Zoning Out:
Vested Rights Can Cost You
Susan K. Burkhart
[email protected]
Vested Rights What Are They?
Analogy if you do personnel law:
• At will employment – no constitutional
protection to continued employment
because you have a mere expectation of
continued employment
• Contract employment – have constitutional
protection to continued employment
because there is a protected “property
interest” at stake
Essential rule of zoning and
vested rights law:
• A zoning ordinance is not a contract
between the town and its citizens; a zoning
ordinance, including a zoning classification,
is subject to repeal or change at the will of
the governing body – subject only to
“vested rights” of the citizens in the town.
McKinney v. City of High Point, 239 N.C.
232, 79 S.E.2d 730 (1954).
/_______/_______/_______/_______/_______
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1.
Landowner bought land – land zoned “GB” in 2000
2.
Landowner confirmed at meeting with Town
Planning Director in 2005 that car dealership
permitted under GB zoning
3.
Landowner spent $100,000 for architect,
engineering fees, etc., went to architectural review
meetings with Town and obtained architectural
approval from Town for proposed building
4.
Landowner obtained building permit
5.
Landowner acquired building permit and spent
$50,000 in engineering costs and other fees in
reliance on the permit
Two Methods for Obtaining
Vested Rights:
• Statute
• Common law - created by case law
(written appellate decisions) rather than
the legislature by enactment of a statute
Common Law Vested Rights
• At common law, the VR doctrine evolved as a
mechanism to balance competing interests of
municipalities, which need orderly, public-interest
driven zoning regulations, and the property rights of
landowners
• The VR doctrine recognizes that where property
owners have reasonably made a substantial
expenditure of money, time, labor or energy in a good
faith reliance on a permit from the government, that
they acquire “vested rights” or a protected right to
complete the development of their land as originally
begun despite any changes in the zoning on the
property.
Essential elements COMMON LAW
vested rights:
1) the party has made, prior to the amendment
of a zoning ordinance, expenditures or
incurred contractual obligations “substantial
in amount, incidental to or as part of the
acquisition of the building site or the
construction or equipment of the proposed
building;”
2) the obligations and/or expenditures are
incurred in good faith;
3. the obligations and/or expenditures were
made in reasonable reliance on and after
the issuance of a valid building permit, if
such permit is required, authorizing the use
requested by the party; and
the amended ordinance is a detriment to the
party.
Browning-Ferris Industries of South Atlantic,
Inc. v. Guilford County Board of Adjustment,
126 N.C. App. 168, 484 S.E.2d 411 (1997).
First Element:
Landowner made
“Substantial Expenditures”
toward development
Held to be “substantial”
expenditures:
• Land acquisition, construction
materials and equipment purchased =
substantial expenditures
Town of Hillsborough v. Smith, 276
N.C. 48, 170 S.E.2d 904 (1969)
• Costs may be viewed proportionally
to overall cost of project: even
digging a trench and installing PVC
pipe was a “substantial expenditure”
given the small scale of the project, i.e.,
installing satellite dish television
Sunderhaus v. Bd. of Adjustment, 94
N.C. App. 324, 380 S.E.2d 132 (1989)
• Whether expenditures were
“substantial” may be question of fact:
expenditure of $20,000 after receipt of
quarry permit was a question of fact for
jury.
Simpson v. City of Charlotte, 115 N.C.
App. 51, 443 S.E.2d 772 (1994).
Second Element:
Developer Acted in “Good Faith”
• Owner acting with “undue haste” in a
deliberate attempt to avoid newly
adopted ordinance does not secure CL
vested rights.
EX: Where developer moved at
“extraordinary pace with knowledge of
community opposition to project, no
“good faith” shown.
Stowe v. Burke, 255 N.C. 527, 122
S.E.2d 374 (1961).
EX: Where developer made expenditures
between date of adoption and effective
dates of rezoning, no “good faith”
shown.
Warner v. W & O, Inc., 263 N.C. 37,
138 S.E.2d 782 (1964).
EX:
Knowledge of a specific pending change in
zoning may defeat “good faith.”
