How to Get a Variance

Show Notes

Sometimes you want to add on to your existing storage facility or make other modifications but you are blocked by city, county or state ordinance. In those cases you have only one alternative: obtaining a variance. But how does that work? In this Self-Storage University Podcast we’re going to discuss the variance process and tips to help you succeed based on past experience.

What is The Self Storage University Podcast?

Welcome to the Self-Storage University Podcast, where you will learn the correct way to identify, evaluate, negotiate, perform due diligence on, renegotiate, finance, turn-around and operate self-storage facilities. And your host is a partner in one of the largest real estate portfolios in the U.S. with nearly $1 billion of holdings, Frank Rolfe.

Webster's defines variance as, the factor quality of being different, divergent, or inconsistent. Now in the self-storage industry, when we talk about a variance, we're talking about having a city, or county, or state give you the right to be divergent and different. This is Frank Rolfe with the Self-Storage University podcast. We're going to talk about how to get a variance on a self-storage facility. Why would you need a variance anyway? Why does that even matter? Well, here's the situation. A lot of times when you buy a self-storage facility, and let's say you want to expand it or make alterations to it, the underlying permit today doesn't allow for that. Maybe the zoning has changed. Maybe you're no longer zoned for self-storage, so therefore you can't build an additional building. Or maybe the rules and regulations have changed on self-storage and how much coverage ratio you can have, and you can't fit the optimal building on the land because it's too much land for too... I'm sorry, too much building for too little land. So there's all kinds of reasons you might need a variance from a city, or a county, or even a state, but how do you get one? What do you do?

Let's assume that you bought a self-storage facility, and you want to add another building on to it, but you don't have quite enough room to do that. So what do you do? Well, you can quit. You can give up and say, "Well, I guess, I can't build it then." Or you could build something that's not as optimal, or you could go to the city and say, "Hey, city, here's what I want to build. Why can't I get that done?" And most cities and most counties and even states have the ability to grant you a variance if they want to, to say, "Yeah, you can be different. We'll let you be different. Nope, your neighbor over there, they can't be different, but you can be different." And that's what a variance is all about. So how do you get one? So if we're saying a variance is an important item on a self-storage acquisition that you're working on and you want to get one, how do you do? Well, back in the day, I didn't know there was a trick to it. So I would file for variances on things, and I would always get shot down. Because see, I was this kind of innocent, good-natured person who thought that things are done above board in city and county governments, but the truth is they're not. What happens is, everyone already has made up their mind before they ever go to the meeting. They never decide anything on the spot.

I've been on commissions and different things, and I can tell you that there's never, ever been a vote ever that wasn't already pre-decided before the meeting. It's kind of a letdown. It's kind of like going out to the Pawn Stars facility in Las Vegas or American Pickers facility there in Le Claire, Iowa, and realizing it's not what you thought it was. You thought you could go into Pawn Stars and actually see Rick his team and they give you a price on what you wanted to sell. And then you come to find out, no, they do the show actually on a soundstage. They don't do it in the store on the strip there in Las Vegas, and then everyone you see on the show, at least from the reports I've read is, their fate has already been predetermined that they're going to buy it or not buy it and how much they're going to pay. So the key is you don't file for the variance until you have the votes, because you're not going to get a fair and square opinion of yourself there on voting night because they already decided that. So before you ever even file, you've got to get the vote. So how do you do that? Well, you go to everybody to find out what they would want to vote for you.

Now, I'm not talking bribery. I'm not saying calling you up and saying, "Hey, how much money would I have to give you to give me that variance?" Often what they want isn't money and they're talking not in their perspective, but that of their constituency. But there are some trade-offs. For example, let's say you went to one of the council members and they said, "Yeah, I will vote to give you that variance, but only if you put up a giant landscaped barrier. So the homeowners in the subdivision next door don't have to look at that building that's encroaching on where you couldn't quite put the building before if we give you the variance." Well, you'd probably do that, right? If you had to plant a row of bushes to get what you want. Okay, well, we can do that. All right.

You go to the next person. "Hey, here's what I want. What do you think?" And they say, "Well, I'd vote for it, but only if you put in new landscaping down the road frontage because your place looks kind of trashy and we're trying to redevelop the city and so we want it to look a little nicer. But if you would do that, I'd vote for it." And you call each of them up and you find out what they want and they almost always have a price. I'm not talking money. I'm talking about the things they'd want to see as part of your facility if they grant the variance, which is for the betterment of the community. And you make the big laundry list and you incorporate all of those things into your application. Because now you know what you have to do to get the votes. Now, never file until you have the votes. So talk to people and find out what they want and if they're not sold immediately or they got to think about it, then don't count that as a yes. They're going to vote against you probably. So you've got to hang in there until you find out what it is. But once you know you have the votes, let's say it's a council and it's got seven people, so you only need four of the seven to vote yes to get your variance. Well, as soon as you got four of them who say, "I'll vote for you if you do X, Y, Z," then you file, but not a minute before you have that done.

