City Council members pledge to fix zoning issues

Dan Kulin

Wednesday, July 21, 2004 | 9:48 a.m.

Unintended consequence is rearing its ugly head in downtown Henderson.

Changing the zoning on some downtown properties from residential to commercial in April was intended to help ease the area's future transition to one lined with businesses instead of homes.

Apparently, though, the changes also have prevented some downtown residents from getting home loans.

The mayor and City Council members pledged to fix the problem as soon as possible, even if it takes changing the zoning there back to residential, so the homeowners can get loans.

"We really did not see this coming," Councilwoman Amanda Cyphers said. "One way or another we will get this fixed."

Two downtown homeowners told the City Council on Tuesday that the new commercial zoning on their homes prevents them from getting loans using their homes as collateral.

Patrick Wilson, 33, who lives on Utah Street in downtown Henderson, said he looked into getting a home equity loan but was told no.

"They don't give residential loans on commercial property," Wilson said.

Brad Jensen also complained to the council that he couldn't get a loan, which he needs to close a deal on another property he hopes to buy.

Dan Shaw, a developer and chairman of the city planning commission, said the problem for those homeowners is that they are trying to get federally insured loans. Those loans are required to be used for residential purposes, Shaw said, and so changing the zoning on those properties to commercial created a problem.

Robert Ryan, the city redevelopment manager, said some downtown property owners whose land is now zoned commercial have been able to get loans, and he was hopeful Wilson's and Jensen's problems will be worked out.

"It came up with one or two before and we wrote a letter," Ryan said, explaining that the city had to show the lender that the property could keep its residential use regardless of the zoning change.

Ryan said perhaps the problem for some lenders is that having the land use and zoning not match could make them concerned that selling the loan on the secondary market could be difficult.

In general, though, city officials said they weren't sure what the problem is, but they intend to find out soon.

"We might have to try a temporary thing so this guy doesn't lose his money," Councilman Jack Clark said, referring to Jensen, who said he has just a few days to close his deal or he loses a deposit.

City Manager Phil Speight said the city attorney's office will review the situation, and the mayor said city staff will contact the lenders to try to fix the problem.

"If a commitment to rezone the property back to residential is the way to fix this then we'll do it," Mayor Jim Gibson said.