No property interest exists, when no building permit application has been filed

by Victoria Heldt

American Central City, Inc., v. Joint Antelope Valley Authority
(Nebraska Supreme Court, June 17, 2011)

Edward Patterson, the owner and sole shareholder of American Central City, Inc. (ACC), owned three properties and claimed a compensable property interest in properties owned by Edward and Dorothy Schwartzkopf, which are located in the same neighborhood.  Patterson based his claim of interest on an option to purchase the Schwartzkopf’s property on the condition that he obtain a building permit.  He planned to construct a building that would sit both on his property and on theirs.  All of these properties were condemned as a part of the Antelope Valley project, which was designed to provide Lincoln with flood control, transportation improvements, and community revitalization.   Patterson claimed he was not properly compensated after the condemnation of the properties and that his substantive due process rights were affected during the trial process.

Patterson argued that he had a compensable property interest in a building permit he wanted to obtain because he spent considerable time and money planning and designing the building.  He claimed that city officials falsely informed him that it would not be possible to build underground parking or place underground telecommunications on the property, and that this information prevented him from going forward with this plans and affected his substantive due process rights.  The Court noted that the granting of a building permit does not give a property owner the right to build or a property interest in the permit.  The Court further recognized that Patterson never actually filed for the permit.  In light of this, it concluded that that the law does not recognize a property interest in a permit that was  never filed.

Patterson also claimed an interest in the Schwartzkopf properties because of the 1995 option to purchase.  Once Patterson failed to obtain a permit, both parties signed a release agreement excusing them from performance.  Then in 2004, the property was sold to JAVA.  Patterson claimed he still had an oral agreement to buy the property even after the release was signed in 1995.  The Court found that he had no compensable interest in the property because the oral agreement would not stand up in court.  The sale of land is subject to the statute of frauds and must be in writing.  Patterson further argued that his case falls under one of the exceptions to the statute of frauds (partial performance) since he incurred expenses and invested time in the planning and designing of the building.  The Court found that any oral agreement Patterson had was with the Schwartzkopf’s, and cannot be enforced against JAVA.

Patterson further argued that the government engaged in inverse condemnation, which means that the government took property without proper compensation or proper condemnation proceedings.  He claimed the government prevented him from putting his property to the “highest and best use” by preventing him from obtaining a building permit and that this qualified as inverse condemnation.  Without the building permit, he could not purchase the Schwartzkopf properties in order to develop his properties as planned.  The Court noted that this claim rested partially on the belief that he had a property interest in the building permit and the Schwartzkopf properties, but as stated earlier he did not.  Additionally, it found that Patterson did not submit sufficient facts to establish that the government acted to prevent him from developing the land.

The Court dismissed all of Patterson’s claims and affirmed the decision of the district court.

Developer had protected property interest in commercial designation of development plan

by Melanie Thwing

Wedgewood v. Township of Liberty, OH
(Federal 6th Circuit Court of Appeals, June 28, 2010)

In 2003, Wedgewood Limited Partnership entered into agreements to build a Wal-Mart and a gas station in Subarea 3 of the Planned Unit Development (PUD)  of the Wedgewood Commerce Center (WCC) in Liberty Township, OH.  The Trustees had rezoned the land to PUD in 1991, and the WCC Development Plan (WCCDP) was approved in 1992.  Subarea 3 totaled 220, 857 square feet. The WCCDP specified that only areas 3, 8, and 9 (a total of 499,930 square feet) were to be used for commercial development, although Subareas 4, 5, 6 and 10 had obtained permits from 1992 to 2003 to develop approximately 390,611 of commercial space.

In October of 2003, Wedgewood filed an application to amend the WCCDP to increase the land in area 3 to 227,825 square feet for the Wal-Mart project.  The project met significant opposition from the community, and the amendment was denied.  After months of increasing opposition, the Trustees in 2004 issued a set of “Zoning Instructions” meant to clarify the current WCCDP. These Instructions indicated a “floating cap” of 500,000 square feet of commercial zoning covering the entire WCC, unless a “major” modification plan was submitted and approved.  The Trustees issued a public statement indicating that “analysis reveals that the commercial development completed to date, and substantially through the approval process, has consumed most of the square footage imposed by the development plan as an overall cap,” and that “we are instructing our zoning department to refrain from issuing any zoning certificates for additional commercial development” unless the proposal goes through the major modification process.

Later that year, Wedgewood again applied for a zoning certificate, but this time to build a smaller 220.597 square foot structure that would fit entirely within Subarea 3. It was not submitted as a major modification plan, and the Commission for Zoning cited this as the reason for denial. Wedgewood countered, filing a claim with the district court for the Southern District of Ohio under 42 U.S.C. § 1983. They argued that the Township’s adoption of the new Zoning Instructions violated Wedgewood’s procedural due process rights, and that the Zoning Instructions were void for vagueness. Summary judgment was granted in favor of Wedgewood, creating a permanent injunction preventing the Township from enforcing the new Zoning Instructions.  The Township immediately appealed to the Court of Appeals for the 6th Circuit.

§519.12 of the Revised Code of Ohio requires notice and a hearing before a zoning ordinance can be adopted or amended.  The Township argues this occurred in 1991 with the adoption of the PUD and the WCCDP, and that the document specifies a 500,000 square foot floating cap. Wedgewood counters that a floating cap had never entered discussion, and is not set forth anywhere in the WCCDP. The Court points out that if a floating cap was meant to exist, then it would be arbitrary to assign subareas 3,8, and 9 as commercial, and that it would ignore the strong correlation between the 500,000 square foot floating cap, and the 499,930 square foot total area for subareas 3, 8, and 9. The Court concludes that the Instructions, for these reasons, changed the WCCDP, which requires a hearing.

The Township then argues that Wedgewood had no protected property interest in the previous amendment procedures, while Wedgewood maintains it did. In Ohio a vested interest in property is given when an application for a building or zoning certificate is filed. Although Wedgewood did this, the Township counters that it was after the Instructions, meaning there was no interest prior. In Stile v. Copley Twp., the district court held a “protectable interest can arise under Ohio law when a government entity restricts a landowner’s ability to use his property.” Using this as a standard, the Court states that Wedgewood justifiably expected to use its land commercially up to 220,857 square feet, unless a proper amendment was passed.

The last issue is whether enacting the instruction without a hearing or providing prior notice to Wedgewood violated Wedgewood’s due process property interest. In Nasierowski Bros. Inv. Co. v. City of Sterling Heights the Court found that not providing notice has a severe and detrimental impact on how the owner can expect to use the land. This standard leads the Court to conclude that Wedgewood was singled out, that prior notice was mandatory, and that Wedgewood had the right to voice concerns.  The summary judgment for a permanent injunction was upheld.





Admin Menu