Structuring Development Project Phases in Costa Rica

Large developments rarely happen in one step. Breaking a project into clear development project phases helps owners control risk, sequence permits, match capital to each stage, and show lenders and investors exactly what has been done and what comes next. In Costa Rica, where land, water, permits, and environmental approval all affect timing, good phasing can be the difference between a project that moves and one that stalls.

This guide outlines a practical way to structure the phases of a development project in Costa Rica. It is general information, not legal, engineering, or financial advice.

Why Phasing Matters

Well-defined development project phases also make it easier to explain the plan to authorities, contractors, and capital providers.

• It spreads risk across stages instead of committing everything at once.
• It lets approvals, design, and construction happen in the right order.
• It helps match equity and financing to specific milestones.
• It gives capital providers clear evidence of progress.

Phase 1: Land and Feasibility

Start with the land. Confirm ownership and title, liens, the survey plan, access, and the zoning that applies. Check that water and utilities can be provided for the planned use, and study the market, the budget, and the likely timeline. For major project financing, GAP looks for sponsors who already own the land before financing is discussed.

Phase 2: Design, Permits, and Approvals

Next come architectural and engineering plans, and the approvals the project needs. Costa Rica’s Organic Environmental Law requires an environmental impact assessment, approved by the National Environmental Technical Secretariat (SETENA), for activities that alter or destroy elements of the environment, and that approval must come before the work begins. Municipal construction permits and utility approvals are also part of this stage.

GAP considers a project shovel-ready when the sponsor owns the land and all of the paperwork is done, including the plans, permits, approvals, and supporting documentation. Learn more about shovel-ready funding in Costa Rica.

Phase 3: The Financing Structure

With a defined scope and approvals in place, the sponsor can present a financing plan: how much equity the owner contributes, how much outside capital is needed, and which phases it will fund. Terms, structure, and requirements depend on the project and the capital provider, and large projects require extensive, project-specific documentation and due diligence. The sponsor pays the costs of preparing the project, obtaining permits, and arranging financing.

Large projects are rarely funded all at once. Construction loans of any size may release money in stages tied to milestones, and a project of many millions will almost certainly receive funds at different stages of the work. How and when funds are released is set for each project.

Phase 4: Construction in Stages

Construction is easier to manage when it is divided into stages that can stand on their own, such as infrastructure first, then the first buildings, then amenities. For each stage, set a budget with a contingency, define the milestones that mark completion, and keep records that an independent inspector or capital provider can review.

Phase 5: Completion and Operation

The final phase covers completion, occupancy or opening, and the plan for sales, operation, or refinancing. Thinking about this exit early shapes decisions in every earlier phase, from design to financing.

Common Mistakes to Avoid

• Seeking financing before land, plans, and permits are in order
• Underestimating water, utilities, and road access
• Budgets with no contingency for delays or cost increases
• Phases that cannot operate or be sold on their own
• Unclear ownership structures or missing company documents

GAP Project Financing for Projects from US$1 Million to US$100 Million

GAP Equity Loans offers major project financing for projects of US$1 million and up, such as hotels, hospitals, malls, and major developments. Steven Stewart leads these conversations. GAP looks for sponsors who already own the land and are shovel-ready, with all of the paperwork done.

If your project is not there yet, you can still talk to Steven Stewart about what is missing and how to get ready. Funding for large projects can be released in stages as the work advances, and those details are discussed with Steven for each project. Terms and structure depend on the project and the capital provider, and approval or funding is never guaranteed.

Frequently Asked Questions

What are the main phases of a development project?

A common structure is land and feasibility, design and approvals, financing, construction in stages, and completion or operation.

What does shovel-ready mean?

For GAP, it means the sponsor owns the land and all of the paperwork is done, including plans, permits, and approvals.

Do projects in Costa Rica need environmental approval?

Activities that alter or destroy elements of the environment require an environmental impact assessment approved by SETENA before work begins.

Can funding be released in stages?

Yes. Construction loans of any size may be funded in stages, and US$1 million-plus projects usually receive funds at different stages. The structure is discussed with Steven Stewart for each project.

Does GAP pay for permits or project preparation?

No. The sponsor pays for project preparation, permits, and financing costs.

This article is general information only and is not legal, engineering, financial, or tax advice. Every project depends on its own documentation, due diligence, and capital provider approval.

WhatsApp us at +506 4001 6413 to get started.

Planning a project of many millions? Talk with Steven Stewart about GAP project financing, even if your paperwork is not finished yet. Learn about project funding in Costa Rica or email info@gap.cr to start the conversation.

Article by Glenn Tellier (Founder of CRIE and Grupo Gap)