By Right Zoning

By right zoning means a proposed use and building are allowed under the zoning already on the parcel, so no zone change is needed. The project still has to meet every applicable standard and obtain its permits. The label settles the zoning question and leaves other review in place.

What by right takes out of the entitlement path

A by right project qualifies under the existing zoning, so adding a dwelling or building the planned scope does not require the municipality to change the zone. The term is also written buy right, with the same meaning.

Changing a zone is the step that brings additional hurdles, and how long it runs depends on the municipality. A by right path removes that step, which removes the largest source of timing uncertainty from the front end of a project.

Process also differs from city to city. In California, a coastal commission adds another body in some locations, so a by right site there can still carry review beyond the zoning counter.

Objective standards decide whether a project is by right

A project is by right only when compliance can be checked against fixed standards. In California, the Housing Accountability Act generally limits cities’ discretion over housing projects that comply with objective zoning standards, although applicable requirements vary and change.

An objective standard is measured against a number or a fixed rule, such as a height limit or a unit count per acre. A standard that calls for judgment, such as compatibility with surroundings, hands a decision to a body and moves the path away from by right in practice.

The working test has two parts. The use has to be permitted on the parcel, and the proposed building has to fit the development rules for that use. A permitted use drawn taller or denser than the code allows is a request for relief, and relief is a separate approval.

“And what it says is that cities must approve housing projects if they comply with all objective zoning standards.”

Why a zone change costs more than the hearing itself

A rezone widens the request and lengthens the path.

In one developer’s deal, spot zoning of a single building was not allowed, so the zone change had to cover the entire block. A rezone can therefore reach past the parcel, which changes who is affected and who can comment.

The path can outlast a favorable vote. Approval at one body can be unanimous and still be followed by a second reading and a period of public comments, so an early vote does not show that the new zoning is in effect.

Environmental review can also set the pace. In California, a full environmental impact report under the California Environmental Quality Act can mean two years to obtain entitlements. A by right project that stays inside objective standards avoids the zone change and the added approval step it brings.

Option length when the path needs a rezone

Site control has to cover the entitlement path, so the path decides how long an option must run. A buyer pursuing a zone change may ask for 12 months and find that about 16 months is closer to what the process needs, and 16 months is hard to get.

An extension costs additional money that is nonrefundable, so each month beyond the base term has a price. A by right project that fits inside the base term does not pay it.

“I’m actually doing a similar deal for a zoning change right now and I asked for 12 months again but I think it’s probably about 16 months is really what you want but it’s really hard to get 16 months.”

Worked example: a 120 unit apartment site on a $4,000,000 land price, by right versus rezone

The following hypothetical figures are illustrative round inputs. Both cases use the same $4,000,000 land price under option, the same $100,000 nonrefundable fee for a 12 month base term, and the same team overhead of $15,000 per month.

The base case follows a by right path. The plan meets objective standards, review takes 6 months and fits inside the base term, so the option cost stays at $100,000. Entitlement consultants cost $60,000. Overhead is 15,000 multiplied by 6, which is $90,000. Total pre-closing cost is 100,000 plus 60,000 plus 90,000, which is $250,000.

The alternative case requires a rezone. The path runs 16 months, so the 4 months past the base term need a $50,000 extension, and the option cost is 100,000 plus 50,000, which is $150,000. Consultants and hearing preparation cost $180,000. Overhead is 15,000 multiplied by 16, which is $240,000. Total pre-closing cost is 150,000 plus 180,000 plus 240,000, which is $570,000.

The rezone case costs 570,000 minus 250,000, which is $320,000 more. Against the $4,000,000 land price, that is 320,000 divided by 4,000,000, or 8 percent. The comparison prices time and process only. The chance that the rezone is denied or reshaped is in neither total.

Mistakes that make a by right label misleading

Reading by right as permit free merges two questions. Zoning eligibility asks whether the use is allowed on the parcel. Site plan review and building permits remain separate steps even when the zoning answer is yes, as does review by any additional body in the jurisdiction.

Testing the use and skipping the building produces a false yes. A permitted use is by right only at the height and density the code allows for it, and a plan drawn past those numbers needs relief.

Assuming a rezone covers one parcel can understate the request. In that developer’s deal, the restriction on spot zoning required a zone change covering the entire block, expanding the application beyond the site.

Counting a favorable vote as final approval misstates status. A second reading and public comments can follow a unanimous vote, and the zoning is not in effect until that sequence finishes.

Sizing an option to the base case when the path may need a rezone leaves land control short. The same site that needs 6 months by right can need 16 months with a zone change, and extension money is nonrefundable.

Checklist questions for testing a by right claim

Check whether the proposed use is listed as permitted in the zone on this parcel. A conditional or special use is a discretionary approval and moves the project off the by right path.

Check whether the full plan meets every objective standard for height and density. A plan that exceeds one number needs relief on that item.

Check whether any requirement calls for judgment by a board or staff member. Subjective standards put a decision maker back into the path.

Identify the approvals that remain after zoning is confirmed. Site plan review and building permits follow even when no zone change is needed.

Check whether the site sits in an area with an additional review body. In California, the coastal commission is one example.

Check the area a zone change would need to cover. The whole-block requirement applied to one developer’s deal where spot zoning of a single building was not allowed.

Check whether the option term covers the path with room for a second reading and public comments. A longer term costs nonrefundable extension money.

Check whether environmental review applies and determine the required level. A full environmental impact report in California can mean two years to obtain entitlements.