So you've developed a great business plan, created a business entity, and secured financing. But, where are you going to open your store or office? Besides the usual concerns about traffic, visibility, and public access, you also have to consider whether zoning and land use regulations will allow your business to operate at your desired location.
Given the myriad of land use laws that could impact how you use your property, it's important to research the land use and zoning regulations in your area. If you’re looking to buy a piece of land or sign a lease, it could be a good idea to get help from an experienced land use attorney before you make any contract official.
What Are Zoning & Land Use Laws?
Land use regulations—and specifically zoning ordinances—are designed to protect the public health, safety, and welfare, and to create a uniform, orderly scheme for the use of real estate. Specifically, zoning ordinances are a kind of land use regulation.
Land use laws regulate how land can be used and accessed, including what rights people have in an area of land. Land use regulations cover zoning, easements, eminent domain, and certain environmental laws.
Zoning is when a city or town divides up land into certain uses. Zoning ordinances then lay out specific rules based on what the district can be used for. Specifically, zoning laws can restrict or limit various aspects of any business, ranging from what business activities you can conduct on a particular piece of land to building specifications, and even the amount of parking you must provide.
Types of Zoning Districts
Zoning districts are divided by how the geographic areas can be broadly used. There are several common zoning districts (often referred to as “zones”).
Commercial Zoning District
This district is reserved for business (or “commercial”) purposes.
The types of businesses allowed in a commercial zone can be broad or specific. For example, a broad commercial zone might be categorized as “general commercial” or “neighborhood commercial” while a specific commercial zone might be categorized as “downtown retail” and “downtown office.”
You’ll likely be able to operate your business out of a commercial zone. Just make sure the specific zone you’re looking at includes your type of business.
Industrial Zoning District
While an industrial zone can involve various kinds of businesses—from automotive repair to HVAC installations—it’s usually associated with factories, plants, and warehouses.
Industrial zones can be split into further zones based on the scale of activities and size of the equipment and facilities. For example, a laundromat could be classified as “light industrial” while a factory plant could be “heavy industrial.”
If you’re a manufacturer or a service-based business, the industrial district could work for you.
Resource Zoning District
This district is categorized by what the land in the district naturally contains, specifically the resources. A resource zone can specifically include “agricultural” and “forest” zones.
Your business might be allowed to operate in an agricultural zone if it:
- grows and harvests crops—for instance, vegetables, fruit, grain, and cotton
- raises livestock—such as cows, chickens, goats, and sheep
- runs a pick-your-own farm—like pumpkin, apple, or strawberry picking
- operates as a wedding venue on a farm, or
- provides agricultural-related games and education.
Residential Zoning District
A residential zone is reserved for residential use. In this district, you’ll find single-family and multi-family houses and apartment complexes.
A residential district might be broken up based on the type of housing—for example, condominiums or manufactured homes—or based on the individual lot size. For instance, a quarter-acre lot might be in a different zone from a two-acre lot.
A residential zone might only work for your business if you work from home and your home is treated as your office or home base for your online business. Even if you make your products at home and display them at trade shows or pop-up tents, you could likely run your business in your residential district.
What Information Can You Find in a Zoning Ordinance?
A zoning ordinance will list what uses are allowed in each zone. For instance, in a “neighborhood commercial” zone, a small convenience store might be legal, but a construction waste site is likely prohibited.
The zoning ordinance will also include development standards. These standards can include:
- setback requirements—that is, how far your building must be from the edge of your property line
- height restrictions—for instance, how many stories your building can have
- parking requirements—like, how many dedicated parking spaces you need and whether street parking is allowed, and
- design standards—such as the roof angle or patio structure.
If you’re opening a retail store, the local government might require that you add parking spaces. Depending on your town or city’s restrictions, you could build an adjacent lot, offer street parking, or rent spaces from a neighboring business.
If your business involves manufacturing, you might need to comply with noise restrictions that control the times you can operate and how many workers you can have on-site.
Who Creates Zoning and Land Use Regulations?
Zoning and land use regulations are most commonly adopted and enforced at the local level. When you’re checking to see whether you can build your distillery next to a farm or can operate your business out of your home, you’ll need to look at your local town or city’s zoning laws.
