Opinion ID: 2049120
Heading Depth: 1
Heading Rank: 17

Heading: The Doctrine of Zoning Estoppel Generally

Text: The most widely-accepted statement of the doctrine of zoning estoppel may be traced to a 1971 article, in which the following principle appears: A local government exercising its zoning powers will be estopped when a property owner, (1) relying in good faith, (2) upon some act or omission of the government, (3) has made such a substantial change in position or incurred such extensive obligations and expenses that it would be highly inequitable and unjust to destroy the rights which he ostensibly had acquired. David G. Heeter, Zoning Estoppel: Application of the Principles of Equitable Estoppel and Vested Rights to Zoning Disputes, 1971 Urb. L. Ann. 63, 66 (1971); Robert M. Rhodes, et al., Vested Rights: Establishing Predictability in a Changing Regulatory System, 13 Stetson L.Rev. 1, 3 (1983). See also Walter F. Witt, Jr., Vested Rights in Land Uses  A View from the Practitioner's Perspective, 21 Real Prop. Prob. & Tr. J. 317, 319 (1986) (The doctrine of equitable estoppel provides that the right to use or develop land cannot be infringed by legislative action when the owner or developer of such land has in good faith relied upon some act or failure to act by a governmental body and made a substantial change in position.). Where zoning estoppel is recognized and applied, the government is prevented from applying any future incompatible, albeit legal, regulations to the property. Kenneth R. Kupchak, et al., Arrow of Time: Vested Rights, Zoning Estoppel, and Development Agreements in Hawai'i, 27 Hawaii L.Rev. 17, 18 (2004). See also 4 Arden H. Rathkopf, The Law of Zoning and Planning § 70.9 (2009) (State courts may apply the principles of equitable estoppel to prevent the enforcement of otherwise applicable regulations where, under the specific facts of the cases involved, it would be inequitable for the restriction to be enforced.); Lynn Ackerman, Comment: Searching for a Standard for Regulatory Takings Based on Investment-Backed Expectations: A Survey of State Court Decisions in the Vested Rights and Zoning Estoppel Areas, 36 Emory L.J. 1219, 1256 (1987) (When a city or county passes a zoning ordinance that invalidates a landowner's intended use of his property, he may argue that the city or county should be estopped from enforcing the ordinance because of substantial expenditures he has made in reliance on the existing zoning of the property.). Regarding the underlying policy rationale for the doctrine of zoning estoppel, Heeter notes that [t]he cases allowing zoning estoppel hold, in effect, that local governments while exercising their zoning powers are accountable for their actions if they lead reasonable men astray. Heeter, supra, at 84. See also Ackerman, supra, at 1275 n. 22 (The defense of estoppel is derived from equity and `focuses upon whether it would be inequitable to allow the government to repudiate its prior conduct.) (quoting Heeter, supra, at 64-65). As stated by another commentator, the policy underlying zoning estoppel is two-fold: hold the government to its commitments, and treat property owners who rely fairly. Kupchak, supra, at 24. Heeter identifies four categories of cases in which a zoning estoppel claim may arise, the second of which is pertinent to the instant case, namely, those cases in which a property owner applies for a permit and initiates development before it is issued, relying on circumstances indicating a probability that it will be issued. Heeter, supra, at 70. Such reliance may include a situation where the use or structure is permitted of right under the zoning ordinance or where a government official has assured the developer that he or she will be granted a permit. Id. at 70, 83. In his article, Heeter explains the distinction between the doctrine of vested rights, which requires generally that a developer first obtain a permit before acquiring constitutionally protected rights in the property, and the doctrine of zoning estoppel, as well as the confusion of many courts (such as in Maryland) regarding the two principles and their terminology: The defense of estoppel is derived from equity, but the defense of vested rights reflects principles of common and constitutional law. Similarly, their elements are different. Estoppel focuses upon whether it would be inequitable to allow the government to repudiate its prior conduct; vested rights upon whether the owner acquired real property rights which cannot be taken away by governmental regulation. Nevertheless, the courts seem to reach the same results when applying these defenses to identical factual situations. Heeter, supra, at 64-65 (internal citations omitted). See also Kupchak, supra, at 20 (Although usually treated by courts and many commentators as interchangeable, the theories of vested rights and zoning estoppel are doctrinally distinct.) (internal citation omitted); Rhodes, supra, at 2 (Although the doctrines of equitable estoppel and vested rights arise from distinct theoretical bases, Florida courts have employed these concepts interchangeably.); Grayson P. Hanes and J. Randall Michew, On Vested Rights to Land Use and Development, 46 Wash. & Lee L.Rev. 373, 383 (1989) (Zoning estoppel, like other forms of estoppel, arises out of equity and is derived from fundamental concepts of justice and fairness.). Both closely-related principles permit the government to retain flexibility in land use planning only if a property owner has not proceeded sufficiently along the development path that it would be unconstitutional or unfair to prevent it from completion. Kupchak, supra, at 18. See also Ackerman, supra, at 1256 (The primary purpose of the doctrine of zoning estoppel is to prevent a city or county from creating a situation in which it would be inequitable or unjust to permit it to negate what it has done or permitted to be done.). Vested rights and zoning estoppel thus counterbalance the government's unfettered ability to use its police power to regulate land uses, providing some insulation of the land development process from shifting political winds and the vagaries of vindictive officials. Kupchak, supra, at 18, 63. See also Ackerman, supra, at 1272 (noting that zoning estoppel particularly applies when a municipality attempts to negate action that it has taken or permitted to be taken). Although key elements are roughly similar, [6] important differences exist between the vested rights doctrine, in which the court must determine whether an owner has a legitimate claim of entitlement based on an affirmative governmental act, such as the issuance of a permit, and the doctrine of zoning estoppel, which