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Construction Insurance and Real
Estate
Timely articles covering the most
pressing issues facing construction firms in the Midwest
The Basics of Real Estate
Zoning
By: Dan Cofran
Zoning laws are one of the least understood and appreciated elements
of real estate development. Most real estate professionals have a
general understanding of the process. However, it is much more
complicated than many appreciate, often leading to costly delays in
even the simplest projects.
Time is real estate development’s “third rail.” Costly time loss can
be avoided by advance planning based upon the understanding that
zoning, platting and permitting laws are the complex result of the
need to balance (1) a city's need for orderly and safe development
with (2) a property owner's right to use his or her property as
desired. Neither has the unfettered right to require or build
whatever it wants.
What most professionals think of as “zoning” is actually three
important processes: zoning, subdivision platting and building
permitting. This newsletter is about zoning and is a companion to
our subdivision platting newsletter. Building permitting is best
handled by a project’s architect or engineer.
Increasingly, federal statutes and regulations are adding a fourth
process, for example, meeting environmental, fair housing,
endangered species and telecommunications facilities requirements.
Successful projects involve the owner or developer, lawyer,
architect and engineer working through all these processes together
as a project team from “square one,” long before any zoning
applications are filed.
Zoning . . . The Basic Plan
Zoning laws didn't even exist in this country until the 1920s.
Rapid, uncontrolled growth of cities during the Industrial
Revolution led to overcrowding, public health problems and general
unsightliness. Conditions were so bad that action was taken at the
state and national levels to create model state zoning and urban
planning statutes for uniform zoning and subdivision platting
systems at thecity level. These laws are patterned after a German
system.
Missouri and Kansas adopted their “state zoning enabling acts” in
1925 and 1921, respectively.
The United States Supreme Court approved zoning as a constitutional
form of private property control in 1926 in Village of Euclid v.
Ambler Realty.
A city's power to zone and control land use comes from the state and
can be exercised only as permitted by the state. The state statutes
passed in the 1920s permit a city to zone if its city council by
ordinance adopts a “comprehensive plan” creating zoning districts
(residential, commercial, industrial, etc.) and then applies them by
ordinance to specifically defined geographic areas (small and
large).
Under the state statutes, both the “comprehensive plan” of zoning
ordinances and their application to specific parcels must first be
reviewed by a citizen based city plan commission guided by its own
“master plan” (not the same thing as the zoning comprehensive plan”)
generally directing the city’s future physical development for
private land use and public infrastructure.
Zoning determinations, other than re-zonings, under state law are
subject to a "safety valve" review by a quasi judicial board of
zoning adjustment. A BZA can grant “variances” if a property cannot
be used without "unnecessary hardship" or "practical difficulty"
under its applicable zoning district regulations. Boards of zoning
adjustment also hear appeals from zoning staff officials’ decisions
and hear applications for conditional use permits.
Most zoning ordinances are "Euclidian" (named after the Supreme
Court case, not the guy in a toga), meaning they divide a city into
different levels of residential, commercial, industrial and
agricultural districts. Each district (1) specifies allowed land
uses (permitted, accessory and conditional), e.g., single-family
residential, neighborhood retail, light manufacturing, and (2) sets
“area” controls regulating building dimensions and limitations,
e.g., set backs, building heights, lot widths, lot depths, maximum
densities, minimum off-street parking requirements and sign
limitations.
Permitted uses are the principal uses allowed in a zoning district,
e.g., single family residences, neighborhood retail, medical office
buildings, manufacturing plants, etc.
Accessory uses are uses normally incidental and subordinate to
permitted uses, e.g., garages and playgrounds in residentially zoned
areas.
Conditional uses are those that are sufficiently unique (or
objectionable) that even though they may come within the permitted
uses of a zoning district, e.g., light industrial, an "okay-across-theboard"
approach will not work and the specific use must be decided on a
case-by-case basis, subject to conditions and, frequently, time
limitations.
Measurable per formance standards may also apply to land uses
involving hazardous or noxious activities like blasting, loud noise,
burning and glare.
Subdivision Platting
While zoning regulates private, on-site land use and structure
dimensions, subdivision platting regulates the public, off-site
physical improvements and public dedications serving a private
developed lot or lots to ensure the development properly knits into
a city’s physical fabric and public needs.
With few exceptions, any time a property will be divided into
separate lots for residential, commercial or industrial development,
a city’s subdivision regulations will require that the property be
platted or even re-platted.
This is the time-consuming and meticulous process of (1) preparing a
legal map dividing real estate into sequentially numbered blocks and
lots (or just lots) for recording and survey purposes, (2)
dedicating public rights-of-way for streets, sidewalks, water mains,
sanitary sewers, storm sewers, storm water detention ponds, street
lights, utility easements and park space (sometimes called
“exactions”) and (3) actually constructing or paying for streets,
sewers, traffic lights, etc. for uniform, planned city growth and
public improvement purposes.
Platting basically is a three-step process: initial staffreview of a
“sketch plan” and separate approvals of a “hard-line” preliminary
plat and a “hard line” final plat. Preliminary plat approval usually
is done at the same time as re-zoning, saving some time.
Platting is very important. It must be completed to get a building
permit and certificate of occupancy. In some instances, conditional
or “risk” building and occupancy permits are available, but in no
event can a full certificate of occupancy be granted without final
platting, a matter of great importance to lenders. Subdivision
platting is more thoroughly reviewed in a separate Spencer Fane
newsletter.
Building and Other Codes
While platting and subdivision r e gul a t ions pro vi de the speci
fi c ations for publ ic improvements, a city's building and other
project codes provide the specifications for the private
improvements.
There are separate codes for structural, electrical, plumbing,
mechanical, fire sprinkler, elevator, storm water drainage and
detention, sanitary sewer and water service (domestic and fire)
connections, grading, erosion and sediment control, driveway cuts,
etc. These codes focus on safety and structural integrity.
It doesn't end with the building codes. Depending upon the project,
additional permitting time can be required for a flood plain
certificate, state and local land disturbance permits, a public
right-of-way encroachment ordinance, river levee review, state
right-ofway review, airport noise zone review, water main extension,
landmarks certificate of appropriateness, special review district
approval, park and boulevard review, air quality permits (smoke,
fumes), health permits (food preparation areas and equipment) and
swimming facility permits.
Open Zoning v. Planned District Zoning
Until the 1960s and 1970s, retail, office and other commercial
properties were zoned in "open" districts.
"Open" zoning districts simply provide a "laundry list" of permitted
uses in a district, e.g., C-1, Neighborhood Retail: grocery, drug
store, hardware store, shoe store, clothing store, book store, etc.
A property owner can use his or her property for any of the listed
uses, generally subject only to limited area controls such as set
backs, building heights, parking requirements, etc. "Open" zoning is
a thing of the past. With the advent of shopping centers and "mixed
use" developments (and a need for flexibility from rigid Euclidian
zoning), cities have moved to "planned districts." In addition to
having to comply with a district's use list or use description, the
owner must submit a detailed site development plan showing a
project's building, driveway, parking, drainage, open space and
landscaping locations n the property.
The site plan becomes the actual zoning for the property. The
physical arrangement of the project's elements cannot thereafter be
changed without going through the full re-zoning process to amend
the plan. Some planned districts are true zoning categories; others
are done as “overlays” to existing open zoning categories.
The Re-Zoning Process
Rezoning is a several month process, followed by several more months
(or more) for final platting and project permitting.
Under state law, only the city, an owner or an owner's
representative can apply to have property re-zoned (you can't
re-zone your neighbor). As part of the same state law, a re-zoning
request is first heard by a city plan commission (citizens appointed
by the mayor and/or city council). The city plan commission conducts
a formal hearing, preceded by two weeks notice published in the
local newspaper and mailed notice to neighboring property owners
(within 185 feet in Missouri and 200 feet in Kansas). City
ordinances generally also require a posted notice in the property to
be re-zoned. The application is reviewed by a city's professional
planning staff which makes a recommendation to the plan commission
as part of its hearing.
If the plan commission recommends favorably, the application then
goes to the city council for a noticed hearing and vote. A majority
vote is required for approval, unless (under state law) a protest
petition is signed by property owners in which event a super
majority (2/3 in Missouri and 3/4 in Kansas) vote is required. A
Missouri protest petition must be signed by owners of at least 30%
of the land (by area) within 185 feet of the property. The Kansas
requirement is 20% within 200 feet.
In Kansas, a petition of protest must be filed within 14 days of a
city plan commission decision. Missouri has no time limit,
presumably allowing filing up to the day of a city council’s final
vote, depending upon local ordinance.
Board of Zoning Adjustment
Zoning ordinances could operate as unconstitutional takings of
property without just compensation if they did not have a “safety
valve” in the event their “one size fits all” approach did not allow
exceptions for hardships or difficulties imposed on the use of
individual parcels of land. Boards of zoning adjustment (called
boards of zoning appeals under the Kansas statute) fill this
function.
Under state law, BZAs are appointed by the city council and have
four principal functions:
• Hear requests for variances to the strict application of a zoning
ordinance’s requirements in the event of practical difficulty or
unnecessary hardship to a property owner;
• Hea r app l i c a ti ons for conditional use permits for
conditional uses under a zoning ordinance, e.g., landfills,
quarries, group homes;
• Hear appeals of zoning determinations by staff zoning
administrators; and
• Hear other matters referred to it by the city council, e.g.
transportation impact fee appeals.
