How to find what a property is zoned for in the city’s website? What are some tips on working with the city to get your project approved? How to go about rezoning a parcel? Scott Krone, principal at Coda Design + Build and Coda Management Group is a developer with over 30 years of experience and shares his knowledge.
Watch this interview here: youtube.com/watch?v=1jomhuWFtGg
Tell us a little bit about you.
I’ve been in architecture development, and design build since I got my master’s degree back in 1994. I had a professor who was an architect, developer and contractor. My background with him was with multifamily, and that’s how my real estate career began is working on his actual projects while in school. It was a great educational process for me, because I got to work on real life projects, I worked for him for six years, and then, when I was 28, I decided to go out on my own and start Coda Design Build, and it has progressed into Coda Management Group, and we’ve developed it into One Stop Self storage as well.
What does Coda do?
We’re developers, a design build firm. We also oversee our assets of self-storage facilities. And One Stop Self storage is a platform which our customers interact with.
Let’s go over an entitlement example please.
When someone brings us a property, the first thing that we do, and we’re determining if we’re going to move forward with it, is we look at what are the entitlements. Entitlements are a fancy word of saying, what is the zoning, what are you entitled to do on a property. A lot of people think that they have to go to someone in the city and get this information, when, in reality, it’s already out there in public forum. As developers, we will always go and look to what it is, and then, we will trust, but verify. We will then go back to the city planners and say, this is what we saw, we want to make sure that we’re in agreement. It’s our way of trusting and verifying with the city official.
I selected a location that we recently worked on in the City of Dayton, and I picked this one because there’s a lot of different things here. There are tabs called residents, businesses, government. Typically, we go to government, because that’s where the different departments are broken down. Here you see planning, neighborhood and development, public works, community communications, community development, boards, commissions and committees, these are all different ones. Public Works has sewers and water lines, planning, neighborhood and development, this is probably where the information is going to be under, because this is how they plan for things.
We click on that one, and it comes up with the zoning coded map, it has an interactive zoning map, this one is really nice. Others might be on a PDF. We will click on that, and then, we put in the address, the property comes up, and we can click on show more results.
Just to clarify a couple of things: 1. every city website is going to be completely different, unfortunately, from one another 2. what we’re looking at right now is either a property that you are looking at purchasing or expanding to make sure that it’s zoned or could be rezoned, correct?
We try not to rezone, but if we do, that’s a whole different process. Right now, we’re trying to determine what it is that we are allowed to do. When we look at this one, 535 East Third Street, it’s bouncing back and forth between these two, I’m not sure why. I’m going to zoom in to see the streets, because then that way I’ll know where we are. We are now under the UBD District, but UBD means nothing to me, I have no idea what that is, they’ve come up with this general term. It might be unified business district, it might be, etc. But that is what we’re going to be looking for when we do it. If you look under this category, there’s a PD 108, this is a planned development, and that was 108th planned development HD 2. These are all different districts that are zoned, if we zoom back out, you can see the different zoning sections, they all have different colors to make it interesting. I2 is typically industrial, a second version of industrial. There’s a CBD, which might be the commercial business district as opposed to unified business district. So those are all the things that we look for in terms of the breakdown.
We know we’re in the UBD district and we’ll now look for the zoning code. In this case it’s a PDF, and that’s not so good, because there are some cities that have interactive ones, which are better, and this makes it a little bit harder. The first thing we always look for is definitions, because the definitions are what drive this process. Here is the use district regulation, they’re broken down between commercial districts, downtown districts, manufacturing, urban preservation overlay, and here’s the industrial districts, but I’m not seeing UBD. Let’s then go to the commercial district, on page 185, which describes what is in the commercial districts to accommodate retailing services that typically serve a limited neighborhood, it tells us the different uses that are permitted in a commercial district. But the real kicker is what is allowable. The permitted uses are per this subsection, 150.300.2, we’re scrolling through and you see assembly hall or auditorium, and then the S&C district, it is permitted. P means permitted, and an A means allowable, allowable means that it’s permitted, but you still have to ask for their permission to allow it, and C is typically conditional.
