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Posts Tagged ‘Vested Rights’

LaVista (NE) annexation not purely for revenue raising

April 18th, 2013

by Gary Taylor

US Cold Storage, Inc. v. City of LaVista
(Nebraska Supreme Court, March 29, 2013)

In 1969, the owner of a 210-acre parcel in Sarpy County petitioned the Sarpy County Board of Commissioners to designate the tract as an industrial area and the board complied. Under Nebraska law an industrial area is land “used or reserved for the location of industry.” At the time of the designation, La Vista’s zoning jurisdiction did not reach any part of the parcel; therefore the city’s approval was not required. US Cold Storage acquired four lots in the industrial area in 1971 and has operated its business there since that time. Sanitary and Improvement District (SID) 59 was created in 1971 to provide utilities and services to the industrial area. The area of SID 59 is greater than, but includes, the entire industrial area.  In October 2009 La Vista resolved to annex SID 59. It sent written notices to the property owners within SID 59 of an October 22 city planning commission public hearing on the proposed annexation. On November 3, La Vista sent written notice to the property owners within SID 59 of a November 17 city council hearing also regarding the annexation of SID 59. On December 1, after conducting the public hearings, La Vista approved an ordinance purporting to annex SID 59 in its entirety.

On December 16, 2009, Cold Storage filed a class action complaint against La Vista and SID 59 challenging the validity of ordinance 1107. The complaint alleged that ordinance 1107 was invalid because (1) La Vista failed to comply with statutory notice requirements when adopting it, (2) the annexation was for revenue purposes only, and (3) state law prohibited the annexation of the industrial area in SID 59.

On January 18, 2011, while Cold Storage’s challenge to the validity of ordinance 1107 was pending in district court, La Vista directed its planning commission to consider the annexation of only a portion of SID 59; specifically, that portion that did not include the industrial area. On April 19, after giving proper statutory notice of this proposed annexation, La Vista adopted an ordinance (ordinance 1142) purporting to annex the portion of SID 59 that did not include the industrial area.  SID 59 filed a cross claim in the initial action, and asserted that ordinance 1142 was invalid.  The district court found in favor of La Vista on all claims, and Cold Storage and SID 59 appealed.

Statutory notice claim.  It was undisputed that the notices did not strictly comply with Neb. Rev. Stat. 19-5001 (one was 3 days late, another was 2 days early, along with  minor errors).  It was also undisputed that SID 59 had actual notice of the annexation proceedings.  In siding with La Vista, the court relied on Neb. Rev. Stat. 19-5001(5), which only voids annexation decisions on notice grounds if the errors are “willful or deliberate.”

Annexation for revenue purposes.  Caselaw in Nebraska proscribes annexation for revenue purposes only.  The court rejected the notion that because the SID was completely built out the city would be incurring no liabilities.  The court referred to La Vista’s required annexation plan, which identified the street and sewer improvements the city would become responsible for in the event of annexation, and the the additional police staff needed to patrol the area.  The city’s finance manager testified that the city would also assume all debts and obligations of SID 59, including approximately $2.1 million in net bonded debt.  The court concluded that although revenue was a factor, but other factors included the indebtedness which the city would assume, the city’s objective of orderly growth, and the perception that annexation of SID 59, which was already surrounded by the city, would improve the provision of services by eliminating jurisdictional issues.

Prohibition against annexation of industrial area.  Prior to 1991, Neb. Rev. Stat. 13-1115 only permitted the annexation of an industrial area under two circumstances (neither of which applied in this case); however, in 1991 the law was amended to allow annexation if the industrial area “is located in a county with a population in excess of 100,000 persons and the city did not approve the original designation of the tract as an industrial area.”  The court found that both conditions were met in this case.  Cold Storage contended that because La Vista could not have annexed the area prior to 1991, a vested right existed to continue the operation of SID 59 without annexation.  The court noted that the true nature of the vested right claimed by Cold Storage was the “benefit” of lower taxes accruing from not being subject to taxation by La Vista; however, the court cited numerous cases for the proposition that exemption from taxation is not a vested right.  “We find nothing in the language of the pre-1991 version of Neb. Rev. Stat. 13-1115 which would constitute a pledge by the Legislature that the circumstances under which property in an industrial area could be annexed would never be altered by an amendment to the statute.”

