One parcel, half zoning residential, half zoning commercial

[Terrel L. Shields]

So I guess the real question is, who is the imbecile at the planning department responsible for this?

The former mayor owns it. He thought it would make it worth more.

 

[George Hatch]

How can you even attempt a H&BU analysis if (a) it can't be subdivided, and (b) there are two different zonings? Unless, of course, one is an overlay, but I don't get that from the OP's post...

They're actually no more difficult than any other HBU analysis. Forget the split zoning for a second and think of the appraisal problem as a whole. This split zoning situation isn't the only way mixed use properties get built. Lots of the commercial zoning regs also allow mixed use development. When the development potential of two sites is comparable then that's the thing, not necessarily what the zoning itself is.

Long story short, it's like any other new-to-you appraisal problem. The first one of these you do will be tougher due to the learning curve, but by the time you get to #3 you will already have figured out your process.

 

[alebrewer]

They're actually no more difficult than any other HBU analysis. Forget the split zoning for a second and think of the appraisal problem as a whole. This split zoning situation isn't the only way mixed use properties get built. Lots of the commercial zoning regs also allow mixed use development. When the development potential of two sites is comparable then that's the thing, not necessarily what the zoning itself is.

Long story short, it's like any other new-to-you appraisal problem. The first one of these you do will be tougher due to the learning curve, but by the time you get to #3 you will already have figured out your process.

Normally, mixed use properties are not under 'split zoning'. They are under a specific zoning (commercial for instance) with a subordinate legal use for the mixed use. And, there aren't two sites - there is only one site. And yes - H&BU analysis DOES involve zoning (legally permissable). Again, I cannot conceive a 'normal' situation where there are two separate zonings on a single, non-subdivisable site. The example that Terrell gave is an example of a nimcompoop ex mayor who doesn't understand zoning... but again, not my area of expertise. Thankfully we don't have that kind of idiocy in my market.

 

[George Hatch]

Well, "all RE is local" is basically always the correct answer for what can happen out in the real world. As I say, I've seen it in this region. And you're right, mixed use development normally occurs on parcels that have a single zoning, but allow different types of uses. But by the same token split zoning isn't always the result of bad decision making. It makes sense to allow residential uses fronting a residential street and commercial uses fronting a commercial street. What would cause problems for such sites would be limiting their development potential to either one or the other. Then you could get conflicting uses with the adjacent properties.

As an example
All of the properties with C1 or C2 zoning in the city of LA will also allow multi-family or mixed use, so in terms of what a buyer whose looking to do a potential mixed use project development the primary difference between a C1 zoned site vs one that's zoned commercial + residential or multi-family would be limited to the density. The C1 in LA allows for up to an R3 density which will include but not be limited to the commercial + SFR.

TBH, I run into Commercial+Multi-Family more often, even though that's not extremely common either.

 

[Stone]

Normally, mixed use properties are not under 'split zoning'. They are under a specific zoning (commercial for instance) with a subordinate legal use for the mixed use. And, there aren't two sites - there is only one site. And yes - H&BU analysis DOES involve zoning (legally permissable). Again, I cannot conceive a 'normal' situation where there are two separate zonings on a single, non-subdivisable site. The example that Terrell gave is an example of a nimcompoop ex mayor who doesn't understand zoning... but again, not my area of expertise. Thankfully we don't have that kind of idiocy in my market.

I also see it, though typically on larger properties instead of small lots. The controlling authority in the cases I've seen simply wants any commercial use limited to a specific part of the parcel. That's likely where the road is and the residential (or ag or other) is away from the road, with that type of use continuing on properties that lie behind it. It is more common to find some limited commercial use as a conditional use, with part of the condition being siting in a specific part of the parcel, but I have seen it a number of times as the OP describes.

 

[alebrewer]

I get the mixed use potential. It is common knowledge that the H&BU of an improvement (or lot) may include multiple uses (e.g. commercial on the bottom floor and residential on the top, utility easement as well as park/open space, etc.). These are examples of mixed use properties - easy peasy. What is not so easy peasy is a parcel that cannot be subdivided that has multiple 'separate' uses (e.g. no longer a mixed use property, but a property with separate highest and best uses). To say that this kind of analysis is 'no more difficult than any other H&BU analysis' is misleading. IF a single site is zoned Commercial at the front of the site, and Residential at the rear of the site, obviously the commercial use could not encroach on the Residential zoning, although the Residential use COULD encroach on the commercial zoning (in most instances). So, then, again - assuming the lot could not be subdivided - and assuming that commercial is 'one' of the H&B uses, you would have two SEPARATE H&BU - one for the commercial segment of the site, and one for the residential segment of the site (potentially).
I think it is misleading to call it 'mixed use', as that is not the case at all. And it is also misleading to say that the analysis is no more challenging than a single use H&BU analysis.