We always look for the use that we’re trying to find that we want, and seeing if it’s permitted in this specific district. If we’re doing self storage, I’m scrolling to see if it is permitted, but I’m not expecting it to because we were permitted by right for our property, it was not in this district. For outdoor storage goods and general materials are an allowable use in the eclectic general commercial district, or the suburban general commercial. They’re getting very specific in terms of their different districts. If I’m not sure what outdoor storage or commercial goods are, then I go to Section 300-002. I’m scroll back up, we’re jumping around a lot, but this is necessary to get into these different districts to find out what is defined and what is not defined.
When we went through this process in the City of Dayton, we saw that our property was zoned for commercial and self storage. We went down to government, to the Department of Economic Development, we saw that under community development, design review. We met with them and said, this is what we’re looking to do with this building, we understand it’s as of right. We went to the planning and development, we see that there’s building services, community engagement and development, which is comprised of the economic development and the community development. We went to them and said, this is what we’re looking to do. And they said, it’s allowable, but we don’t like that you’re doing this with exterior elevation, the code says that you have to have 40% glass, we want to see this entire elevation in glass, and at least two floors of glass on the side street; and if you do that, we’ll be happy. We said, great.
I didn’t want to make the whole street elevation glass because with self storage, there’s no reason to see into our buildings, it makes our buildings less environmentally efficient, because we have heat gain into a building that we’re not trying to cool. The less glass we have, the more economically friendly it is to keep it at one temperature. We did it because we wanted to work with the city. We submitted the permit, got the permit, and when it came to getting another approval, as part of our financing with the city, they were withholding it. We asked why they were withholding it. They said that we didn’t ask them what they wanted. We said that we met with them and here are the meeting notes, here’s what the response was, how we implemented, how we got the building permit; we’ve done everything, all of the outlines that are here. They said, that we didn’t come to them first. We said, what is it you’re looking for. They said tat they didn’t want self storage. I said, if you don’t want self storage, why is it zoned for self storage? They said that they weren’t expecting it to be self storage.
I then tried talking about how self storage serves the community, and the benefits of it, and asked if you didn’t want it, what do you want? They said that they wanted retail. And we began this process of negotiating with them what we were going to put on the first floor for an X period of time, and they wanted me to give up my zoning rights. I was not going to give up no matter what, because they would have the ability of changing what my zoning was, and we compromised.
They said that they wanted a coffee shop which is around 1,200 to 1,500 square feet. I said I’d give them the prime corner, I will put it on the market for one year and if we can’t lease it up, it will revert back to self storage; if not, it will be a coffee shop. I’ll rent it at the same price per square foot as my self storage, $15 a square foot. They said, no it should be $4. I said, if it’s in such high demand, why do I have to discount $11 a square foot. I agreed to go down to $12 a square foot, and they said to do so for 18 months, and I said fine. I listed it for $12 a square foot for a year and a half, we didn’t get one serious offer, and we reverted it back to self storage.
If I wasn’t familiar with the codes and entitlements, then I would have been subject to what they wanted versus what the law says. These codes are laws, they are passed, they’re implemented, and that’s how you can get cited for the things you don’t follow. We were in the urban business district, which was allowable. When you see eclectic, mature, suburban, etc, these are all the different ways in which they named them. Within each of these districts, you have permitted uses, supplemented permitted uses, conditional uses and accessories. It also goes into how much of the land you can cover, what your setbacks are. In your case, you were asking me if it’s a permanent structure versus a non-permanent structure. If you’re going through the process of having to rezone something, and you see the use is prohibited, then I’m sure you’re not going to get it.
When we look at the zoning maps, we look for trends, if we’re going to be an outlier in a neighborhood, if you have huge mansions that are on one home per acre of land, and someone wants to come in and put a six story apartment building, all the neighbors are going to be upset, you’re not going to get it.
If you want to put a single family home in a city, and you have high-rises, they will say why would you want to do that? It could also be equally as permitted, because the city wants to maximize the tax revenue. All of these things are generated to make sure that the tax revenue is in alignment with their codes, that’s the underlying principle of what the entitlements is, to make sure that there’s representation and getting your equal opportunity to pay your tax. When we begin our process of looking at a property, we look at what is the zoning to make sure we can do what we need to do, and if not, what is the process to change it.
