Imagine you are a landowner whose property is dedicated to a use that has run its course—say a golf course for example. The land represents a sizable family investment and naturally your thoughts turn to what other uses are possible to assure the land is put to a productive and, hopefully, profitable use for the benefit of your family. While the property is surrounded by a mix of low density housing, it nonetheless sits adjacent to city streets with ample capacity for added traffic, available transit service and easy access to the interstate highway. The market seems to favor higher density market-rate housing right now, either work-force or senior housing. You have been reading that cities are seeking out more dense projects including housing to attract young families and to retain seniors. And, your property is one of a few private land areas of any size left for development within an otherwise fully developed community. It would seem a good time to convert the land to a new use that is supported by the market, but only if you can secure the necessary land use and zoning changes that are needed to bring this about. Unfortunately, once you begin the public approvals process to convert your land use, you are abruptly reminded that you have virtually no control over (or say in) what happens next.
I frequently receive calls from landowners or business owners who are trying to convert property to a new use and need to understand what this entails. Invariably, we confirm for these owners what a specific city process will require to complete a land use or zoning amendment. While the process of changing a land use designation seems simple and fair on its face, in practice it may be far from simple or fair. Here’s a real-life example. Our owner above, submits an application to change the land use designation of his property to allow the possibility of higher density housing to be constructed. Obtaining the land use change is important as any potential buyer wants to understand what is going to be allowed before pursuing a purchase agreement and a formal development application. The use allowed will determine the value, ie. price, of the land. Once the owner submits the necessary land use application to change the allowed use, she is rendered a spectator to what happens next, with virtually no power to affect the ensuing course of events.
State law gives cities in Minnesota very broad authority to decide the land use designation for all property within a given jurisdiction. This means that the owner’s well-reasoned plan to change the land use designation for her property is essentially irrelevant from the city’s point of view. A city could accept the application and approve it, it could deny the change or go a different direction entirely, whether the owner is supportive or not. Moreover, a land use application, by law, must be reviewed in a public hearing conducted by a planning commission or city council. This requires public notice and opportunity to comment from surrounding residents. What the owner quickly learns is that the surrounding residents earnestly believe they have a right to dictate the future land use designation (or that it not change at all). If enough residents rise up to oppose the landowner’s application, it becomes politically treacherous for city leaders to ignore the residents’ objections.
It is hard enough on the landowner to hear residents who she may not even know speak critically of the proposal to change the land use, attributing it to the owner’s greed or complete disregard for the impact of any change on the surrounding residents. More than a few will avow that it should be converted to a city park. It is even harder on the owner when the city’s leaders make it clear that they are listening to the residents, first and foremost, and effectively ignore the interests of the landowner. But the real “topper” is when the city not only rejects the landowner’s request but then decides to initiate a land use change of its own for the property, without regard to the owner’s interest or financial consequences, including whether the new, alternate land use designation will be viable in the marketplace. The sad truth is that the landowner in this situation has little choice but to let the process play out, hoping that some good will come of it. Meanwhile, if a new land use designation is approved, the county assessor will likely revalue the property based on whatever new designation is approved by the city, putting a new property tax burden on the owner without any certainty that the land can be sold for its newly designated use.
It’s a sobering reminder that as the landowner, the only certainty you have is your obligation to pay your property taxes; the rest is out of your control.