Development

AppDiv, Second Dept.

(memorandum opinion)

In landowner's hybrid action and proceeding challenging a determination by the zoning board of appeals (ZBA) that landowner had not acquired vested rights to build under the terms of a prior ordinance, the town appealed from Supreme Court's determination that landowner had acquired vested rights. The Appellate Division reversed and dismissed the petition, holding that expenditures made in supposed reliance on conditional approval of a preliminary site plan were insufficient to establish vested rights.

Landowner acquired the 29-acre parcel, which was then zoned R-3 to permit multi-family residences, in 2000. Two years later, landowner sought site plan approval from the town planning board for a 136-unit project that would have included 34 four-unit residential buildings. In 2003, during the approval process, the planning board's consultant recommended that landowner negotiate a boundary adjustment with a neighbor. Two years later, the town board voted to revise the town's draft comprehensive plan to zone landowner's parcel, among others, R-1, which would permit only single-family development. At roughly the same time, landowner successfully negotiated a land exchange with the neighbor, and the planning board filed an approval of the exchange in January 2006. Although the planning board continued to review the site plan, the town board, in March 2006, formally rezoned the property R-1.

In a prior proceeding, landowner challenged the rezoning, and Supreme Court invalidated the amendment. While the town's appeal was pending, the planning board awarded landowner preliminary site plan approval, subject to 18 conditions, 11 of which had to be satisfied before the planning board chair was authorized to sign the plan. Four months later, in March 2008, the Appellate Division upheld the zoning amendment and concluded that landowner had not acquired common law vested rights. The court did, however, hold that the land exchange constituted a subdivision, which entitled landowner to a three-year exemption from application of the new ordinance, an exemption that would expire in January 2009 (Town Law section 265-a). Landowner then obtained permits to remove water tanks and to clear and grade the property, and did the work authorized by those permits. Landowner had expended nearly $360,000 on engineering and review costs before conditional approval of the site plan, and expended another $180,000 on construction and engineering after approval.

Then, in April 2009, landowner applied for an amendment to the site plan, but the planning board, based on a recommendation of the code enforcement officer, concluded that the three-year exemption had expired, and that the project was now subject to R-1 zoning. The ZBA denied landowner's appeal, and landowner brought this hybrid action and proceeding. Supreme Court granted the petition.

In reversing, the Appellate Division started by observing that a landowner can generally acquire vested rights only by making substantial expenditures in reliance on a legally issued permit. The court then acknowledged that final subdivision approval may sometimes substitute for a legally issued permit, but indicated that New York courts had not settled whether final site plan approval, if followed by substantial expenditures, could trigger acquisition of vested rights. The court held, however, that in this case landowner could not establish vested rights because the planning board never granted unconditional approval and the landowner did not fulfill the conditions delineated in the planning board approval. Moreover, the court held that the limited permits landowner did receive ' authorizing demolition of a single family house and water tanks, and regarding and clearing ' could not, even after landowner made expenditures in reliance on those permits, create vested rights to construct the entire project because the expenditures landowner made would leave the property amenable to single-family development permitted by the new ordinance. As a result, the court upheld the ZBA's determination that landowner had not acquired vested rights.

COMMENT

Generally, a landowner may acquire common law vested rights to complete construction under a former zoning ordinance only when, pursuant to a legally issued permit, landowner has undertaken substantial construction and made substantial expenditures prior to the effective date of the zoning amendment. However, substantial improvements made in reliance on subdivision approval or final site plan approval may confer vested rights to develop the entire project under the former zoning ordinance, even where landowner has not obtained building permits for every phase of the project. In Ellington Const. Corp. v. Zoning Bd. of Appeals of Inc. Vill. of New Hempstead, 77 N.Y.2d 114 (1990), the developer of a subdivision, which had been approved by the town board in sections, built seven homes on section one and installed various improvements on both section one and section two of the subdivision before the village amended the applicable ordinance in January 1986. In June 1986, the building inspector denied landowner's application for a building permit to begin construction in section two, concluding that the section two lots were not exempt from the more restrictive zoning requirements because landowner had not sought to obtain a permit within Village Law ' 708's three-year exemption period, which had started to run in 1982 when the board approved landowner's revised subdivision plat. The Court of Appeals, however, held that landowner had acquired common law vested rights to obtain building permits for the remaining lots in accordance with the former zoning ordinance through landowner's substantial expenditures on roads and utilities before, during, and after the three-year exemption period. Notably, the court recognized that the substantial improvements, which included the installation of drainage facilities, water and sewer lines, fire hydrants, curbs, and underground telephone and electric service between 1980 and 1984, were for the benefit of the entire subdivision.

