Articles

NBI Part III - Special Issues

A VESTED RIGHTS

The doctrine of “vested rights” permits a property owner to use a structure or a lot subsequent to a change in the zoning regulations, based upon the use of such structure or premises prior to the change in zoning. Those uses and lots which were fully in accord with the zoning prior to the zoning change are referred to as legal non-conforming uses and lots (discussed later, under the caption “Non-conforming Uses and Lots”). This section of the material shall deal with vested rights prior to the time that the structure or use has been fully implemented.

1. RIGHTS CREATED BY STATUTE

The first basis for such vested rights may be found in certain statutes. For example, the Village Law1 provides, in substance, that, if after a final subdivision approval has been granted by a planning board of a village (which also has a zoning ordinance) and the subdivision map has been filed with the county clerk, no zoning regulations affecting the subdivided parcels which would otherwise increase the required lot areas or lot dimensions, or the side, rear, or front yard set-back requirements in excess of those applicable when the subdivision map was approved, shall in any way affect any of the lots shown on the subdivision plat for a period of three years after the filing of the subdivision plat. Depending upon the existence or non- existence of a planning board or a zoning ordinance within the village, that period might be reduced to only one or two years.2

The purpose of said statutes is to reconcile the interests of home builders and developers who have made financial commitments relying on existing zoning ordinances, with the interests of towns and villages to upgrade their zoning requirements.3 Accordingly, a developer may secure the right to complete a subdivision in accordance with the existing zoning requirements, protected against any subsequent rezoning by the municipality, by manifesting a commitment to the execution of the subdivision plan by completing improvements and incurring expenditures in connection therewith, during the exemption period, sufficient to constitute vesting under common-law rules.4

2. RIGHTS CREATED BY CASE LAW

In addition to the statutory vested rights one can obtain, an owner will be permitted to complete a structure or (in the case of a subdivision) a development which a zoning amendment has rendered nonconforming when the owner has undertaken substantial construction (pursuant to a valid building permit5 ) and made substantial expenditures prior to the effective date of the amendment.6

The doctrine of vested rights has generally been described as an application of the constitutionally based common-law rule protecting nonconforming uses, but is also said to have been grounded on principles of equitable estoppel. Whether rooted in equity or common law, the operation and effect of the vested rights doctrine is the same and it has been applied alike to a single building or a subdivision. That general rule has, on occasion, been tempered to state that neither the issuance of a permit nor the landowner's substantial improvements and expenditures, standing alone, will establish the right. For a vested right to arise, a landowner's actions relying on a valid permit must be so substantial that the rezoning action results in a serious loss, rendering the improvements essentially valueless.7

3. RIGHTS CREATED BY ESTOPPEL

When a municipality illegally delays the processing of an application, thereby preventing a property owner from vesting its rights prior to the adoption of an amendment to the zoning regulations, the courts in equity may direct the issuance of a building permit.8 Similarly, when a municipality illegally revokes a legally issued building permit, thereby preventing a property owner from vesting its rights, the courts in equity may reinstate the building permit in order to provide the property owner with sufficient time to vest its rights.9

B MORATORIA

In Tahoe-Sierra Pres. Council v. Tahoe Reg'l Planning Agency, 535 U.S. 302 (2002), the United States Supreme Court held that moratoria are legal as essential tools of successful municipal review and control over land development. In that case a “temporary taking” by virtue of a moratorium, was analogized to temporarily denying an owner all of the use of its property as part of the State's authority to enact safety regulations, or as part of the normal delays in obtaining building permits, changes in zoning ordinances, variances, and the like. The Supreme Court found that the imposition of two moratoria, totaling 32 months, on development in the Lake Tahoe Basin while formulating a comprehensive land-use plan for the area, was not a “taking” requiring compensation.

The rule is perhaps best stated that the enactment of a moratorium upon certain land use or development will be upheld if it is reasonably designed to temporarily halt development while the municipality considers, inter alia, comprehensive zoning changes, so long as it is for a valid and reasonable purpose and for a reasonable period of time.10

C EXCLUSIONARY ZONING

1. RESIDENTIAL USES11

The issue of exclusionary zoning arises from the concept that the legislative basis for zoning is to promote the health, safety, morals, or the general welfare of the community and zoning is susceptible to constitutional challenge if it is clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare. Thus, it necessarily follows that the validity of a zoning ordinance depends on the facts of the particular case and whether it is really designed to accomplish a legitimate public purpose.

