United States: Zoning Fundamentals – What Developers And Builders Need To Know

What is zoning and how does it work?

In simple terms, zoning refers to a city's ability to regulate property owners' use of their land within its corporate boundaries. For instance, a city may prohibit commercial accessory uses within its residential districts, thereby prohibiting at-home businesses. Failing to comply with a city's zoning regulations can result in fines of up to $2,000.00 per violation, per day, depending on the nature of the violation(s). Additionally, one would not be able to move forward with city platting or permitting absent proper zoning.

Importantly, Texas law prohibits zoning within a city's extraterritorial jurisdiction (the unincorporated area immediately surrounding city bounds that is customarily provided city services) and within unincorporated land generally. There are no restrictions on land use (other than safety related regulations imposed by counties) on extraterritorial jurisdiction or unincorporated land.

Chapter 211 of the Texas Local Government Code governs municipal zoning authority. Pursuant to Section 211.003, within its bounds, a city may regulate:

Cities are divided into zoning districts and within each district, a city may regulate the construction, reconstruction, alteration, repair, and use of buildings, structures, and land.

Do you need standard or specialized zoning?

The most common zoning districts are residential, commercial, industrial, and other special purpose districts like office and agricultural. Most cities also have subsects of these districts, for instance, multifamily, which contains regulations specific for high-density residential use, and neighborhood retail, which further restricts commercial uses near residential districts. Standard zoning districts work well for small scale projects that fit squarely within existing zoning regulations. The more specialized the project, the more likely it is that the project does not comply with all existing regulations and will require variances, special exceptions or planned development zoning.

For example, a builder plans to construct eight townhomes on a vacant one-acre lot. In the applicable city, the builder's property and planned townhomes are in full compliance with the city's zoning regulations for a residential multifamily zoning district. Here, the builder should move forward with platting and permitting. On the other hand, if the same builder's city regulations required that all multifamily designated property had to provide at least one-acre per every six dwelling units, then our builder needs special permission or specialized zoning to construct eight townhomes on the one-acre lot. Specialized zoning is preferred over special permission as Board of Adjustment and Zoning Commision approval of variances and special exceptions is never guaranteed and are often approved with conditions.

Planned development zoning – what it is and why you might want it.

Planned development zoning refers to a zoning district that is created specifically for an area of land and/or a specific project. The regulations only apply to the area of land named in the city ordinance establishing the planned development district and such regulations are drafted to be particular to the project. Specialized projects, or projects involving new industries, will almost always benefit from planned development zoning. For instance, Texas cities do not currently regulate commercial drone delivery as a land use. Such commercial drone delivery operators benefit from working directly with cities to establish new zoning regulations instead of seeking permission each time its proposed use does not fully comply with existing zoning regulations.

Planned development zoning is common. The first step is approaching a city's planning department to inquire about requesting planned development zoning. Staff will work with the requestor to identify particular needs and methods and draft new regulations.

How do zoning changes become effective?

A zoning regulation is not effective until after a public hearing on the matter at which parties in interest and citizens have an opportunity to be heard. Before the 15th day before the day of the hearing, notice of the time and place of the hearing must be published in an official newspaper of general circulation in the city.

In home rule cities, the city zoning commission makes a preliminary report and holds at least one public hearing on that report before submitting a final report to the city council. The city council may not hold a public hearing until it receives the final report of the zoning commission unless provided otherwise in the city's zoning regulations.

Before the 10th day before the hearing date, written notice of each public hearing shall be sent to each owner, as indicated by the most recently approved municipal tax roll, of real property within 200 feet of the property on which the change in classification is proposed is located.

In general-law cities, the governing body exercises zoning authority without the appointment of a zoning commission and all required public hearings would be held by the governing body.

Provisions to include in your purchase and sale agreements related to zoning.

As a seller, (i) remove all provisions related to zoning reports as part of due diligence deliverables (this is publicly available information); (ii) remove any seller representation or warranty regarding buyer's use of the property (sellers cannot predict the future); (iii) make buyer responsible for causing any zoning changes with the applicable city and decide whether the outcome of this is a reason for buyer termination; (iv) make no guarantees as related to legal nonconforming rights; and (v) pay close attention to conditions precedent, options to terminate and whether any are tied to achieving a zoning result (these can never be guaranteed). As a buyer, (i) instead of requesting publicly available zoning information, request any communications between seller and the applicable city that may not be part of a public record and show future zoning intent; (ii) have seller represent and warrant that buyer's intended use of the property is in conformance with presently existing zoning regulations; (iii) require seller to cause any needed zoning change with the city if seller is in a better position to do so or has better city connections; and (iv) add seller representations regarding any legal nonconforming use rights.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.