Understanding the dynamics of municipal zoning, including how planning and development departments operate, are important keys to becoming a successful real estate investor. The type of land zoning affects what a property is worth, and the level of ‘worth fluctuation’ is based on supply and demand – how much of a particular zoning there is in a municipality or group of nearby municipalities versus the demand of those wanting to use land for a specific purpose. This article explains a procedure that investors may wish to employ when deciding to make an offer and when removing conditions on a purchase; what municipalities use to make zoning decisions; and a current case example on municipal zoning (i.e. City of Edmonton).
When investors offer to purchase residential or commercial property, it is important to confirm the following information from your REALTOR® first before (or after) a deal pending; next to check with a reputable real estate lawyer to obtain a legal perspective; and thirdly confirm with the governing municipality development department all of the following: relevant property characteristics including past zoning applications, permits, lot size, etc. on file; the current zoning; the current zoning restrictions; and the current zoning of adjacent or nearby neighborhood parcels. These factors will affect what the property can be legally used for today and what chances there are of expanding the property’s use to more valuable uses in the future. Note the municipality maintains control for direct control provisions, discretionary uses, and special requests requiring municipal interpretation and decisions, and the municipality has the flexibility and obligation to make these decisions within the bylaw zoning control and land use limitations. It is impossible to predict with certainty how the municipality would respond to issues that are not ‘black and white’ since various factors come into affect for decision making including levels of public response to re-zoning and permit applications.
Using the City of Edmonton as an example (note restrictions and bylaws vary for every county or municipality), open the link below to view the Current Zoning Bylaw No. 12800 dated May 2009 (note: zoning bylaws are subject to change):
< Current Zoning Bylaws - City of Edmonton >
This document contains information related to but not limited to the following: Zoning and Development Approval Procedures; Use Class Definitions; Development Officer Authority and Responsibilities; Development Classes; Development Application Submissions; Special Information Requirements; Development Permits; Regulations related to Lots and Yards; Miscellaneous Regulations (including Fencing; Lighting; Height; Accessory Uses and Buildings; Parking; Excavation; Landscaping; Performance; Signs; Special Uses); Secondary Suites; Residential Zonings; Commercial Zonings; Institutional Zonings; Overlays; and Special Zonings. This bylaw (in conjunction with other applicable bylaws) is used by the City of Edmonton Planning and Development when deciding how to proceed with: rezoning applications; development permit applications; decisions on whether a current or proposed land use is correct for the zoning; penalizing illegal land use; etc.
In summary, because municipalities maintain absolute power to shut down a non-complying business or order an entire or part of a non-complying building to be changed or destroyed, it is important for real estate investors to consult your REALTOR®; your real estate lawyer; and a municipality bylaw enforcement officer to understand everything you can about the current zoning, its limitations, and the municipality’s plans of aggressiveness for future development expansion before removing conditions to purchase either a residential or commercial property. Ask your REALTOR® to show you past sales and trends of similar properties so you can see how changing or retaining the current zoning (municipal land use) may affect the future value. Caution must be used when projecting supply vs. demand over a long term basis (e.g. over 5 years) because at any time (unless strict development expansion restriction bylaws are in place) the municipality can open up more land for developers if they believe that supply is not sufficient to keep up with the demand. As the ‘municipality aggressiveness for expansion’ increases, the property values for both established and new areas will decrease. Likewise, municipalities with higher restrictions on expansion will, with all else equal, experience higher property values.
[To review my previous articles relating to this topic, open the following links: < Legalizing a Basement Suite in Edmonton >; < The Importance of RPR and Compliance >; < Buying a Vacant Residential Lot >; and < Regulations for Yards, Access, Design, and Height Requirements, and Secondary Suite Safety Standards >].
[Article written and ©2010 by Kelly Grant, M.Eng., ABR, NCSO, P.Eng. - REALTOR® at Maxwell Devonshire Realty in Edmonton, AB]
Disclaimer: for those readers not currently represented by another licensed REALTOR®, to obtain more information on this topic and / or if you are serious about selling or buying in the Greater Edmonton Area, call Kelly at 780-414-6100 (pager) or send Kelly an email to SOLD@KellyGrant.ca to schedule a confidential appointment.