Variances in Iowa: Observations Applicable to Tennessee

 Earley v Board of Adjustment Cerro Gordo County, 2021 WL 744513 (Iowa February 26, 2021)

This very interesting case from the Iowa Supreme Court discusses the standards for area variances, and whether those are different from other types of variance requests. The court concludes that the same restrictive standards would apply and, from my perspective, this is ultimately the correct answer here in Tennessee as well.

This is a fairly typical variance request case. The property owners, Gregory and Lea Ann Saul, hired a contractor to build a pergola on the side of their home, covering a patio. The property is located in a single-family residential district, with a required 6 foot side yard setback. The pergola and patio are only 21 inches from the property line.

After construction, the local zoning officials informed the owners of the violation, a permit was applied for, denied, and a variance requested. Again, in typical fashion, the property owners were unable to demonstrate any unnecessary hardship. While the precise requirements for variance under Iowa law are different from those here in Tennessee, there was no proof of any unique physical feature or any other variance requirement.

Nevertheless, also a tradition in zoning variance cases, the members of the zoning board felt that the pergola “looked nice” and unanimously approved the variance, waving the penalty for building the pergola without a permit.

As you might expect, the neighboring property owner, Ms. Earley, appealed pursuant to a petition for writ of certiorari. The local court upheld the decision of the zoning board, and the Court of Appeals affirmed the District Court. The Iowa Supreme Court granted the application for further review.

First, the Iowa Supreme Court gives a nice summary of rules of thumb for variances. Variances should be granted sparingly and with great caution or in exceptional instances only. The board cannot amend or set aside the zoning ordinance under the guise of a variance. If an applicant does not make the required unnecessary hardship showing, granting a variance is an illegal act by the board.

Second, I’d like to emphasize that the standards for variances in Iowa, at least statutorily, are quite different from those here in Tennessee. The statute at issue in this case, Iowa Code §335.15 (3) provides:

To authorize upon appeal, in specific cases, such variance from the terms of the ordinance as will not be contrary to the public interest, where owing to special conditions a literal enforcement of the provisions of the ordinance will result in unnecessary hardship, and so that the spirit of the ordinance shall be observed and substantial justice done.

This language is verbatim the variance provision found in the Standard State Zoning Enabling Act promulgated by a blue ribbon committee working with Herbert Hoover’s Department of Commerce in the middle 20s, almost 100 years ago. As I have written elsewhere, the problem with this language is that it offers no real standards by which to judge whether an application for a variance should be granted or not. A number of courts, including the Iowa Supreme Court, have adopted an approach suggested by the New York Court of Appeals in Otto v Steinhilber, 282 NY 71, 24 NE 2d 851, 853 (1939). The New York Court articulated a three-part test requiring the applicant to show:

(1) the land in question cannot yield a reasonable return if used only for a purpose allowed in that zone;

(2) the plight of the owner is due to unique circumstances and not to the general conditions in the neighborhood; and

(3) the use to be authorized by the variance will not alter the essential character of the locality.

Of course, as you read those requirements, it’s clear that the New York high court was considering a use variance rather than a bulk or area variance, the subject of the Iowa case. Further, while the second and third conditions make reasonable sense and in fact are to a large extent mirrored by the more specific Bettman model variance provision which we have here in Tennessee, the first criterion, asking if a reasonable return is possible, seems to me largely irrelevant. From my perspective, if there is some unusual physical feature of the property which prevents the applicant from utilizing some aspect of his property in a manner similar to what would be permitted on other properties in the same general area, then a variance should be granted, regardless of whether there is a reasonable return. That issue is a continuing debate in Tennessee as in other jurisdictions.

The Iowa Supreme Court made clear that it had adopted the New York standard in Deardorff v Board of Adjustment, 254 Iowa 380, 383-84, 118 N.W. 2d 78, 80 (1962). In that case, a variance which was granted to allow a greater height then permitted under the applicable zoning regulations was overturned by the Iowa Supreme Court, concluding that there was no demonstration of any unique physical feature justifying the relaxation of their zoning regulations in favor of that particular property owner.

