CLASS 8-C: LAND USE CONTROLS AND PROPERTY DEVELOPMENT

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1 CLASS 8-C: LAND USE CONTROLS AND PROPERTY DEVELOPMENT LEARNING OBJECTIVES When you have finished reading this chapter in the text, you should be able to: Identify the various types of public and private land-use controls Describe how a comprehensive plan influences local real estate development Explain the various issues involved in subdivision Distinguish the function and characteristics of building codes and zoning ordinances KEY TERMS Buffer zone An area generally included within a master plan which allows for a separation between residential and nonresidential districts; often a landscaped park. Building code An ordinance that specifies minimum standards of construction for buildings to protect public health, safety and welfare. Clustering The grouping of home sites within a subdivision on smaller lots than normal, with the remaining land used as common areas. Comprehensive plan A master plan to guide the long-term physical development of a particular area. Deed restriction A clause in a deed that limits the future uses of the property; such restrictions may contain limitations on the density of buildings, the types of structures that may be erected and actual usage of the property, as well as limitations on a vast variety of other uses. Density zoning Zoning ordinances that restrict the maximum average number of houses per acre that may be built within a particular area, generally a subdivision. Developer One who attempts to put land to its most profitable use through the construction of improvements. Enabling acts State statutes that authorize counties and municipalities to enact zoning ordinances for land-use control. RECP Broker Transition Course Manual Student Module 8-C, Page 215

2 Interstate Land Sales Full Disclosure Act Federal consumer protection law that requires those engaged in interstate land sale or leasing of 100 or more lots to file a statement of record and to register the details of the land and promotion with the Department of Housing and Urban Development (HUD). Nonconforming use A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area. Planned unit development (PUD) A planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision. Plat A surveyor's map of a subdivision indicating the precise location and boundaries of individual properties. Restrictive covenants A clause in a deed that limits the way the real estate ownership may be used. Variance A written permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by applicable zoning laws. Zoning ordinances An exercise of police power by a municipality to regulate and control the character and use of property so as to protect public health, safety and welfare. ADDITIONAL TERMS Building permit Written permission granted by a county or municipal government for the construction of a building or other improvement or for the demolition or substantial repair of an existing structure. Covenant A written promise to perform or not to perform specified acts with regard to property; usually found in deeds, mortgages and contracts for deed. Direct public ownership Ownership of real property by the federal, state or local government. Spot zoning A change in a local zoning ordinance to permit a particular use inconsistent with the area's zoning classifications. Spot zoning is not favored in the law and is open to legal attack by surrounding property owners. Subdivision regulations County or municipal ordinances regarding construction of new subdivisions, regulating such considerations as streets, sewers, lots and blocks, utilities, areas dedicated for public use, and so on. Zoning Board of Appeals A county or municipal board organized to hear complaints about the effects of zoning ordinances on specific parcels of real estate and to rule on requests for zoning variances. RECP Broker Transition Course Manual Student Module 8-C, Page 216

3 LECTURE OUTLINE I. Land Use Controls A. Land use controlled by public and private restrictions and public ownership of land. B. The police power of the states is the inherent authority to create the regulations necessary to protect the public health, safety and welfare. C. The states, in turn, allow local municipalities to make regulations that are consistent with the general laws. II. III. Property Tax A. Property taxes represent a property owner s portion of the local government s spending in a given year. Property taxes in Indiana are paid in arrears, meaning the taxes paid in the current year represent the taxes owed for the previous year. Taxes in Indiana are due annually in two installments - May 10 and Nov. 10. B. A property s assessed value is the basis for property taxes. Annually local assessing officials assess the value of real property on March 1 based on market value in use of the property. C. County officials add all of the assessed values of property in a county together and subtract the applicable deductions to determine the county s net assessed value. The Indiana Department of Local Government Finance sets the total amount of money government units in a county can spend in a year based on projected revenues for the county. D. This total allowed expenditure is divided by the net assessed value to determine the tax rate. Most simply, this can be explained as: 1. TAX RATE = Estimate of funds to be raised/net assessed value 2. The tax rate is multiplied by the assessed value after all deductions are subtracted from each property. The Comprehensive Plan Also called a A. Developed to ensure that social and economic needs are balanced against environmental and aesthetic concerns. B. Provides the municipality with the goals and objectives for its future development 1. Land use That which is proposed for residential, industrial, business, agriculture, traffic and transit, utilities and common facilities, including recreation. 2. Housing needs That which is anticipated for future residents, including rehabilitation of declining neighborhoods and accommodation of new housing in different dwelling types for households in all income levels. RECP Broker Transition Course Manual Student Module 8-C, Page 217