BZAs are quasi-judicial bodies, in effect, “zoning trial courts”
with witnesses sworn and generally subject to cross examination.
Unsuccessful BZA applicants cannot take their cases to the city
council. Appeals go to the circuit (Missouri) or district (Kansas)
court, with review limited to a review of the BZA transcript to
determine whether its decision is supported by the record; the case
is not retried before a judge.
Variances
Variance requests are probably the most common BZA proceeding.
There are two kinds of variances. Use variances are available if a
property's permitted zoning use imposes an unnecessary hardship on
the owner, e.g., residentially zoned parcel in a manufacturing
district in which no one wants to live. Area (or non-use) variances
are available if a zoning district’s dimensional requirements such
as set backs and building heights impose practical difficulty
because of a parcel’s unique physical characteristics, for example,
irregular shape or steep topography.
While not always observed in actual practice, a variance cannot
properly be based on a hardship or difficulty arising from a land
owner’s intended use of property. It must somehow be attributable to
a unique feature of the property itself. For example, a set back
area variance to allow a large storage building simply because the
property owner has a lot to store is an invalid basis for an area
variance.
For both use and area variances, a BZA must be satisfied that a
variance will still be consistent with the spirit and intent of the
zoning ordinance.
Use variances can be frowned upon since they are tantamount to
re-zonings if not disciplined by true findings of unnecessary
hardship. In fact, use variances are forbidden by Kansas statute.
Under the Missouri statute, use variances are not allowed in Kansas
City, Missouri, presumably a legislative reaction to concerns about
an apparent abuse of use variances as short cuts around the full
rezoning process.
In Missouri, variances require super majority BZA votes — 4 out of 5
votes. Kansas uses a simple majority.
Conditional Use Permits
Conditional use permits are required for controversial land uses
such as landfills and quarries. Frequently called "locally
undesirable land uses" (LULUs), these land uses must meet both a
zoning district requirement as to a permitted use and more specific
conditional use requirements. Examples include land fills, quarries,
group homes, halfway houses, shooting ranges, carnivals, stables,
amusement parks, day care centers, nursing homes, air fields,
cemeteries and athletic fields.
Therefore, conditional uses must make it through two local land use
hoops. First, the land must have a proper zoning, a matter handled
by the city plan commission and city council, e.g., generally
industrial or agricultural in the case of a land fill. Second, the
actual conditional use permit application must then be heard by the
BZA.
As with variances, conditional use permits require super majorities,
4 out of 5 votes, in Missouri, and simple majorities in Kansas.
Many cities call conditional use permits “special” use permits. The
terms mean the same thing.
Zoning Officer Appeals
Local police do not enforce zoning ordinances. Instead, each city
has a designated zoning administrator for enforcement, frequently
part of a city’s building code enforcement function.
Therefore, a property owner cited for a zoning ordinance violation,
e.g., operating a business in a residentially zoned area or building
a loading dock too close to a street, can appeal to a BZA either to
overturn the zoning administrator’s decision or to request a
variance to the zoning ordinance’s requirement.
As with variances and conditional use permits, supermajority votes
are required to overturn a zoning administrator’s decision in
Missouri.
Court Appeals
Unsuccessful applicants for re-zonings, variances, conditional use
permits and zoning administrator appeals can take their cases to a
court.
However, courts are very reluctant to second-guess city councils and
boards of zoning adjustment and the scope of judicial review of
zoning decisions is narrow. Therefore, the property owner who sees
the city council or BZA process as essentially political with the
notion of hiring a lawyer and going to court if unsuccessful will be
sorely disappointed.
Courts review a city council or BZA decision, without taking new
evidence or re-trying the case, and act only in extraordinary
situations.
Missouri courts view local re-zoning decisions as “legislative” and
will interfere only if a city council has acted unlawfully or
arbitrarily. If the result is “fairly debatable,” a Missouri court
won’t touch it.
Kansas courts treat re-zoning decisions as “quasijudicial” (like a
BZA proceeding). While this means they expect thoughtful
consideration of various land use factors by a city council, they
still avoid reversing an elected body if its decision is fairly
debatable.
Therefore, in a controversial case it is essential to have a
complete record before the city council or BZA, including
appropriate, qualified expert testimony* (civil engineer, traffic
engineer, storm water engineer, architect, urban planner,
demographer, blasting expert, noise expert, etc.) to be able to
argue to a court that the record before the city council or BZA
pushes its decision beyond the realm of fair debate.
*Witnesses in zoning hearings before city plan commissions, city
councils and boards of zoning adjustment “testify” by making verbal
statements and frequently submitting written reports. They do not
“testify” with questions and answers “Perry Mason-style.”
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