The Nebraska Supreme Court affirmed the ruling of the district court on all issues.

Annexation, Nebraska courts, Notice, Vested Rights , , ,

With no vested right to develop under old ordinance, clock requiring agency action does not start

October 27th, 2011

by Victoria Heldt

Kraemer Mining & Materials, Inc v. City of Sauk Rapids
(Minnesota Court of Appeals, July 5, 2011)

In 2004, Kraemer Mining Materials leased 164 acres of land located within the Sauk Rapids Township with the intent to mine granite deposits from the property.    At that time, Joint Board Ordinance 13 governed land use regarding mining operations.  It stated that mining was a conditional use and required a conditional use permit that would expire automatically in five years.  On May 11, 2007 Kraemer requested a conditional use permit and a variance from the five-year limit in Ordinance 13 since they anticipated the project to last between 20 and 40 years.    The Board was informed of Kraemer’s request, but did not review it because the size of the proposed mine required an Environmental Assessment Worksheet (EAW).  Kraemer was notified of the need for an EAW on May 29, 2007.  The same notification also stated that the 60-day deadline for an agency to act on a zoning request (required by Minn. Stat. § 15.99) would not begin to toll until the EAW process was complete.

During the 15 months that it took Kraemer to complete the EAW, the Board amended its zoning ordinances.  The goal of the amendment was to ensure that similar conditions were placed on future mines as those that the Board previously placed on a mine operated by Bauerly Bros. Inc.  In 2005, the Board granted an interim-use permit to Bauerly that contained conditions that were not contained in Ordinance 13.  In August of 2007, the Board adopted Ordinance 23 which it later included as Section 14 in Ordinance 25.  Ordinance 25 codified Ordinance 13 and all subsequent amendments into one easy, user-friendly ordinance.

On August 27, 2008 Kramer was notified that the EAW process was complete, and that it did not need to file an environmental impact statement.  Two days later, on August 29, 2008, Kraemer received a notice from Marney Curfman (City Planner) stating its conditional use permit application was now incomplete as it did not contain all of the information required by Section 14 under Ordinance 25.  The notice also informed Kramer that the 60-day deadline for acting on an application would not start until a complete application was received Although Kraemer felt that Ordinance 13 still applied to their application since it was in effect when the request was submitted, they submitted a second application for a conditional interim use permit (CIUP) that conformed to Ordinance 25.  In January of 2009 the Board unanimously approved Kraemer’s conditional use permit but denied its request for a variance from the five-year limit.

In district court, Kraemer argued that the Board violated the Minn. Stat. § 15.99, requirement that an agency address a permit application within 60 days.  They also claimed that several conditions in Section 14 were invalid under state law a lacked a rational basis.  Kraemer attempted to depose several people (i.e. the City Attorney, City Planner, and Community Development Director) but the Board objected to the depositions.  The court granted summary judgment for the Board.

On appeal, Kraemer brought forth its original two claims in addition to a challenge of the district court’s decision to deny Kraemer’s motion to compel depositions.  Kraemer argued that the Board violated Minn. Stat. § 15.99 based on two points.  It was of the opinion that Ordinance 13, and not Ordinance 25, applied to its application for a permit.  If this were the case, the clock on the 60-day limit would have begun to tick on August 27, 2008, when the environmental review process was complete, and the Board would have had to address it by October 27, 2008.  The Court disagreed with this logic.  It noted that the language of Ordinance 25 was clear in that it was to be “effective immediately.”  This means it applies to pending applications, consistent with the well-recognized principle that “there is no vested right in zoning.”  Only if a development has “progressed sufficiently with the physical aspects of the project or made a binding commitment to develop the property” can a developer use the vested rights principle to avoid the application of new rules.  Kraemer attempted to counter this decision with a previous case (Eagle Lake) where the Court ruled that a new zoning rule should not be retroactively applied.  This argument was rejected because the decision in Eagle Lake in fact held that the city could have discretion on which zoning rule to apply.  In this case, the Board has the discretion to apply the new ordinance if it so chooses.  The second part of Kraemer’s first claim asserts that the Board violated section 15.99 on the grounds that the letter received from the City Planner did not constitute notification by an “agency action” as required by the statute.  The Court dismissed this claim, stating that Curfman’s status as an employee of the City of Sauk Rapids is sufficient evidence that her letter is an agency action.

