An overlay district is an area that is additionally placed within an existing zoned districts (for example a residence, commercial or manufacturing district), or superseding multiple borders of those existing districts. An overlay district includes a set of regulations in addition to the regulations of the already underlying district(s). The use of the overlay districts are to enable certain beneficial actions or constructions that existing zoning does not allow.
An overlay district can be appointed by any governmental unit with the power to create zoning districts by taking the following steps:
Purpose: what are the objectives and reasons for applying for an overlay district?
Applicability: what are the borders of the new overlay district and what is its effect on the underlying zone?
Regulations: what are the regulations and restrictions of the overlay district when it comes to bulk regulations, design, mapping, architecture, parking, etc?
Most overlay districts can be found in important environmental and historic areas, while commercial overlay areas are on the rise in dense urban areas. For example, buildings located on an environmental overlay zone such as a foodplain zone may be required to use special building materials to avoid flood damage. The buildings located in a residential and floodplain overlay zone need to obey the rules of both zones. A historic overlay can be applied in order to protect important historical buildings within a community. (Garvin, 2001)
In NYC, commercial overlays can be found in many residential districts. C1-1 through C1-5 and C2-1 through C2-5 are commercial districts which are mapped as overlays and allow for retail stores, markets, restaurants etc. When a commercial overlay is mapped within an R1 through R5 district, except an R5D district, the commercial FAR is 1.0 (equal to the ground floor use); within an R5D district or an R6 through R10 district, the commercial FAR is 2.0 (equal to both ground floor and first floor). The residential FAR for a commercial overlay district is determined by the residential district regulations.