| Matter of Exeter Bldg. Corp. v Town of Newburgh |
| 2014 NY Slip Op 00996 [114 AD3d 774] |
| February 13, 2014 |
| Appellate Division, Second Department |
| In the Matter of Exeter Building Corp. et al.,Respondents, v Town of Newburgh et al.,Appellants. |
—[*1] Burke, Miele & Golden, LLP, Goshen, N.Y. (Richard B. Golden of counsel), forpetitioners/plaintiffs-respondents.
In a hybrid proceeding pursuant to CPLR article 78, inter alia, to review adetermination of the Town of Newburgh Zoning Board of Appeals dated November 24,2009, made after a hearing, that Exeter Building Corp. and 17K Newburgh, LLC, haveno vested right to develop certain real property under the R-3 zoning regulations in effectprior to March 6, 2006, and action for a judgment declaring that Exeter Building Corp.and 17K Newburgh, LLC, have a vested right to develop the real property in accordancewith those prior zoning regulations, the appeal is from so much of an order and judgment(one paper) of the Supreme Court, Orange County (Slobod, J.), dated October 7, 2011,as, after a hearing, inter alia, granted that branch of the petition which was to review thedetermination that Exeter Building Corp. and 17K Newburgh, LLC, have no vested rightto develop the property under those prior zoning regulations and declared that ExeterBuilding Corp. and 17K Newburgh, LLC, have a vested right to develop the property inaccordance with those prior zoning regulations.
Ordered that the order and judgment is reversed insofar as appealed from, on the law,with costs, the determination is confirmed, that branch of the petition which was toreview the determination that Exeter Building Corp. and 17K Newburgh, LLC, have novested right to develop the property under the R-3 zoning regulations in effect prior toMarch 6, 2006, is denied, and the matter is remitted to the Supreme Court, OrangeCounty, for the entry of an amended judgment, inter alia, dismissing the proceeding onthe merits and declaring that Exeter Building Corp. and 17K Newburgh, LLC, have novested right to develop the subject real property under the R-3 zoning regulations ineffect prior to March 6, 2006.
In December 2000, the petitioners/plaintiffs, Exeter Building Corp. (hereinafterExeter) and 17K Newburgh, LLC (hereinafter together the plaintiffs), became the ownersof a parcel of approximately 29 acres of real property in the Town of Newburgh. Theproperty was within the Town's R-3 zoning district, which permits multi-family housing.In 2002 the plaintiffs applied to the Town of Newburgh Planning Board (hereinafter thePlanning Board) for approval of a site plan [*2]for aproposed project to be known as Madison Green that was to consist of 34 residentialbuildings, each containing four single-family units, for a total of 136 units. Exeter wasaware that final approval of the site plan for Madison Green could not be obtained until asewer moratorium then in effect was lifted. Exeter acknowledged in a May 2002 letter tothe Planning Board that it was pursuing the approval of the site plan for Madison Greenat its own risk.
Meanwhile, the Town was engaged in a rezoning effort. In April 2001, it hadcommissioned the preparation of a draft comprehensive plan, and an initial draft wascompleted that month. The initial draft did not include a proposal to change the R-3zoning of the plaintiffs' property.
Over the course of several years, as the Town refined its draft comprehensive plan,the plaintiffs appeared before the Planning Board in furtherance of the final approval ofthe site plan for Madison Green. In December 2003, during the approval process, aconsultant to the Planning Board recommended, for several reasons, that the plaintiffsadjust a boundary line between their property and an adjoining property. Accordingly,the plaintiffs commenced negotiations with the owner of that adjoining property.
In the summer of 2005, the Town's planning consultant recommended that the Townrevise the draft comprehensive plan to include a change of the zoning of variousproperties, including the plaintiffs' property, from R-3 to R-1, a more restrictive category.The chairperson of the Planning Board warned the plaintiffs in a letter that adoption ofthe proposed change to the draft comprehensive plan would "directly affect" the finalapproval of the site plan for Madison Green in that development of Madison Greenwould not be permissible under R-1 zoning. The chairperson cautioned the plaintiffs thattheir continued efforts to develop Madison Green would be at their own risk. Thechairperson assured the plaintiffs that, in the event that they chose to move forward, thePlanning Board would continue its review in a "timely fashion." In August 2005, theTown Board voted to include the revision in the draft comprehensive plan.
