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HomeMy WebLinkAboutEffect of Zone Changes on Building Permits Previously Issued THE EFFECT OF ZONE CHANGES ON BUILDING PERMITS PREVIOUSLY ISSUED, PENDING OR EXERCISED CITY ATTORNEYS' DEPARTMENT LEAGUE OF CALIFORNIA CITIES 1962 ANNUAL CONFERENCE LOS ANGELES, CALIFORNIA TULLY H. SEYMOUR ASSISTANT CITY ATTORNEY CITY OF NEWPORT BEACH Tully H. Seymour Assistant City Attorney City of Newport Beach City Attorneys ' Department Leaggue of California Cities 1962 Annual Conference Los Angeles , California THE EFFECT OF ZONE CHANGES ON BUILDING PERMITS PREVIOUSLY ISSUED, PENDING OR EXERCISED When a property owner wishes to erect a building or other structure in a community having a comprehensive zoning ordinance, it is generally required that he first obtain a build- ing permitl which is issued upon a showing that the proposed structure will be in conformity with local zoning regulations , structural standards , and such other requirements as may be im- posed in the interests of health and safety. The requirement of a building permit is an exercise of the police power and the granting or denial of a building permit is a "municipal affair" over which a city has complete control. It is subject only to the rule that in granting or denying a permit it must use sound discretion. Lindell Co. v. Board of Permit Appeals (1943) , 23 C. 2d 303, 311 P. 519. Unless a property owner has acquired a vested right to use his property in a certain manner , it is not exempt from the 1 • A "permit" has been defined as "a written license or warrant issued by a person in authority, empowering the grantee to do some act not forbidden by law, but not allowable without such authority" . Black's Law Dictionary, Fourth Edition, 1951 2 In re Stoltenberg (1913) , 165 Cal. 789 -2- operation of a subsequently enacted amendment of the zoning ordi- nance despite the fact that the property owner has an application pending for , or has previously obtained, a building permit. How- ever, if the zone change becomes effective after the property owner has substantially changed his position in reliance on a valid building permit, the general rule is that he has acquired a vested right to continue the use. The leading California case concerning the effect of a zone change on building permits is Brougher v. Board of Public Works (1928) , 205 Cal. 426. The factual situation was as follows : Petitioners were the owners of certain real property located within the City and County of San Francisco. On April 18 , 1927 , application was made by the petitioners to the Board of Public Works for a building permit to construct a ten-story hotel build- ing on their property. The proposed use of the property was permissible under the then existing zoning ordinance. The Board of Public Works took no action on the permit application until May 9, 1927 , a period of twenty-one days following the date of the application, at which time the board denied the permit. The board based its denial of the permit on an amendment of the zoning ordinance that limited the height of buildings to forty feet in the zone in which petitioners ' property was located. The amendment had been adopted by the Board of Supervisors on May 2, 1927 , and became operative on May 9, 1927 , the same date on which the permit was denied. The California Supreme Court denied peti- tioners ' application for a writ of mandate, stating that had the zoning ordinance not been amended after the filing of the -3- application for a building permit, the Board of Public Works could have been compelled by mandamus to issue the permit. How- ever, since the ordinance imposing the height limitation became effective while the application for the building permit was pending and before final action had been taken, the court found the denial of the permit to be justified. In the Brougher case the court relied heavily on its earlier decision in Miller v. Board of Public Works (1925) , 195 Cal. 477 , 234 P. 381. In Miller the Los Angeles Board of Public Works had actually issued a building permit to erect a four- family flat when it subsequently learned that the City Council was considering the enactment of a comprehensive zoning ordinance which was quite likely to prohibit the type of structure for which the permit had been issued in the zone in which the prop- erty was located. Shortly thereafter, the board revoked the previously issued building permit on the basis of the probable zoning change. Plaintiffs then filed suit to compel the issuance of a building permit. Five days after the action was filed, the City Council enacted an emergency, interim ordinance which pro- hibited the construction of "any building designed or intended to be used for housing more than two families" in the zone in which plaintiffs ' property was located. The sole issue presented on appeal was the validity of the emergency ordinance; no con- tention was made that the board lacked the power to revoke a permit once it