Definition
A variance is a discretionary land-use approval that grants relief from a specific zoning requirement when strict compliance would create an unreasonable hardship due to unique property conditions. Variances do not typically change the allowed use of land; instead, they modify the standards that govern how development fits on the site (setbacks, height limits, lot coverage, parking, landscaping, etc.).
What Variances Usually Apply To
- Setbacks: reduced front/side/rear yard requirements.
- Height: minor increases to building height limits (jurisdiction-dependent).
- Lot coverage / FAR: permission to exceed certain bulk or coverage standards.
- Parking: reduced required stalls, alternative parking layouts, or dimensional relief.
- Signage: sign height/area/location relief.
- Buffers/landscaping: adjustments due to site shape, utilities, or constraints.
Variance vs. Rezoning vs. Conditional Use
- Variance: relief from a standard (how you build).
- Rezoning: changes the zoning designation (what you can build/use, and often intensity).
- Conditional/Special use: allows a use with conditions after review (a permitted use, but not by-right).
How a Variance Is Evaluated
Requirements vary by jurisdiction, but most variance approvals revolve around a few common themes:
- Unique physical conditions: irregular lot shape, steep topography, wetlands, easements, or other constraints.
- Hardship not self-created: the problem can’t be caused by the applicant’s choices (in many jurisdictions).
- Minimum necessary relief: only as much variance as needed to make reasonable use of the property.
- Consistency with public interest: no material harm to neighbors, safety, or neighborhood character.
- Consistency with plan intent: the request aligns with the purpose of the zoning code and area plans.
Why It Matters
Variances can unlock a deal by making a site buildable or improving unit count, layout efficiency, and rentable square footage. But because they are discretionary, they introduce entitlement risk: potential denial, delays, appeals, redesigns, and added costs. In underwriting, a variance can be the difference between a feasible and infeasible project.
Investor Uses
- Site optimization: improve building footprint, parking layout, or unit yield within constraints.
- Value creation: modest relief can increase density or efficiency, raising residual land value.
- Risk pricing: discretionary approvals should be reflected in return requirements and contingencies.
- Deal structuring: use entitlement contingencies, options, or milestone-based closings.
Example
A developer wants to build an infill multifamily project on an irregular corner lot. The zoning code requires a 20-foot side setback, but the lot narrows substantially at the rear due to a utility easement. Without relief, the building footprint becomes too small to support a feasible unit mix. The developer applies for a variance to reduce the side setback to 10 feet for a limited portion of the building.
- Benefit: feasible building footprint and circulation.
- Risk: public hearing delay, conditions of approval, or denial forcing redesign.
- Underwriting response: add schedule buffer, legal/consultant costs, and downside design scenario.
Common Pitfalls
- Assuming approval: variance decisions can be political and neighbor-driven.
- Requesting too much relief: large variances often fail the “minimum necessary†standard.
- Self-created hardship: designing a building that ignores code and then seeking relief can backfire.
- Missing appeal risk: approvals can sometimes be challenged, adding time and uncertainty.
- Underestimating conditions: cities may add design constraints, landscaping, or operational limits.
Best Practices
- Confirm the standard: read the code carefully; some relief may be available administratively.
- Design to comply first: pursue variance only when constraints genuinely prevent reasonable use.
- Build the record: document hardship, alternatives considered, and why the request is minimal.
- Engage early: pre-application meetings with planning staff and targeted neighbor outreach.
- Underwrite a downside plan: “no variance†design, timeline delay, and added cost contingencies.