1.3.1.3. Zoning and Land Use Controls. Zoning is a factor to be considered in evaluating property. Accordingly, if the property to be appraised is subject to zoning, the appraiser must identify the applicable restrictions and interpret the impact of such restrictions on the utility and value of the subject property. If zoning is uncertain, legal instruction may be required. In selecting comparable sales for use in the appraisal, the appraiser should select those sales that have the same or similar zoning as the property being appraised.36 

The appraiser must consider not only the use restrictions of the zoning ordinance, but also other provisions of the zoning ordinance that may affect value. Examples include lot area requirements, building setback requirements, floor/area ratios, lot coverage ratios, off-street parking, landscaping requirements, height limitations, treatment of preexisting nonconforming uses, and treatment of uses that became nonconforming after adoption of the zoning ordinance. If the appraisal involves a partial acquisition, the appraiser must consider the effect of the zoning provisions on both the larger parcel and the remainder property. 

Special care must be taken to determine the effect of a zoning ordinance on a remainder property that has been converted to a nonconforming use by the government’s partial acquisition. Some ordinances have specific provisions to reclassify or “grandfather in” properties that have become nonconforming by reason of a partial acquisition by a governmental agency. Other ordinances contain no mechanism for converting a property that has become nonconforming after adoption of the zoning ordinance into a conforming property or classifying it as a preexisting nonconforming use. Penalties for nonconformity can be severe under such circumstances. 

The appraiser must consider not only the effect of existing land use regulations, but also the effect of reasonably probable modifications of such land use regulations,37 such as what impact on value any probability of a rezoning of the subject property might have. Although an appraiser might conclude that a property could be put to a more profitable highest and best use if it were zoned differently, this does not in itself suggest that a probability of rezoning exists. 

An investigation of the probability of rezoning should include: 

• interviews of zoning administrators and members of the legislative body that make final zoning determinations; 

• reviews of all rezoning activity of nearby property (both approvals and denials), land use patterns in the neighborhood (and any recent changes), physical characteristics of the subject and nearby properties, neighborhood growth patterns, and land use planning document provisions; 

• investigation of neighborhood attitudes concerning rezones; 

• determination of the age of the zoning ordinance; and 

• analysis of sales of similar property to determine whether the sale prices reflect anticipated rezoning. 

If the probability of a rezoning is impacted, either positively or negatively, by the government project for which the subject property is being acquired, such impact must be disregarded under the scope of the project rule.38 In partial acquisitions, the probability of rezoning must be separately analyzed in regard to the larger parcel before acquisition, and the remainder property after acquisition. If the remainder property has a greater probability of rezoning, there may be a direct benefit to the property that must be offset against the total;39 if such probability has been diminished, a compensable damage may have occurred.40 

In addition to zoning, the appraiser must consider the impact of other land use regulations on the utility and value of the subject property. These land use regulations may be of local, state, regional, or national origin. Many common land use regulations that may have an impact on property value are listed in the sidebar. The client agency should advise the appraiser of any special or unique land use regulations it has identified that may affect the value of the property. 

Common land use
regulations that can affect
market value:
• building codes
• health code regulations
• subdivision regulations
• development moratoria
• other development restrictions
• environmental impact statements
• shorelines management requirements
• coastal zone management
• flood plain management regulations
• comprehensive land use plans
• mining regulations
• timber harvesting regulations
• wetland regulations
• open space requirements
• endangered species protections
• noise, air, or water pollution controls
• hazardous or toxic waste controls