In this case, the court observes that the Court of Appeals below concluded that a different standard should apply in the case of an area variance, that is, where some bulk regulation such as a side yard requirement, is the subject of the request. The court first reviewed the distinction between use variances and area variances:

A use variance permits the use of land for purposes other than those prescribed by the zoning ordinance, and is based on the standard of unnecessary hardship.” On the other hand, an area variance does not involve a use prohibited by the ordinance, but concerns a deviation from specific requirements such as height limitations, setback lines, size regulations and the like. 

Relying on a law review article, N. Williams Hines, Difficulties Standard for Area Variances, 102 Iowa Law Review Online 365, 366 (2018), which noted that “notwithstanding the distinctly different purposes served by these two types of zoning variances, two-thirds of US states, including Iowa, apply the same strict requirements for granting them both,” the court found that to be a correct statement of the law.

The court felt that the rule of stare decisis required consistency in application of the standard. This is particularly true because the requirements for obtaining a variance are set by statute. The legislature presumably was aware of the court’s interpretation of the statute, and if the legislature had wanted to change that interpretation, it had only to change the language of the statute. After almost 60 years, no such amendment to the statutory provision had been made.

After clarifying the standards to be applied, the court applied those standards to this case. The application of the standards is largely immaterial to us here in Tennessee. However one interesting aspect, which comes up time and time again, is the fact that the property owners argued that their good faith completion of the illegal pergola was a factor which should augur in favor of allowing the variance to stand. The Supreme Court of Iowa indicated that it had repeatedly rejected these types of equitable considerations as immaterial to the statutory grounds authorizing a variance. The same is, and should be, the rule here in Tennessee.

The court reversed the decision granting the variance. While the standards for variances in Iowa are very different from those here in most jurisdictions in Tennessee, the case is highly instructive. The same kinds of issues arise time and time again before not only the courts in Iowa and Tennessee, but I dare say, across the vast majority states in the country as a whole.

As I finished this entry, I remembered an old case of mine, JD Biggs v Metro Board of Zoning Appeals, decided in the early 80s. In that case, it was a carport which was constructed with a permit, but the permit showed the required 5 foot side yard. As built, the carport was within 2 feet of the property line. The zoning board turned down the application for a variance, the trial court affirmed, and although I no longer have a copy of the case, I believe that the Tennessee Court of Appeals affirmed as well. I will try to upload a copy of the trial court opinion in the near future.

Whitson v La Vergne Board of Zoning Appeals

This interesting case, decided in May 2020, involves the issue of vested rights. A seemingly minor problem brought the case to court; the owners of a carwash applied for a building permit intending to convert the business to car sales. The permit was issued, indicating the ultimate intended use, and in fact, the planning director wrote a letter in order to facilitate approval by the Tennessee Motor Vehicle Commission for the business operation. The doors were replaced as provided for by the permit at a cost of approximately $14,000.

However, after operations began, the city notified the owner of the property that site plan approval had not been obtained as required. The property owner appealed to the board of zoning appeals which affirmed the decision requiring site plan approval.

The decision of the zoning board was appealed to the trial court which upheld the zoning board decision and the case was appealed to the Tennessee Court of Appeals arguing that the property owner had vested his rights in the use of the property and/or that the city was equitably estopped from enforcing the site plan requirement.

It is difficult to understand what the real issue might have been in this case. I am puzzled on two levels: first, why did the owner of the property not want to go through site plan review?* Even though, as I will mention below, site plan under these circumstances makes little sense, surely it would have been quicker and cheaper to go through site plan review instead of filing an appeal with the zoning board, appealing that adverse decision to trial court, and then appealing the trial court decision to the Tennessee Court of Appeals. I am left with the feeling that there was likely some dedication requirement which the applicant was trying to avoid.

Second, why is this case going through site plan review anyway and why is a public hearing necessary? Judge Bennett, writing for the court, cited §3.110 of the Zoning Ordinance for the proposition that applicants for a building permit must also submit scale drawings in conformance with the site plan provision. But here’s the full quote:

The purpose of this provision is to prevent undesirable site development which would unduly create inadequate circulation and unnecessary congestion; to obtain maximum convenience, safety, economy and identity in relation to adjacent sites; and to provide maximum flexibility for expansion, change in use and adapting to individual needs. Thus, applicants for building permits must submit scale drawings, according to the particular types of development proposals, to the La Vergne Municipal Planning Commission in accordance with the following procedures.

