Michigan Has New Rezoning Tool

May 9, 2005
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LANSING — A three-bill package signed into law this past winter has granted Michigan municipalities the authority to enter into contracts with private developers to specify certain land uses as conditions for rezoning.

The practice, known as contract zoning or conditional zoning, first emerged in the state as one of the Michigan Land Use Council’s recommendations in 2003. Michigan is one of only a half-dozen states to allow the practice. It was almost universally supported by the development community, with backing from the Michigan Townships Association, Michigan Home Builders Association, Michigan Chamber of Commerce, New Designs for Growth, Michigan Farm Bureau, the Michigan Land Use Institute and the Michigan Environmental Council.

“The theory is it gives municipalities more control over the rezoning process but also alleviates some of the acrimony that has come to exist regarding many controversial rezoning decisions in municipalities across the state,” said Brian Page, managing partner of Dykema Gossett PLLC in Grand Rapids.

Prior to the contract zoning amendment in January, if a project did not fit within the zoning classification or the municipality’s master plan, the developer needed to get the property rezoned.

The problem from the municipality’s side was that once it agreed to the rezoning, it was stuck with the new classification. Since zoning regulations “go with the land” rather than with a project, developers have sometimes convinced municipalities to rezone land based on a persuasive site plan, then pulled a “bait-and-switch.”

“Once it’s rezoned the developer can come back with a whole different project,” Page said.

While contract zoning creates a failsafe for the municipality, it can aid the developer, as well.

“The municipality might not have agreed to the rezoning in the first place, or you end up in a situation where the community is wholly against the rezoning because they don’t believe that there is enough control over the process,” Page said.

“The theory is it gives both the local municipality and the developer more control over situations where rezoning is necessary in order for a particular development that both the developer and municipality want, but there is some flak out there making it a controversial situation.”

As the law is written, the developer must enter into the contract voluntarily. In fact, some planners fear that contract zoning may prove unconstitutional if proposed by the municipality as a condition for rezoning.

The first mention of contract zoning in West Michigan occurred last month at a planning commission meeting in Robinson Township, when attorney John Cameron brought up the idea as a solution to push through a 175-acre residential development.

His clients, Fred and Adele Croft, are seeking to rezone 11 adjoining parcels that stretch from Lincoln to Johnson streets from rural residential to single-family residential. The rezoning would allow a minimum lot size of three-quarters of an acre compared to the 1.8-acre rural residential minimum. The smaller lots would allow for a 220-home development.

Earlier this year, Grand Rapids-based Eastbrook Homes failed in its attempt to create a 198-unit planned unit development (PUD) on the site.

Neighbors wholeheartedly protested the new proposal, citing concerns for rural life, water and light pollution. There was even a statement from the Grand Haven Area Public Schools proclaiming the district could not support such a large influx of families.

After tabling the request for a later date, Cameron suggested contract zoning as a possible compromise.

“It’s different than a PUD,” he told the Grand Haven Tribune. “It provides an opportunity for the municipality to protect itself and it provides an opportunity for the applicant — but there is still a box around it.

“While it relaxes some of the restrictions for the PUD, you gain flexibility to address items that cannot be addressed in a PUD and to address them in different ways. And the hammer that the statute provides for a violation of the zoning contract — that is to rezone it to the former classification — is something that is much more severe.”

Under contract zoning, the rezoning applies only to the specific project as proposed by that developer, Page said. Strict timelines and uses are built into the contract. If the developer doesn’t go forward with the project, the zoning reverts to the original status.

“It gives the community the ability to demand the special provisions that they want as part of the development deal, and it allows the developer to get the approval without having to sue the municipality,” Page said.

Page used a manufacturing example. The municipality might want to see a certain facility built, but the community might not want to risk rezoning to general manufacturing. Contract zoning allows the municipality to rezone for that specific project, without the possibility of a less responsible user moving in instead.

“It’s still subject to referendum,” he noted, “which is one of the more curious aspects of this. At least that’s what they say, because it hasn’t been tested yet.”

Other unanswered questions include what would happen to a contract-zoned facility if it were vacated.

Brad Ward, director of public policy and government affairs for Michigan Association of Realtors (MAR), believes contract zoning can offer more benefits than serving as a tipping point for controversial developments.

“I envision something like a mixed-use development where I want to have condos as well as single-family homes, and some light commercial like a coffee shop and bookstore — new urbanism-type deals,” Ward said.

“But in order to get that project approved, I have to go through a very, very lengthy rezoning process.”

Besides alleviating that often long and sometimes costly burden, contract zoning also allows the municipality to negotiate with the developer about features each is looking for.

The municipality can trade smaller lots for sidewalks or condominiums next to houses for streetlights.

“It puts the local government unit and the developer on equal footing to come up with a development plan that fits into the community and the scheme of what the township wants to accomplish with their land use,” Ward said.

Ward said the practice allows for greater flexibility, design and use for the developer, making his project and the community as a whole more marketable and attractive.

Another legislative change that MAR is excited about is the new streamlined platting process that will go into effect in July.

By enabling developers to present a preliminary plat to all approving bodies before creating final plans, the new structure allows for simultaneous approval of the final plat by all authorizing bodies. The frontloaded approval process could cut more than a year off the sequential platting timeline.         

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