When a zoning ordinance was challenged on the ground that the ordinance entirely excluded multifamily residential housing from the list of permitted uses, the court noted that the primary goal of zoning must be to provide for the development of a balanced, cohesive community which will make efficient use of the municipality's available land. By “balanced,” the court did not mean that a municipality must maintain a certain quantitative proportion among various types of development. Such a requirement would undermine one of the basic purposes of zoning, which is to provide in an orderly fashion for actual public need for various types of residential, commercial, and industrial structures. Similarly, a municipality is free to establish various types of use zones. There is no requirement that each zone must contain some sort of housing balance. The court’s concern was not whether the zones, in themselves, were balanced communities, but whether the municipality itself, as provided for by its zoning ordinance, would be a balanced and integrated community. Thus, if one zoning district provides for multiple-dwelling development, there is no requirement that other portions of the municipality contain such developments. While it may be impermissible in an undeveloped community to prevent entirely the construction of multiple-family residences anywhere in the locality, it is perfectly acceptable to limit new construction of such buildings where such units already exist.

The first branch of the test for establishing whether a zoning regulation constitutes impermissible exclusionary zoning is simply whether the municipality has provided a properly balanced and well ordered plan for the community. Of course, what may be appropriate for one community may differ substantially from what is appropriate for another. Thus, the court must ascertain what types of housing presently exist in the specific community in which the challenge is being made, their quantity and quality, and whether the array adequately meets the present needs of that municipality. Also, it must be determined whether new construction is necessary to fulfill the future needs of the residents of that municipality, and if so, what forms the new developments ought to take.

Secondly, in enacting a zoning ordinance, consideration must be given to regional needs and requirements. It may be true, for example, that a municipality already has a sufficient number of multiple-dwelling units to satisfy both its present and future populations. However, residents of the county, as well as the larger region, may be searching for multiple-family housing in the area to be near their places of employment or for a variety of other social and economic reasons. There must be a balancing of the local desire to maintain the status quo within the community and the greater public interest that regional needs be met.

Although the traditional view is that zoning acts only upon the property lying within the municipality's territorial limits, it must be recognized that zoning often has a substantial impact beyond the boundaries of the municipality. Thus, the court, in examining an ordinance, should take into consideration not only the general welfare of the residents of the municipality, but should also consider the effect of the ordinance on the neighboring communities. While regional needs are a valid consideration in zoning, apart from any question as to the standing of persons outside the zoning jurisdiction to raise the issue, the municipality need not permit a use solely for the sake of the people of the region if regional needs are presently provided for in an adequate manner. Thus, for example, if a municipality’s neighbors supply enough multiple-dwelling units or land to build such units to satisfy those municipalities’ need as well as its own, there would be no obligation on the municipality’s part to provide more, assuming there is no overriding regional need. So, the second branch of the test is whether the municipality, in excluding new multiple housing within its borders, considered the needs of the region, as well as those of the municipality, for such housing. So long as the regional and local needs for such housing were supplied by either the municipality or by other accessible areas in the community at large, it cannot be said, as a matter of law, that such an ordinance had no substantial relation to the public health, safety, morals or general welfare. The question becomes one of fact for a trial.

2. INDUSTRIAL USES

The prohibition against exclusionary zoning, is intended to prevent a municipality from improperly using its zoning power to keep “people” out. Therefore, under New York law, a municipality is entitled to exclude industrial uses.12 A municipality is not obliged to permit the exploitation of any and all natural resources within it as a permitted use if limiting that use is a reasonable exercise of its police powers to prevent damage to the rights of others and to promote the interests of the community as a whole.13

D CONTRACT ZONING AND CONDITIONAL ZONING

“Contract zoning,” sometimes referred to as “conditional rezoning,” ordinarily arises when a property owner seeks to have its property rezoned by a municipality to permit the owner to use the property in a manner different from what otherwise would be allowed. While the municipality may be willing to do so, it may agree to do so only upon the property owner agreeing to certain conditions, beyond those that will be set forth in the zoning law. Those conditions are customarily set forth in a declaration of covenants and restrictions running with the land and enforceable by the municipality. Probably the principal objection to such an arrangement is that it constitutes illegal spot zoning.14

1. SPOT ZONING

“Spot zoning” is a rezoning by a municipality that is not enacted as part of a well-considered and comprehensive plan calculated to serve the general welfare of the community, but rather the singling out of a small parcel of land for a use classification totally different from that of the surrounding area, for the exclusive benefit of the owner of such property, and to the detriment of other owners, and is therefore illegal.15

