• A conditional use permit grants special permission for a property to be used in a way that current zoning ordinances typically limit.
• The primary purpose of a CUP is to provide flexibility within a zoning ordinance, allowing the property owner to utilize the property more profitably.
• A CUP is similar to zoning variances and rezoning but has a few key differences (proof of hardship for a variance, while rezoning intends to change the zoning for a particular area completely.)

The primary purpose of a conditional use permit is to grant special permission for property owners and real estate developers to use the property in specific ways that fall outside the current zoning laws. As a result, a CUP injects some flexibility into local zoning ordinances[1].

Another reason for a conditional use permit is to enable the city or municipality to control certain property uses that may negatively impact the community.

In most cases, obtaining a CUP under reasonable conditions is a cheaper and simpler alternative to rezoning the property or land entirely.

Example of a Conditional Use Permit

For example, a car dealership wants to open a new branch in an area zoned for commercial and manufacturing purposes. Because a car dealership operating in this space does not conform to local zoning laws, the owners may need to obtain a CUP before proceeding with the project.

In evaluating the CUP application, the city’s planning and zoning department will assess whether the dealership’s operations are compatible with its surrounding areas.

They can consider factors like location, traffic flow, accessibility, noise pollution, and so on.

The commission may award the permit with certain conditions. For instance, they may require the dealership to open and close at predetermined hours so its operations do not interfere with the originally intended use of the area.

RELATED: What Is a Building Permit?

As mentioned, CUPs are granted at the discretion of the city planning commission or the relevant body with jurisdiction and authority over the area. If the property owner cannot meet these conditions, this authority may revoke the conditional use permit.

Obtaining a CUP will often depend on the local zoning ordinances in that particular zoning district. Using the conditional use permit application procedure in Dane County, Wisconsin[2] as a reference, here is a general overview:

1. Initial consultation with the zoning administrator — This step ensures that the applicant has valid grounds for seeking to obtain a CUP. They should then speak with an attorney or real estate professional before initiating the application process to understand the requirements and how to proceed.
2. Application — This involves filling out and submitting an application to the local zoning authority. They will process the application and consider any impact the project might have on the area, particularly concerning the existing zoning ordinance.
3. Environmental review — This involves reviewing the developer’s environmental report, the project’s ecological status, and the potential impact on relevant environmental laws and regulations.
4. Public hearing — A public hearing might be held to discuss the proposal. The property developers or project owners will provide testimony and address concerns (if any).
5. Decision — Application approved or denied.

Each step may involve several sub-steps, but a CUP process follows the outline above.

Documentation Requirements

CUP applications need to be submitted with the relevant supporting documents. These include:

• Narrative on Operations — This document explains what the project is about, including details regarding the number of personnel involved, proposed hours of operation, and disposal of hazardous waste.
• Site Plan — This is a scaled map showing the area the project may likely affect.
• Building Plans — A comprehensive plan for the buildings constructed as part of the development project.
• Research Results — In some cases, CUP approvals may be contingent on conducting certain studies to address committee or public concerns. The results of these studies will need to be included in the CUP application.

Do Conditional Use Permit Approvals Expire?

Whether or not a CUP approval expires depends on the municipality that issued the approval[3].

For example, the city of Urbana, Ohio, stipulates that if a conditional use permit is used for anything other than what was initially approved for over one year, the CUP approval automatically expires[4].

Meanwhile, in St. Paul, Minnesota, CUP approvals may only be valid for up to two years, within which development on the project must have commenced. If, after this period the project has yet to begin in line with the terms of the approval decision, it may be revoked[5].

Real estate investors can benefit immensely from issuing conditional use permits because they help improve the flexibility in how a property can be used in that area. For instance, a CUP can facilitate the transition of a property determined to be more profitable by serving a different purpose.

Another benefit is that as long as the property does not violate the CUP approval terms, the permit stays with the property even when the ownership is transferred.

Lastly, a conditional use permit can help satisfy lender requirements for commercial real estate loans[6]. Usually, when processing loan applications, lenders want to know if the borrower has obtained the city’s permission to start a project that interferes with current zoning ordinances.

These three terms are similar, with a few key differences.

A conditional use permit creates an exception to the current zoning ordinances. If approved, the owner must adhere to the conditional terms attached to the approval.

A zoning variance is similar to a CUP as it permits a property owner to utilize the property in a way that would otherwise vary from the current zoning ordinance’s requirements[7]. What makes it different is that applicants must be able to demonstrate “hardship”—a situation where the existing land use laws would create unnecessary difficulty for the property owner and limit the property’s reasonable use and return potential.

For this reason, variances tend to have more stringent requirements and are less commonly distributed than CUPs[8].

Finally, rezoning is more extensive and involves legally changing the property’s zoning. It is the most definitive way to utilize the property that does not conform with existing ordinances in that area[9]. This process is generally more complicated and expensive and often requires the community’s support before approval.

1. Conditional Uses. Land Use Training & Resources. (n.d.) University of Wisconsin. Retrieved from  https://fyi.extension.wisc.edu/landusetraining/conditional-uses-pc/
2. Understanding the Conditional Use Process. (n.d.) Website of Dane County, Wisconsin. Retrieved from https://plandev.countyofdane.com/Zoning/Conditional-Use-Permits/CUP-Process
3. ElGenaidi, D. (2021, November 24.) How a Conditional Use Permit Can Bypass Certain Zoning Laws. Lev. Retrieved from https://leverage.com/financing/conditional-use-permit/
4. 1105.32 EXPIRATION OF A CONDITIONAL USE PERMIT. (n.d.) Codified Ordinances of Urbana, OH. American Legal Publishing. Retrieved from https://codelibrary.amlegal.com/codes/urbana/latest/urbana_oh/0-0-0-12841
5. CONDITIONAL USE PERMIT. (n.d.) St Paul, Minnesota Government. Retrieved from https://www.stpaul.gov/departments/safety-inspections/building-and-construction/zoning-appeals-and-variances/conditional-use-permit
6. Conditional Use Permits in Commercial Real Estate. (2022, November 26.) Janover Commercial Real Estate Loans. Retrieved from https://www.commercialrealestate.loans/commercial-real-estate-glossary/conditional-use-permits
7. Coffey, R. (2013, March 22.) Difference between special use permits and variances. Michigan State University. Retrieved from https://www.canr.msu.edu/news/difference_between_special_use_permits_and_variances
8. Lovelady, A. (2014, May 27.) Variance Standards: What is hardship? And when is it unnecessary? School of Government at the University of North Carolina. Retrieved from https://canons.sog.unc.edu/2014/05/variance-standards-what-is-hardship-and-when-is-it-unnecessary/
9. Christensen, T. (2023, January 19.) What is Rezoning? Historical Index. Retrieved from https://www.historicalindex.org/what-is-rezoning.htm