Does a Zoning Ordinance Prevent or Restrict Your Business' Planned Expansion?

I am often asked the options one may have when a zoning ordinance prevents or restricts a business from expanding. This article discusses some alternatives one may possess when confronted with such an obstacle and the department within the local government that may grant the requested relief.

In Michigan, nearly all property is zoned by the local government, more commonly known as either the city, village or township. Local governments are a sub-instrumentality of the State and have no inherent power of their own. Each local government obtains its authority from the State either by a direct line of power from the Home Rule Provision of the Michigan Constitution or from the Legislature through State law. The Michigan zoning enabling act sets out the procedures for the enactment, amendment and administration of zoning ordinances, and it is from there where local governments receive their power to impose restrictions on real-property. When such restrictions prevent or restrict a business’ planned expansion, the business generally has four alternatives.

First, a landowner may seek to obtain a variance from the zoning board of appeals. A variance is one of the most commonly used techniques and acts as an exception to a specific zoning ordinance. Practically, a variance allows one to use or build upon property in a manner that violates the specific zoning ordinance. There are two types of variances, area variances and use variances.

Area variances provide exceptions to height and density restrictions, minimum lot size requirements, setback requirements and similar restrictions. In order to obtain an area variance, the following must be shown: (1) the literal enforcement of the zoning ordinance will result in unnecessary hardship or involve practical difficulties; (2) the practical difficulty or unnecessary hardship must not be self-created by the landowner; and (3) the unique circumstances of the subject property.

Use variances allow landowners to use their land in a manner that the zoning ordinance would otherwise prohibit. For example, use variances have been granted to allow a trucking business, medical office building, as well as an electrical contractor’s shop to operate in an area zoned as residential. Further, a use variance may also be sought to extend a businesses hours of operation, though prohibited by the municipal ordinance. In order for a use variance to be granted, the following must be proved: (1) the literal enforcement of the zoning ordinance would result in unnecessary hardship or involve practical difficulties; (2) the practical difficulty or unnecessary hardship must not be self-created by the landowner; (3) the property cannot be reasonably used only for a purpose permitted in that zone; and (4) the spirit of the ordinance has been observed, public safety secured, and substantial justice done. Note, due to its stringent standards, it is typically more difficult to obtain a use variance than it is to obtain an area variance.

Second, the landowner may seek a special land-use permit. A special land-use is one that is authorized within a zoning ordinance, but which permission must be obtained before the property is used in such a manner. Hence, a special land-use permit is only issued if it is found that the landowner’s use qualifies under the zoning ordinance. Examples of what uses fall under such zoning ordinances include recreation centers, multi-unit residences, private clubs, driving ranges, movie theaters, service stations and day care centers.

Although special land-use permits are discretionary in nature, the ordinance that provides the criteria for approval cannot be vague or ambiguous. As such, the ordinance must provide: (1) the standard and elements that must be fulfilled; (2) whether the city council, township board, zoning board of appeals or the planning commission is charged with the review and granting of the permit; (3) the procedures and information that are required for application and review; and (4) the special land uses and activities which are eligible for approval. Additionally, the approval of the permit requires the body to make a finding of fact and specify the basis for its decision to approve, deny or approve the permit with conditions.

Third, a landowner may seek an amendment to the zoning ordinance. Generally, the legislative body of the local government may amend a zoning ordinance if the landowner can show the amendment will serve the health, safety, morals and general welfare of the municipality. If the subject property is found to be rezoned solely for the benefit of the landowner, however, and has the effect of increasing the subject property’s value, then the amendment may be subsequently challenged and invalidated. When the amendment is made for the benefit of the municipality as a whole, and not solely for the benefit of the individual landowner, the amendment is legal and valid even though the individual landowner may benefit. Examples of amendments that have been upheld are when lots within a residential district are rezoned to allow for retail and other commercial shops, which benefits the community as a whole.

When seeking an amendment the specific zoning ordinance or ordinances should be completely understood. Further, it is generally good practice for an attorney to discover any variances or special land-use permits that have been previously granted, the historical use of the subject property, the land use trends of the surrounding property, as well as the surrounding utilities, roads and infrastructure, all of which may assist in persuading the legislative body to grant the amendment. For an amendment to be valid, it must also be adopted in accordance with the prescribed procedures set out by the municipalities charter.

Finally, if the local government does not grant the variance, the special land-use permit or amend the zoning ordinance, the landowner may have the right to appeal the decision to the circuit court or challenge the zoning ordinance itself. In fact, some ordinances have been held to be void after it was found that the municipality acted contrary to procedure or the powers granted to it by the State, as local governments have no inherent power of their own.