was duly issued, nor that the ordinance , if valid, could not operate retroactively to nullify a permit previously issued. The court upheld the action of the board in revoking the -4- permit, sustaining the emergency ordinance as a valid exercise of the police power on the basis that it was an integral part of the comprehensive zoning plan which was still under study•. In the recent case of Harney v. Board of Permit Appeals (1961) , 195 C. A. 2d 442 , the District Court of Appeal followed the rule of the Brougher case that a zone change occurring during the period when an application for a building permit is pending may serve as a basis for denial of the permit. Harney applied for a building permit to construct a billboard on April 4, 1960. The application was heard by the Planning Commission on April 21 , 1960 , at which time the applicant was informed that the commis- sion intended to submit an amendment to the building code to the Board of Supervisors which would prohibit the erection of bill- boards on the proposed site. The Planning Commission then put aside the application pending action on the proposed legislation 3 "It is a matter of common knowledge that a zoning plan of the extent contemplated in the instant case cannot be made in a day. Therefore, we may take judicial notice of the fact that it will take much time to work out the details of such a plan and that obviously it would be destructive of the plan if, during the period of its incubation, parties seeking to evade the operation thereof should be permitted to enter upon a course of construc- tion which might progress so far as to defeat in whole or in part the ultimate execution of the plan. " Miller v. Board of Public Works , supra, at p . 496. See also Lima v. Woodruff (1930) , 107 Cal. App. 286 , in which the court refused to issue a writ of mandamus to compel the building inspector of the city of San Jose to issue a building permit where his refusal was based on an emergency ordinance directing him not to issue any permit not in conformity with the provisions of a preliminary zoning ordinance, the adoption of which had been recommended to the City Council by the Planning Commission. -5- which was subsequently adopted by the Board of Supervisors , the effective date being. July 23, 1960. After the adoption of the amendment and on June 16, 1960, the Planning Commission denied the permit application. Following an unsuccessful appeal to the Board of Permit Appeals , the applicant obtained a writ of mandate from the Superior Court. An appeal from the Superior Court was taken by the board. Harney argued that his right to a permit should be determined as of the date of the application and could not be affected by an ordinance subsequently adopted. The Dis- trict Court of Appeal rejected that argument on the basis of the Brougher case , and accordingly reversed the judgment. Respond- ent' s petition for a hearing by the Supreme Court was subsequently denied. In Munns v. Stenman (1957) , 152 C. A. 2d 543, 314 P. 2d 67, the District Court of Appeal stated by way of dictum that the rule of the Brougher case should not apply to justify denial of a building permit when the permit clearly should have been issued prior to the adoption of the amendatory ordinance restricting the use of the property. The facts in the Munns case were as follows: On November 3 , 1953, Munns applied to the building department of the city of Monrovia for a building permit to construct a single- family residence in an area of the city known as Hidden Valley which was zoned for such a use. After a two-week delay Munns was informed by the city engineer that no building permits were being issued for construction in Hidden Valley. The refusal of the permit reflected an official city policy based upon a contention that Hidden Valley had been illegally subdivided in violation of -6- the city' s subdivision ordinance. The city therefore took the position that no building permits would be issued until all par- cels in the area had been brought into compliance with the stand- ards contained in the subdivision ordinance. On December 1, 1953 , the city amended its building code to require , among other things , that before a building permit could be issued it must appear that the property for which the permit was to be used conformed in all respects to the standards imposed in the city' s subdivision ordi- nance for new subdivisions. After attempts at negotiation of the dispute between the city and Munns proved to be futile, Munns filed suit for a writ of mandamus to compel the city to issue a permit. In sustaining the judgment of the trial court granting the writ, the District Court of Appeal held that the amendment of the building code was basically discriminatory, arbitrary and confiscatory when applied to residents of Hidden Valley. Although the decision rested upon the finding of the court that the amend- ment of the building code was unconstitutional, the appellate court attempted to distinguish the Brougher case, supra, stating at p . 