The first sentence of the quoted material makes clear that the purpose of site planning is to prevent undesirable site development basically to prevent inadequate circulation and unnecessary congestion onsite (and this is the best way to understand what site plan review is). But in this case, the building was to remain. There’s no evidence in the Court’s opinion that the building was being modified except by replacement of some doors. So, why is site plan necessary when the structures on the site are not being moved or otherwise changed? Site plan review under the circumstances seems totally unnecessary. Again, one wonders what was really going on.

For example, there is a requirement for sidewalks to be dedicated or an exaction to be paid in the site plan provisions. Perhaps the property owner balked at paying for sidewalks or dedicating the property necessary for sidewalks. This is understandable: in the case of a property where there is little or no change in the overall development, paying for sidewalks seems a violation of Nollan v California Coastal Commission, one of my favorite cases. I will have more to say about that in future posts.

Along the same lines regarding site plan review, the court drops a footnote on page 5, quoting the Director of Codes, as stating at the BZA hearing, that the codes department can’t authorize a change in use by issuing a building permit. But that dodges the real question: can the planning commission authorize a change in use by issuance of a site plan? Site planning should be zone district agnostic: that is, the Planning Commission doesn't get to consider whether the use is a good one or not. Many cities authorize changes in use merely by the issuance of a building permit and/or a site plan approved by Codes without a hearing. There is no requirement in most instances to go to a hearing before the Planning Commission for site plan review. A related question is why does site plan consideration require a public hearing? Approval of building construction plans is done by the codes employees without such a hearing usually; why is site planning different?

Now, it is understandable if there is new construction on the property. But based on my reading of the case, other than the replacement of the doors there was no new construction. Again, site plan review seems to have very little to do with this process. Certainly, something else must’ve been going on.

The actual analysis in the case is fairly straightforward.

As a general rule, the issuance of a building permit results in a vested right only when the permit was legally obtained, is valid in every respect, and was validly issued. Capps v. Metro. Gov’t of Nashville & Davidson County, 2008 WL 5427972, at *10 (Tenn. Ct. App. Dec. 31, 2008). 

Because site plan review was a prerequisite to the issuance of a building permit, the issuance of the building permit without Planning Commission approval was invalid and therefore the building permit itself was invalid. This rule is well accepted, at least up until 2015.

In 2015, Tennessee adopted the Tennessee Vested Property Rights Act, Tenn. Code Ann. § 13-4-310 (b)-(k). That act provides:

A vested property right shall be established with respect to any property upon the approval, by the local government in which the property is situated, of a … building permit allowing construction of a building where there is no need for prior approval of a preliminary development plan…”

Two observations on this language: first, site plan review in most communities does not qualify as a “preliminary development plan” as defined by the statute. So, a vested property right is established upon the issuance of a building permit.

The second observation concerns the real question in a case like this: whether it is protected by the Tennessee Vested Property Rights Act. Yes, we know that a building permit which was erroneously issued prior to 2015 basically is a nullity and accomplishes nothing. But given the legislative wording of the new act, does that same rule carryover? The act does not address this particular issue and so far, there’s been no case asking for resolution of the question. Frankly, I suspect that the same result obtains: that is that an invalidly issued permit is worthless and does not vest any rights at all. But, having said that, we knew that was the case before 2015; it would be nice to have a clarification by way of an interpretation of the new language in the new act. Is a building permit which is issued erroneously after the adoption of the Tennessee Vested Property Rights Act still null and void, or does the language quoted above from the act change the result? We will have to wait for another case to find out.