That summer, after successful negotiations for an exchange of land with an adjoiningproperty owner, the plaintiffs submitted a proposal for a boundary adjustment to theirproperty. In October, the Planning Board approved the boundary adjustment, and theapproval was filed on January 24, 2006. Review of the site plan for Madison Greenproceeded, but on March 6, 2006, the Town Board enacted its comprehensive plan asLocal Law No. 3 (2006) of Town of Newburgh (hereinafter Local Law 3), and theplaintiffs' property was rezoned from R-3 to R-1.
The plaintiffs commenced legal proceedings against the Town, its Planning Board,and the Town's Building Inspector, seeking invalidation of Local Law 3 and adeclaration that they have vested rights, under both statute and common law, to developMadison Green under the R-3 zoning regulations. In November 2006, the Supreme Courtissued an order invalidating Local Law 3, but also declaring that the plaintiffs did nothave vested rights to develop Madison Green under the R-3 zoning regulations. Theplaintiffs appealed, and the Town and its Building Inspector cross-appealed from thatorder.
In June 2007, while the appeals were pending, the plaintiffs received preliminary siteplan approval for Madison Green, subject to numerous conditions. The next month, theTown's code compliance department granted the plaintiffs a permit authorizing thedemolition of a single-family residence on the property, and the plaintiffs demolished theresidence. Additionally, on December 20, 2007, the Planning Board passed a "Resolutionof Approval Site Plan Final" (hereinafter the Resolution) with respect to Madison Green,upon the plaintiffs' satisfaction of certain conditions. The Resolution stated, in relevantpart, that "THE PLANNING BOARD RESOLVES to approve this Site Plan as saidproposal is depicted on the plans identified above upon the conditions outlined below,and the Chairperson . . . is authorized to sign the plans upon satisfaction ofthose conditions below noted to be conditions precedent to signing." The Resolutioncontained 18 specific conditions, 11 of which were required to be met before thechairperson of the Planning Board would be authorized to sign the plans. From thesubmission in 2002 of their application for approval until the Resolution was approved,the plaintiffs had incurred $358,999.73 in engineering and review [*3]costs.
Four months later, in March 2008, this Court decided the appeal and the cross appeal(see Matter of Exeter Bldg.Corp. v Town of Newburgh, 49 AD3d 731, 733-734 [2008]). This Court upheldLocal Law 3 and agreed with the Supreme Court that the plaintiffs had not establishedthat they have a vested right under the common law to proceed with Madison Greenunder the R-3 zoning regulations. Nonetheless, we also held that the boundaryadjustment that the plaintiffs had negotiated with an adjoining property owner, andwhich the Town approved, constituted a subdivision under Town Law § 276 (4)(a) and Town of Newburgh Code § 163-2. The effect of this subdivision was togive the plaintiffs a three-year exemption from the rezoning of their property (seeTown Law § 265-a). During that exemption period, the plaintiffs were entitled toproceed with the approval process in order to establish a vested right under the commonlaw to build Madison Green under the R-3 zoning regulations. The parties agree that theexemption period began on January 24, 2006, and ended on January 24, 2009. As of thedate of our decision and order, approximately 10 months were left in the three-yearexemption period.
In April 2008, the plaintiffs obtained a permit to remove water tanks on propertyadjoining the subject property, and they removed the tanks and their foundation. In June2008, the plaintiffs applied for a clearing and grading permit. The Planning Boardapproved the permit in July 2008, and in August 2008, the code compliance departmentissued the permit. The plaintiffs performed clearing and grading on the property,including the installation of 170 feet of underground pipe. The Town advised theplaintiffs that the installation of the pipe was not authorized by the permit. In October2008, the code compliance department issued a permit to the plaintiffs authorizingerection of signs on the property advertising new townhouses. In all, from the PlanningBoard's approval of the Resolution in December 2007, to the expiration of the three-yearexemption period in January 2009, the plaintiffs incurred $46,581.73 in engineering andreview costs, and $135,199.24 in construction costs, for a total cost during that period of$181,780.97. It is undisputed that many of the conditions set forth in the Resolution hadnot been complied with by the plaintiffs when the statutory exemption period ended inJanuary 2009.