Also, when you talk to these people and even when you make your presentation, you got to think in terms of them. How does it benefit them? If you went to them and say, "Look, here's a deal, I want to build this building where you don't allow it. So I want a variance to build it there because if I build it there, it's going to save me X thousands of dollars or it's going to make me X thousands of dollars. Well, the city didn't get any of that money. That doesn't really help them when I owe to. Instead, talk only about the benefits of they're going to see. If you expand your self storage facility, what benefits does the community have? Well, it gives them more room for storage. You might talk about the fact that, you know, right now there's not any available space. So you're doing this so that people who own homes or businesses can now have an option, a potential place to store the stuff.

So that's good stuff. Or you can talk about the fact that if they grant the variance, you're going to make your facility look the best it ever has. It'll be an asset to the community. Right now, you're going to bring it back to life and make it look good again. That's the kind of stuff they want to hear. They want to hear things that benefit the city. They could care less about what benefits you. A lot of people don't understand this. They think somehow they're appealing to the council to help them out. They have no desire to help you out. All they care about is how you're going to help them and their constituents. Another thing you should do is join the Chamber of Commerce. Be a part of the community, particularly in suburban and exurban markets, not urban markets, because urban markets are a little strange on this. But in the suburban and exurban markets, when you are an active member of the community, starting with joining the Chamber of Commerce, then you're going to have a much greater likelihood to get that variance because they feel that you're on their team.

I live in a small town and I can tell you that if you had a business wanting a variance in a small town, the best thing you could do is be a part of that small town. And when I say be a part of it, be active. Join things. Pay dues. It doesn't hurt to also make connections with the city. Take the mayor out to lunch. Talk to some of the people who are the movers and shakers in town, because the more you are enmeshed with that group, the more you'll be trusted. And when people give you variances, part of the problem with getting the variance itself is trust. You're never going to get a variance if you have a self-storage facility that you've owned for a while and not kept it in tip-top condition. JW Marriott once said, "It's the little things that make the big things possible." And if you need a variance, what's going to make that possible is that you've really done a great job of what you've got. Another thing you want to do to get a variance is have good social media reviews. Have a good online presence that's very positive. Remember that all of us today look at everything on the internet to get an immediate rating in our own brain whether this is a good person or a bad person. Everyone's guilty of this.

So every time you talk to a business or individual, I bet you're on the internet, Googling them up and what is their background and what is their LinkedIn and all that kind of stuff. And you're no different to them. If the city fathers and you've requested this variance and they go online and they see that your self-storage facility only has a one-star review and nothing but bad comments, well, you're probably not going to get your variance because they don't like you. They don't trust you. They think there's something wrong with you. So it would really behoove you to have a very, very good online presence. It's not hard to get a five-star review or four-star review. Just ask happy customers to give you a positive review. And don't say the word positive review. Some people get bent out of shape. They say, "Oh, no, no, no, you can't coach the reviewer." Well, it's crazy. I mean, if you go to the local post office, they'll give you the thing and circle the thing and say, "Hey, can you go on there and give us a good review?" So, I mean, let's be realistic here. But even in a politically correct world, if you simply ask people who are happy to give you a review, you know you're going to get a good review.

If you don't put in that effort, what are you going to get? Well, you're going to have only the customers who hate your guts, who will put in the time to give you that one-star review or no-star review and tell the world how awful you are. You need to dilute those down. You can probably get 10 for one ratio of happy customers to the unhappy. And if you were to do that and all those happy customers gave you a high review, you're going to go ahead and turn your one-star into a four almost overnight. And you'll have many, many people explaining how good you are. The bottom line to it is it takes some effort to get a variance. It takes strategy. Yes, you can file for the permit application. Yes, you can create the plans. But that's not how you get variances passed. Instead, you have to think about it politically.

You have to be smart. You have to be cagey. You got to follow the system that's been developed since some backroom, probably back in 1850, who knows. But that's the way the city politics and county politics works. Embrace that. Don't say, "Oh, I don't want to be part of the system." Yes, you do in this case. You've got to be part of the system. That good old boy network that rules many of these smaller and even medium-sized suburban and exurban markets. That's your target. You've got to be in line with them. If you can just do that and follow these tricks they're giving you, you should be able to get that variance passed. This is Frank Rolfe with the Self-Storage University podcast. Hope you enjoyed this. Talk to you again soon.