However, because spot zoning is the very antithesis of planned zoning, if an ordinance is enacted in accordance with a comprehensive zoning plan, it is not "spot zoning," even though it (1) singles out and affects but one small plot, or (2) creates in the center of a large zone small areas or districts devoted to a different use, such as a business area or a railroad station in residence zone. The relevant inquiry is not whether the particular zoning consists of areas fixed within larger areas of different use, but whether it was accomplished for the benefit of individual owners, rather than pursuant to a comprehensive plan for the general welfare of the community.16

2. CONTRACT ZONING IS NOT ILLEGAL17

The New York Court of Appeals, in upholding the concept of “contract zoning,” addressed the principal arguments raised in objection to it.

(a) Contract Zoning Does Not Constitute Illegal Spot Zoning.

This argument is based upon the concern that all conditions must be uniform within a zoning district and the assumption that conditional zoning benefits particular landowners rather than the community as a whole, thereby undermining the foundation upon which comprehensive zoning depends by destroying uniformity within the zoning district. The court challenged that argument because illegal spot zoning is a downward change to a less restrictive zoning classification that benefits the property rezoned and not the opposite, as in contract zoning, which is the imposition of greater restrictions on land use than permitted within the zoning district, actually benefiting the surrounding properties and adversely affecting the premises on which the conditions are imposed. And, as noted above, zoning is not invalid per se merely because only a single parcel is involved or benefited; the real test is whether the change is other than part of a well-considered and comprehensive plan calculated to serve the general welfare of the community. Such a determination depends on the reasonableness of the rezoning in relation to neighboring uses -- an inquiry required regardless of whether the change in zone is conditional in form. And, finally, if it is initially proper to change a zoning classification without the imposition of restrictive conditions notwithstanding that such change may depart from uniformity, then no reason exists why accomplishing that change subject to conditions should automatically be classified as impermissible spot zoning.

Since the rezoning of land is essentially a legislative act, whether such legislation is conditional or unconditional, the standard for judging its validity is whether the rezoning is warranted, and, if it is, then conditions imposed to minimize conflicts among districts should not, in and of themselves, be deemed illegal spot zoning.

(b) Contract Zoning Does Not Constitute An Illegal Bargaining Away Of A Local Government's Police Power.

A municipality does not have the power to make contracts that control or limit it in the exercise of its legislative powers and duties. Therefore, it is argued, restrictive agreements made by a municipality in conjunction with a rezoning violate public policy. However, the court found that unless there was proof that the municipality was in fact binding itself from exercising its zoning powers in the future, a rule which would have the effect of preventing a municipality from protecting nearby property owners from a change in the zoning by imposing conditions on the properties rezoned, would not be in the best interests of the public. The imposition of conditions on property sought to be rezoned may not be classified as a prospective commitment on the part of the municipality to zone as requested if the conditions are met; so long as the municipality is not necessarily precluded from later reversing or altering its decision.

(c) Contract Zoning Is Not Illegal Because The State Enabling Legislation Does Not Confer Upon Municipalities Express Authorization To Enact Conditional Zoning Amendments (Ultra Vires).

Although there exists no explicit authorization for a municipality to attach conditions to zoning amendments, there is also no statute that expressly forbids it to do so. In such instances, so long as there is independent justification for the practice as an appropriate exercise of its municipal power, the power will be implied. Conditional rezoning is a means of achieving some degree of flexibility in land-use control by minimizing the potentially deleterious effect of a zoning change on neighboring properties; reasonably conceived conditions harmonize the landowner's need for rezoning with the public interest and certainly fall within the spirit of the enabling legislation.18

3. THE LIMITS ON CONTRACT ZONING.

Contract zoning may not be considered outside the scope of the zoning power of a municipality. When conditions are incorporated in an amending ordinance, the result is as much a zoning regulation as an ordinance adopted without conditions. Just as all zoning is limited by the police power, and municipalities must act reasonably and in the best interests of public safety, welfare, and convenience, the scope of permissible conditions must be similarly limited. Therefore, if the conditions imposed are found unreasonable, the rezoning amendment as well as the required conditions would have to be nullified, and the affected property would revert to its pre-amendment zoning classification.19 In an interesting case involving a criminal proceeding for violating a condition in a declaration of covenants and restrictions made in conjunction with an application by a property owner for inclusion of its premises within a specific zoning district which permitted gasoline service stations, the court held that it would not enforce a condition “illegally” imposed (the court indicated that the same would apply to a condition for a rezoning or a variance).20 In that case, the condition prohibited the sale of alcoholic beverages. The court held that the municipality had illegally invaded a field that has been preempted by a comprehensive and detailed State regulatory scheme. The court, however, did not revert the property back to its pre-amendment status.