The next issue brought up in the case is the matter of equitable estoppel. Once again, this issue has been litigated many times. As the court noted, the doctrine of equitable estoppel in Tennessee does not apply generally to the acts of public officials or public agencies. So, the issuance of a building permit which was done wrongfully or erroneously, statements made by public officials to a building permittee, that they don’t need to get anything else or do anything else, do not help the permittee to win its case. And if you think about it for a few minutes, it makes perfect sense: if the person on the front desk who issues the building permit to the applicant, can make a mistake and issue a permit for commercial use in a residential district, or mistakenly represent to a building permit applicant that a commercial use may be used at such and such a location which just happens to be a residential district, in effect what has happened is that the codes employee has changed the zoning on the property without consideration not only of the supervisors in the codes administration, but also the members of the city council. Clearly, absent very unusual circumstances, the codes employee issuing the permit cannot bind the local government to something which has not been approved by the local legislative body.

This only serves to emphasize that an applicant seeking permission to build needs carefully to review the relevant regulations and make an independent determination concerning the validity of any requested permit. A mistake by the government won’t affect the government; it only will hinder the applicant’s plans.

This is a very interesting case, perhaps more for what it doesn’t say than for what it does.

*Addendum: Just as I was about to post this entry, I spoke with one of the attorneys involved in the case and evidently between the time of the issuance of the building permit and the time of the appeal to the zoning board, another car lot located in the same general area so that a distance requirement within the zoning ordinance was triggered preventing the use of the property as a car lot. That means that unless this petitioner could demonstrate vested rights, the newer car lot would prevent him from obtaining site plan approval. Again, this result would make much more sense if site plan review had been important under the circumstances of the case.

Vested Rights

In the case I mentioned yesterday, Ready Mix v Jefferson County,  2012 WL 3757025,  the court briefly discusses the vested rights doctrine in a way which I think simply and accurately describes the doctrine. Justice Wade drops a lengthy footnote (#18) discussing the doctrine indicating that "in general, the vested rights doctrine provides the zoning ordinance may not retroactively deprive a property owner's use of property. According to one authority, two conditions must be met in order to claim protection under the doctrine: (1) prior approval by the governmental authority; and (2) a substantial change in position by the property owner in reliance on the prior approval." The court cites the well-known McQuillin on Municipal Corporations as authority.

I have always found this formulation of the vested rights doctrine to be the easiest and simplest understand. When I speak about this topic, in fact I simplify it further: the developer must have (1) a building permit, and (2) substantial construction must've taken place. Of course, the governmental authorization does not necessarily have to be a building permit, but that is generally the type of approval given; and in addition although a substantial change in position is the actual legal formulation of the doctrine, generally speaking, it takes substantial construction on the property in order to best the rights. Simply expending monies in preparing the property, doing architectural or engineering work, or other kinds of activities, is usually insufficient.

The court recognizes that the vested rights doctrine does not technically apply in this case inasmuch as the County did not give prior approval to the quarry operation. but it is interesting that the court discusses the vested rights doctrine and uses it as an additional consideration in concluding that the newly adopted zoning regulations do not prevent the operation of the quarry.

It is worthwhile keeping in mind the simple formulation of the vested rights doctrine which the Tennessee Supreme Court now has approved: "In sum, reliance on the vested rights doctrine requires issuance of the building permit, plus substantial construction and/or expenditures." Citing CK Development LLC v Town of Nolensville, 2012 WL 38287 at *11. I don't think that there is anything particularly new about this, but it just serves to emphasize the simplicity of the vested rights doctrine and the importance of obtaining a building or other permit in order for the doctrine to apply.

Vested Rights and Variances

I probably spend too much time talking about variances in New Jersey, but as anyone who might peruse my previous posts will know, the New Jersey variance statute is quite similar to ours here in Tennessee. In a recent case, Fernandez v Bloomfield Zoning Board of Adjustment, 2010 WL 5428868, the New Jersey Appellate Division considered a case in which the property owner obtained a permit for a stop work order was issued when it was determined that the construction violated setback in other bulk requirements. The board of zoning appeals denied the requested variance, not because they could not demonstrate that there was an exceptional physical feature (on the contrary, the property was quite your regular in shape) but because the Board found that the variance would not satisfied the so-called "negative criteria," that is, the variance would create a substantial detriment to the public good.

