Managed Retreat Toolkit

Zoning and Overlay Zones

Introduction to Zoning and Overlay Zones

Credit: Jay Diener, Seabrook-Hamptons Estuary Alliance.

Local governments have the primary authority to regulate land uses in their communities through zoning and floodplain ordinances. In particular, zoning ordinances provide the legal framework that governs the use and development of land in a municipality according to different districts based on the uses that are permitted (e.g., residential, commercial, industrial).See footnote 1 Overlay zones or districts can impose additional regulations on an existing zone based on special characteristics in that zone, such as for natural, historical, or cultural resources protection.See footnote 2 One advantage of overlay zones is that they enable local governments to address area-specific needs or requirements without disrupting underlying zoning classifications. To establish an overlay zone, local governments must: (1) establish the purpose for creating the district; (2) map the district; and (3) establish regulations to achieve the purposes for creating the district.See footnote 3  Before implementing any zoning or land-use changes, however, local governments must ensure that they have the authority to utilize a tool under state law.

Zoning and Overlay Zones in a Managed Retreat Context 

Local governments can use zoning and overlay zones to support a variety of purposes and goals related to managed retreat including to: 

  • Phase out development in vulnerable coastal areas experiencing sea-level rise, recurrent flooding, and land loss by limiting or prohibiting new development or redevelopment — particularly in a post-disaster context — above a specified legal threshold (e.g., “substantial damage”)See footnote 4 or requiring development setbacks or the removal or relocation of structures upon the occurrence of future physical impacts or “triggering” events (e.g., minimum beach width, permanent wetland encroachment; for more information, see the Managed Retreat Toolkit section on Regulatory Tools>Development Permit Conditions) (e.g., Florida Adaptation Action Areas, Norfolk, Virginia, “sending” areas for Transfer of Development Rights programs);
  • Prohibit hard shoreline armoring structures and promote the use of living shorelines (with natural or nature-based features) to facilitate the construction of natural shoreline protection measures that can enable coastal ecosystems to maintain their connectivity to the surrounding ocean and coastal environment and also remove structural barriers to inland ecosystem migration as sea levels rise and coasts are eroding (e.g., East Hampton, New York);
  • Protect inland habitat and species migration corridors and higher ground establishment areas that can support and sustain migrating habitats and species through natural resource conservation zones or overlays (e.g., Yankeetown, Florida); and
  • Allow increased density and more resilient design standards in higher ground or inland “receiving” areas (e.g., Norfolk, Virginia, “receiving” areas for Transfer of Development Rights programs).

Zoning and overlay zones can be combined with other planning, acquisition, and regulatory tools to facilitate larger-scale or layered retreat strategies. Notably, local governments should seek to coordinate zoning decisions with coastal zone regulations (at state and/or local level; it varies by state) that can overlap with and serve similar purposes to balance human coastal uses and conservation. Moreover, local governments should look at managed retreat strategies comprehensively to ensure that one type of tool or legal or policy decision will not undermine or conflict with another. For example, after conducting a neighborhood-wide buyout of 200 homes, Woodbridge Township, New Jersey rezoned the 120-acre buyout area from Residential to Open Space Conservation/Resiliency in order to, among other requirements, prohibit new development and only allow for passive recreational amenities like trails and open space uses to preserve the floodplain. Regulations can also be combined with incentives through acquisition or market-based tools (e.g., tax benefits, conservation easements) to remove or relocate structures in vulnerable coastal areas or floodplains. 

Although zoning is inherently a local government power, the state may also serve as a regulator in the coastal zone in some jurisdictions. In addition to their regulatory authority, states can be engaged in local land-use and zoning discussions and provide funding, technical, or other types of support to facilitate these managed retreat decisions. For example, states can consider working with local governments to fund and pilot the development of retreat-related overlay zones and create template language that could be adapted and replicated in other jurisdictions (e.g., Florida Adaptation Action Areas). In addition, states can play a key role in coordinating regional or cross-local government policies or actions that would require independent actions in more than one county or municipality. Local governments may also choose to work with state legislatures to amend or supplement zoning authorities — particularly in Dillon Rule states — where necessary.


