The Property Rezoning Process: What Land Developers Need to Know

Entitling a property for a real estate development project is challenging enough. But when your land entitlement tasks include property rezoning, the complexity and risk of the process increase exponentially.

Each piece of land is designated a property zoning that controls the land use and type of allowed development on the property. The zoning designation also establishes development requirements like maximum building height, minimum setbacks, allowed density, and other critical project details.

And what if you want to build something on the land that doesn't fit within the in-place zoning? You'll need to rezone the property by navigating the rezoning process.

A guide to the video

  • Land zoning dictates the type of allowed development and property design standards
  • Every municipality has different zoning classifications and ordinances that are important to be familiar with before undertaking a real estate development project
  • In some cases, there are administrative alternatives to full property rezoning, like zoning variances and conditional use permits

Video transcript follows

The adage that you can do what you want on your private property is misleading. I wish it were the case, but in land development it’s far from the truth.

Every piece of land has a designated land-use that dictates what can be built, and how much of that something can be built on the property. So, in layman’s terms, that means that the government actually tells you what you can do on your property.

But what if you want to change that land-use designation the property was given? What then?

You’ll need to go through what’s called a property rezoning. It’s a daunting aspect of the real estate development process, is often misunderstood, and there is no guarantee that the result will be what you were hoping for.

So, in this video, I am going to cover everything you need to know about property zoning, different types of zoning, the rezoning process, and how you can manage risk throughout the project.

What’s up everyone – it’s Matt Marsh with Marsh & Partners.

Marsh & Partners is a development and national consulting firm that helps business owners and investors maximize their real estate and transform their businesses.

If you’re enjoying what we’re doing here, and want to keep seeing more content like this, please hit that like button and share this video and our other videos with people you think might find some value in it.

 

What is zoning & why is it important?

Before we dive into a discussion of the rezoning process, I want to first define zoning and talk about why it’s important.

Zoning is a method of urban planning that divides land into zones and controls the allowed land use on a property. Zoning ordinances also dictate the allowed density of development, necessary setbacks, building height, signage, and other criteria that impact how the land can be used.

If a property has been annexed into a city, that city often oversees any property zoning issues. If the land isn’t under the jurisdiction of any city, the governing county is generally the overall authority.

But this is all important for several reasons.

First, it means that any project or development you propose on a plot of land needs to adhere to the property’s current zoning. Zoning is a critical component of the land entitlement process, so in order to get a project permitted, the zoning needs to be correct. If your project falls outside of those zoning ordinances, you’ll need to petition the local municipality to change to property zoning to allow for your project.

It also means that as a landowner or real estate developer, you should be familiar with the different types of zoning in the given municipality and understand what is allowed under each zoning.

For instance, land that has been earmarked for commercial development probably doesn’t support single-family homes. And land that is zoned for residential construction likely won’t support an industrial project. So just because you may have found the “perfect land” for a project, it may not be zoned correctly for what you’re trying to do.

By no means do I have that information memorized for every place I am doing projects, but I certainly know where to look. Most municipalities have unified development or land development ordinance (UDO) that outlines everything that is allowed under each zoning.

And if you can’t find the information you need there, you can reach out to the local planning department, and they should be able to help answer land use questions as well.

 

Different kinds of property zonings you might find

Every jurisdiction has its own set of development rules and regulations – and with that comes a different set of planning acronyms and nomenclature regarding zoning. So, in order to really understand how your property or project are impacted by zoning, you’ll need to research the regulations where that land is located.

But there are some general zoning classifications that are pretty uniform across municipalities to consider:

High-density residential (HDR) zoning:

High-density residential zoning is usually found in urban areas and near city centers or high-growth areas of suburbs. This type of zoning normally accommodates apartments, condos, townhomes and attached single-family houses.

Low/medium density residential zoning:

Low and medium density residential zoning is commonly found outside urban areas, in the suburbs and in rural areas. This zoning often allows for single family residences ranging in density from 1-unit per acre to six and even 10 units per acre.

Agricultural zoning:

Normally found in rural areas, agricultural zoning is established to provide areas for low density residential uses and agricultural operations.

Commercial zoning:

There are various types of commercial zoning that exist, but they are normally found in already existing commercial corridors, down-town areas, and business districts. Depending on the density and type of allowed commercial, this zoning allows for a mix of retail, office, and services uses.

Industrial zoning:

Industrial zoning is found outside of densely populated residential areas and is usually segregated into areas with other similar industrial uses. Municipalities try to locate industrial property within proximity to major roads to allow for warehousing, service-oriented businesses, and heavy industrial uses.

Mixed-use zoning:

Mixed-use is a zoning classification that allows for a blend of uses on a single property. Often found in urban areas and near suburban town centers, mixed-use zoning can accommodate a combination of residential, commercial, entertainment, and institutional uses.

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Again, every municipality is different, and every zoning classification allows a different set of uses and densities, but typically, a property’s zoning will fall under one of those general classifications. It’s important to also consider how restrictive zoning code often makes development projects more expensive, so when you’re underwriting a project, those costs will need to be accounted for.