What you went through is for a property you have already identified, correct? If people are looking for off market deals, they would do the opposite, look at the code first to identify what the code is for whatever you’re looking at building, and then look at the city map for the codes, correct?
If I’m driving down the street, and I see a property for sale by owner, then that would be the case that I would go in and put the address in, I’d look at the zoning map, see what the current zoning is, what is permitted to see if I can even do what I want to do with the property.
When I first started, we were assigned a 50-acre site, it was formerly a Sara Lee factory, it’s where they would bake their breads and their pound cakes. The assignment was to come up with a plan for 1,000 condominiums. It was zoned industrial because it was a commercial bakery. It wasn’t a storefront retail baker. This is a massive plant, on 50 acres. Since it was zoned industrial, we had to figure out what would be the process to convert it to residential. That’s called a PUD, a planned urban development. When we were looking at the zoning map it was a PD, a planned development. The city outlines what is the procedure for changing the zoning, that’s called a planned urban development. That took a year, meeting with architectural review committees, zoning committees, planning commission committees, and the village board. If one of those says no to you, you have to go back to the beginning and start it all over. One of the properties that I did this with took 36 meetings.
Was that in California?
It was just north of Chicago, and the property was vacant. There were homes from 1800s, and the neighbors started revolting because one neighbor was going to sell the property to them and when they went to sign the contract they wanted an extra $100-150,000, so the developer said no, we don’t need you. So the neighbors started this revolt against the developers because they weren’t included. We were the third developer into the property, the other two went bankrupt on it, and we were able to convert it in two months, and that’s the best case scenario. It was zoned for self storage, it was a warehouse, and an office building, and we were going to do a class A facility. The requirements for self-storage was you had to have someone live there, you have to have a fence, and we said that this doesn’t really apply, how do we work around this. And the municipality said, we’re small, and don’t really know much about this, why don’t you just write the code and we’ll adopt it?
I went to architecture school, not city planning school, I had never written zoning codes. We actually looked at the county zoning, and modeled it after the county’s and used that to say, if the county adopts this, you shouldn’t have any problem adopting it as well. They liked that. We also looked beyond our own zoning, and tried to come up with other uses, in case we wanted to change the parcel so that we’d have a lot of flexibility. That was the easiest one, two months, and the longest one was a year.
Does your company does entitlement work for other people’s projects and buildouts, or just for yourself?
We have done it for a few churches as well. We had to entitle a church back into a church. Originally it was a church, then it became a Veterans of Foreign Wars and a dance studio. Someone was going to convert it into a winery, he couldn’t get his liquor license, then he sold it to the church that I was working with. We had to rezone it back into a church. We have also done single family homes, townhomes, multifamily, industrial, and self storage.
I have a piece of land, and it is not zoned for self storage, it’s zoned for retail or multifamily, and it’s not in a zone where retail would be a good spot. I had to ask the city at least five different questions for them to say, well, if you do a component of office, we can possibly approve the self storage side. This information was never volunteered in the first place, you have to dig and ask more questions, until you really get to the bottom of what could really possibly be zoned or rezoned for.
If you are trying to rezone something, it’s good to find out what they want. When we were rezoning the church back into the church, this was on a small piece of property, the original church got built, there were farms around it, and they sold it all off, and we had single family homes next to it, they had no onsite parking. One of the requirements was that you had to have one parking space for every 5 or 10 seats of assembly. All zoning comes down to parking, if it’s multifamily, it’s how many parking spaces per apartment; it’s retail, then it’s how many parking spaces per retail square feet. For self storage, we don’t need a whole lot of parking, we just need four spots.
The church needed 175 parking spaces, and across the street was a municipal parking lot, and the city said, we’re going to give this to you, we want something in return, we want that repaved, we want a new parking lot. And I went to talk to my client, I told him that he is asking them for something, so what are you going to give them in return, because you don’t have anything to give them, and you need this. I said it was going to cost about $80,000 to redo the parking lot. The pastor said, okay, that makes sense, we’ll put it in the budget, let’s get it done, we need this building. That was the exchange, the give and take in terms of, if you’re asking for something, be willing to give something up.