Municipalities Must Re-Think Traditional Exclusionary Zoning to Allow Greater Flexibility for Mixed Use/Residential Development

Given the post-pandemic adjustments to our daily work and life patterns, high interest rates and decreased demand for office and retail space in Westchester County and throughout the Hudson Valley, the time is now for municipalities to embrace forward-thinking changes to outdated, onerous and restrictive zoning codes. Rather than put every zoning use in its own separate, exclusionary rigid box of residential, commercial or office, municipalities should allow for more flexible zones with a combination of such uses based on the needs of the community. The time for municipalities to embrace mixed-use zoning is now. Downstream consequences of the Fed’s tightening program are surfacing and signaling slower growth ahead. This is particularly true for office and retail properties. Office-using employment lagged the Hudson Valley’s overall growth rate, increasing just 0.1% year-over-year. See CBRE Figures – Westchester County – Q1 2023. The Wall Street Journal reports that lending for offices has plummeted to 35 percent of 2019 figures with retail not far behind. The consequences of this are that municipalities are potentially left with vacant and underperforming buildings which lead to other negative impacts in the community, loss of ratables, blight etc. Conversely, the demand for residential, multi-family development is booming and there is simply not enough of it.

The COVID-19 pandemic did not cause this trend. The pandemic accelerated trends that have been going on for years, namely the densification of assets through the redevelopment of properties, which are often retail centers or low-rise office sites. See Multi-Housing News 9-14-20. Based on this market reality, the retail and office landscape has changed, causing developers to reimagine their existing offices and shopping centers by adding residential developments to those properties. This pattern is the next logical step, as it adds market rate units to cater to the growing young millennial and empty-nester population, while at the same time bringing new life to underutilized commercial buildings and needed tax ratables to municipalities. In the area of retail centers, adding residential development to those properties provides those retail developers with an instant customer base, namely, residents seeking the live-work-play model of providing retail, dining, and entertainment all under one roof – all within walking distance.

Local municipal officials should seize this golden opportunity to reinvigorate their zoning codes to allow residential development in commercial/retail zone districts. Shifting consumer trends have led to vacancies in many commercial areas. To keep these areas viable and satisfy the need for housing options, municipalities should explore zone changes that would permit residential uses in pre-existing commercial zones. While municipalities may be hesitant to engage in this exercise due to factors stemming from lack of political will, fears of changing the character of the local neighborhoods and public opposition, such factors can be overcome with the right mix of expert input from professionals, open dialogue with stakeholders, community members and municipal officials, and a needs-based assessment of the type of mixed-used development appropriate for a particular site. By the same token, this exercise to provide more flexible zoning should not be an onerous task marred by massive, costly and at times, lengthy timeframes, and logistical problems.

Adding residential use to commercial zones is an opportunity to transform local municipalities for the better. Municipalities should not fear such conversions, but rather embrace it and remove draconian zoning laws that no longer comport with modern world realities. The days of traditional exclusionary zoning, and strict separation of uses are outdated and stifle the ability of municipalities to evolve. Bleakley Platt & Schmidt’s Land Use & Zoning Law Practice Group can help develop strategies for overdue zoning law updates. Contact Lino Sciarretta at (914) 287-6177 or lsciarretta@ bpslaw.com.