Bad idea to rezone from residential to affordable housing

by Lynn

Visitor Question: My family owns property in New Jersey that is currently zoned residential but is being used for business because our business has been there a long time.

The town has approached us about rezoning for affordable housing, so that if we ever decide to sell the land it would be utilized in that way.

NJ has been seeking to enforce the affordable housing act lately and we think the town is being pressured to come up with potential land earmarked for this purpose. There is little developable land left in our town.

What would the pros and cons be of rezoning, specifically related to land value?

This is something the town wants to happen so it would probably be an easy process at this point in time. It's possible the political climate will change and we may not have this opportunity again (or it will be an uphill battle).

Editors Reply: We presume that by affordable housing, you and the town mean multi-family housing where more than one household would be living in a building.

If so, land is usually considered more valuable with multi-family zoning than with single-family zoning.

We have only a couple of reservations about this. The first one is that you want to make sure that the town's zoning laws allow you to continue with your business if the land is rezoned. Probably that is not a problem, since you are doing business there now, but it is best to make sure.

While you are asking the town about this, make sure you understand whether the rezoning would impact whether you could resume business even if part of the building is destroyed.

Many towns and cities have a so-called grandfather clause that allows what are called nonconforming uses (nonconforming to the current zoning ordinance, that is) to continue. But also there are many provisions that indicate if a nonconforming use is destroyed, it cannot be rebuilt without conforming to the zoning ordinance.

But we wouldn't think that would be a problem either, since you already are a nonconforming use and would not be worsening your situation if the land were to be rezoning for multi-family housing.

The other consideration is that your property tax assessment no doubt would increase if you rezone from single-family to multi-family. You would want to do a little research on that, or make some tactful inquiries directly to the assessor. Property taxes are so high anyway in some areas near New York that this could be an important factor in your decision.

We want to suggest a different option for you to consider. If you like it, you could discuss the possibility with the town, which might or might not be accommodating.

In most cases commercial (business) zoning results in a high property value than multi-family zoning. Some towns have what is known as cumulative zoning, which means that everything permitted in a lower zoning classification, such as single-family residential, is permitted in the next higher class, such as multi-family residential. In turn all residential might be permitted in some commercial zoning districts. If this is the case in your town, you might ask the town about whether commercial zoning would be possible. Normally this would give you the highest possible property value, and in your case, you could argue that you are only asking for zoning that is compatible with long-standing land use.

Again concerns about your real estate tax assessment should be addressed before going too far with this option.

One other note is that you might ask your town whether it is possible to pursue the rezoning without affordable housing being mentioned prominently. Your question almost makes it seem as if affordable housing is the title of a zoning classification. Some people hear that phrase and immediately begin to imagine the worst. You would then want to think carefully about how much complaining and anger from friends and neighbors you are signing up for. To be fair, all multi-family housing, even if luxury housing, is subject sometimes to neighborhood objections, but you are in the best position to anticipate what neighbors might think.

If you want to do this, try talking with the immediate neighbors first to see how they feel about it.

But the land value is all on your side if you are upgrading from single-family residential to either multi-family or commercial.

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