In April 2009, the plaintiffs sought to amend the site plan, but the code enforcementofficer at the code compliance department wrote to the Planning Board indicating thatthe three-year exemption period under Town Law § 265-a had expired and that thesubject property was now subject to the R-1 zoning requirements. Therefore, thePlanning Board disapproved the amended site plan. The plaintiffs appealed to the Town'sZoning Board of Appeals (hereinafter the ZBA), but, after a hearing, the ZBA upheld thePlanning Board's determination that the plaintiffs had not established a vested right underthe common law to develop Madison Green under the R-3 zoning regulations. In itswritten decision dated November 24, 2009, the ZBA concluded that, inasmuch as theplaintiffs had not satisfied all the conditions in the Resolution, they were not entitled tohave the chairperson sign the site plan and, thus, were not entitled to the issuance of abuilding permit under the site plan. The ZBA also rejected the plaintiffs' contention thatthe permits already issued with respect to demolition, erection of a sign, and clearing andgrading could, in the absence of a building permit authorizing construction of MadisonGreen under the site plan, satisfy the first prerequisite for a claim of common-lawvesting.
The plaintiffs commenced this hybrid proceeding and action against the Town, themembers of the Town Board, the Planning Board, the ZBA and its members, and theTown Code enforcement officer (hereinafter collectively the defendants) seeking, amongother things, to annul the ZBA's determination and a judgment declaring that theplaintiffs have a vested right under the common law to develop Madison Green under theR-3 zoning regulations. After a hearing, the Supreme Court issued an order andjudgment, inter alia, granting that branch of the petition which sought to annul thedetermination and declaring that the plaintiffs have a vested right to develop MadisonGreen under the R-3 zoning regulations.
Zoning, which is an exercise of the "police powers" (see Matter of GernattAsphalt Prods. v Town of Sardinia, 87 NY2d 668, 683-684 [1996]; Matter of440 E. 102nd St. Corp. v Murdock, 285 NY 298, 304 [1941]; Matter of Cobleskill Stone Prods.,Inc. v Town of Schoharie, 95 AD3d 1636, [*4]1637 [2012]), restricts the use of real property (seeLutheran Church in Am. v City of New York, 35 NY2d 121, 128 [1974]; Peoplev Miller, 304 NY 105, 108 [1952]). The doctrine of vested rights is implicated whena property owner seeks to continue to use property, or to initiate the use of property, in away that was permissible before enactment or amendment of a zoning ordinance butwould not be permitted under a new zoning law (see People v Miller, 304 NY at108; see generally 4 Ziegler, Rathkopf's Law of Zoning and Planning, §70:1 [4th ed 2011]). In those situations, the right of the property owner is to be balancedagainst the right of the public to enforce the zoning law (see Glacial Aggregates LLC vTown of Yorkshire, 14 NY3d 127, 135 [2010]; People v Miller, 304NY at 108-109; Matter of Cobleskill Stone Prods., Inc. v Town of Schoharie, 95AD3d at 1638; Matter of Putnam Armonk v Town of Southeast, 52 AD2d 10, 15[1976]).
Generally, "nonconforming uses or structures, in existence when a zoning ordinanceis enacted, are . . . constitutionally protected and will be permitted tocontinue, notwithstanding the contrary provisions of the ordinance" (People vMiller, 304 NY at 107; seeJones v Town of Carroll, 15 NY3d 139, 143 [2010]; Glacial Aggregates LLC v Town ofYorkshire, 14 NY3d 127 at 135 [2010]; Matter of Syracuse Aggregate Corp.v Weise, 51 NY2d 278, 284 [1980]). By contrast, rezoning may restrict new uses ofthe property (see Matter of Pete Drown, Inc. v Town Bd. of Town of Ellenburg,229 AD2d 877, 879 [1996]; cf.Rocky Point Drive-In, L.P. v Town of Brookhaven, 21 NY3d 729 [2013]). Theintermediate situation, in which the use of property is in transition when the new zoningis adopted, is at the heart of most disputes regarding the common-law doctrine of vestedrights. The common-law doctrine has been characterized as "one of the most troublesomeareas of land use regulation" (4 Ziegler, Rathkopf's Law of Zoning and Planning, §70:1 at 70-3 [4th ed 2011]).
