Overlay districts
By J. David Chapman/April 21, 2022
For decades, municipalities have struggled with innovation in development. Developers are constantly pushing the limits of existing codes. Most developers have felt at least a bit of frustration when implementing creative ideas that builders and customers require or desire with the rules, ordinances, and codes. Frankly, even the planners and planning departments of these municipalities are frustrated trying to make good projects comply with existing rules, ordinances, and codes. It is particularly irritating when a city has one set of codes and very different needs in different parts of the city. Urban projects have a tough time complying with code created for suburban development and require several variances to proceed.
There are a few tools that planning departments and developers have at their disposal. The first is going to the planning commission and city council for variances to the code to allow for the project to proceed. The second is filing a Planned Unit Development, or PUD, document to have the project approved with the variances. The last is for the municipality to create “overlay” districts creating different and separate codes for an area of town. Last week, I wrote about solving the problem with PUDs. Today, I consider “overlay districts.”
An overlay district or zone is a zoning district that is applied over one or more previously established zoning districts, establishing additional or stricter standards and criteria for covered properties in addition to those of the underlying zoning district. Communities often use overlay zones to protect special features such as historic buildings, urban environments, wetlands, or waterfronts. Overlay zones can also be used to promote specific development projects, such as mixed-use development, waterfront developments, housing along transit corridors, or affordable housing.
Overlay zones have the potential to be very effective governmental regulatory tools. Since they tailor regulations to specific properties and districts to meet specific community goals, they can be more politically feasible to implement and can help communities meet stated goals or address specific inequities. On the other hand, they can create inefficiencies and inequities by applying regulations and restrictions to some properties and not to others. Moreover, additional regulations may increase time and expense both for developers and for the public bodies involved in the development approval process. Like PUDs, overlays are effective tools and can have a huge positive effect on f the community if done correctly; however, they must be carefully considered.
J. David Chapman is professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu)