Nonconformities &Nonconformities &Vested RightsVested Rights

T’aint Fair!T’aint Fair!

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NonconformitiesNonconformities

• Non-Conformities Non-Conformities – Certain uses of land are allowed to continue, Certain uses of land are allowed to continue,

as NONCONFORMING USES, even though as NONCONFORMING USES, even though that use is no longer permitted. that use is no longer permitted.

• The most common causes of non-The most common causes of non-conformities are rezonings and comp plan conformities are rezonings and comp plan changes.changes.

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• A existing non-conforming use must have A existing non-conforming use must have been a conforming use at one timebeen a conforming use at one time

• Then when the rules are changed, a Then when the rules are changed, a determination is made that it would be determination is made that it would be “unfair” to terminate the existing use;“unfair” to terminate the existing use;– Forever, orForever, or– For a defined amortization period, orFor a defined amortization period, or– Until the property changes hands, orUntil the property changes hands, or– As long as the structure lasts.As long as the structure lasts.

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Billboards . . .Billboards . . .• Many billboards have been made non-conforming Many billboards have been made non-conforming

uses by local government prohibition of billboards uses by local government prohibition of billboards in most if not all zoning districts.in most if not all zoning districts.

• Courts have upheld such prohibitions if;Courts have upheld such prohibitions if;– The was a valid public purpose andThe was a valid public purpose and– If there was a reasonable amortization period.If there was a reasonable amortization period.

• In 2002, the Florida Legislature passed and the In 2002, the Florida Legislature passed and the Governor signed into law a prohibition against the Governor signed into law a prohibition against the amortization of billboards, thereby effectively amortization of billboards, thereby effectively stopping local government prohibition of stopping local government prohibition of billboards.billboards.

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A nonconforming useA nonconforming use

–A retail store in a residentially A retail store in a residentially zoned neighborhood.zoned neighborhood.

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• Most jurisdictions place many restrictions on non-Most jurisdictions place many restrictions on non-conforming uses:conforming uses:

– The use cannot be expanded – The use cannot be expanded – • what about the “café” in front of Wilbert’s?what about the “café” in front of Wilbert’s?

– Improvements cannot be made – Improvements cannot be made – • which is why Wilbert's parking lot is not paved;which is why Wilbert's parking lot is not paved;

– But, the structure can be maintainedBut, the structure can be maintained• What’s the difference between improvement and maintenance?What’s the difference between improvement and maintenance?

– If the structure is damaged beyond a certain degree – If the structure is damaged beyond a certain degree – commonly between 40 and 60% – it cannot be rebuilt. commonly between 40 and 60% – it cannot be rebuilt.

• There is some very interesting “creative accounting” in regard to There is some very interesting “creative accounting” in regard to the extent of damage to non-conforming structures.the extent of damage to non-conforming structures.

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• Would you believe that this is 50% Would you believe that this is 50% damaged?

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Jones v Los AngelesJones v Los Angeles, , 295 P.14, 19 (Cal.1930)295 P.14, 19 (Cal.1930)

• California Supreme Court laid out a line of California Supreme Court laid out a line of reasoning when Los Angeles prohibited reasoning when Los Angeles prohibited sanatoriums in residential areas . . .sanatoriums in residential areas . . .– ““The exercise of power in this instance is, on The exercise of power in this instance is, on

the whole, far more drastic than in those in the whole, far more drastic than in those in which a mere right to engage in a particular which a mere right to engage in a particular business is restricted. business is restricted.

– We are asked to uphold a municipal ordinance We are asked to uphold a municipal ordinance which destroys valuable businesses, built up which destroys valuable businesses, built up over a period of years. . .”over a period of years. . .”

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• ““The approval of such a doctrine would be The approval of such a doctrine would be a blow to rights in private property such as a blow to rights in private property such as this court has never before witnessed. this court has never before witnessed.

• Only a paramount and compelling Only a paramount and compelling public necessity could sanction so public necessity could sanction so extraordinary an interference with extraordinary an interference with useful business.”useful business.”

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Los Angeles v. GageLos Angeles v. Gage,,274 P.2d 34 (Cal appl 1954)274 P.2d 34 (Cal appl 1954)

• JonesJones and and GageGage are almost the same are almost the same issue, but with different outcomes. issue, but with different outcomes.

• Another difference between Another difference between JonesJones and and GagGage is amortization;e is amortization;– With With JonesJones, Los Angeles required immediate , Los Angeles required immediate

cessation of the activitycessation of the activity– With With GageGage, Los Angeles allowed 5 years for , Los Angeles allowed 5 years for

compliance.compliance.

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• Gage had operated the plumbing business Gage had operated the plumbing business on Cochran Avenue for 16 years.on Cochran Avenue for 16 years.

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Cochran AvenueCochran Avenue

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• Gage had operated the plumbing business Gage had operated the plumbing business on Cochran Avenue for 16 yearson Cochran Avenue for 16 years

• Gage would suffer economic losses – Gage would suffer economic losses –

– Loss of revenue of $125k - $350k a yearLoss of revenue of $125k - $350k a year– Relocation cost, maybe $5,000 or soRelocation cost, maybe $5,000 or so

• Trial court held for Gage on the basis of Trial court held for Gage on the basis of hardship.hardship.

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Three significant points . . .Three significant points . . .

1.1. Gage was given 5 years to relocate the Gage was given 5 years to relocate the business,business,

2.2. While Gage’s damages would be great if While Gage’s damages would be great if the business was lost, the cost of the business was lost, the cost of relocation was relatively modest, andrelocation was relatively modest, and

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3.3. Los Angeles was able to identify the Los Angeles was able to identify the ““paramount and compelling public paramount and compelling public necessit[ies]” that call for this regulation,necessit[ies]” that call for this regulation, [[JonesJones]]

““[T]he noise and disturbance caused [T]he noise and disturbance caused by the loading and unloading of by the loading and unloading of supplies, trucking, and the coming supplies, trucking, and the coming and going of workmen in connection and going of workmen in connection with the operation of a plumbing with the operation of a plumbing business with an open storage yard . . business with an open storage yard . . ..”..”

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A reaction . . .A reaction . . .

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Vested RightsVested Rights• Non-conforming uses deals with properties in Non-conforming uses deals with properties in

current uses that are no longer allowed, i.e., current uses that are no longer allowed, i.e., developed.developed.

• Vested rights deal with properties that are not in Vested rights deal with properties that are not in

a current use that is no longer allowed, i.e., a current use that is no longer allowed, i.e., undeveloped. undeveloped.

• Both doctrines deal with issues of equity and Both doctrines deal with issues of equity and fundamental fairness.fundamental fairness.

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• Vested rights exist where a property Vested rights exist where a property owner/developer has proceed sufficiently owner/developer has proceed sufficiently far with a project. far with a project.

• Of course, the major issue is “how far is Of course, the major issue is “how far is sufficiently far?”sufficiently far?”

• Many of the cases involve whether the Many of the cases involve whether the owner knew (or should have known) of the owner knew (or should have known) of the restrictions – restrictions – – ““Red Flag” and Red Flag” and – ““zoning in progress.” zoning in progress.” – This is why zoning matters are advertised. This is why zoning matters are advertised.

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0%

20%

40%

60%

80%

100%

Buy Plat Sell Build Occupy

Progress towards vestingProgress towards vesting

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• Many cases turn on whether the restrictions Many cases turn on whether the restrictions were for the general welfare – a legitimate were for the general welfare – a legitimate state interest – or whether they were state interest – or whether they were directed toward some less lofty goal.directed toward some less lofty goal.

• The doctrine of vested rights has undergone The doctrine of vested rights has undergone a tremendous evolution.a tremendous evolution.– Traditionally, beginning a project -- making Traditionally, beginning a project -- making

substantial expenditures in reliance on a substantial expenditures in reliance on a governmental approval -- was sufficient to governmental approval -- was sufficient to substantiate a claim for vesting. substantiate a claim for vesting.

– But, the trend has been to invoke more stringent But, the trend has been to invoke more stringent tests.tests.

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Avco Community Developers v Avco Community Developers v South Coast Regional CommissionSouth Coast Regional Commission, ,

553 P.2d 546 (Cal 1976)553 P.2d 546 (Cal 1976)

• Question – should Avco have to comply Question – should Avco have to comply with recently enacted legislation for its with recently enacted legislation for its ongoing development – Laguna Nigel in ongoing development – Laguna Nigel in Orange County?Orange County?

• What did they have to do?What did they have to do?– apply to the California Coastal Commission apply to the California Coastal Commission

for permits to construct buildings within the for permits to construct buildings within the defined coastal area of California.defined coastal area of California.

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• How would applying to the California How would applying to the California Coastal Commission for permits be Coastal Commission for permits be injurious to Avco?injurious to Avco?

– They might not get the permits!They might not get the permits!– But, how are we to know that?But, how are we to know that?

