Journal Reader Question #2

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We're seeing some zoning restrictions locally on the building of financial institution branches. Are members of your panel seeing this in other areas, and how are you dealing with it?

Bob Saunders,

RWSaunders, Pittsburgh

There is an increasing trend, particularly in growth sectors of the country, to restrict the development of drive-up facilities. The method that is employed most frequently is to utilize "conditional use" language in zoning ordinances, as the language applies to drive-up facilities. This method is being effectively utilized to block the development of fast food restaurants.

Unfortunately, retail banking facilities also rely upon drive-up services, which typically account for over 60% of a branch's transactions. Given such, a variance must be granted in order to develop a drive-up facility on a parcel which is restricted by this type of conditional use language.

We initiate the variance process by conducting informal talks with local code enforcement officials, prior to submitting for site development permits. At the meetings, we demonstrate the benefits that the credit union branch will provide to the community, in terms of employment and real estates taxes.

We focus on the fact that our credit union clients are not-for-profit organizations, providing key financial services to residents of their communities. We also provide supporting data, which identifies the typical branch user as a resident of their community, who utilizes a drive-up for reasons related to convenience, as well as security.

Ralph LaMacchia, LaMacchia Group, Milwaukee, Wis.

Yes, we are. Our approach starts with the way we communicate with the city. A credit union is a not-for-profit financial cooperative, not a non-profit. Most non-profits are exempt from property taxes. Naturally, most cities don't like this. Credit unions pay property taxes and the community benefits. This helps tremendously at the city department staff level. The municipalities that object are not necessarily objecting to a financial institution. They are objecting to the drive-ups, which typically require a conditional use permit. Seemingly, they may object to the traffic impact to the area, i.e. hundreds of cars a day, headlights shining on residences, etc.

How we overcome this type of conflict is from traffic impact studies to the city's streets. We identify the long-term plans for the area, past problems, Department of Transportation plans, bypasses, and traffic lights. We offer solutions to the problem from the onset and before we purchase the site. We have one such project that has taken one-and-a-half years. This project includes two deceleration lanes, two new median cuts, two cross-access agreements, a frontage road, and improvements to an affected property owner. Before we close, all of these details must be worked out. What the city said was "we have a problem with your proposed use." What we heard was "help us figure this out if you can." The credit union not only received the site they wanted, they received value. The site was big enough to split, so they are selling off the second parcel. This is a win/win situation, the credit union ends up with a free site and the city receives the same increase in tax base and no hassles.

Typically, more than one individual or department at the city level has authority over decisions. At times, it can be difficult to get specific information, which could potentially complicate the building process. Don't let this be a hurdle. The best advice: don't demand anything from any city official; just get them on your side. Do your homework or hire someone who can!

Tom Lombardo, HBE Financial Facilities, St. Louis

Yes, we are seeing an increase in zoning restrictions all over the country as communities try to balance the need for their growth with the challenges associated with new development. Typically, restrictions tend to be greater in high-growth markets, and less so in slower-growth communities.

Codes, covenants and zoning restrictions cover a wide range of issues, including parking, water management, signage, green space requirements and impact fees for infrastructure improvements.

Given the number and complexity of these and other zoning issues, a strategic planning study can play an important role in helping credit unions select and evaluate the best sites for new branches. We strongly encourage our credit union clients to allow ample time to perform due diligence on the many issues that can impact a site or expansion program before closing on the property.

Andrea Simler-DeGolier, DEI, Cincinnati

According to our in-house Due Diligence Coordinator, Richard Milliken, "We are seeing zoning restrictions as it pertains to a drive-thru. In most cases it can be resolved by identifying the restriction early on in the pre-design phase. A special use permit is usually required or a variance request needs to be applied for as a part of the site plan approval process. A special use permit or variance can add as much as 90 days to the overall approval process (obtaining a Building Permit) to any given project. You may even need to employ traffic studies to support your request. However, in some cases when your project is located inside the city limits of a town with high density traffic, the request for special use or variance may not even be an alternative. The answer might just be 'No.'"

As far as zoning issues relative to my job, at times we are challenged with signage restrictions. In some cases we have over come this challenge by utilizing the interior vestibule areas and glass storefronts to create an interior "billboard" with specialty lighting that provides day and night exposure. The vestibule area acts as the facility "billboard," truly using the retail philosophy of the storefront as "the eyes of the facility."

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