Policy Tradeoffs of Zoning and Overlay Zones

Zoning decisions and overlay zones can vary in terms of purpose and scope, among other factors; therefore, it is difficult to assess the policy tradeoffs of these tools generally. There are, however, some overarching policy considerations for local governments. 


  • Zoning processes necessitate staff and funding resources, particularly to support community engagement processes around complex and politically sensitive discussions around retreat. Depending on the ordinance, zoning changes can also require administrative support to enforce restrictions. Smaller or rural communities may face more resource constraints and have less funding available to support specialized zoning staff for these purposes. 
  • Zoning restrictions may be more politically controversial than other non-regulatory tools because they will limit or regulate private property uses. 


  • Zoning decisions for retreat may have an impact — positive, negative, or neutral — on local tax bases. Where existing and future development is reduced or phased out in the face of sea-level rise, flooding, and land loss, governments will lose property tax rateables; however, where new development is intensified, local governments could experience gains in property tax revenues (or offset losses if zoning changes or overlay zones include both types of “sending” and “receiving” areas). 


  • Whether directly or indirectly (e.g., by increasing density in higher ground areas away from the coast), zoning and overlay zones can promote the conservation and protection of important coastal habitats that provide various environmental and community benefits. 


  • Zoning decisions are more successful when communities are engaged throughout both their development and implementation. By engaging communities, local governments can be more strategic, inclusive, and thoughtful about climate adaptation and managed retreat and minimize potential inequities — both in areas where existing and future development may be reduced or phased out in the face of sea-level rise, flooding, and land loss and areas where new development may be intensified and could cause existing residents and businesses to be displaced (e.g., climate gentrification).
  • To promote equitable outcomes, zoning should, at a minimum, prioritize the provision of recreation areas and public access in coastal areas and the development of affordable housing in receiving areas. 
  • Zoning changes coupled with economic incentives may help to offset potential regulatory costs, particularly on frontline communities. 


Legal Considerations for Zoning and Overlay Zones

By amending zoning ordinances, the most common legal challenge governments may face is takings claims. Jurisdictions can design zoning changes in ways that can withstand potential regulatory takings challenges and minimize potential legal risk. The Fifth Amendment of the U.S. Constitution and analogous provisions of state constitutions prohibit governments from “taking” private property without just compensation.See footnote 5 While there are different types of takings, courts apply a “per se” test to physical occupationsSee footnote 6 and regulations that deprive a private property owner of all or essentially all of his/her property’s economic value;See footnote 7 however, in a managed retreat context, most zoning regulations designed to protect people, property, and the coastal environment will be evaluated under a case-by-case-specific balancing test.See footnote 8  Generally, courts will uphold zoning changes that restrict or limit development in vulnerable coastal areas and floodplains if an affected property maintains some economic value and a regulation serves a legitimate public interest, such as safety or to offset ecological impacts resulting from the use of private property. 

Governments can avoid or mitigate potential takings risk by ensuring that zoning changes and overlay zones are informed by relevant data and plans, particularly local comprehensive plans. At a minimum, governments should: clearly justify the need for zoning amendments based on best available data; articulate the purpose for new development and redevelopment requirements in planning and other documents that put affected private property owners on sufficient notice; and design and implement zoning decisions on appropriate spatial scales that are not greater than the spatial area necessary to achieve their stated purpose (e.g., establishing lower density development requirements only in a municipality’s coastal areas most vulnerable to sea-level rise and erosion to protect people and property from these physical threats). For more information on takings and recommendations to minimize legal risk, see the Crosscutting Legal Considerations>Takings section of this toolkit. 


