Commercial real estate has given rise to a number of insipid sayings. The most notorious, of course, is "location, location, location," which are the "three most important things in real estate." Another familiar adage is one about projects not succeeding without sufficient parking. Less often heard, if not less important, would be the admonition, "Don't be the first to build something in places where the rules are unclear." In particular, consider your options carefully before volunteering to be the trial balloon for building a major project on environmentally sensitive land, especially when the government has not decided exactly how it wants to mitigate such projects. The experiences of two developers — one a large-scale master plan developer and the other a smaller, apartment developer — are snapshots of the uneasy relationship between home building and environmental policy in North San Diego County at a time when newly minted environmental laws are racing to keep pace with rapid home building. In some instances, regulators do not have mitigation standards or other conservation practices in place, and must negotiate each of these environmental issues separately with developers. Consider the case of Morrow Development, a Carlsbad-based home builder that spent nearly 20 years negotiating a development agreement with the city. The site of Villages at La Costa offers gorgeous views of rolling landscape and dramatic valleys in the inland portion of the San Diego County city. On this 1,866-acre site, the developer proposed building more than 3,000 homes, mostly single-family homes, in four-master-planned "villages." The area is also habitat for the elusive gnatcatcher and about 60 other species. In 1990, the U.S. Fish and Wildlife Service added a another layer of complexity to the negotiations by declaring the area part of the 800,000 acres of protected gnatcatcher habitat in Southern California. In 1995, the company, the city, and Fish and Wildlife agreed on a habitat conservation plan for Villages at La Costa that set aside 835 acres as permanent habitat. The developer also acquired 200 acres of adjoining land, which was combined with additional mitigation lands from other developers to form a 1,500-acre reserve. Shortly after, Morrow donated the land to the Batiquitos Lagoon Foundation, an environmental group that had fought the project in earlier years. Not until October 2001, however, did the project win the approval of the Carlsbad City Council. "That deal has been the hallmark" in local land-use negotiations, said Jack Henthorn, former Carlsbad housing and redevelopment director who is now a private consultant. The deal was all the more impressive, he added, because "the regulatory environment changed as the approval process was going forward." A smaller project is the 20-acre Summit at Carlsbad, where Pacific Properties and Development of Las Vegas plans to build 146 apartment units in 11 buildings. Unlike the Villages at La Costa, the Summit property was not gnatcatcher habitat but was former farmland. The acreage, however, lay between two designated habitats, and the city wanted to create a corridor to bridge the two. "When this project was originally proposed," said Henthorn, who consulted on the project," the Carlsbad Habitat Management Plan was still evolving, and there were no clear regulations as to deal with this issue." Pacific Properties acquired the site from another developer in 2000. "They just got tired and ran out of money," said Jim Stockhausen, executive vice president for Pacific Properties. Even though the site contained no gnatcatcher habitat, Henthorn said, "it was a critical link in the habitat management plan for the northern San Diego County area." Environmental regulators had limited jurisdiction over the site, because the site was not officially habitat. Yet the homebuilder continued to negotiate with the city's environmental staff, as well as with Fish and Wildlife, the California Department of Fish and Game, and the Multiple Habitat Conservation Program, an inter-jurisdictional entity that monitors habitat. Furthermore, the presence of degraded wetlands, which required mitigation, brought the U.S. Army Corp of Engineers into negotiations. The developer eventually agreed to devote 60% of the site to open space. "Through that process, we were able to identify what we called the ‘habitat line,' within which development would take place while the area outside that line would then be available to meet the agency's required linkage," Henthorn said. By doing so, he added, "we have created an opportunity for the gnatcatchers to facilitate their crossing of a north-south corridor between Carlsbad and Oceanside bifurcated by Highway 78." Although the area was zoned for single-family housing, the developer decided to build a multi-family complex instead, in exchange for a modest 2% increase in density. In a quid pro quo, the developer set aside 20% of the project for low- and moderate-income renters, rather than the standard 15% required by the city. The project exists within an eight-acre footprint, with units clustered in three-story, walk-up buildings, leaving the rest of the property as the gnatcatcher highway. After five years of negotiation, the developer had received all of the state and federal agency endorsements, and the city approved the project earlier this year. The interesting part of the process," Henthorn said, "is that it shows that when agencies and builders can sit down and clearly communicate what their respective needs are — even in this situation, where there were no regulatory restrictions — we were able to meet the needs of the agencies to create this linkage." What made the process work, he added, was "the builder's willingness to redesign the project and to come up with a design that met with both the builder's needs and agencies' requirements." Compared with the nearly 20 years that Morrow spent getting permits for La Costa, five years may not seem so bad. "I believe we could have done it half the time," Pacific Properties' Stockhausen said a little ruefully. On the other hand, he added, "I'm told that five years is about standard for Carlsbad."