successful project and a year wasted under contract often comes down to the advisor’s understanding of local rules—and the ability to say no before a deal begins.