4. THE RIGHT OF A MUNICIPALITY TO WITHHOLD ITS CONSENT FOR RELIEF FROM A COVENANT.

When a municipality conditions a rezoning on the execution of a declaration of covenants providing, in part, that certain activity may not occur on the property rezoned without the consent of the municipality, absent a provision that such consent may not be unreasonably withheld, the municipality may not be compelled to consent or to give an acceptable reason for failing to do so.21

E NON-CONFORMING USES AND LOTS

In zoning, references to non-conforming uses and lots refer to uses or lots that were legal when created, but no longer comply with all of the zoning regulations that were subsequently implemented.

Every zoning regulation places a limitation on the use of property. Therefore, to some extent, every zoning regulation is a restriction of a property owner’s rights. As to a particular property within the zoning district, that restriction may be prospective or prohibit the continuation of an existing use. For example, in a residential zone, an amendment that removes two-family dwellings as permitted uses is only prospective to a property owner who has developed his property with a single-family dwelling, since it only prevents him from converting to a two-family dwelling. However, to a person who has already developed his property with a two-family dwelling, the restriction, on its face, would prohibit the continued use of the dwelling for two families. A “vested right” in this context, is the right to continue that non-conforming use, in the example, the two-family dwelling, notwithstanding the fact that the zoning no longer permits such uses.

The “vested right” concept arose because, without creating some protection for a property owner, requiring the property owner to discontinue an existing use, based upon an amendment to the zoning regulations, would often cause substantial loss and hardship, a loss much greater than that sustained by reason of a prospective use restriction only. The destruction of substantial businesses or structures developed or built prior to the adoption of an amendment to a zoning regulation is not deemed to be balanced or justified by the advantage to the public, in terms of more complete and effective zoning, accruing from the cessation of such uses.22 The rights of such property owners to continue such uses, notwithstanding the fact that their properties do not conform to the zoning regulations, are termed “vested rights.”

However, when the loss sustained by the property owner from the zoning amendment is relatively slight or insubstantial, the courts will support a municipality’s requirement that the property come into conformity with the new regulation.23

A good summary of the law was stated by New York’s Court of Appeals:

“When zoning ordinances are initially adopted to limit permissible uses of property, or when property is rezoned so as to prevent uses of property previously allowed, a degree of protection is constitutionally required to be given owners of property then using their premises in a manner forbidden by the ordinance. Thus we have held that, where substantial expenditures were made in the commencement of the erection of a building, a zoning ordinance may not deprive the owner of the ‘vested right’ to complete the structure. So, where the owner already has structures on the premises, he cannot be directed to cease using them just as he has the right to continue a prior business carried on there.

However, where the benefit to the public has been deemed of greater moment than the detriment to the property owner, we have sustained the prohibition of continuation of prior nonconforming uses. These cases involved the prior use of property for parking lots. We have also upheld the restriction of projected uses of the property where, at the time of passage of the ordinance, there had been no substantial investment in the nonconforming use. In these cases, there is no doubt that the property owners incurred a loss in the value of their property and otherwise as a result of the fact that they were unable to carry out their prospective uses; but we held that such a deprivation was not violative of the owners' constitutional rights. In People v. Miller, we explained these cases by stating that they involved situations in which the property owners would sustain only a ‘relatively slight and insubstantial’ loss.”24

Although courts will protect a property owner’s right to maintain a legal non-conforming use or structure, municipalities may prohibit a property owner from enlarging or extending a non-conforming use or from rebuilding or making alterations to a non-conforming structure.25

At one time it was assumed that nonconforming uses could be protected without ultimately affecting a municipality’s long term zoning plan, because, with the passage of time, the non-conforming uses would terminate. But, when that had proven not to be the case, the courts acknowledged the right of municipalities to require that such non-conforming uses be terminated after a given period of time.26 With regard to non-conforming structures, that reasonable period of time should be based upon the amortized life of the structure, allowing for the normal life of the structure, without extensive alterations and repairs.27 With regard to non-conforming uses, the termination must provide a sufficient period of time for the property owner to amortize his investment.28

