Feature Article - Keeping Track of Zoning Changes

Zoning is the primary tool that cities use to control land use.  Most zoning codes establish base zoning districts that allow different types of land uses (such as single family, multifamily, retail, office and industrial) and further provide a list of certain uses that are permitted, prohibited or conditional in that district.  Typically, each zoning district has a specific set of site development regulations applicable to it covering:  height, setbacks, floor to area ratio, impervious cover and similar items.  In addition to base zoning districts, many zoning codes provide for conditional overlays that adjust land uses and site development regulations applicable in a base district for specific parts of the city.  For instance, Austin has the Waterfront Overlay for properties located near Lady Bird Lake and the University Neighborhood Overlay for properties located around the University of Texas campus.

Typically developers and investors pay attention to zoning regulations when purchasing a tract in order to determine whether or not their proposed use is allowed.  Landowners, however, should also pay attention to changes in zoning ordinances that occur after they acquire property, as such changes may affect their ability to develop or redevelop the site.  Zoning changes usually come in one of three ways:  (i) a downzoning; (ii) a conditional overlay; or (iii) a change in the zoning code.

Zoning Change (Downzoning)-A downzoning is usually instituted by the city when the city determines that the zoning on a site is no longer compatible with the surrounding area.  For instance, in an area that, over time, becomes primarily residential, a city may attempt to downzone an industrial site to be more compatible with the surrounding residential uses.  Although a downzoning usually has a drastic effect on a site, a landowner will almost certainly have plenty of notice and an opportunity to oppose the downzoning.  Further, the landowner will likely have the tool of a valid petition to oppose the change, thereby requiring a super majority of council members (6 of 7) to approve the change.

Conditional Overlays-Property owners do not always receive as much notice of a new conditional overlay (or have as much opportunity to oppose via a valid petition) as a straight downzoning.  This is because a conditional overlay usually covers a larger area and is not targeted to a specific tract.  Conditional overlays usually are instituted by city planning staff when it is determined that a certain area of the city has unique characteristics that require different rules and regulations than those provided by the base zoning districts applicable in the area of the overlay.  Most conditional overlays cover an area that contains a number of different tracts with a variety of base zoning designations, but typically there is at least one feature that ties all the tracts together; for instance, a lake, a university or a major roadway.  As noted above, conditional overlays are used to change the rules and regulations applicable in the base districts covered by the overlay.  Two examples in Austin are the Waterfront Overlay and the North Burnet Gateway Plan.  The Waterfront Overlay affects properties located near Lady Bird Lake and creates, among other things, height limitations that limit the height of a tract below what is allowed by the base zoning district.  Some tracts along the Waterfront Overlay are zoned "L" which has a 200' height limit.  When the Waterfront Overlay was passed, some of those tracts were limited to heights as low as 45'.  The North Burnet Gateway Plan (roughly covers an area bounded by Walnut Creek, Metric Blvd, US 183 and Mopac) contains tracts having a base zoning designation of "LI", which allows light manufacturing uses. The overlay contained a new list of prohibited and permitted uses which trump the base district uses.  Some "LI" zoned tracts lost light manufacturing as a permitted use.  A number of owners were surprised to learn they had lost height via the Waterfront Overlay or lost the ability to do light manufacturing in the North Burnet Gateway Plan.

Code Changes-Another change that can affect property owners' rights are changes in the zoning code itself.  For instance, a city may change the list of prohibited and permitted uses in a base zoning district or change the definition of what constitutes a given use.  For example, Austin changed the definition of "Restaurant" a few years ago in a way that allowed zoning districts to have drive-thrus.    In either of these events, a use that was previously permitted on a tract may no longer be allowed after the code change.  These changes can be much more difficult than either downzoning or conditional overlays for owners to track and deal with, as typically there would be no direct notice to the property owner.  A property owner would not be aware of the proposed change unless they are notified through a property owner's association, trade organization or a newspaper article.

In summary, while almost all developers and investors pay attention to the zoning of a property being acquired, it is also important for developers and investors to pay attention to any notice of changes in zoning that may affect property after acquisition.

Written By:

Steve Metcalfe

Metcalfe Williams, LLP.