Land Use Regulations and Your Small Business Text Size:

You thought the hard parts were over: you came up with a good idea or product to sell, you decided what legal form your small business would use, and you've developed a business plan and secured financing. But, where are you going to open the store or office?

Aside from the issues of location - traffic, public access, etc., the "where?" is critical: is the planned use of the property that you've purchased or leased for your small business permitted under zoning and land use regulations?

Zoning and land use regulations are designed to protect the public health and safety as well as natural resources and the environment. These types of laws can restrict or limit various aspects of any business, ranging from what kinds of business activities can be conducted on a particular piece of land, to the specifications for buildings, and the parking to be provided for customers or clients.

Zoning laws are created and enforced almost entirely at the local government level, that is, by ordinances made by a county, city, or township, and sometimes they overlap. For instance, if your proposed site is inside a city's limits, you might have city and county zoning laws to deal with. So, before you buy a piece of land or sign a lease, research the zoning laws in your area, or get some help from an experienced business law attorney.

Zoning & Land Use Laws

Zoning ordinances are supposed to form a uniform, orderly scheme for using real estate. Typically, you'll see five major types or categories of zones:

• Commercial
• Industrial
• Agricultural
• Recreational
• Residential

Typically, you can't use property zoned as one category to carry on a business that has its own zoning category. For instance, a "business" normally has to be conducted in a "commercial" zone. So, you probably can't open your business in a "residential zone," unless it falls within some type of zoning exception - like a "variance" or "non-conforming use" - or if it's a "home-based" business, which are often regulated by separate zoning laws.

Zoning Problems

If faced with the situation where your proposed site isn't zoned for your type of business, there might be some ways for you to get up and running anyway.

A non-conforming use is when land is used in a manner that's inconsistent with a new zoning ordinance. A use may be "non-conforming" because:

• The nature or characteristics of the building itself don't conform to the zoning ordinance, such as when the building is taller than the maximum height allowed by the new law, or
• The activity going on in the building doesn't conform, like when a zoning classification changes from light commercial to residential, an existing business could continue to operate, as the area around it changed

Generally, you don't have to quit an existing non-conforming use and can continue after the adoption of a zoning ordinance. However, the right to continue a non-conforming use may be lost if the non-conforming use is abandoned. For example:

• If a nightclub is operated in a storefront in an area that is later zoned to exclude all alcohol-related operations, the nightclub can continue to operate
• If the nightclub closes, the right to continue the use may be lost if the same nightclub is not reopened or if some other similar alcohol-related use is not begun within a certain period of time

Conditional use is when a use is permitted under a zoning ordinance but only when certain conditions are met. For example, a zoning ordinance may permit professional offices in a residential zone if at least four off-street parking places are provided.

When a use is conditional, the zoning ordinance often will require the property owner to file an application with local officials so that they may determine whether the conditions have been met.

Variances, or "special use permits," are an exception to the requirements of a zoning ordinance. State or local laws will normally detail when and how variances may be granted.

Usually, you must show some kind of hardship to get a variance, such as:

• An undersized lot on which a variance is needed to construct any useful structure
• There's not enough available land for you to buy at a reasonable cost so that you can create the parking spaces needed for your small business

Getting the zoning changed on property is a very difficult process, which requires notifying the public of the proposed change and having the local agency or board granting the change. Often, neighbors and others fiercely oppose the change, so don't be surprised if your application for a variance or change in zoning hits a few bumps in the road.

Spot Zoning is when a piece of land is given a zone category that is different from the zoning for the neighboring property: the supposedly uniform land use scheme envisioned by the zoning laws is bent to allow for a special use. Often, applications for variances are challenged as illegal spot zoning. Whether or not a particular exception is illegal spot zoning or permissible depends on:

• How the property is being used
• The wording of the zoning law
• The actual land use plan

Questions for Your Attorney

• I'm thinking of buying an established small business. Since it's been operating for several years, I shouldn't have any zoning problems, right?
• What can happen if the city finds out that I'm operating 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?

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