After notice of public hearing about rezoning,
developers consulted planning staff to
determine what to do to get “grandfathered in.”
They then proceeded to subdivide the land,
record the plat, secure a zoning compliance
permit and install roads prior to vote on
rezoning.
Held: no “good faith” shown.
Koontz v. Davidson County Bd. of Adjustment,
130 N.C. App. 479, 503 S.E.2d 108, rev.
denied, 349 N.C. 529, 526 S.E.2d 177 (1998).
BUT - knowledge of only a possible
ordinance change does not itself
defeat “good faith.”
Thomasville of N.C., Ltd. v. City of
Thomasville, 17 N.C. App. 483, 195
S.E.2d 79 (1973).
Third Element:
Reliance on Valid Permit
Examples of Valid Permits:
•
•
•
•
Building permit
Special or conditional use permit
Preliminary or final plat approvals
Quarry permit
Expenditures made on INVALID
(mistakenly issued permit) do NOT confer
vested rights
• Where owner had operated a bakery in
violation of zoning ordinances for 9 years
- no VR because permit was mistakenly
given in violation of residential zoning
district.
City of Raleigh v. Fisher, 232 N.C. 629,
61 S.E.2d 897 (1950).
• No vested rights where building inspector
issued building permit for sign
construction after the owner’s original sign
permit expired.
• No VR because the building permit was
invalid.
Morris Communications Corp. v. City of
Bessemer City Zoning Bd. of Adjustment,
689 S.E.2d 880 (March 2, 2010).
• Also, city cannot be estopped to enforce
its zoning ordinances because of
promises or action that the landowner
relied upon to its detriment.
Morris Communications Corp. v. City of
Bessemer City Zoning Bd. of Adjustment,
689 S.E.2d 880 (March 2, 2010).
• Must be reliance on a permit before
expenditures were incurred
Warner v. W&O, Inc., 263 N.C. 37, 138
S.E.2d 782 (1964).
• Leith v. Town of Southern Pines,
No. COA 9-433
N.C. Court of Appeals
(decision pending)
/_______/_______/_______/_______/_______
1
2
3
4
5
1.
Landowner bought land – land zoned “GB” in 2000
2.
Landowner confirmed at meeting with Town
Planning Director in 2005 that car dealership
permitted under GB zoning
3.
Landowner spent $100,000 for architect,
engineering fees, etc., went to architectural review
meetings with Town and obtained architectural
approval from Town for proposed building
4.
Landowner obtained building permit
5.
Landowner acquired building permit and spent
$50,000 in engineering costs and other fees in
reliance on the permit
Browning-Ferris Indus. of S. Atl., Inc. v.
Guilford County Bd. of Adjustment, 126
N.C. Ap 168, 172, 484 S.E.2d 411, 415
(1997).
Held: letters from staff confirming the
zoning on a property do not give rise to
vested rights. Must have building permit
to obtain CL vested rights.
Huntington Properties v. Currituck County, 153
N.C. App. 218, 569 S.E.2d 696 (2002).
• Pltf owned mobile home park; after park in operation
for 20 yrs, County amended its zoning ordinances to
prohibit mobile home parks and pltf’s park became a
lawful “nonconforming use.” Then, pltf wanted to
expand its operation.
• Ct: Pltf could have obtained vested rights in 2 ways:
– by obtaining building permits from the State to expand its
capacity; or
– by obtaining a final interpretation from the County planning
staff that the park could lawfully expand under UDO
provision allowing expansion of a nonconforming use “in
volume only.”
REVIEW:
•
Common Law Vested Rights arise if:
 Owner makes:
1) substantial expenditures;
2) in good faith;
3) in reliance on a valid permit
prior to the amendment of a zoning
ordinance that prohibits the
development.