But state and federal governments also have an interest in protecting land. Other laws that impact land use, such as environmental and wildlife regulations, are often adopted and enforced at the state or federal level.
For example, if you’re planning to put your business on the outskirts of town or in a rural area, wildlife protection laws might limit density so that any new development must be placed on a large lot. Alternatively, pollution regulations could make certain industrial uses impractical near residential areas.
What If Your Business Isn’t Allowed at Your Desired Location?
In a perfect world, you’ll choose a piece of property where your business will either be permitted “outright” (your use is already in line with the zoning laws) or as a “conditional use” (your use is allowed with town approval as long as you meet certain extra requirements). If your business is unlawful in a zone, it might be best to look for another location.
However, if you want to operate in an area where zoning currently prohibits your business, you can research whether there’s an exception to the zoning. Perhaps you can qualify for a "variance" or "nonconforming use.” You also might be able to apply for a zone change.
Conditional or Special Use Permits
A conditional use is when a use is legal under a zoning ordinance, but only when you comply with certain conditions. For example, a zoning ordinance might permit professional offices in a residential zone if the developer includes two off-street parking spaces for each office.
When a use is conditional, the zoning ordinance often will require the property owner to file a “special permit” application with local officials—usually the zoning and planning board—showing how certain conditions can be met with the current proposed use. For instance, a distribution center could propose to limit delivery hours if traffic and noise-related nuisances are the town’s primary concern.
After meeting with the property owner and reviewing the application, officials can determine whether the conditions have been met with the proposed use or whether the conditions can be met with small changes to the proposed use. For example, the town could propose that a greenhouse’s nighttime operating hours are limited to four employees rather than six.
Variances
A variance is an exception to the requirements of a zoning ordinance. State or local laws typically detail when and how the government will grant a variance. Usually, you must show a hardship to get a variance, such as:
- an undersized lot on which a variance is needed to construct any useful structure, or
- a lack of available land for you to buy at a reasonable cost to create the parking spaces necessary for your small business.
Nonconforming Use
A nonconforming use is when a land use preexists current land use laws. A use could be "nonconforming" because:
- the nature or characteristics of the building itself don’t conform to the zoning ordinance—for example, when the building is taller than the maximum height allowed by current law, or
- the activity going on in the building doesn’t conform—for instance, when a zoning classification changes from light commercial to residential, in which case an existing business could continue to operate, as the area around it changed.
In many situations, it would be unfair if a company developed its property in conformance with the then-current laws and later had to relocate because the zoning laws changed. So, you don't have to quit an existing nonconforming use just because the laws change and now prohibit the use. However, the right to continue a nonconforming use can be lost if the nonconforming use is abandoned.
For example, if a bar is located in an area that’s later zoned to exclude all alcohol-related operations, the bar can continue to operate. But if the bar closes, it'll either need to reopen later or another similar alcohol-related use will need to open in place of the bar for the right to the nonconforming use to remain in effect.
Zone Change
A zone change is a change in how the zone is classified. If applying for a conditional use or variance is impractical, then you can apply for a zone change.
The rezoning application process is lengthy and usually requires:
- a rezoning application
- application filing fee
- meetings with neighbors and community members
- conferences with local officials, and
- a hearing with local officials and the public.
It can be a complicated process to get approval for a variance or conditional use. The process will likely require notifying the public of the proposed change and having the local government approve the change. It’s common for neighbors to oppose significant changes, so don’t be surprised if your application hits a few bumps in the road.
Questions for Your Attorney
Relying on an exception—like a variance or nonconforming use—or applying for a zoning change comes with risks and expenses. Talk to your land use attorney about your options before committing to a location where zoning is an issue.
Here are some questions you might consider asking a lawyer:
- I'm thinking of buying an established small business. Since it's been operating for several years in its current location, do I have to worry about zoning?
- What can happen if the city finds out that I'm running my business in a zone that doesn’t allow such use?
- I can’t afford to put my business plans on hold while I wait for a variance. Can I operate my business while I wait for a decision on my variance?
- What can I do if the city or local zoning board denies my application for a variance?