A developer in a growth market south of Nashville closed on a 40-acre site in 2022. The site had good frontage, reasonable topography, and a zoning classification that fit the planned multi-family program. The site also had a sewer capacity problem that nobody caught until after the wire cleared.
The municipal sewer main stopped 2,400 feet short of the property. The city's capacity allocation plan did not include an extension in the planning horizon. The developer's options were to pay for the extension, roughly $1.8 million, or negotiate a reduced density that the existing capacity could absorb.
A $1.8 million surprise can be avoided in the first 48 hours of a deal. The check list is short. The phone calls are free.
Five utilities, five checks
Water. The check: is a water main within a reasonable distance of the property, what size is it, and can the municipal system deliver the required fire flow.
The call: the public works or water department. The request: a service availability letter. Most municipal utility providers will issue one on request, sometimes with a small fee, usually in two to four weeks.
What to watch: pressure and fire flow. A small-diameter main may be adequate for domestic service but inadequate for fire suppression on a multi-story or commercial building. Hydrant flow tests, performed by the local fire department, are the authoritative measurement.
Sewer. The check: is a public sewer main within a reasonable distance, does the collection system have capacity, and is there a moratorium.
The call: the public works or wastewater department. The request: a capacity allocation or sewer availability letter. Some cities issue these quickly. Some have a queue.
What to watch: capacity moratoria. Growing suburbs often have periods where the wastewater treatment plant is at or near capacity, and new allocations are paused. Any moratorium in place or reasonably anticipated is a dealbreaker unless the price reflects it.
Power. The check: what voltage service is available, what is the estimated service load, and will the utility require any capital contribution.
The call: the electric utility's new service coordinator. The request: a preliminary service letter with any capital contribution estimate.
What to watch: three-phase availability, transformer capacity, and line extension costs. A commercial project that needs three-phase 480V service from a single-phase residential line will eat significant capital contribution. Rural electric cooperatives are generally more expensive to extend than investor-owned utilities because the cooperative is less willing to subsidize the extension.
Natural gas. The check: is a gas main present and what is the capacity.
The call: the gas utility's new service group. The request: an availability confirmation.
What to watch: older suburban neighborhoods sometimes have gas systems that were designed for residential loads and cannot support a large commercial customer without reinforcement. Gas utility extensions are sometimes free, sometimes expensive. Ask specifically.
Fiber. The check: is commercial-grade fiber available at the property boundary.
The call: the incumbent provider, the competitive provider, and the municipal broadband authority if one exists.
What to watch: what looks like fiber may be last-mile copper. A site that will need enterprise-grade connectivity for tenants should confirm actual fiber availability, not just "we serve that area."
What the public GIS shows
Most municipal GIS portals show the location of utility lines. Some show the diameter. Few show the capacity or the current load. The GIS is a starting point, not an answer.
A 12-inch water main drawn on the GIS may have ample pressure or no pressure, depending on the elevation profile and the pumping infrastructure upstream. The GIS does not know that. The utility engineer does.
This is why service availability letters matter. The letter commits the utility to the statements in it. If the letter says "capacity is available for up to 180 EDUs," the utility has a record of that commitment. It is the documentation a lender will want to see.
Timelines, roughly
Water and sewer availability letters: two to six weeks.
Electric service letters: two to eight weeks, longer if a capital contribution study is needed.
Gas availability: one to four weeks.
Fiber: days to weeks, depending on the provider.
An acquisition that closes in under thirty days without these letters is closing on faith. Sometimes that is fine. Sometimes it is $1.8 million wrong.
The specific gotchas
Sewer capacity. The most common and most expensive surprise. Always confirm in writing.
Fire flow. A growing share of jurisdictions are enforcing fire flow requirements on redevelopment as well as new development. A site with insufficient fire flow may need a new main before the existing building can expand.
Utility stubs. On raw land subdivisions, verify that the stubs that appear on the plat are actually installed. Platted does not mean built.
Easements for extensions. If a utility must cross an adjacent parcel to reach the subject, the easement must exist. If it does not, the extension cannot happen without a new easement, which is a negotiation, not a check.
Septic and well. For rural sites without public utilities, the checks are different. Soils percolation tests drive septic feasibility. Well yield tests drive water feasibility. Both can be negotiated as closing conditions.
The take-home
A developer who closes without service availability letters in hand is betting that the utility systems match the GIS representation. That bet is won most of the time and catastrophic the rest of the time. The cost of the checks is small. The cost of skipping them can eat a year's earnings.
Write the checks into the LOI as closing conditions. The letters will arrive in time, or the seller will extend the closing, or the deal was never going to work on the original terms. All three outcomes are better than closing blind.