551 of the opinion: "While it is generally true that such an application must conform to an ordinance passed while action upon the same is pending (citing Brougher) , that rule seems not applicable to a situation in which the permit clearly should have been issued before amendment to the law. "4 The preceding comment 4 For the contrary view, see McCann v. Jordan (1933) , 218 Cal. 578. On February 5 , 1932 , petitioners sought to file articles of incorporation with the Secretary of State and tendered the nom- inal filing fees then in effect. The Secretary of State refused -7- by the court was dictum since it was unnecessary to the decision in view of the determination that the amendment was unconstitu- tional as applied to Munns ' property. The author of this paper is convinced that the dictum in the Munns case is not a correct statement of the law in Cali- fornia in view of the result in Harney v. Board of Permit Appeals , supra, and the subsequent denial of a hearing in that case by the California Supreme Court. In Harney, which was decided about four years after the Munns case , the court disagreed with the dictum in Munns , stating at p. 448: "While the court in the Munns case undertook to distinguish the Brougher case , we do not believe it did so. Rather,we-feel that its decision prop- erly rests on its stated second ground that the ordinance in question was 'discriminatory, arbi- trary and confiscatory' for it clearly appears from the record in that case that the building department of Monrovia denied the permit solely on the basis of its own plans for the area and procured the enactment of the ordinance to compel compliance therewith. If there is any distinction between the cases it can only be in the fact that in t o Broug er case the or finance was valid, and in Ene HE case 1E was invalid. " Emp asis added) to file the articles unless paid a filing fee of $1,000. Peti- tioners then obtained a peremptory writ of mandate requiring the respondent Secretary to accept the articles for filing upon pay- ment of the fees previously tendered. The Secretary, on advice of the Attorney General, again refused to file the articles and was ordered by the court to show cause why he should not be held in contempt. His defense was that while the case was pending urgency legislation had been adopted requiring the higher fee . Held, that respondent could not be held in contempt. The court stated at p . 580: "The situation before us here is very similar to that presented by an application for a permit to build a certain type of structure in a certain place , under the terms of an existing ordinance, followed by a change in the ordinance. It is well settled that the new ordinance mav rate retroac- tively to require a denial oT t e application or the nullifica- tion of a permit already issuedprovided that the applicant has not alreadV engaged in substantial buildina or incurred expenses in connection therewith."( Emphasis added -8- There is authority that a zoning ordinance which is not made expressly retroactive does not merely by its enactment revoke building permits previously issued. London v. Robinson (1928) , 94 Cal. App. 774. In London, the zoning law was amended after the defendants had obtained a building permit and no attempt was made by the city to revoke the permit. The action was brought by a neighboring property owner seeking to enjoin construction of the building based upon the prohibition contained in the amendment to the zoning ordinance. The court held that the amendment did not apply to the permit previously issued to the defendants because the ordinance did not contain retroactive language. However, the result might well have been different if the city had revoked the building permit at the time the ordinance was adopted. Thus far, we have considered the effects of an amendment of a zoning ordinance or building code on the position of an ap- plicant for a permit under two sets of circumstances : (1) When the amendment is adopted after application for a permit has been made to the proper authority and the application is still pending at the time the law is changed; and (2) When the amendment is adopted after a valid build- ing permit has been issued, but before construction under the permit has commenced. From the authorities cited, we are led to the conclusion that in both of the above described situations the amendment of the law, if valid, may be given retroactive effect by either a refusal to issue a permit for the prohibited use in the first case -9- or by revoking a previously issued permit in the latter case. The next problem to be considered is under what cir- cumstances does a property owner acquire a vested right to con- tinue a particular use by virtue of the granting of a building permit despite the fact that the law is amended so as to prohibit the use prior to the time that actual construction is completed? As a general rule a valid building permit may not be revoked be- cause of a subsequent change in zoning where the permittee has substantially changed his position in reliance on the permit. It is not surprising to find that there is no hard and fast ob- jective standard for determining at precisely what point a vested right can be said to arise under a building permit. A substantial beginning of construction will usually be held to create a vested right, but the mere fact that property was purchased with the in- tention of putting it to a particular use5, or that contracts have been entered into for the drafting of architectural plans and con- struction work, has been held insufficient to create vested rights6 . 