Even where rights may otherwise vest, landowner may abandon those rights if he displays an intent to abandon and delays development for a prolonged period of time. In Schoonamaker Homes v. Vill. of Maybrook, 178 A.D.2d 722, 728 (1991), landowner obtained final subdivision approval from the town board in 1972 for property to be divided into separate sections for apartments, townhouses, and single-family residences. Landowner then developed 239 townhouses and 49 single-family houses. In November 1986, landowner applied for building permits to begin construction on the apartment units. Three days later, the Village amended its zoning ordinance to reduce by 50% the number of apartment units landowner was permitted to build. Although the court indicated that landowner's substantial expenditures for subdivision infrastructure, including roads, sewer systems, water systems and storm water systems, had created vested rights to complete development of the apartments, the court held that landowner had abandoned those rights by waiting 20 years to apply for the building permits.

Although there is not as much authority when landowner secures approval of a site plan rather than a subdivision, it appears that a landowner can acquire, and abandon, common law vested rights when landowner makes expenditures in reliance on approval of a site plan. Thus, in 202 Developers, Inc. v. Town of Haverstraw, 175 A.D.2d 473 (1991), the court determined that landowner's substantial expenditures prior to the zoning amendment conferred vested rights to develop the property pursuant to the revised site plan, but remanded for a determination of whether landowner had intended to abandon those rights. In 202 Developers, Inc., landowner obtained site plan approval in 1970 to construct residential units on two sections of property. Landowner completed section one and built roads, utilities, and made other substantial improvements that were designed to service both sections of the project before applying for and receiving approval for a revised site plan for section two in 1974. Landowner made no further improvements to the property. When a subsequent purchaser applied for and was denied a building permit, pursuant to the revised plan, in 1985, the court determined that the original landowner had acquired vested rights, but remanded for a determination of whether, in light of the 11-year delay, landowner had intended to abandon those rights. Id. at 475.

Vested Rights

Exeter Bldg. Corp. v. Town of Newburgh

2014 WL 553256, 2/13/14

AppDiv, Second Dept.

(memorandum opinion)

In landowner's hybrid action and proceeding challenging a determination by the zoning board of appeals (ZBA) that landowner had not acquired vested rights to build under the terms of a prior ordinance, the town appealed from Supreme Court's determination that landowner had acquired vested rights. The Appellate Division reversed and dismissed the petition, holding that expenditures made in supposed reliance on conditional approval of a preliminary site plan were insufficient to establish vested rights.

Landowner acquired the 29-acre parcel, which was then zoned R-3 to permit multi-family residences, in 2000. Two years later, landowner sought site plan approval from the town planning board for a 136-unit project that would have included 34 four-unit residential buildings. In 2003, during the approval process, the planning board's consultant recommended that landowner negotiate a boundary adjustment with a neighbor. Two years later, the town board voted to revise the town's draft comprehensive plan to zone landowner's parcel, among others, R-1, which would permit only single-family development. At roughly the same time, landowner successfully negotiated a land exchange with the neighbor, and the planning board filed an approval of the exchange in January 2006. Although the planning board continued to review the site plan, the town board, in March 2006, formally rezoned the property R-1.

In a prior proceeding, landowner challenged the rezoning, and Supreme Court invalidated the amendment. While the town's appeal was pending, the planning board awarded landowner preliminary site plan approval, subject to 18 conditions, 11 of which had to be satisfied before the planning board chair was authorized to sign the plan. Four months later, in March 2008, the Appellate Division upheld the zoning amendment and concluded that landowner had not acquired common law vested rights. The court did, however, hold that the land exchange constituted a subdivision, which entitled landowner to a three-year exemption from application of the new ordinance, an exemption that would expire in January 2009 (Town Law section 265-a). Landowner then obtained permits to remove water tanks and to clear and grade the property, and did the work authorized by those permits. Landowner had expended nearly $360,000 on engineering and review costs before conditional approval of the site plan, and expended another $180,000 on construction and engineering after approval.

Then, in April 2009, landowner applied for an amendment to the site plan, but the planning board, based on a recommendation of the code enforcement officer, concluded that the three-year exemption had expired, and that the project was now subject to R-1 zoning. The ZBA denied landowner's appeal, and landowner brought this hybrid action and proceeding. Supreme Court granted the petition.

