According to the 2000 U.S. Census, over four million people work from home, representing 3.3% of the nation’s population. The Small Business Administration reported that in 2000, nearly 20,000 entrepreneurs grossed more than $1 million operating from a home-based environment. Zoning codes have traditionally been designed to separate incompatible land uses, leading to the establishment of separate zoning districts for businesses and for residential areas. However, with the growth in home-based businesses and home occupations, municipalities have to be more creative in balancing the public health, safety, and welfare in residential districts and thepressures necessitating the accommodation of appropriate home-based businesses. For more information about current trends in regulating home occupations see, http://www.governmentlaw.org/files/RELJ-zoning_home_occupations.pdf The recent case below from North Dakota provides a good example of a home occupation that is not compatible with the surrounding residential neighborhood.
The Bogers own three city lots in Minot which are zoned single family residential. For the past 25 years the Bogers operated a street-sweeping business out of their home. They also started a lawn service and snow removal business. They store street sweepers, front-end loaders, dump trucks and other equipment and machinery used in the businesses on their property. Employees of the businesses reported to work at the Boger residence, picked up the equipment they needed, and left their personal vehicles at the residence. In October 2002, the city of Minot sued the Bogers to enjoin them from conducting the businesses out of their home, alleging those businesses did not qualify as allowable home occupations under the applicable city zoning ordinance. The Bogers counterclaimed, alleging that Minot’s attempt to enforce the zoning regulations and restrictions constituted a taking of their property through inverse condemnation in violation of their constitutional rights. Following hearings, the district court granted the injunction requiring the Bogers to refrain from storing heavy equipment on the property and allowing their employees to mobilize for work at their residence. The court also dismissed the Boger’s counterclaim, concluding there had been no taking of their property through enforcement of the zoning ordinance. The Bogers appealed.
The North Dakota Supreme Court reviewed the language in the zoning ordinance which required home occupations to meet five tests including that: not more than one other person is employed by the owner/manager (except for immediate family members); the exterior of the premises is indistinguishable from any other residential dwelling of like design and character; it does not generate vehicular traffic or parking substantially greater or substantially different in kind or character than that ordinarily associated with a similar dwelling used solely for residential purposes; the home occupation is no more dangerous to life, personal safety or property than any other activity normally carried on with respect to premises used solely for residential purposes; and there are no loud or unpleasant noises, noxious fumes, or perceptible vibrations attributable to the home occupation. The Court determined that the Bogers’ use of property was in violation of several of these provisions. The Supreme Court also stated that the City has authority to consider aesthetics in implementing a zoning ordinance.
With respect to the takings claim, the Court said that the zoning ordinance advances a legitimate and substantial government interest, and that the Bogers had no legitimate or reasonable investment-backed expectation in using the premises for a commercial rather than residential purpose since the zoning ordinance was in effect prior to the time when they purchased the property. Further, the ordinance did not deprive the Bogers of all economically beneficial use of their property. Therefore, no takings occurred.
City of Minot v. Boger, 2008 WL 152142 (N.D. 2008).
The opinion can also be accessed at: http://www.ndcourts.gov/court/opinions/20070158.htm
For another short article on home based businesses, see: http://www.governmentlaw.org/files/homsebased.pdf