Next Kraemer contends that a CIUP is a “hybrid” permit that the Board is not authorized to make.  The Court disagreed, noting that Minn. Stat. § 462.3597 specifically allows municipalities to grant permits for interim uses of property.” The fact that the Board referred to the permit as a conditional interim use permit (as opposed to an interim use permit, with conditions) is irrelevant.  It is still simply an interim use permit regardless of its title.  Finally, Kraemer claimed that the five-year limitation on conditional permits lacks a rational basis because it does not “minimize conflicts with future development.”  All future development is hypothetical and the Board cannot predict when development will begin.  The Court decided that the five year limit is reasonably related to the purpose of preserving the transitional nature of the area, which will minimize conflicts with future development.  The Court also dismissed Kraemer’s claim that the mine will not have a detrimental effect on the surrounding property based on many complaints from property owners surrounding the Bauerly mine.

The Court ruled that the district court was correct in its refusal to compel depositions since the Board’s decision would be limited to the administrative record, the information was irrelevant, and the depositions would “impermissibly inquire into the mental impressions of the Board and its staff as well as information protected by attorney-client privilege.”

The Court of Appeals affirmed the district court decision.

Conditional Uses/Special Uses, Minnesota courts, Vested Rights, Zoning amendments , , , , ,

Sign company had no vested right to have permit processed under old ordinance

January 17th, 2011

by Melanie Thwing

Lamar v. City of Kansas City
(Missouri Court of Appeals, November 9, 2010)

In September 2007, the City Council of Kansas City, Missouri passed an amendment to its code of ordinances.  The amendment prohibited outdoor signs with “revolving, moving, flashing, blinking, or animated characteristics.”  The amendment also provided that until the amendment went into effect no permits for altering outdoor signs were to be approved.  

Lamar had filed a permit application with the city two days before the enactment of the ordinance.  Because of the pending ordinance city staff refused to process Lamar’s application until after the ordinance was passed. In district court Lamar argued that the permits should have been processed immediately based on the ordinances that were in effect at the time of application.  The district court disagreed and summary judgment was granted to the City. Lamar appealed to the Court of Appeals.

The court looked to previous rulings which held that “the mere filing of an application gave the applicant no vested right under the old ordinance.” From these the court holds that just filing an application is not enough to provide a vested right. Rather, the owner “must have reasonably relied upon a belief that the existing law would continue to be in force.” This requires not only a reliance on the continuation of the ordinance, but also a reasonable belief.

The Missouri Court of Appeals ultimately held that Lamar had no vested right to have its permit processed under the old ordinancem and dismissed the case.

Missouri Courts, Signs and billboards, Vested Rights , ,

Iowa S.C. on moratoria, vested rights and bad faith

August 28th, 2009

posted by Gary Taylor

GEISLER V. CITY OF CEDAR FALLS (link to case here)
769 NW2d 162 (Iowa Supreme Court, July 10, 2009)

In this case, the Iowa Supreme Court validates use of moratoria as planning tool and expounds on Iowa’s vested rights doctrine, but remands to district court the landowner’s claim of bad faith actions by the city.

In 2004, Michael Geisler purchased land located in an Overlay District of Cedar Falls, Iowa to develop an eight-unit apartment complex. In May 2005, he submitted a site plan to the Cedar Falls planning and zoning commission. Apparently at the time an amendment to the Overlay District that would have prohibited the project was “under discussion.” At the commission’s May 18, 2005, meeting, the Cedar Falls city planner stated that the site plan met all the basic ordinance requirements; however, because there was substantial resident opposition to the proposed development voiced at the meeting, the commission voted to recommend denial of Geisler’s site plan.