5 O'Rourke v. Teeters , 63 C. A. 2d 349, 146 P. 2d 983, held that the act that a party makes a large investment in a city lot, which at the time it is purchased is free of restrictions , with intent to use it for business purposes , does not invalidate a zoning ordinance which is subsequently enacted restricting the use of the property to residential purposes . Price v. Schwafel (1949) , 92 C. A. 2d 77, 206 P. 2d 683. Property which owner intended to use for a shopping center was rezoned to permit only residential use; held, city not estopped. 6 Brett v. Building Commr. of Brookline, 250 Mass . 73, 145 N.E. 269. Permits under the existing zoning ordinance were granted to erect two duplexes on adjoining lots . The ordinance was subsequently amended after permittees had made certain contracts towards the construction of the duplexes and partially completed preparation of the sites . Held, that the amended ordinance was applicable to the project, and that no vested right had been acquired. -10- In Wheat v. Barrett (1930) , 210 Cal. 193 , plaintiff sought a writ of mandate to compel the Building Inspector of the City of Pied- mont to issue a building permit for the erection of a store build- ing valued at $100,000. The Building Inspector based his refusal to issue the permit upon ordinance No. 268 which prohibited the erection of store buildings in the zone in which plaintiff's prop- erty was located. The trial court held the ordinance void on the ground that it created a monopoly and ordered that a writ of man- date issue. Prior to the taking of an appeal by the city, the peremptory writ of mandate was served on the Building Inspector and the required permit fee was tendered to him, but he persisted in refusing to issue a permit . Plaintiff then proceeded to enter into a contract for the construction of the building, and the con- tractor commenced work under the contract , dug 610 feet of trench and erected 84 feet of forms for concrete - evidently for founda- tion purposes . The work was stopped at this point by threat of arrest on the part of the Building Inspector. In the meantime, the City Council enacted a new ordinance prohibiting the erection of store buildings within the zone in which plaintiff's property was located. On these facts , the court held that plaintiff had not secured a vested right by virtue of the partial construction work. Although not expressly stated in the opinion, it seems reasonable to assume that the court decided the case on the same basis as though a permit had been issued. The court cited the case of Brett v. Building Commr. of Brookline6 , stating at p . 198: " . . . . .here, as in the Brett case, ' such work had not progressed very far. "' Thus the basis of the decision in Wheat v. Barrett • • -11- seems to be that the work accomplished prior to the time the zone change became effective was inconsequential in proportion to the total cost of construction, and was therefore insufficient to create a vested right. In each of the following cases it was held that construc- tion work pursuant to a valid building permit had progressed to the point where the property owner had acquired a vested right despite a subsequent zone change prohibiting the intended use of the property: Pelham v. Switzer, 130 Misc . 545, 224 N.Y.S. 56 Petitioner, relying upon a permit issued to him to build an apartment house, paid a substantial sum of money on account of the purchase price of the property, had the land surveyed, employed the services of an architect and expended about $1,000 in excavat- ing. His original permit was then revoked, such revocation being predicated upon an amendment to the zoning ordinance. The court held that respondent had acquired a vested right. Dobbins v. Los Angeles , 195 U.S. 223 (25 S. Ct. 18) , 49 L. E In August, 1901, the City Council of the City of Los Angeles adopted an ordinance fixing the limits within which gas works might be erected within the city. On November 22, 1901, plaintiff was granted a permit to erect a gas works in an area not covered by the ordinance. Plaintiff then entered into a con- tract for and constructed foundations for a gas works at a cost of $2,500. On November 25, 1901, the City Council amended the , ordinance to include the location of plaintiff's property within the prohibited territory. The court said that (p. 176, 49 L. Ed. ) -12- "being the owner of the land, and having partially erected the works , the plaintiff in error had acquired property rights , and was entitled to protection against unconstitutional encroachments which would have the effect to deprive her of her property without due process of law". It should be noted that the decision was limited to the question of whether the complaint was sufficient to state a cause of action against the city. Trans-Oceanic Oil Corp. v. Santa Barbara (1948) , 85 C. A. P. In 1941, plaintiff applied for and obtained a permit to drill an oil well on property located within the City of Santa Barbara which was zoned to permit family residences and drilling for and production of oil. Soon after receiving the permit, plain- tiff spent approximately $4,500 in preparatory work for drilling a deep well on the property. Before actual drilling was begun, World War II intervened and the property was taken over by the Army for military use. Plaintiff regained possession of the property in 1945. On March 7 , 1946, the City Council amended the zoning ordi- nance to prohibit oil drilling in the zone in which plaintiff's property was located, but took no action at that time to revoke the drilling permit previously issued to plaintiff in 1941. During 1947 plaintiff entered into contracts for the drilling of the well. On April 9, 1947, the City Council, at a special meeting, without any notice to plaintiff, and without a hearing, revoked the well drilling permit. Held, plaintiff had acquired a vested right to drill and extract oil pursuant to the permit. -13- Griffin v. County of Marin (1958) , 157 C. A. 2d 5075% 321 P. 2d 148 On April 6, 1954, the county planning commission approved the plans submitted by the respondents for the construction of a gasoline service station, but at the same meeting recommended that respondents ' property be rezoned from an M-1 (light industrial) zone to an R-1 (single family residence) zone. On April 21, 1954, the building department issued building and utility permits for the service station. Prior to this date respondents had the property surveyed and had plans and specifica- tions prepared. Immediately after obtaining the permits , respond- ents employed a contractor who cleared the site with a bulldozer. On May 25, 1954, the board of supervisors enacted an ordi- nance rezoning the property to a single family residence zone. The building and utility permits were then revoked. Shortly thereafter the state filed an action to condemn a portion of the property for state highway purposes . As to the portion of the property sought to be condemned the effect of the rezoning was to lower the market value of the property within the taking since the state would only have to pay for the residential value of the property. Respondents filed an action for declaratory relief, and obtained a judgment that the rezoning as applied to their property was discriminatory, confiscatory and unconstitutional. The judg- ment further recited that the revocation of the permits was void. Although the state was not a party to the action, the court stated that the county knew of the state' s plans before it rezoned the property. -14- The District Court of Appeal affirmed the judgment. In- stead of basing 4_ts affirmance on the unconstitutionality of the zone change, the appellate court chose to rest its decision on the vested right doctrine, stating at p . 513 of the opinion: "While the work on construction had not progressed to the extent it had in most of the cited cases , the work had progressed at a material cost to respondents . The trial court was justified in finding that these expenses had been incurred in good faith reliance on the permit and that respondents ' rights had therefore vested. Whether the work had progressed to a point sufficient to warrant the estop- pel was a trial court question." As indicated by the preceding cases , a vested right under a building permit may arise at any time after the permit has been acted upon and the owner has , in good faith, proceeded to incur obligations and commenced construction. The Griffin case cannot be reconciled with the decision in Wheat v. Barrett, supra, since the actual work completed in Griffin at the time of the rezoning was negligible. Apparently the fact that the county knew that the state was about to condemn a portion of the property at the time the rezoning amendment was enacted influenced the court to find that the board of supervisors did not act in good faith. If the pending condemnation suit had not been a factor, perhaps the District Court of Appeal would not have been so willing to uphold the trial court's finding of a vested right. At any rate, the result in Griffin would have been the same even if the court had de- termined that the property owner had not acquired a vested right. It should be noted that the county did not petition the California -15- Supreme Court for a hearing. The author of this paper is inclined to