Zoning battle on nonconforming before code went into effect

[Brian Stampe]

Hi, 

I would like some zoning and investment deal advice.

I am considering a property in a small town with decent historical appreciation, because I see the possibility of living there with an improved lifestyle as well as cash flowing rentals already on the property. However, the major caveat is that there is a zoning battle going on right now. The owners tried to sell this 1.5 acre property, with 5 small rentals plus one main house back six months ago. It was contingent and during the buyer's due diligence period they dropped the deal because the 5 small homes are considered nonconforming to be used as rentals. Right now the sellers are in a series of city council meetings to try and get confirmation from the city that they can still use the properties as intended. The homes were moved onto site before the city code went into effect. AND the code clearly states that it is not meant to be retroactive. Yet the city council is arguing because there hasn't been anyone in there for the last year or so, they have been abandoned.  The sellers are arguing that they have paid the bills and recently replaced the roof and are not abandoning them. And are selling with the intention of the new buyer renting them. 

The 1.5 acre parcel is zoned R-2 and currently has 5 house structures on it (one of which is a duplex). It is directly next to an R-3, trailer park. 

They all share water and sewer. Small private rd to access the property. Both of which are sticking points for council. 

The code states, "A separate and independent building sewer service line shall be provided for every permitted use, home or residence per lot."

There is a final meeting on March 7th where they will determine if these homes are going to be allowed a nonconforming use permit. It looks like they will not permit it. Despite what seems like a stretch of the abandonment argument from my lens. 

The sellers have reduced the price from 500 to 400 since the first buyer backed out. I am still curious about this opportunity despite what feels like some significant risk because a.) There could be significant immediate cash flows and internal rate of returns and b.) it could be a forever home for me as it is tucked in a nice acreage with nice trees and the main home could be fixed up to be a real nice place to be. I am self employed contractor and have half the year off to do renovations over the next few years. (Though they aren't necessary i would want to complete them within 10 years or so). My only other home i STR and do pretty well. I live in my camper most of the year to save money (and travel and work). So I could use this new property as a better home base.

Questions:

A.) Could I craft an offer before the hearing that has a very liberal backup option for me? My thinking is if they decide to allow nonconforming use the price may go up significantly. If they do not, price will stay the same or go down some. But if they deny the nonconforming, I could back out while still being able to tempt them with an offer that is reflecting of this risk and subdued interest. Additionally, I could enter the fray of the council meeting putting as a potential buyer, describing my idea for the property and helping sway them into allowing nonconforming use. Maybe suggesting I widen the private road and put a gravel cul de sac in for fire/ambulance right of way. Or address other concerns besides new water and sewer line as I think that would be out of my budget. 

B.) If they deny nonconforming use, is there a case for getting it rezoned to R-3 as its right next to R-3? I talked to zoning, and they said that was reasonable. What kind of issues might you foresee with this? Neighbors' attitudes NIMBYism etc.? There is a trailer park next door with 30 rented lots. AND the owner of said trailer park was not in favor of allowing this nonconforming use! 

C.) R-3 Zoning designation would allow multiple manufactured homes on a single sewer/water tap. These are anchored to their foundation and are stick built i believe. Is there wiggle room here to convert them in a way that would be considered manufactured?  If so I could then rent them out as they would no longer be nonconforming. 

D.) What kind of teeth do these zoning laws have typically? Could I just rent it out even if its ruled nonconforming? What kind of laws would i be breaking likely? 

E.) The other 'more legitimate' way forward could be to get it rezoned to R-3, replatte the property, put a new street in with proper sewer and water mains. But I feel like subdividing in this way would be too expensive. There could be some potential issues with widening the street as there is sometime of easement agreement with not widening it. (Realizing i need to look into this more) 

I am really hopeful I can find a way through this maze to make this work. If there is a will there is a way no? 

Thanks so much for your time and expertise, 

Rookie investor

Brian