4 3. Movement of people and goods Highways, public transit, parking, pedestrian, and bikeway systems. 4. Community facilities and utilities Schools, libraries, hospitals, recreational facilities, fire and police, water resources, sewerage and waste treatment, storm drainage and flood management. 5. Energy conservation Reduction in energy consumption and promotion of renewable energy sources. IV. Zoning A. Zoning regulation 1. Local laws (zoning ordinances) that regulate the use of land and structures within designated land-use districts, affecting items such as: a. Permitted uses of each parcel of land b. Lot sizes c. Types of structures d. Building height e. Setbacks f. Style and appearance of structures g. Density h. Protection of natural resources 2. Made possible by state enabling acts. 3. No nationwide or statewide zoning ordinances but governments may regulate land use through special legislation such as scenic easement, coastal management, and environmental laws. B. Zoning classifications 1. Zoning classifications generally divide land uses into a. Residential b. Commercial c. Industrial d. Agricultural 2. Land may also be set aside for mixed-use, such as planned unit developments. C. Zoning ordinances 1. Buffer zones Such as parks and playgrounds, may be included to separate residential areas from nonresidential areas. 2. Certain land use objectives can be achieved with: a. Bulk zoning To control density and avoid overcrowding. b. Aesthetic zoning To specify certain types of architecture. c. Incentive zoning To ensure that certain types of use are incorporated into developments. 3. Constitutional issues and zoning ordinances: a. 14th Amendment to the U.S. Constitution prevents states from depriving any person of life, liberty or property, without due process of law. RECP Broker Transition Course Manual Student Module 8-C, Page 218

5 b. The tests commonly applied in determining the validity of zoning ordinances require that: (1) the power be exercised in a reasonable manner, (2) the provisions be clear and specific, (3) the ordinance be free from discrimination, (4) the ordinance promote public health, safety and general welfare, and (5) the ordinances apply to all property in a similar manner. 4. Taking: 5th Amendment Nor shall private property be taken for public use, without just compensation. a. Inverse condemnation, b. Compensation may be negotiated, c. Before and after method. 5. Zoning permits Enforce zoning laws. a. Zoning hearing boards Established to hear complaints about the effects zoning may have on specific parcels of property. b. Nonconforming use Generally applies to properties that conformed with the zoning before it was subsequently changed. c. Variance A permanent exception to the zoning ordinance. d. Conditional-use permit Granted to a property owner to allow a special use of property that is defined as an allowable conditional use within that zone. V. Building Codes and Certificates of Occupancy A. Specify minimum construction standards. B. Require building permits and periodic construction inspections. C. Require the issuance of certificates of occupancy. VI. Subdivision A. Subdivision and land development ordinances part of comprehensive plan. 1. Subdividor: Buys undeveloped acreage and divides into smaller lots for sale. 2. Developer: Constructs improvements on subdivided parcels and sells them. B. Regulation of land development 1. Controlled by state and local government. 2. State sets minimum requirements; local government may have higher standards. 3. Land development plan must comply with municipality=s comprehensive plan. 4. Plats a. Detailed map showing geographic boundaries of individual lots. b. Includes engineering data and restrictive covenants. c. Environmental impact report may be required. RECP Broker Transition Course Manual Student Module 8-C, Page 219

