Daily Development for
Tuesday, December 19, 1995

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

ZONING AND LAND USE; VESTED RIGHTS: A developer has no vested rights in a city's strict adherence to an approved master plan where applications for zoning, subdivision maps, architectural design and building permits had yet to be submitted and approved, but processing of these other decisions must show "substantial deference" to the original plan. American West Development, Inc. v. City of Henderson, 898 P.2d 110 (Nev. 1995).

The city approved a master plan for multifamily dwellings subject to certain reservations, including the right to determine the final density designation under the new municipal code which was to be adopted by the City later in the year. Several years later, the developer sought specific zoning for the construction of the multi-family units reflected in the master plan, but the City refused to consider the zoning application until the developer submitted the equivalent of a new master plan pursuant to the new municipal code.

The developer refused to submit a new master plan and claimed vested rights in the original master plan based upon its reliance thereon and on a provision in the new code preserving the validity of master plans approved prior to the new code's adoption. In a somewhat confusing opinion, the court held that there were no "vested rights" in the master plan, but nevertheless prohibited the City from requiring a new one, apparently because of the provision in the new code preserving the old master plans.

The court observed that the Nevada standard for finding "vested rights" in a proposed development project to vest, is that (1) zoning or use approvals must not be subject to further governmental discretionary action affecting project commencement; and (2)the developer must prove considerable reliance on the approvals granted.

The court concluded that the developer did not have vested rights in all of the details of the original master plan since the only discretionary act performed by the City was approval of the original master plan itself. Applications for zoning, subdivision maps, architectural design and building permits had yet to be submitted and approved. Such applications would have to be accompanied by documentation required under the new code, and, apparently, the individual decisions made based upon this new information, could lead to some variation from the overall scheme.

The court also held, however, that the City is required to give "substantial deference" to the original master plan. This requirement appears to be based upon the code provision preserving prior adopted master plans, but it could be based upon an unstated conclusion that there are vested rights in some elements of the original plan.

Comment: The court in this case apparently was suspicious of the pattern of behavior of the City, and "bought" the developer's premise that the City was in fact departing from prior adherence to the old master plan (even after the code revision) because of local political pressure from neighbors. In short, the City wasn't following consistently its own rules and practices.

But the case points out a fundamental problem with zoning procedures - they take enormous amounts of time. City policy often changes during the pendency of the procedures. Under these circumstances, developers often do commit resources in reliance upon earlier decisions by the City. From the standpoint of the developers, it is appropriate to require (at least when there is reliance) that discretionary determinations made by the City in the latter stages of a development project be consistent with basic guidelines established earlier in the project.

Many states have more fixed "vested rights" concepts - identifying a particular zoning decision - such as issuance of a building permit - as the time at which rights are deemed to be "vested." Although this kind of test has the virtue of certainty, it also opens the process up to abuse, as the City can hold off committing itself for a substantial period of time, requiring substantial investment by the developer in an apparently well worked out group of development policies without depriving the City of the opportunity to change its mind as political opposition to a particular development project gets organized.

Planning advocates and development advocates obviously take opposite sides of the question of what is the desirable balance of interests here. But there may be a difference of opinion on an even more fundamental level. Is there a "right to develop" at all. Can we afford to have such a right, in our complex and interdependent society? Can we afford not to have such a right, and still call ourselves a "private" economy and a "free" society?

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last five years, these Reports annually have been collated, updated, indexed and bound into the Annual Survey of Developments in Real Estate Law, volumes 1-5, published by the ABA Press. The Annual Survey volumes are available for sale to the public. Contact Shawn Kaminsky at the ABA. (312) 988 5260.

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