On appeal, the court affirmed the decision of the Board of Adjustment and also addressed the landowners claim that the town should be prevented from issuing the stop work order as a result of the doctrine of equitable estoppel. The difficulty with equitable estoppel or the doctrine of vested rights under the circumstances is that a clear error was made in issuing the permit. In effect, the building permit was void ab initio. The problem is that if the building official could bind the city and change the laws of the city merely by the issuance of a building permit, there would be a lot of modifications to city walls based on an erroneous permit issuance. The rule generally is that there is no estoppel created by the issuance of an invalid building permit. The developer must be careful and must check on his own to ensure that the construction is permitted within the guidelines of the city regulations.

 The Appellate Division agreed with this approach:

The law is clear that to prove equitable estoppel in these circumstances, plaintiffs must establish that the zoning ordinance was ambiguous and the municipal official's interpretation of the ordinance was at least "debatable." [citations omitted] "A less restrictive rule of law for invocation of estoppel against a municipality could invite intolerable vulnerability to mischief at the hands of unethical builders or construction officials." Irvin, supra, 305 N.J. Super. at 660. We do not imply here that plaintiffs acted unethically; we merely acknowledge that there are sound reasons to set a high standard for invoking estoppel based on the erroneous issuance of a land use permit.

Plaintiffs do not argue that the zoning ordinance at issue was unclear or that the municipal official's interpretation was debatable, as opposed to simply wrong. In fact, the record contains no explanation as to the responsible municipal official's interpretation of the zoning ordinance, and it is not even clear which person in the zoning office was responsible for erroneously issuing the permit. Because the zoning office acted contrary to an unambiguous ordinance in issuing a zoning permit, plaintiffs cannot invoke estoppel against the municipality.

Further, the equities do not favor plaintiffs, given the Board's finding that granting the variance would cause harm to their neighbors. As built, the second-story addition was 2.57 feet from the neighbors' property line on the westerly side, instead of the six feet required by the ordinance. As the Board reasonably concluded, in such a crowded neighborhood, that represented a significant incursion on the neighbors' privacy. Further, as previously noted, the Board credited the testimony of the objectors that the addition interfered with their available light and their views of the neighborhood.

 As a result, there was no equitable estoppel. For interesting case with much more serious ramifications, take a look at Park View Associates v City of New York, 71 NY 2d 274 (1988).

The denial of the variance was also affirmed.

Applicants for a variance bear the burden of proving that they satisfy both the positive and negative criteria. See Cohen v. Bd. of Adjustment, 396 N.J.Super. 608, 615 (App. Div. 2007). We agree with [the lower court] that there was nothing arbitrary in the Board's decision that plaintiffs failed to satisfy the negative criteria. Based on the Board's factual findings, which find ample support in the record, granting the variances would have caused some of the very harms the zoning ordinance was designed to prevent, including diminishing the neighbors' light and open space, and invading their privacy. See N.J.S.A. 40:55D-2(c). Therefore, on this record, plaintiffs did not satisfy the negative criteria, and the Board properly denied their application on that basis.

There is nothing unusual in the outcome of this case. But again, it runs somewhat counter to the result that common sense might indicate and serves as a warning to developers everywhere that care must be taken to ensure that the proposed development complies with local regulations.

Tennessee courts do seem to be somewhat more lenient under certain circumstances with regard to the doctrine of equitable estoppel and/or vested rights. There is a somewhat similar case here in Tennessee, Rebound v Goodlettsville Board of Zoning Appeals, 1989 WL 150670 (Tenn. App. December 13, 1989). In that case, the zoning official evidently made a mistake in advising the applicant about the potential use of the property. At the time of the revocation of the building permit, the construction of the facility was substantially complete. Several million dollars worth state. The majority of the court felt that a variance should have been granted, but under Tennessee law, as we have frequently discussed, that is certainly problematic. There was almost certainly no basis for a variance under Tennessee law. In a concurring opinion, Judge Ben Cantrell relied instead on the doctrine of equitable estoppel, feeling that the advice given by the local zoning officials was sufficient to commit the city. As the NJ case above demonstrates, many times that is not enough.