 

[Mark K]

I get the mixed use potential. It is common knowledge that the H&BU of an improvement (or lot) may include multiple uses (e.g. commercial on the bottom floor and residential on the top, utility easement as well as park/open space, etc.). These are examples of mixed use properties - easy peasy.

If you don't have a problem with HBU on a multi-use property, e.g., office/retail below, apartments above, why is it so difficult to take the same approach on a parcel of land with two zonings/uses? Once you do a few of them they're no more difficult than a multi-use building; the complexity level is the same.

I see the same issue with zoning overlay districts that encumber sites. Zoning says one thing, the overlay allows/prohibits others and these overlays are also painted with a broad brush that, in many cases, affect only part of a site.

I guess its all in what you get used to.

 

[alebrewer]

If you don't have a problem with HBU on a multi-use property, e.g., office/retail below, apartments above, why is it so difficult to take the same approach on a parcel of land with two zonings/uses? Once you do a few of them they're no more difficult than a multi-use building; the complexity level is the same.

I see the same issue with zoning overlay districts that encumber sites. Zoning says one thing, the overlay allows/prohibits others and these overlays are also painted with a broad brush that, in many cases, affect only part of a site.

I guess its all in what you get used to.

I don't have a problem with any of it. What I have a problem with is aliens taking over our brains. That said, my point was that it's not a 'mixed' use - it is two SEPARATE uses for two separate improvements, which involves two SEPARATE H&BU analyses, no? (as opposed to a mixed use, which is a single improvement with multiple uses - and is still ONE H&BU analysis - namely that the (one) improvement has a H&BU of multiple uses, as verified by legal constraints (including ONE zoning), physical constraints, etc.) In which case, it IS more challenging than one H&BU Analysis. Think of it this way - which is more challenging, building one home, or building two homes? I didn't say I couldn't do it, nor did I say I don't have the mental capacity to wrap my brain around what would be involved. I said that (a) it's not a mixed use - it is two separate uses, and (b) H&BU analysis IS more challenging. I just don't see why you and George think that means I don't know what I'm doing?

Regarding overlays, I don't see it as the same issue. With an overlay, you're still doing a H&BU analysis on ONE improvement, which is legally constrained, not only by the base zoning, but by the overlay as well. Again - the discussion here is about two SEPARATE uses...

 

[Stone]

I don't have a problem with any of it. What I have a problem with is aliens taking over our brains. That said, my point was that it's not a 'mixed' use - it is two SEPARATE uses for two separate improvements, which involves two SEPARATE H&BU analyses, no? (as opposed to a mixed use, which is a single improvement with multiple uses - and is still ONE H&BU analysis - namely that the (one) improvement has a H&BU of multiple uses, as verified by legal constraints (including ONE zoning), physical constraints, etc.) In which case, it IS more challenging than one H&BU Analysis. Think of it this way - which is more challenging, building one home, or building two homes? I didn't say I couldn't do it, nor did I say I don't have the mental capacity to wrap my brain around what would be involved. I said that (a) it's not a mixed use - it is two separate uses, and (b) H&BU analysis IS more challenging. I just don't see why you and George think that means I don't know what I'm doing?

Regarding overlays, I don't see it as the same issue. With an overlay, you're still doing a H&BU analysis on ONE improvement, which is legally constrained, not only by the base zoning, but by the overlay as well. Again - the discussion here is about two SEPARATE uses...

I don't think people believe you don't know what you are doing. But, based on the fact that multiple people have tried explaining it to you (and that it isn't as crazy irregular as you seem to think it is), it is obvious that you have no experience with this type of situation (by your own admission) and that you've decided it is simply wrong and won't try and understand what others are telling you.

It is a mixed use whether or not you feel that is the case. Frankly, for those of us who've dealt with it, it isn't all that puzzling.

 

[Stone]

I've come to believe over the years of reading posts on this forum, and listening to people in classes, that many or even most appraisers really don't spend that much time working through HBU analysis and when something that is out of their ordinary practice comes up it can be a bit baffling to do so. That sounds condescending, but it isn't meant to be. There are any number of things that other appraisers do more often that I struggle with because I don't. But, I do have to work through different HBU possibilities all the time and something like this is an extra step in terms of explanation, but it isn't particularly crazy or difficult to wrap one's head around if part of your practice involves really dealing with different types of HBU for different properties.