Statutory Vested Rights
BUILDING PERMIT VESTED RIGHTS under N.C. Gen. Stat. §160A-385(b)
(b) Amendments in zoning ordinances shall not be
applicable or enforceable without consent of the
owner with regard to buildings and uses for which
either (i) building permits have been issued pursuant
to G.S. 160A-417 prior to the enactment of the
ordinance making the change or changes so long as
the permits remain valid and unexpired pursuant to
G.S. 160A-418 and unrevoked pursuant to G.S.
160A-422 or (ii) a vested right has been established
pursuant to G.S. 160A-385.1 and such vested right
remains valid and unexpired pursuant to G.S. 160A385.1.
If owner has a valid building permit, he need not
prove the elements of common law vested rights.
Need not show spent “substantial sums,” or “good
faith” or reliance on a “permit.”
Why do common law vested rights even matter?
Common law vested rights can arise from site plan
approval, special use permits, conditional use
permits, quarry permits, billboard permits, as well as
building permits… so they do matter.
* Vested Rights required for every due process
(42 U.S.C. §1983) damages claim.
“SITE SPECIFIC DEVELOPMENT PLAN”
VESTED RIGHTS
- under N.C. Gen. Stat. §160A-385.1
If landowner obtains “site specific
development plan” approval from town,
he can acquire vested rights before he
obtains a building permit.
“Site specific development plan” = plan
submitted to town describing with
“reasonable certainty the type and intensity of
use.” May be:
– a subdivision plan
– preliminary or general development plan
– conditional or special use permit
– conditional or special use district zoning
plan
– or “any other land-use approval
designation as may be utilized by a city.”
City or town’s ordinances will typically
define “site specific development plan”
• Must be defined as permit or approval
earlier than the issuance of a building
permit
“Site Specific Development Plan”
• Must be approved by city/town
following notice and public hearing.
Site specific development plan vested
rights last minimum of 2 years, but up to
5 years if so provided by the city/town in
its ordinances.
NON-VESTED “VESTED RIGHTS” - RIGHT TO
HEARING UNDER ORIGINAL ORDINANCE
UPON SUBMITTING APPLICATION
• Applicants are entitled to complete a hearing
on a pending application under the original
zoning ordinance;
• Towns/cities cannot modify a zoning
ordinance to preclude development before
voting to approve or disapprove a pending
application.
Robins v. Town of Hillsborough, 361 N.C.
193, 639 S.E.2d 421 (2007).
PRACTICE POINTERS:
1) Know your zoning ordinance or UDO, esp. how
it defines “site specific development plan”
2) Know your zoning ordinance of UDO, esp. the
length of time by which a decision must be
rendered on a pending application
3) Train your staff – don’t send “zoning approval
letters” or anything equivalent, which could
be construed as an “approval”
4) Don’t hasten the rezoning process to avoid an
undesirable project; follow all rules for public
notice, staff review, etc. If Town/city violates
any rules along the way, the Robins rule means
that the applicant will get a full review of the
application under the original zoning.
5) Don’t communicate by e-mail, esp. about
proposed projects – it’s discoverable through a
FOIA request and later in a lawsuit. Council
should save public debate for public forum.
6) Document the reasons for Town action in the
minutes – don’t let citizens’ comment be only
record.
7) Invoke benefits of (relatively) new statute:
“Zoning regulations shall be made in
accordance with a comprehensive plan. Prior to
adopting or rejecting any zoning amendment,
the governing board shall adopt a statement
describing whether its action is consistent with
an adopted comprehensive plan and explaining
why the board considers the action taken to be
reasonable and in the public interest. That
statement is not subject to judicial review.”
N.C.G.S.A. § 153A-341 (effective Jan. 1,
2006).
8) Review your town/city’s comprehensive plan.
9) Consider possibility that City/town may be
sued for Fair Housing Act violation, under 42
U.S.C. §3601-3619, or “Title VII”) even if no
“vested rights” exist.
Fair Housing Act prohibits zoning
decisions even based on good faith
(laudable and nondiscriminatory) zoning
goals, if the zoning results in a
discriminatory impact.
Fair Housing Act also prohibits
discrimination based on “disability,”
– which includes drug and alcohol
dependence.