6 5. Subdivision plans Zoning ordinances Generally provide for street, road, and highway specifications; water main, sanitary sewer, and storm sewer installation; easements or right of ways for public utilities; and minimum lot sizes. 6. Density zoning ordinances restrict average maximum number of houses per acre. a. Street patterns (1) Gridiron pattern (2) Curvilinear system b. Clustering for open space (See Figure 19.2). Developer may choose to cluster building lots for open space. VII. Private Land-Use Controls To control and maintain the desirable quality and character of a property or subdivision. Deed restrictions Originated at the time ownership is conveyed (deed) to limit the use; binds all grantees; may have time limitations. Restrictive covenants Included in a subdivision plat or separate recorded document to set standards for all the parcels in a subdivision. Legal Issues regarding private restrictions A. Restrictions that prohibit the free alienation (transfer) of property ownership are usually against public policy and, thus, void and unenforceable. B. Restrictions that limit land use are usually valid. C. Overly broad and repugnant restrictions are usually overturned by the courts. D. If restrictions conflict with the zoning ordinances, the more restrictive of the two will take precedence. E. Enforcement of private restrictions usually requires an injunction. F. Delaying such enforcement can result in laches. VIII. Regulation of Land Sales A. Interstate Land Sales Full Disclosure Act: Regulates interstate sales of unimproved lots. Designed to prevent fraudulent marketing schemes when land is sold without being seen by the purchaser. 1. Required to register details with HUD. 2. Must provide purchasers with property report in any development that exceeds 25 lots or lots are less than 20 acres. B. State subdivided-land sales laws. 1. Some affect only sale of land located outside the state to state residents. 2. Other states regulate sales of land located both within and outside of state. 3. These laws tend to be stricter and more detailed than the federal law. RECP Broker Transition Course Manual Student Module 8-C, Page 220

7 REVIEW QUESTIONS 1. The purpose of building permits is to: a. generate revenue for the municipality. b. control the activities of building inspectors. c. ensure compliance with building codes. d. prevent encroachments. 2. Deed restrictions are NOT created by which of the following? a. Deed. b. Statute. c. Written agreement. d. General plan of a subdivision. 3. Restrictive covenants that run with the land: a. are no longer effective when the title is transferred. b. apply only until the developer has conveyed the title. c. can be removed by a court of competent jurisdiction. d. apply to and bind all successive owners of the property. 4. The primary intent of zoning ordinances is to: a. ensure the health, safety, and welfare of the community. b. demonstrate the police power of the state. c. limit the amount and types of businesses in a given area. 5. Before the government can exercise its right of eminent domain, the use of the property must be: a. a public use for which the property owner will be fairly compensated. b. established for the health, safety, and welfare of the government. c. a local use that will benefit the residents in the immediate area. d. established as a fee simple determinable estate for a particular use. 6. A conveyance that includes a condition controlling or limiting the use of the property conveyed is an example of: a. the need for competent legal advice. b. a deed restriction. c. the need for a zoning appeal. d. a zoning variance. 7. Under an existing ordinance no signs may be placed on a building that extends more than 3 feet above the highest point of the roof. An owner wants to erect a 9 foot high revolving sign on the roof of his store. To legally do this, the owner must get a: a. deed to the air rights. b. variance. c. nonconforming use permit. d. court order. 8. The owner constructed a building that is 7 stories high. Several years later the municipality changed the zoning ordinance, prohibiting buildings that exceed 6 stories in height. Which of the following is true regarding the existing 7 story building? a. It is a nonconforming use. b. The building must be demolished. c. It is a conditional use. d. The owner must obtain a variance. RECP Broker Transition Course Manual Student Module 8-C, Page 221

8 RECP Broker Transition Course Manual Student Module 8-C, Page 222