Relying upon the constitutional underpinnings of the vested rights doctrine, for a long time, many municipal attorneys (and courts) had held the opinion that there was a common law exemption from an upzoning of minimum area zoning regulations, when the property was held in single and separate ownership and had been improved with a legal structure which was in use at the time of the zoning regulations' adoption and was rendered substandard as a result of the amendment. The case came up most often when what was once a buildable lot for residential purposes, was upzoned. The contention was that despite the upzoning, the owner was either not required to obtain a variance, or was entitled to a variance as a matter of right. The New York State Court of Appeals, after acknowledging the foregoing general conception of the law, held that there was no such common law policy, and that a municipality could make changes to its minimum lot size requirements, without resulting in vested rights to the existing non-conforming lots.29

The case had an interesting tag line:

“Finally, respondent's argument that denial of a variance and permit amount to a confiscatory taking is rejected. Respondent failed to offer proof of the value of the property before and after the regulation went into effect ( Matter of Kransteuber v Scheyer, 176 A.D.2d 724, affd 80 NY2d 783).”

Based upon that statement and the decision in Kransteuber v Scheyer, it would appear that if the property owner could prove that the subject property could have yielded an economically reasonable return before the rezoning, but cannot as a result of the rezoning, the rezoning has resulted in a constitutional taking for which the property owner is entitled to compensation from the municipality.

1 Village Law § 7-709 (2); see also Town Law § 265-a; and General City Law § 83-a.

2 Village Law § 7-709 (2).

3 Ellington Constr. Corp. v. Zoning Bd. of Appeals, 77 N.Y.2d 114 (1990).

4 Ellington Constr. Corp. v. Zoning Bd. of Appeals, 77 N.Y.2d 114 (1990).

5 While no vested right can accrue from construction based upon an invalid building permit, if there was good faith reliance on the invalid permit, it should be considered in determining whether or not to grant a variance. Jayne Estates, Inc. v. Raynor, 22 N.Y.2d 417 (1968).

6 Ellington Constr. Corp. v. Zoning Bd. of Appeals, 77 N.Y.2d 114 (1990).

7 Town of Orangetown v. Magee, 88 N.Y.2d 41 (1996).

8 Pokoik v. Silsdorf, 40 N.Y.2d 769 (1976), rehearing denied 42 N.Y.2d (1977).

9 Town of Orangetown v. Magee, 88 N.Y.2d 41 (1996).

10 Cellular Tel. Co. v. Village of Tarrytown, 209 A.D.2d 57 (2nd Dept 1995).

11 The statements set forth in this subpart on residential uses are taken from Berenson v Town of New Castle, 38 N.Y.2d 102 (1975)

12 Gernatt Asphalt Prods. v. Town of Sardinia, 87 N.Y.2d 668 (1996).

13 Gernatt Asphalt Prods. v. Town of Sardinia, 87 N.Y.2d 668 (1996).

14 Collard v. Flower Hill, 52 N.Y.2d 594 (1981).

15 W. Branch Conservation Ass'n v. Town of Ramapo, 284 A.D.2d 401 (2nd Dept. 2001) amended 301 A.D.2d 485 (2nd Dept 2003).

16 Rodgers v Village of Tarrytown, 302 N.Y. 115 (1951).

17 The following discussion with regard to contract zoning is substantially a paraphrasing, with some direct quotes from the decision in Collard v. Flower Hill, 52 N.Y.2d 594 (1981).

18 Collard v. Flower Hill, 52 N.Y.2d 594 (1981).

19Collard v. Flower Hill, 52 N.Y.2d 594 (1981).

20People v. Amerada Hess Corporation, N.Y.L.J., July 15, 2003, p. 21, col. 3 (Sup Ct. Nassau Co.)

21 Collard v. Flower Hill, 52 N.Y.2d 594 (1981).

22 People v Miller, 304 N.Y. 105 (1952).

23 People v Miller, 304 N.Y. 105 (1952).

24 Matter of Harbison v City of Buffalo, 4 N.Y.2d 553, 558-559 (1958), internal citations omitted.

25 Matter of Harbison v City of Buffalo, 4 N.Y.2d 553 (1958).

26 Matter of Harbison v City of Buffalo, 4 N.Y.2d 553 (1958).

27 Matter of Harbison v City of Buffalo, 4 N.Y.2d 553 (1958).

28 Matter of Harbison v City of Buffalo, 4 N.Y.2d 553 (1958).

29 Khan v. Zoning Bd. of Appeals, 87 N.Y.2d 344 (1995).

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