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Why Zoning Reports Mark the Beginning and End of Real Estate Transactions

by | Oct 13, 2022

Zoning laws are a fact of life in practically every part of the United States. They create an orderly development of property that benefits communities economically, socially, and environmentally.

Zoning constantly evolves keeping pace with real estate trends, such as the proliferation of all types of uses such as multi-family housing, retail, office, self-storage, warehouse/distribution facilities, and the changing needs of communities. As a result, commercial and residential real estate projects can sometimes face zoning issues which may cause time-consuming and costly delays in a financial transaction, or possibly prevent the development of new construction.

To help alleviate this problem, the property owners, lenders, investors or borrowers typically obtain assessments or due diligence reports on their projects. From a zoning perspective, Parties should order a Zoning Assessment Report which provides the history, existing conditions and a breakdown of the use, structure(s) and improvement compliancy. The zoning report is a product that includes confirmation of the property jurisdiction, zone district, use permissions, developmental guidelines, information and documentation on zoning, building, fire violations, planning approvals, and certificates of occupancy. In addition, to determine the improvements and structure legality, the report compares client-provided reports such as an ALTA survey, appraisal or property condition reports to the zoning requirements in order to determine the compliance of the property in question.

Zoning Assessments are also beneficial to the telecommunications industry. A zoning report can help answer a variety of questions, such as: Is the cell tower in compliance with the current zoning laws? Can a cell tower be placed on a particular parcel without knowing if it’s allowed by the municipality? If this cell tower was destroyed by natural disaster, can we rebuild it?

For example, telecom companies have been increasingly building or upgrading cell phone towers across the country to meet surging cell phone demand. According to an industry report, there are more than 420,000 cell towers nationwide and more are on the way. A significant amount of this activity is being driven by the rollout of new broadband technology, called 5G, which is faster and has greater capacity than the previous network generation.

Many zoning authorities, however, have adopted a tough stance on where and how these towers can be built due to changes in zoning codes or community resistance toward these structures.

The growing U.S. cannabis business is another industry that benefits from these reports because they determine whether the property can be used to sell or grow cannabis products and list other zoning restrictions impacting this type of business. This information helps determine the best location and business model.

For proposed construction projects, developers often seek a site feasibility report, which spells out specifically what a municipality will permit to be built on certain property types. This report includes a detailed site analysis of the proposed project, which includes the project’s planning and development requirements and cost; building, permitting and inspection cost; and design standards such as landscaping, parking, signage and utilities. Site feasibility reports are also particularly valuable for projects that face unique challenges in gaining zoning approval.
Outside zoning specialists and professionals help owners successfully navigate the complicated and ever-changing zoning laws and property codes. BBG offers industry-leading, comprehensive zoning experience with expertise in diverse real estate properties and markets. The firm’s zoning practice offers Zoning Assessment Reports, Zoning Summary Reports, Site Feasibility Reports, Document Searches and special add-ons to Zoning Reports such as Flood Zone Information.

Learn more about Zoning Due Diligence or Request a Quote by contacting rtaylor@bbgres.com or assessmentsales@bbgres.com.

In addition, check out Rosetta Taylor’s Podcast called Let’s Talk Zoning available on YouTube and LinkedIn. There she covers several topics related to zoning due diligence.