In reversing, the Appellate Division started by observing that a landowner can generally acquire vested rights only by making substantial expenditures in reliance on a legally issued permit. The court then acknowledged that final subdivision approval may sometimes substitute for a legally issued permit, but indicated that New York courts had not settled whether final site plan approval, if followed by substantial expenditures, could trigger acquisition of vested rights. The court held, however, that in this case landowner could not establish vested rights because the planning board never granted unconditional approval and the landowner did not fulfill the conditions delineated in the planning board approval. Moreover, the court held that the limited permits landowner did receive ' authorizing demolition of a single family house and water tanks, and regarding and clearing ' could not, even after landowner made expenditures in reliance on those permits, create vested rights to construct the entire project because the expenditures landowner made would leave the property amenable to single-family development permitted by the new ordinance. As a result, the court upheld the ZBA's determination that landowner had not acquired vested rights.

COMMENT

Generally, a landowner may acquire common law vested rights to complete construction under a former zoning ordinance only when, pursuant to a legally issued permit, landowner has undertaken substantial construction and made substantial expenditures prior to the effective date of the zoning amendment. However, substantial improvements made in reliance on subdivision approval or final site plan approval may confer vested rights to develop the entire project under the former zoning ordinance, even where landowner has not obtained building permits for every phase of the project. In Ellington Const. Corp. v. Zoning Bd. of Appeals of Inc. Vill. of New Hempstead, 77 N.Y.2d 114 (1990), the developer of a subdivision, which had been approved by the town board in sections, built seven homes on section one and installed various improvements on both section one and section two of the subdivision before the village amended the applicable ordinance in January 1986. In June 1986, the building inspector denied landowner's application for a building permit to begin construction in section two, concluding that the section two lots were not exempt from the more restrictive zoning requirements because landowner had not sought to obtain a permit within Village Law ' 708's three-year exemption period, which had started to run in 1982 when the board approved landowner's revised subdivision plat. The Court of Appeals, however, held that landowner had acquired common law vested rights to obtain building permits for the remaining lots in accordance with the former zoning ordinance through landowner's substantial expenditures on roads and utilities before, during, and after the three-year exemption period. Notably, the court recognized that the substantial improvements, which included the installation of drainage facilities, water and sewer lines, fire hydrants, curbs, and underground telephone and electric service between 1980 and 1984, were for the benefit of the entire subdivision.

Even where rights may otherwise vest, landowner may abandon those rights if he displays an intent to abandon and delays development for a prolonged period of time. In Schoonamaker Homes v. Vill. of Maybrook, 178 A.D.2d 722, 728 (1991), landowner obtained final subdivision approval from the town board in 1972 for property to be divided into separate sections for apartments, townhouses, and single-family residences. Landowner then developed 239 townhouses and 49 single-family houses. In November 1986, landowner applied for building permits to begin construction on the apartment units. Three days later, the Village amended its zoning ordinance to reduce by 50% the number of apartment units landowner was permitted to build. Although the court indicated that landowner's substantial expenditures for subdivision infrastructure, including roads, sewer systems, water systems and storm water systems, had created vested rights to complete development of the apartments, the court held that landowner had abandoned those rights by waiting 20 years to apply for the building permits.

Although there is not as much authority when landowner secures approval of a site plan rather than a subdivision, it appears that a landowner can acquire, and abandon, common law vested rights when landowner makes expenditures in reliance on approval of a site plan. Thus, in 202 Developers, Inc. v. Town of Haverstraw, 175 A.D.2d 473 (1991), the court determined that landowner's substantial expenditures prior to the zoning amendment conferred vested rights to develop the property pursuant to the revised site plan, but remanded for a determination of whether landowner had intended to abandon those rights. In 202 Developers, Inc., landowner obtained site plan approval in 1970 to construct residential units on two sections of property. Landowner completed section one and built roads, utilities, and made other substantial improvements that were designed to service both sections of the project before applying for and receiving approval for a revised site plan for section two in 1974. Landowner made no further improvements to the property. When a subsequent purchaser applied for and was denied a building permit, pursuant to the revised plan, in 1985, the court determined that the original landowner had acquired vested rights, but remanded for a determination of whether, in light of the 11-year delay, landowner had intended to abandon those rights. Id. at 475.