Vesting of Property Rights / Phased Developments
Under the proposed legislation, SB 3648,/ HB 3696, a developer would not be compelled to comply with any changes to development regulations made after the date any application for development is submitted, unless the new ordinance or regulation directly addresses a serious life threatening safety hazard.
The bill provides that the preliminary approval for a subdivision, planned development, site plan, or specific plan zoning remains in effect for five years from the date of approval. The bill also provides that there shall be no changes to zoning, planning, storm water requirements, layout, or design and construction standards for streets, curbs and sidewalks, lot size, yard dimensions and off tract-improvements within the five-year period of time; provided the application for final approval is made within five years of preliminary approval. Under the bill, all subsequent phases of the development would be covered under those regulations and standards in place on the date the first phase of the development was granted preliminary approval. This means there would be no changes to zoning, planning, storm water requirements, layout, or design and construction standards for streets, curbs and sidewalks, lot size, yard dimensions and off-tract improvements as they might pertain to a phased project for twenty to thirty years or more so long as the developer can initiate a new phase within five years of the previous phase.
* Property development rights would vest on the date of submission of an application for development. As such it would grant vested rights to the developer prior to any review of the application by any local governmental entity or official. Additionally, the bill would grant vesting even upon the filing of an incomplete application that does not satisfy the minimum requirements required of all applicants.
* The proposed bill is contrary to decades-old common law, which has been consistently upheld by the courts of this state and holds that rights do not attach to property, or vest, until there is either substantial construction on the property or substantial liabilities incurred that are directly related to construction.
* The bill would nullify the pending ordinance rule of law recognized by the Tennessee Supreme Court. The Supreme Court has held that the issuance of a permit or other approval alone does not grant the holder "vested rights." The "pending ordinance doctrine" is intended to protect the ability of a legislative body to adopt important changes in public policy by preventing a permit applicant from obtaining a permit that would work to defeat the goal of legislation that is pending but has not yet been finally adopted.
* The bill seeks to insulate developers from changes to "development regulations." The fact that development regulations is not defined within the bill creates ambiguity and seemingly represents an intent to create an avenue whereby the developer would be insulated from future changes in any number of areas, including ordinances relating to building codes, street standards, density, landscaping, signage, etc. It seems rather certain that the ambiguity that exists as a result of the legislation's failure to define such a principal term, upon which all relies, will result in a plethora of litigation.
* The inclusion of storm water management regulations would effectively negate a local government's ability to ensure developments comply with federal and state storm water management regulations. As a result, a local government would be forced to choose to either spend taxpayer dollars to bring the development into compliance or risk violating permits and incurring monetary penalties and even a federally-imposed prohibition on development.
* Property development rights would vest with any application for development, which would include submission of a preliminary plan, also known as a concept plan or master plan, to a planning commission. Typically, these initial plans offer a very limited overview of the developer's intentions and address the broader picture and often do not include survey and engineering information or other details necessary to render a conclusive decision regarding a proposed development project.
* The lack of specifics contained in these initial plans would expose the city and taxpayers to substantial risks. In an effort to counteract these risks, cities would be compelled to eliminate the mutually beneficial phased approval process, limit the number of parcels considered under each application, and require the inclusion of more detailed and more costly elements in the preliminary applications. The effect would be to generally slow down the approval process, require developers to expend more money up front without assurance of approval, remove the predictability and flexibility currently afforded developers, and harm planning efforts.
* The bill would prevent a local government from ensuring compliance with changes to standards that are not unique to a particular development and were not considered as part of the engineered plans but, instead, have been adopted on city-wide or county-wide basis.
* There would be no changes to zoning, planning, storm water requirements, layout, or design and construction standards for streets, curbs and sidewalks, lot size, yard dimensions and off-tract improvements as they might pertain to a phased project for twenty to thirty years or more so long as the developer can initiate a new phase within five years of the previous phase.
