Successful commercial real estate loan brokers must have many skills including a knowledge of sales, financial analysis and real estate valuation. But that’s not all. They also need a solid understanding of planning and zoning. These areas are essential for making informed lending decisions, ensuring regulatory compliance and understanding the long-term feasibility of commercial properties.
Knowledge of zoning laws will aid commercial loan brokers in advocating for projects that support local growth and expansion goals, determining whether the borrower will be able to use the property as intended and influencing their decision to back the approval of a loan.Â
Comprehending local zoning laws helps loan brokers gauge the possible risks associated with a specific project. If a subject property is not zoned for its planned use, it could lead to legal issues, costly adjustments or, in the worst case, a reduction in value.
Land use planning
The concept of classifying land use has been around for a long time. It can be traced back to ancient practices of categorizing land use and separating areas for divergent functions, such as public areas, residential areas and industrial areas. U.S. cities began implementing zoning regulations in the late 1800s, operating under the objective of separating incompatible uses, such as prohibiting an industrial factory from operating next to a school or apartment building.
Modern zoning laws in the U.S. began in the late 19th and early 20th centuries, with the nation’s first comprehensive zoning ordinance adopted by New York City in 1916. The primary purpose of land use planning has always been to ensure a balanced development that meets the needs of the present without compromising the ability of future generations to set their own needs and requirements.
Land use policies are shaped by many economic, social and environmental factors. Planning involves the process of creating a vision for the future development of a community or region. It comprises a range of activities, such as determining the most appropriate use of land based on factors such as environmental constraints, infrastructure availability and community needs.
Understanding zoning
By understanding the benefits and challenges of effective land use planning and zoning, communities can work towards creating more sustainable, equitable and resilient environments for future generations.
Essentially, zoning is a set of municipal or local regulatory tools used to implement land use plans and control the development of land. Zoning ordinances divide land into different zones or districts, each with its own set of permitted uses, density and development standards. The primary goals of zoning are to protect public health and safety, promote orderly development and preserve property values.
These laws are components of urban development and environmental management. They dictate how land is utilized, the types of buildings that can be erected and the overall organization of urban and rural spaces.
Planning and zoning decision-makers within a city typically include several of the following entities: the city council, planning commission, zoning board of appeals, city planners, department of urban development or planning and community boards or advisory committees. The specific structure and roles will vary depending on the city’s size and mode of governance.
Zoning districts include the following classifications: industrial, light industrial, commercial, light commercial, agricultural, single-family residential, multifamily residential and schools. The zoning maps in each jurisdiction will show precise boundaries for each district.
Varying regulations
Zoning regulations dictate a variety of factors, including building height and density, setback requirements (building distance from property lines), lot sizes, parking requirements and landscaping and design standards.
These regulations can vary significantly from one jurisdiction to another due to a variety of factors. Different cities may have unique zoning classifications based on their development goals.
While most cities include residential, commercial and industrial zones, the specific categories and subcategories can differ. For example, one city might have a detailed mixed-use zone allowing for a combination of residential and commercial developments, while another city may have more strict separation standards.
The differences in zoning regulations between cities are shaped by a complex interplay of local context, community needs and planning philosophies. Understanding these variations is essential for commercial loan brokers, developers, residents and policymakers as they navigate the complexities of urban planning and land use.
Land use planning
Planning and zoning laws are designed to set uniformity standards which strive to maintain the following:
- Balanced development by encouraging efficient, walkable and mixed-use development models that reduce the need for prolonged commutes.
- Sustainable property values: this is done by supporting consistent character and quality of development within a specific area.
- Public health and safety issues are enforced by separating conflicting land uses and ensuring developments meet minimum standards.
- Quality of life is maintained by requiring a variety of housing options, recreational choices and community amenities.
Challenges to planning
Planning and zoning laws are not without their issues, which include balancing growth and preservation. It is difficult to find the right equilibrium between accommodating growth and preserving natural resources and community character.
Other common problems include community resistance. Local opposition to new developments or zoning changes (often referred to as “not in my backyard” or NIMBYism) can hinder planning efforts. Shifts in population and economic conditions also require ongoing adjustments to land use plans and zoning regulations.
Addressing environmental sustainability and climate change impacts in land use planning is increasingly important but can complicate decision- making processes. Economic constraints can also result in difficulties. Limited funding and resources can restrict the ability of municipalities to implement and enforce effective land use and zoning policies.
Not all decisions made by city councils and planning commissions are consistent with the goals of a developer, builder or certain segments of the community. Residents or members of the business community don’t have to settle for the stated land use decisions.
State statutes require a mandatory appeal process which is usually performed by a board of adjustment or an appeals hearing officer. In cases where an acceptable resolution cannot be reached, the plaintiff has the option of taking their appeal to the courts for settlement.
Land use, planning and zoning are critical components of urban and regional development, shaping the physical environment and influencing the social, economic and environmental fabric of communities. They provide a framework for managing land resources, guiding growth, and fostering community development.
As communities evolve, it is essential to adopt land use plans and zoning regulations to meet new challenges, ensuring development will benefit all residents while protecting the environment and quality of life. Commercial loan brokers enhance their own value by having a solid understanding of the planning and zoning process in their state.