 

The rezoning process

The first step is understanding what kind of zoning your property has currently. This can be done in several ways.

First, many municipalities have their real estate records available online. Property owners can search by address or owner to view tax bills, deed, and zoning information.

An alternative would be to work directly with the planning or zoning department to get a copy of the zoning map and any ordinances that apply to the property.

Sometimes, municipal GIS systems having zoning information which can often be viewed as a color-coded overlay on the geographic map.

But once you figure out what a property is zoned, the next step is to determine what that zoning classification allows on the property. If your proposed use or real estate development doesn’t fit within the current zoning, you’ll need to pursue a rezoning.

The rezoning process varies slightly between municipalities, but is almost always time consuming, expensive, and risky. As a developer or landowner, the approval process to rezone a property may look something like this:

  1. Pre-application meeting with city or county staff: This is important to get a better idea about the rezoning process and to consult with staff about the potential impacts of the proposed zoning change. 
  2. First neighborhood meeting: For better or for worse, your neighbors will have some influence in your rezoning case. Developers can use this first neighborhood meeting to initiate a conversation with the community members most directly impacted by the proposed development.
  3. Submission of rezoning application: Based on the municipality’s guidelines, a formal application for the rezoning needs to be submitted.
  4. Staff level review: Staff reviewers from city departments like planning, utilities, environmental, fire, engineering, and transportation will review the proposal and make any necessary comments.
  5. Second neighborhood meeting: In some cases, municipalities require a 2nd neighborhood meeting if a project meets certain design and size criteria.
  6. Planning commission review: The planning commission will hold a public meeting where staff comments are addressed, the applicant has an opportunity to present their project, and the public can make comments. The planning commission will then make a recommendation to city council.
  7. City council hearing: After hearing comments from the applicant and public, the city council will vote and render a final decision on whether the rezoning is approved.

If the city council votes to approve the project, then you’ve successfully rezoned the property. If for some reason, they deny your petition, there is usually a process that allows applicants to appeal a rezoning decision.

Keep in mind that more than likely your project will face resistance at various stages of the process. It’s common that city staff will offer comments that need to be considered and worked into your site plan or rezoning application. And since the planning commission offers a recommendation on your project to the city council, you’ll also want to make sure your plan fits within what the municipality is looking for long term.

You should be receptive to these suggestions and be able to make a strong case why your project won’t have negative impacts to the surrounding area.

 

Zoning variances & conditional use permits

There are some cases where a proposed project doesn’t require a full rezoning, but doesn’t meet the standards of the municipality’s zoning code.

Sometimes, zoning conditions make it difficult for an owner to develop a property. In that case, you might be able to argue hardship and apply for a zoning variance. Variances can be applied for even without hardship, but it’s important to be able to make a case as to why you can’t comply with the zoning requirements.

A variance could be required for exceptions to the code like minimum building size or dimension requirements, building height or the number of stories, or setback requirements. 

A conditional use permit is another alternative to a full property rezone when your project doesn’t adhere to the prescribed allowed uses for the land. If your use isn’t allowed “by-right,” it may instead be allowed with a conditional use permit.

Typically, if a conditional use permit is granted, you can use the land in a way that is not usually permitted, as long as you adhere to a set of conditions.

The good news is that both of these actions are considered more administrative than judicial, so they are typically handled by a local board of adjustment or appearance commission. They won’t require the full rezoning process and carry substantially lower risk.

 

Land rezoning risks

The rezoning process is prohibitive - at any time during rezoning, you may be required to make corrections, undergo further deliberations with sub-committees, and resubmit applications for additional review, which could result in more expenses and further project delays. Depending on the municipality, it can take 6-12 months, and sometimes more, to navigate a rezoning. So as a landowner, that’s 6-12 months of additional carrying costs like property taxes, a mortgage if there is one on the property, and legal, architectural, engineering, and service providers fees.

That doesn’t even consider the fact that there is no guarantee that your rezoning request will be approved at the end of the process. It’s not uncommon that real estate developers navigate the entire rezoning process, spending tens and in some cases hundreds of thousands of dollars, only to be told no by city council.

Land entitlement risks are a huge question mark for any development project and a rezoning only adds to that complexity. And there is no way to tell if your rezoning application will be approved before you submit it.

You can review recently approved cases, and study the city’s future land use map – all those will help, but still won’t guarantee a positive outcome. The success of your rezoning will depend on how you propose to use and develop the property and the way neighboring properties are being used.

 

Final thoughts

Land rezoning is a pretty dense subject for a video. But it’s a risky process that’s often misunderstood.

If you’re thinking about rezoning a property, I’d consult with a land-use attorney to discuss your specific case as it pertains to the municipality you’re operating in. They’ll usually be up to date on the rezoning process and may even have some insight into how you need to tailor your application and present your case during the process.

A real estate development consultant may also be able to assist. They offer a range of services that often transcend traditional industry silos of expertise and can help you make informed decisions without breaking the bank.

If you’re engaged in a real estate development project currently, or are thinking about tackling a project, we have a bunch of great articles and videos to help you through your project that are worth checking out.

Check out the video description for a link to our complete real estate development made simple guide and other great resources to

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