6 Things Investors Should Know About Rezoning Properties
It’s rare for a community to remain unchanged. In some places, the population grows substantially due to affordable housing. In others, high unemployment rates or other economic barriers lead to higher rates of vacancy. Regardless of the cause, most areas change substantially over time.
When there are new obstacles or needs, rezoning allows for certain properties to be used differently than they were before. For example, an aging apartment complex may be knocked down and rezoned for a shopping center.
Whatever the case, zoning laws can be intricate, which means you’ll need to have knowledge of the rezoning process and certain real estate terms.
Here are six things investors should know about rezoning properties.
Zoning categories vary by location
Zoning laws are designed to control how pieces of real estate can or can’t be used. In most cases, this is governed at the local level by a city or county through the use of ordinances. In addition to providing guidance on how certain areas of land may be used, there are usually rules about density and even building height.
Zoning categories vary greatly across different cities or counties, but these are the most common ones:
Residential – From single-family homes to apartment complexes and trailer parks, residential zoning is designated for housing purposes.
Commercial – This type of zoning can be quite diverse but usually involves businesses that have frequent interaction with the public. Commercial property may be used for office space, retail stores, restaurants, and hotels.
Industrial – Although it may be easy to confuse the two, industrial zoning is different from commercial zoning because it takes noise and other environmental disturbances into consideration. For example, a manufacturing plant or an airport may fall into the industrial zoning category.
Agricultural – Agricultural zoning is a category of use for communities concerned with protecting farmland used to grow anything from plants to produce.
Rural – Farms, ranches, and similar types of properties with large acreages are usually found within rural zoning categories.
Mixed-use – Available in a variety of forms, mixed-use zoning often allows for residential and commercial property to exist in the same space. For example, a building that has restaurants on the bottom floor and apartments or condos on the floors above ground level.
Restrictions may apply
Unfortunately, rezoning isn’t always possible, even when you have an excellent vision of what the space could be and how much revenue it could produce.
There are often many restrictions that can have an impact on your plans. For example, historic districts are strictly preserved when it comes to new construction and renovations. Design overlays may also apply, which can restrict everything from building color to window types.
In addition, areas with environmental concerns may have restrictions for certain types of land use. If there are endangered species nearby or protected spaces like wetlands, it’s often highly unlikely that any rezoning requests will be granted.
Your area’s future plans could have an impact
It’s important to consider the overall goals and vision of your city or county before you apply for rezoning.
How will the area look in a decade? Is the city planning on making significant infrastructure improvements? Is there a need for more rental units? Are there plans for anything in the immediate vicinity of your property? What’s more, how would the answers to these questions affect your investment?
You can find a lot of information about your county or city’s long-term plans by browsing its government website. This is critical information to have, especially if you’re actively looking at certain properties with a real estate agent. In the event that a denial of your rezoning proposal would result in large profit losses, it may be best to reconsider your investment.
Many people have a say in the rezoning process
The rezoning process is rarely quick or easy.
It can take multiple months or even years to accomplish, not to mention a lot of money. One reason for this is the collaborative process most municipalities try to adopt, especially when other members of the community will be impacted.
You will need to petition your governing board to change the zoning, which usually includes working closely with a planning commission before your proposal goes forward for legislative approval. There are often public hearings as well, which allow people from the community to comment on your plans for the land.
There is usually an appeals process
Did your rezoning request get denied? Don’t panic. The good news is you can often give it another shot.
An appeals process will usually take a few months, and in many cases, you’ll have to wait a certain amount of time. Take this as an opportunity to go back to the drawing board and build a case that clearly depicts why you think the governing body was wrong.
You’ll likely need to make a few changes or supply additional evidence that bolsters your case. Working with the planning department may help you make the right adjustments next time around.
When in doubt, consider hiring an expert to help you with this. Real estate attorneys are a good place to start.
There may be other zoning options
In the event that your rezoning request seems likely to fail, there are zoning exceptions that may help you get closer to your goal. There are generally two types of exceptions that fall into this category. They are special use permits and zoning variances.
A special use permit allows a piece of land to be used in a way that deviates from what is normally accepted in the area. It creates an exception to the governing regulations or ordinances. For example, a business that is allowed to operate in an area that is usually designated for residential purposes.
A zoning variance is also a request to deviate from the current zoning laws, but this is typically granted only if you can prove that the existing zoning regulations make it considerably difficult for you to use the property.
Luke Babich is the CSO of Clever Real Estate in St. Louis. Connect with him on Facebook or Twitter.