believe that the Griffin case should be limited to its particu- lar facts and that the .earlier vested rights cases cited in this paper are more representative of the California rule. There is inevitably a considerable time interval between the initiation of a zone change at the planning commission level and final adoption of an amendment to the zoning ordinance by the City Council. The State Planning Act requires that advertised public hearings be held by both the planning commission and the city council. Most charter cities have similar requirements . When the prospective rezoning is more restrictive than the exist- ing zoning, it is often desirable from the standpoint of sound plan- ning to prevent the introduction of uses which, although permitted uses under the existing zoning, will be nonconforming uses under the recommended rezoning. The alert property owner may try to take ad- vantage of the existing zoning by obtaining a building permit and commencing construction before the zone change can be enacted. His interest will be protected under the vested rights doctrine if the building is partially completed at the time the rezoning goes into effect. Although the building department may temporarily delay issuing a building permit for the purpose of investigation, it can- not hold up a permit indefinitely on the basis that the property will probably be rezoned in the future. In this situation the property owner can force the issue by seeking a writ of mandamus . One approach to the problem of preventing objectionable uses from being introduced into an area when a rezoning is under consideration is suggested by the case of Miller v. Board of Public -16- Works , supra. It will be recalled that in Miller a building permit was revoked on the basis of the prospective enactment of a compre- hensive zoning ordinance . Five days after the property owner filed a suit to compel issuance of a permit, the City Council enacted an emergency ordinance which limited the uses in the zone in accord- ance with the proposed comprehensive zoning ordinance. The emer- gency ordinance was upheld by the court as a valid exercise of the police power7. There is specific sanction for such a procedure at Sec . 65806 of the Government Code8. Under this section, a temporary interim zoning ordinance may be adopted as an urgency measure pro- hibiting such uses which may be in conflict with a proposed zoning ordinance or amendment to an existing zoning ordinance. The sec- tion was held valid in Mang v. Santa Barbara County (1960) , 182 C. A. 2d 93. Although Section 65806 is not necessarily available 7 See also Price v. Schwafel (1949) , 92 C. A. 2d 77 , 206 P. 2d 683. 8 "If the planning commission, or the department of planning, in good faith, is conducting or intends to conduct studies within a reason- able time for the purpose of, or holding a hearing for the purpose of, or has held a hearing and has recommended to the legislative body the adoption of any zoning ordinance or amendment or addition thereto, or in the event that new territory may be annexed to a city, the legislative body to protect the public safety, health and welfare,. may adopt, as an urgency measure, a temporary interim zoning ordinance prohibiting such and any other uses which may be in conflict with such zoning ordinance. Such urgency measure shall require a two-thirds vote of the legislative body for adoption. Such temporary zoning ordinance shall be of no further force and effect one year from the date of adoption thereof; provided, how- ever, that after notice pursuant to Section 6061 and public hearing, the legislative body may by a four-fifths vote extend such temporary ordinance for one year . No more than two such extensions may be adopted. When such temporary zoning ordinance has been adopted, every subsequent ordinance adopted pursuant to this section, cover- ing the whole or a part of the same property, shall automatically terminate and be of no further force or effect one year after the date of the adoption of the first such ordinance." -17- to chartered cities , unless they have an enabling provision in their charters or have adopted the State Planning Act by refer- ence, there would seem to be scarcely any doubt that a chartered city could validly enact such an interim zoning ordinance under its police power9. In summary, the doctrine is firmly established in Cali- fornia that a subsequent change in the zoning law is applicable to building permits for which applications are pending or which have been previously issued unless the permittee has commenced construc- tion in reliance on a building permit issued prior to the change in the law. 9 Hunter v. Adams (1960) , 180 C. A. 2d 511, held that a resolution of the City ouncil of a chartered city "freezing" the issuance of building permits within a community redevelopment project area for slightly in excess of a year was a proper exercise of the police power. A petition for a hearing was denied by the California Supreme Court.