"In New York, a vested right can be acquired when, pursuant to a legally issuedpermit, the landowner demonstrates a commitment to the purpose for which the permitwas granted by effecting substantial changes and incurring substantial expenses tofurther the development" (Town of Orangetown v Magee, 88 NY2d 41, 47[1996]; see Matter of RCEnters. v Town of Patterson, 42 AD3d 542, 544 [2007]; Matter of LefrakForest Hills Corp. v Galvin, 40 AD2d 211, 218 [1972], affd 32 NY2d 796[1973], cert denied sub nom. Baum v Lefrak Forest Hills Corp., 414 US 1004[1973]; Matter of Fox Lane Corp. v Mann, 216 App Div 813, 813 [1926],affd 243 NY 550 [1926]). "Neither the issuance of a permit . . . northe landowner's substantial improvements and expenditures, standing alone, willestablish the right. The landowner's actions relying on a valid permit must be sosubstantial that the municipal action results in serious loss rendering the improvementsessentially valueless" (Town of Orangetown v Magee, 88 NY2d at 47-48; seeGlacial Aggregates LLC v Town of Yorkshire, 14 NY3d at 136; People vMiller, 304 NY at 109; Matter of RC Enters. v Town of Patterson, 42 AD3dat 544; People ex rel. Publicity Leasing Co. v Ludwig, 172 App Div 71, 73-74[1916], affd 218 NY 540, 542 [1916]).
"Reliance" is an essential element of the doctrine (Glacial Aggregates LLC vTown of Yorkshire, 14 NY3d at 136-137). Although many cases speak in terms ofreliance on permits (see e.g. Town of Orangetown v Magee, 88 NY2d at 47;Matter of RC Enters. v Town of Patterson, 42 AD3d at 544), a right may vest incertain situations when "subdivisions" have been given a "final grant of approval"(Matter of Ellington Constr. Corp. v Zoning Bd. of Appeals of Inc. Vil. of NewHempstead, 152 AD2d 365, 373 [1989], affd 77 NY2d 114 [1990]).Whether a planning board's final unconditional approval of a site plan may, evenin the absence of a building permit, satisfy the first prong of the test has not been settledin New York (cf. Figgie Intl. v Town of Huntington, 203 AD2d 416, 418-419[1994]; but cf. 202 Devs. v Town of Haverstraw, 175 AD2d 473 [1991]), and itis not before us now.
The plaintiffs placed the issue of common-law vesting directly before the ZBA,which had the authority to determine the claim (see Matter of Estate of Kadin vBennett, 163 AD2d 308, 309 [1990]). The ZBA's determination must be upheldunless it "was made in violation of lawful procedure, was affected by an error of law orwas arbitrary and capricious or an abuse of discretion" (CPLR 7803 [3]; see Matter of Mar-Vera Corp. vZoning Bd. of Appeals of the Vil. of Irvington, 84 AD3d 1238, 1240 [2011]).The ZBA's determination was neither arbitrary and capricious nor an abuse of discretion.Even if a property owner may claim vested rights in reliance on an unconditional finalapproval of a site plan, it is undisputed that the Planning Board never grantedunconditional approval of the plaintiffs' site plan. Indeed, since the plaintiffs did notfulfill the conditions precedent that were delineated in the Resolution, the chairpersonwas not authorized to sign the site plan. [*5]Accordingly,the plaintiffs could not establish that they had vested rights to develop Madison Greenunder the Resolution.
Further, the plaintiffs may not ground a claim of common-law vesting upon relianceon the limited permits that were issued to them. None of those permits—whichauthorized demolition of the single-family house and the water tanks, erection of a sign,and regrading and clearing—either singly or together amounted to the Town'sapproval of Madison Green. Thus, the plaintiffs' expenditures and construction inreliance on those limited permits could not satisfy the prerequisite for common-lawvesting of the right to construct the entire project. At most, the limited permits authorizedthe plaintiffs to complete the work described in the permits themselves, which, ifundertaken, would leave the subject property in a condition amenable to developmentunder the new, more restrictive R-1 zoning regulations.
Accordingly, the ZBA's determination should have been confirmed, and the SupremeCourt should have declared that the plaintiffs do not have a vested right to develop theproperty under the R-3 zoning regulations.
In light of our determination, we need not address the defendants' remainingcontentions. Mastro, J.P., Skelos, Balkin and Leventhal, JJ., concur.