JLL Value & Risk Advisory’s Becky Gaston–An MBA NewsLink Q&A

Becky Gaston serves as National Practice Lead, Zoning, with JLL Value & Risk Advisory

MBA NewsLink: You joined JLL last year to expand the zoning line of services at JLL Value and Risk Advisory. Can you share a little about your role and how it’s transpired over the past year?

Becky Gaston: I joined JLL to create and run a national best-in-class zoning program to support JLL’s due diligence clients. Since joining JLL over the past year, we’ve established new zoning-related services to answer the call of our client’s needs, developed a municipal database to streamline and expedite the research process, reduced zoning report and municipal document turnaround times and implemented a municipal response tracking system, which enables JLL to provide real-time updates to clients on document statuses and associated costs.

Our expanded service offerings now include Use Analysis reports, SBL/SML reports, Municipal Document Acquisition, Proposed Development/Redevelopment Feasibility reports, Fannie Mae and Freddie Mac specific zoning reports and Client-specific report templates.

My role has evolved from initially focusing on zoning program setup to now emphasizing client relationship development and outreach.

MBA NewsLink: For those that aren’t familiar with zoning due diligence, what does the zoning report process look like?

Becky Gaston: While no two zoning reports are identical, our standard zoning report always comprises two key components: municipal research and zoning analysis with report writing.

The initial steps include:

Gathering client-provided materials (ALTA Survey, parcel information, unit mix/rent roll)

Locating zoning maps and assessor/parcel information

Requesting relevant municipal documents (Zoning Verification Letter, Open Zoning/Building/Fire Code Violations, Certificates of Occupancy, Site Plans, Special Approvals or Variances, Planned Public Improvements or Right-of-Way Plans that may affect the property)

Municipal research is prioritized, with emphasis on follow-up to obtain necessary documents.

The zoning analysis then proceeds as follows:

Reviewing applicable zoning codes

Identifying relevant use, bulk, and parking regulations

Comparing property features to zoning requirements

Determining the property’s conformance status

For non-conforming properties, the analyst identifies the reasons for non-compliance and determines the rebuild restrictions applicable to the property

This analysis typically relies on the ALTA Survey, though aerial imagery and municipal records may suffice if unavailable.

MBA NewsLink: Have there been changes in the zoning landscape that have required more thorough reporting?

Becky Gaston: Two major trends we have seen in the past few years are a switch from Euclidian zoning to Form-based zoning and the creation of transit-oriented developments.

Form-based codes put an emphasis on the physical forms of buildings based on building type, rather than separating land uses based on zoning district. While these codes allow a wider range of uses within buildings and more flexibility for developers, it makes the zoning report process more challenging, as building types may not be clearly defined for buildings that pre-date the form-based code. When it comes to form-based codes we need more thorough information from the client regarding existing uses, and we need to know exactly what building type the municipality applies to the property.

Transit-oriented developments are focused on creating walkable, mixed-use communities that are centered around high-quality public transportation systems. This often involves the use of build-to lines rather than minimum setback requirements, meaning the buildings are required to be located at a certain distance nearer to the street, to provide a cohesive street wall that creates pedestrian friendly areas. TOD’s typically have requirements for mixed-use development, reduced minimum parking requirements, and maximum parking requirements.

A property that predates a form-based code or TOD may have more substantial legal nonconformities than a property that predates a standard Euclidian zoning code. Despite this, these newer codes are typically more developer-friendly, often resulting in favorable rebuilding conditions for the property owners. In cases of complete damage or destruction without 100% rebuild rights, owners might need to entirely redesign the property during reconstruction. However, these new zoning trends allow for increased density and flexibility, potentially leading to higher rental income in the long run.

MBA NewsLink: There has been a lot of discussion around conversions or adaptive re-use projects – is that spurring some of these zoning changes as well?

Becky Gaston: Yes. As cities and developers reimagine underutilized spaces, there are significant impacts on the zoning process. Zoning code regulations often need updating to accommodate new mixed-use developments and repurposed buildings. The past decade has seen a rise in adaptive-reuse and mixed-use overlays. Additionally, properties may need to go through a planned development or special permit approval process to allow the conversion or adaptive re-use.

MBA NewsLink: Can you provide examples of how your zoning reports have helped clients avoid potential issues?

Becky Gaston: While uncommon, we occasionally encounter noncomplying (illegal nonconforming) properties. When such issues arise, we promptly inform the client and provide guidance on remediation.

Three notable cases illustrate different municipal solutions:

First, an under-construction development:
Issue: Building setback exceeded site plan and PUD allowances.

Solution: Client obtained an amended PUD site plan approval.

Outcome: Zoning report updated to Legal Conforming; construction loan closed.

Next, a 1980s office building with a 2006 addition:
Issue: Unauthorized expansion created rear setback nonconformity.

Solution: Client secured a rear setback variance.

Outcome: Zoning report updated to Legal Conforming; acquisition loan finalized.

Third, a late 1990s self-storage facility with a 2010 expansion:
Issue: 2010 expansion buildings constructed within front setback line; expansion was approved by the building department site plan, but never the zoning department.

Solution: County zoning administrator deemed property Legal Conforming due to previously approved site plan and advised they would not penalize the property owner for an oversight in coordination between the building and zoning departments.

Outcome: Lender accepted the solution and proceeded with the loan.

These cases demonstrate our commitment to identifying zoning issues, collaborating with clients and municipalities, and finding appropriate resolutions to ensure property compliance.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)