concerns instead whether the government has given official assurance to the developer that construction has been approved and may proceed. Kupchak, supra, at 24-25 (noting that the courts' tendency to collapse the significantly different doctrines of vested rights and zoning estoppel into one by rationalizing that the two analyses rarely produce a different result is a gross oversimplification). See also Hanes, supra, at 388 (noting that zoning estoppel depends on the existence of a governmental act or omission, while vested rights requires an affirmative governmental act such as the issuance of a permit). Unlike the doctrine of vested rights, zoning estoppel shifts the focus from the owner's irrevocable commitments to the government's process and whether it would be unfair to permit the government to exercise its regulatory power to change regulation after its act or omission has induced a property owner to alter its position in reliance. Kupchak, supra, at 23-25 (In a vested rights determination the focus is on the property owner's expectations and fundamental rights, while in analyzing zoning estoppel the focus is on the government's process and whether it induced the owner's reliance.). See also Ackerman, supra, at 1272 (Although the vested rights doctrine emphasizes what the landowner has done, zoning estoppel examines the actions of both the landowner and the municipality.). Thus, when considering a zoning estoppel claim, a court must first determine whether the government has given official assurance to the developer that the proposed project may proceed, and whether the owner relied on the official assurance to its detriment. Kupchak, supra, at 24. The key difference between the vested rights and zoning estoppel approaches then is one of timing, namely, determining what government action in the development approval process gives a property owner the green light. Id. at 25. See also, Ackerman, supra, at 1256 (Although there are apparent similarities in the requirements of vested rights and zoning estoppel, the latter is really a more flexible test that emphasizes principles of equity, rather than specific points in time that trigger vesting.). Once the government provides official assurances to the developer that construction may proceed, the property owner is entitled as a matter of law to rely on that approval in making expenditures. Kupchak, supra, at 48. Commentators argue that strict reliance on the vested rights doctrine, under which a developer first must obtain a building permit and commence meaningful construction under the permit, has been widely criticized, even by courts that apply it, because it provides for certainty too late in the process, does not forestall litigation, and maximizes the owner's exposure to regulatory risk. Id. at 26. Instead, allowing room for both vested rights and zoning estoppel claims inject[s] a measure of certainty in an otherwise uncertain process and attempt[s] to minimize the risk that the rug can be pulled out unexpectedly from a property owner after the government has given the green light to a use and the owner has started down the path in reliance. Id. at 63. On the desirability of recognizing the doctrine of zoning estoppel, Rathkopf notes: Some states, notably Illinois, recognizing that some expenses, even very substantial ones, may necessarily be incurred in the prebuilding permit state of a land development project, have refused to follow the majority rule that expenditures incurred prior to the issuance of a building permit are of no avail. Those states have expressed the rule that to achieve a vested right which will be unaffected by the amendment of an ordinance, a landowner must have experienced a substantial change of position, expenditure, or increase of obligation either pursuant to a building permit or in reliance upon the probability of its issuance. Rathkopf, supra, at § 70-19 (emphasis in original). Regarding the question of good faith, Heeter notes that the court's focus is upon the mental attitude of the owner when he acted. Heeter, supra, at 77. Thus, the courts will find that a property owner acted in good faith if, knowing that rezoning was at least possible, he did not accelerate his development or increase his investment or obligations in an effort to establish such an apparent degree or amount of reliance as to prevent the rezoning. Id. at 78. In other words, the owner must act with honest intentions and refrain from deliberately [trying] to increase his equities in some way. Id. at 78, 81. If the developer has good reason to believe, before or while acting to his detriment, that the officials' mind may soon change, estoppel may not be justified. Rhodes, supra, at 4. See also Hanes, supra, at 398-99 (Good faith ... means that the landowner proceeds with his proposed development plans in accordance with a governmental approval without knowledge of a pending change in the zoning ordinance.). In order to claim zoning estoppel, a plaintiff's reliance must be of a substantial nature. Heeter, supra, at 84. Concern is for the economic hardship which the owner would suffer were the government allowed to have its way. Id. Specifically, [t]he substantial change in position element involves expenditures of money, the irrevocable commitment of resources, and the acceptance of liabilities in reliance upon the governmental act. Hanes, supra, at 400. In discussing what may constitute substantial expenditures, one commentator notes the numerous preparatory actions that developers must undertake before beginning construction: As a practical matter, a landowner who seeks to develop his land incurs expense even in preparing to apply for a permit. Then, too, the larger the development project proposed, the greater the expense in conforming to the requirements for making an application. Even an application for a permit to build a structure conforming to all regulations and intended for a permitted use on an established lot must be accompanied by a plot plan and architectural plans and specification. Large-scale projects may require a change of zone or an application for a special permit, the preparation of an environmental impact statement, and public hearings. They can also involve the services of attorneys, planners, engineers, appraisers, and environmentalists, and can require approvals from various agencies before a building permit for the first structure can be applied for. Rathkopf, supra, at § 70.19. Heeter's definition of zoning estoppel, or a definition that is substantially similar to Heeter's definition, has been adopted by courts in Connecticut, [7] Florida, [8] Georgia, [9] Hawaii, [10] Illinois, [11] South Dakota, [12] and Utah. [13]