Dirty Work: Land planners leverage grading plans into more profitable proformas

By Chris Wood

“I’ve been involved in land grading for 25 years, and I’ll tell you one thing,” says Jim Berger, who re-engineers land plans as senior construction manager for Seattle-based Port Blakely communities, “The person who coined the phrase ‘dirt cheap’ obviously never moved any.”

Many within the development community say Berger is lucky to even have grading problems. With residential construction at its lowest point of activity in 17 years and fuel prices making the use of heavy equipment cost-prohibitive, markets across the country are witnessing plenty of what grading insiders call “standing iron”—hulking scrapers and bulldozers parked dormant on land tracts, awaiting their next job. “The only dirt moving going on right now is in public works projects,” says Barry Gross, president of Irvine, Calif.-based real estate and development consultancy Strategic Land Advisors. “Subdivision grading contractors especially are sitting around doing nothing. Builders have plenty of lots that are graded or built and awaiting sale already. Why pay the money [to start construction] and carry the loan?”

For those who want or need to move dirt, new strategies are needed to make grading financially feasible. While equipment advancements such as electro-hydraulics, GPS and laser grade controls, and even bio-fuel powered engines are boosting grader accuracy and efficiency, the cost to power up such machines still constitutes a major portion of development budgets. In addition to scrapers, haulage vehicles also feel the pain at the pump: Standard dirt removal is running at all-time highs ranging between $20 and $25 per cubic yard. With some master-planned communities looking at a mass overlot grade of 50 million cubic feet, it’s easy to see how the cost of moving and dumping your dirt can quickly add up.

STRESS REDUCTION
To that end, grading engineers and land planners continue to rely on the first commandment of grading: Move your dirt once or not at all. In particular, contour grading—which emphasizes developing along existing terrain characteristics, as opposed to traditional cut and fill earth-working—is gaining popularity for reducing stress on the environment and grading budgets alike. On 5,400 acres in middle Tennessee, Philadelphia-based Mantria Corp. is trying to build the country’s first carbon-negative, master-planned community, and company CEO Troy Wragg says sustainability naturally begins with the company’s land management and grading plan. “We’re obviously implementing grading plan. “We’re obviously implementing a lot of sustainable development techniques; one of them is earth grading,” Wragg says. “We’re using bio-diesel bulldozers, but equally important is that we are following natural topography lines via contour grading. Natural contouring results in a better aesthetic look, it’s less expensive because you don’t have to disturb more ground than necessary and you are not creating severe grades that will require more fuel for vehicles both during and after construction.”

Whether employing contour techniques or traditional mass and rough grading, progressive developers and land consultants are also beginning to embrace lighter single-family densities in favor of boosting individual lot values. Though contrary to the prevailing development trends of the last decade, re-engineered land plans with smaller unit counts incorporate less grading and less infrastructure. Proponents say the end product is also more salable, commands a higher premium, and delivers an increased return on investment.

For example, Junction City, Kan.- based American Dream Development president Jeff Burton points to a current project in Fort Sill, Okla., where his company re-engineered an $8 million land plan originally calling for 423 lots on 132 acres with 54 premium open lots and a projected return of $2 million. “In development today, you’ve got to prove that you can be competitive in the space—and you do that by economizing your land plan,” Burton says of the parcel redesign that reduced the unit count to 343 but now includes 120 premium lots and 55 duplex townhouses. Ultimately, the developer sacrificed $1 million in sales for a projected cost savings of $4 million. “That’s a perfect example of the new thinking. We reduced our overlot grading cubic yard count from 220,000 to 80,000 cubic yards of dirt moving and our lineal feet of infrastructure from 17,420 to 6,600. That’s how you cut costs,” he says.

DOWN AND DIRTY
Still, a certain amount of earth-moving is necessary at all developments, which is where grading contractors are getting down and dirty with creative grading management tactics. Outside of Houston, where the Texas prairie stretches far and fl at, you’d think grading would be a nonissue.
Instead, dirt management is becoming a key strategy for developers looking to topo-build stand-out natural features.

“We’re not doing traditional ditch cuts and berming anymore. We’re talking about creating big, natural land forms,” says Tom Afflerbach, a principal at Austin, Texas-based landscape architecture firm TBG Partners, which advises top residential builders such as Centex Homes, D.R. Horton, and KB Homes. “Instead of cutting a straight ditch, we’ll create meandering creeks and larger retention ponds. We take that extra dirt and lift the adjacent neighborhood into hills to create water views deeper into the neighborhood.”

In Seattle, Berger says more developers are becoming land traders in a literal sense—selling and trading truckloads of dirt to each other at a discount to standard haulage and dump fees. “If developers are in a position where they have a lot of rocky soils and can screen the rock out and use it, it becomes an advantage; you can also sell that aggregate,” he says.

Regardless of the grading plan, Berger and others emphasize getting the entire planning board on the same page to think more creatively about the land plan and the associated costs of moving dirt. “That’ll be the challenge as construction ramps up again, Berger says. “But that’s your challenge as a developer and construction manager in the first place—to pull everyone together to make sure you use the most integrated land use planning available to you.”

[ the points ]
Making the Grade
Four grading strategies to take your land plan to the head of the class.

■ Keep your distance. The most cost-effective grading plan is one that never occurs. If you must move dirt, make sure to only move it once.
■ Stay between the lines. Contour grading follows the natural topography of the land. The method
often reduces overlot grading volumes while promoting environmental sustainability.
■ Think creatively. Land plans can be reshaped to utilize different product and densities that reduce grading costs and increase ROI.
■ Use the buddy system. Other developers might need your dirt, and some might even pay for it. Graded dirt and aggregate can often be used for on-site infrastructure such as roads and stormwater bioswales.