At the Cedar Falls city council meeting held May 23, 2005, the council considered Geisler’s site plan. Several citizens residing in the Overlay District expressed concerns about the plan, including the increase in traffic it would generate and the detrimental effect to single-family homes in the area. The council denied the site plan because it was “inconsistent with the character of the neighborhood due to architectural design … [and was] not of comparable scale and character in relation to adjoining properties.” At the same meeting, a motion also passed to discuss a temporary moratorium to study the issue of multi-family unit construction in the Overlay District. At the next city council meeting on June 13, 2005 the council passed a resolution imposing a moratorium on all development or construction of multi-family housing in the Overlay District. On that same day Geisler submitted a revised site plan that could not be processed in time to be discussed at the meeting. On June 22, 2005 Geisler filed a petition for writ of certiorari in the district court alleging the city acted illegally by denying his site plan and subsequently passing the moratorium. On July 11, 2005 a city official refused to process the revised site plan in light of the moratorium, effectively denying the project. On December 12, 2005 the city council passed an amendment to the Overlay District that prohibited multi-family housing. Geisler did not resubmit the site plan after the enactment of the ordinance.

Moratoria. The city first asserted that the district court did not have jurisdiction to hear the case because a writ of certiorari can only be used to challenge judicial and quasi-judicial actions, and the council’s adoption of the moratorium was a legislative function. The Iowa Supreme Court agreed, stating that in enacting the moratorium, “the city was performing a traditional legislative function.” In doing so, the court gave implicit approval to the use of moratoria by Iowa cities, an issue not previously addressed by the court. It observed that “a moratorium aids a governing body in performing the legislative task of municipal planning….They aid in bridging the gap between planning and its implementation into legal measures. They may be used to preserve the status quo while study of the area and its needs is completed [thus serving] a significant public purpose.”

Vested rights. The discussions of vested rights and bad faith came about in the court’s attempt to address a matter of procedure known as the “pending ordinance rule.” Under this rule, a court is supposed to decide a case “based on the zoning law as it exists at the time of the court’s decision.” The pending ordinance rule thus requires the court to apply the zoning ordinance as amended on December 12, 2005, since both courts’ (district and supreme court) decisions were made subsequent to the city council’s adoption of those amendments.

According to the court, the theory of vested rights acts as one exception to the pending ordinance rule. In a 1998 case, Quality Refrigerated Services v. Spencer, the Iowa Supreme Court determined that a developer acquires a vested right to proceed under the old ordinance if (1) s/he makes substantial expenditures toward the development prior to the zoning change, and (2) those expenditures were made lawfully. In the present case, the court essentially states that only expenditures made pursuant to a validly-issued building permit can be considered “lawful.” Since no building permit had been issued at the point when Cedar Falls rezoned Geisler’s property, he had not acquired a vested right to proceed.

The second exception to the pending ordinance rule is if the local government acted in bad faith. To establish bad faith in the context of a zoning decision, Geisler would need to show that Cedar Falls (1) illegally denied the application, and (2) did so with an improper purpose. The Supreme Court laid out markers for determining both illegality and improper purpose. Citing the 1999 Iowa Supreme Court case U.S. Cellular v. Board of Adjustment, the Court observed that the denial, without any legal justification, of an application that clearly meets all the requirements of the then-existing ordinance is illegal. Then, after providing examples from the Second and Sixth Federal Circuits, and state cases from New Jersey and Wisconsin, the Court “discerned that an improper purpose exists when a zoning authority adopts a new zoning regulation designed to frustrate a particular applicants plans for development.” It went even further in a footnote, saying that “unlike the [examples cited in these other cases] where bad faith was found when the governing body sought to change the rules in response to a particular request, the result may be different where a zoning change is already being contemplated before the particular request is made.” The Court found that the district court failed to consider the issue of bad faith and remanded the case back to the district court to determine whether the city acted illegally and with an improper purpose.

Bad faith zoning, Iowa Supreme Court, Moratoria, Vested Rights , , , , ,