Practice Tips

When implementing zoning changes and overlay zones in a managed retreat context, decisionmakers may consider the following practice tips to address and balance different legal and policy tradeoffs: 

  • Create integrated long-term comprehensive plans, which provide a durable legal framework to implement zoning: Clear and well-designed comprehensive plans provide a more durable legal framework for zoning and a greater level of certainty for public and private investments around long-term managed retreat strategies. If well designed, this certainty is a key economic development strategy. Zoning that is constantly changed and amended can have a chilling effect on new investments. 
  • Evaluate how zoning can be used to meet local needs for managed retreat: Communities will have varying needs associated with managed retreat and local governments should consider how zoning changes or overlay zones can help them achieve different purposes, goals, and objectives. Local governments can avoid “reinventing the wheel” by using these longstanding tools but apply them in ways that will support areas affected by rising seas and other climate impacts.
  • Invest in data at an appropriate scale: Local governments will need the best available data and information on an appropriate scale to effectively guide and inform planning and zoning decisions. While specific data needs will vary based on a proposed zoning change or purpose, governments can consider the following data relevant to informing planning and zoning changes: sea-level rise and erosion rates, shoreline conditions, demographics, economics, and the location of existing and migrating coastal habitats like wetlands and forests.

    While some governments may already have the necessary data, others will have to invest in or look for opportunities to obtain data before they can engage their agencies and communities in discussions about managed retreat. Notably, much of this data (e.g., demographic projections, environmental studies) may already be collected by local governments to support local comprehensive planning processes and could also be leveraged for zoning purposes. In addition, federal agencies (e.g., National Oceanic and Atmospheric Administration, U.S. Geological Survey) and conservation nonprofits (e.g., The Nature Conservancy) may have data on an appropriate scale that governments can use to inform the development of their plans and corresponding legal and policy decisions. Alternatively, local governments may have to consider grant or other funding opportunities to initiate partnerships to collect this data from scratch. Community residents — particularly those who have lived in an area for a long time or have historical or cultural ties — can provide additional types of data or information based on historical or lived experiences that, among other things, can help governments better understand cyclical or long-term changes on the coast to inform zoning discussions. Governments, therefore, should aim to make data collection processes as comprehensive as possible and reach out to more than just traditional experts. 
  • Engage communities: Local governments should seek to engage community members throughout the entirety of comprehensive planning and zoning processes for managed retreat, especially those who live, work, or have other interests (e.g., recreational) in an area that is the subject of potential zoning changes. Comprehensive plans and zoning can affect the daily lives and livelihoods of residents, so it is important for local governments to include those most directly affected in these discussions. In addition to minimizing potential legal risk (see bullet below), community engagement processes can help local governments craft stronger decisions that better support community or neighborhood priorities, needs, livelihoods, and overall well being. For example, in areas rezoned for natural resource conservation purposes, governments can work with residents to identify wetland migration corridors that do not conflict with other private property uses. Similarly, residents could aid governments in identifying potential higher ground receiving areas that need revitalization or new investments and would not cause the displacement of current residents (e.g., climate gentrification). 
  • Align zoning with different types of local plans and initiatives: Local governments should strive to align zoning decisions with different types of local plans and initiatives, in addition to long-term comprehensive plans. Aligning zoning decisions with other plans and initiatives can offset various administrative and economic tradeoffs. This can occur when governments aim to coordinate land-use and zoning actions across different types of plans and agencies that have related authorities or actions. Additionally, this alignment can help maximize environmental and social/equity benefits and minimize the associated costs by avoiding conflicting decisions from different agencies. For example, if a local government creates an overlay district in its local comprehensive plan to discourage or limit new residential development and promote the conservation of open space in a vulnerable coastal area, transportation-related plans (e.g., Long Range Transportation Plans) should not prioritize siting new roads in that location. 
  • Minimize potential legal risk by implementing zoning changes that are informed by communities and plans: By engaging residents throughout the entire process of planning and proposing changes to zoning regulations, governments may be able to avoid or mitigate potential legal challenges by proactively seeking and addressing public concerns and conflicts. In addition, comprehensive plans especially can serve as legal and policy guidance that put residents “on notice” of regulatory decisions that may impact private property rights. In light of potential takings litigation, courts often evaluate whether local governments provided adequate notice to private property owners as one factor in assessing whether a takings has occurred. Generally, courts view public notice as one factor, among others, favorable to governments in finding that a takings has not occurred. Finally, local governments should seek to document the findings of their zoning decisions (e.g., scientific, economic, safety) in comprehensive plans and other documents to produce an administrative record that can show the reasons and justification underlying a municipality's managed retreat decision (e.g., to protect lives and property). For more information on takings, see the Crosscutting Legal Considerations>Takings section of this toolkit.

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