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• ““It has long been recognized . . . that if a property It has long been recognized . . . that if a property owner has performed substantial work and owner has performed substantial work and incurred substantial liabilities in good faith reliance incurred substantial liabilities in good faith reliance on a permit . . , on a permit . . ,

he acquires a vested right to complete construction he acquires a vested right to complete construction in accordance with the terms of that permit.”in accordance with the terms of that permit.”

• Avco, with approval from Orange County, CA, had:Avco, with approval from Orange County, CA, had:

– Subdivided the property; Subdivided the property; – Graded the property and installed utilities. Graded the property and installed utilities. – Avco had spent over $2 million on the project.Avco had spent over $2 million on the project.

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But . . .But . . .

• Avco had not applied for building permits.Avco had not applied for building permits.

• So, would Avco be exempt from the So, would Avco be exempt from the requirement to first receive a permit from requirement to first receive a permit from the California Coastal Commission?the California Coastal Commission?

• No! No! – No vested rights exist because the regulation No vested rights exist because the regulation

does not strip this land of all value.does not strip this land of all value.

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• A difficulty presented to the court in A difficulty presented to the court in Avco Avco is that the court is being asked to rule on is that the court is being asked to rule on the application of public safety regulations the application of public safety regulations in the abstract.in the abstract.

• Avco did not put forward any injury that Avco did not put forward any injury that would or could occur.would or could occur.

• The court was very concerned about the The court was very concerned about the broader implications of this case.broader implications of this case.

• Avco would have done better to have Avco would have done better to have presented damages and then call for presented damages and then call for balancing of equities.balancing of equities.

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Kauai v. Pacific Standard Life Kauai v. Pacific Standard Life Insurance CompanyInsurance Company,, 653 P.2d 766 (Haw. 1982).653 P.2d 766 (Haw. 1982).

NOT ASSIGNEDNOT ASSIGNED• A 60 acre oceanfront property. A 60 acre oceanfront property. • After necessary zoning was granted, a civic After necessary zoning was granted, a civic

group circulated a petition to repeal the group circulated a petition to repeal the zoning. zoning.

• The matter was put to a referendum and the The matter was put to a referendum and the zoning was repealed. zoning was repealed.

• During the petition/referendum process, the During the petition/referendum process, the developer proceeded with development and developer proceeded with development and applied for and received some building applied for and received some building permits.permits.

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The developer had:The developer had:

– Spent $158,797.64 for planning & design Spent $158,797.64 for planning & design [between the time the zoning was passed and [between the time the zoning was passed and the referendum was certified]. the referendum was certified].

– Spent $286,356 on development after the Spent $286,356 on development after the referendum was certified.referendum was certified.

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• The court found for the developer and The court found for the developer and awarded damagesawarded damages

– Of $158,798 for good faith expenditures Of $158,798 for good faith expenditures incurred before the referendum was certifiedincurred before the referendum was certified

– Did not consider the “bad faith” $286,346 Did not consider the “bad faith” $286,346 expenditures incurred after certification.expenditures incurred after certification.

– The developer saw it coming and could have The developer saw it coming and could have mitigated damages, but chose not to.mitigated damages, but chose not to.

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Vested Rights in FloridaVested Rights in Florida

• As a As a generalgeneral rule, in Florida, rule, in Florida,

• Vesting occurs at plat or site plan approvalVesting occurs at plat or site plan approval

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Vested Rights in FloridaVested Rights in Florida

• As a As a generalgeneral rule, in Florida, rule, in Florida,

• Vesting occurs at plat or site plan approvalVesting occurs at plat or site plan approval

• This is This is NOTNOT an absolute an absolute

• There is no absolute point of vesting in There is no absolute point of vesting in FloridaFlorida– See See Pinecrest Lakes v ShidelPinecrest Lakes v Shidel

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• In vested rights litigation . . .In vested rights litigation . . .• Florida courts have been known to Florida courts have been known to

balance the . . .balance the . . .

• The harm to the property owner withThe harm to the property owner with• The public purpose sought.The public purpose sought.

• When the property retained a beneficial When the property retained a beneficial use, the Florida courts have been open to use, the Florida courts have been open to actions that modified the “vested” actions that modified the “vested” development, provided there was a clear development, provided there was a clear and compelling public purpose.and compelling public purpose.

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City of Parkland and Broward Countyv. Norman Septimus, 428 So.2d 681

• Property downgraded fromProperty downgraded from– 5.49 units per acre5.49 units per acre– To less than 1 unit per acreTo less than 1 unit per acre

• Fourth DCA . . .Fourth DCA . . .

• ““[P]laintiffs . . . did not substantially change [P]laintiffs . . . did not substantially change their position in reliance upon their position in reliance upon governmental act in question.”governmental act in question.”

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