The entitlement process doesn’t involve any construction, but it does involve identifying the sources of those utilities and the costs to bring them to the sites.
In the case of Del Sur, all those studies would have to have been completed well in advance of turning the first shovel of dirt. They had to amend the General Plan, the zoning, they had to resolve all the hillside and open space easements, the traffic studies, set aside land or contribute to existing schools, fire stations and other infrastructure they ould impact. The list isn’t endless, but it’s pretty long.
As for how they finance, the answer is: Yes, developers have to borrow a lot of money in order to complete these various processes. The terms of those loans are not cheap either. We’re not talking about 6% interest rates and no closing costs here. Development and construction loans are very expensive. It usually works in the form of several loans in succession over a period of years, each rolling over into another loan as a particular phase of the project is completed. The payoff of all loans usually doesn’t occur until the developer is in their final phases. All financing gets paid off before any profits are realized.
When a developer walks away from a purchase option, they not only forfeit their deposits, they also forfeit all the time and money they’ve already put ito those projects. In some cases, those “other” costs may well equal the amount of the deposit money they’re losing.