Vested Rights Act of 2014: Some questions

Over the last couple of months, I’ve been involved in some litigation involving the Vested Rights Act of 2014. One of the interesting sidelights of the case has to do with development plans. The statute, as you may recall from an earlier post, establishes a vested right to use a parcel of property in accord with an approved development plan or building permit. Tenn. Code Ann. § 13-4-310 (b).

The act defines the term “final development plan” to mean “a plan which has been submitted by an applicant and approved by a local government describing with reasonable certainty the type and intensity of use for a specific parcel or parcels of property.” The statute gives several examples such as a subdivision plat, a master planned unit development plan, site plan or “any other land use approval designation as may be utilized by local government.” Tenn. Code Ann. § 13-4-310(k)(5)(a). Furthermore, the statute gives a fairly precise definition of what needs to be included in order to be protected. Tenn. Code Ann. § 13-4-310(k)(5)(b).

Interestingly, §310 (e) allows the local government to specifically identify the types of development plans which will trigger the protection of the statute. However, there’s a big caveat: “provided, that regardless of the nomenclature used in the ordinance or resolution to describe a development plan, a plan which contains any of the information described in subdivision (k)(5) or (k)(6) shall be considered a development plan that will cause property rights to vest according to this section.”
 Tenn. Code Ann. § 13-4-310 (e).

What happens if the local government defines those develop plans, but leaves one out? For example, Metro Nashville has enacted such an ordinance, but the ordinance leaves out a final site plan approval by the zoning administrator pursuant to MetZo §17.40.170. Since that section very specifically requires that the plan “specifically describe the nature and scope of the development serve as the basis for the issuance of permits” it would seem to clearly fall within the protection of the statute.

Another thing which is significant here: the definition of a development plan within the Vested Rights Act does not require that the local approval be with a public hearing before an administrative body of any type. Certainly, those kinds of approvals would qualify, but in the Metro ordinance, if it is not a plan which must go before the planning commission, it must nevertheless be specifically approved by the zoning administrator prior to the issuance of the permits. Isn’t this enough to protect the property owner?

Another interesting issue which came up in this piece of litigation involves the definition of the term “building permit.” Although quite rare, there may be some types of land uses which do not require a building permit whatsoever. Certainly agricultural uses (although accessory buildings such as banes, housing for agricultural workers, and so forth may be needed) in many contexts do not need a building permit. Does that mean that agricultural application which does not include any construction may be lost if the local legislative body changes the zoning before farm work actually begins? Suppose the agricultural use obtained a certificate of occupancy – is the CO sufficient to vest rights under the VRA?

Finally, suppose the farm did apply for and obtain a building permit for housing for workers in a municipality (so that the well-known County agricultural exemption is inapplicable; Tenn. Code Ann. § 13-7-114) but this cause the local legislative body to change the zoning before construction could begin on the housing. Is there an argument that since the farm is over hundred acres in size, and the accessory housing is less than 1% of that, that the building permit does not somehow best the right to use the property as agricultural?

These are all interesting questions. Personally, it would seem to me that a development plan approved by the local zoning administrator would best rights pursuant to the terms of the plan even if the local government had not specifically named that type of a development plan as a document which could vest rights. It also seems to me that if an agricultural use obtained a building permit, or for that matter, a certificate of occupancy, relating to any portion of the property, that its rights are to vest based on the issuance of either the building permit or certificate of occupancy.

I’m sure we will learn more about this over time. In this case, much as in the Tennessee Religious Freedom Restoration Act, we have little case law on which to base our conclusions, and as a result it is quite difficult to anticipate how the courts will actually apply the statute. However, I would think over the next few years, we will certainly get some resolution of these issues.

The 1922 Memphis Zoning Code

I have been getting ready for a seminar which I am helping to present on August 1 here in Nashville, and while perusing some interesting zoning and land use topics on the Internet, I happened to bump across this interesting website which has a copy of the original 1922 Memphis Zoning Ordinance. Since Josh Whitehead, the Planning Director for the Office of Planning and Development in Memphis and Shelby County is interested in these historic documents, I'm sure he was involved in posting the copy of the ordinance.

The 1922 ordinance was the first one in the state of Tennessee. In addition, Memphis and Shelby County also had the first set of enabling statutes passed by the Tennessee General Assembly (Chapter 165 of the Tennessee Private Acts of 1921), well before the adoption of the public enabling legislation for zoning, which was adopted in 1935.  Tenn. Code Ann. § 13-7-101 et seq. It’s worth the trip over to take a look, as well as the other previously adopted versions of the zoning ordinances, including the 1955 Zoning Code and the 1981 version as well. In addition to the text, copies of the zoning maps are also available for review on the website.

While I'm at it, I should mention that Josh has a personal website which focuses on a number of different aspects of life in Memphis, but in particular often reviews properties which have an interesting zoning history. Just as an example, one of the earliest decisions involving variances in Tennessee, Reddoch v Smith, 214 Tenn. 213, 379 S.W. 2d 641 (1964) was an appeal from a decision of the Shelby County Board of Adjustment. Josh has a set of photos, not only of the property as it currently exists, but copies of the application to the zoning board, the staff recommendation, the minutes of the board granting the application, and the trial court opinion. If you have a minute, it's definitely worth a look. The web page is here.

I have to admit that Josh and I may be the only folks in Tennessee who actually have an interest in these bits of zoning memorabilia, but as Josh makes clear on his website, these early decisions often have a lasting impact on the future development of the property.

Central Radio v Norfolk: More on Signs

After completing the entry yesterday, I noticed that the 4th Circuit Court of Appeals had addressed a noncommercial sign in the context of Reed v Town of Gilbert. In this case, a media company whose property was the subject of condemnation actions placed a 375 square feet sign on a 6 lane major highway, painted or attached to a building it owned. The sign protested the use of eminent domain procedures.

The city cited the company for an illegal sign. The company sued based on the holding in Reed v Town of Gilbert. The Norfolk sign ordinance excepted government and religious flags and banners but regulated flags or banners which referenced products or services. The court quickly concluded that this was content regulation forbidden by Reed, leaving only the question as to whether there was a compelling governmental interest. The court thought not, but was even clearer that the method chosen was not the least restrictive means:

With respect to the City's stated interest in preserving aesthetic appeal, for example, the flag of a private or secular organization was no greater an eyesore than the flag of a government or religion, and works of art that referenced a product or service did not necessarily detract from the City's physical appearance any more than other works of art. Yet, the sign code allowed the unlimited proliferation of governmental and religious flags, as well as works of art that met the City's dubious criterion, while sharply restricting the number and size of flags and art bearing other messages.

The court found in favor of Central Radio.

Central Radio Co. Inc. v City of Norfolk, 2016 WL 360775 (4th Cir. January 19, 2016)

Reed v Town of Gilbert: Suggestions

As you can tell from the several previous blog posts, Reed v Town of Gilbert seems to leave a lot of open questions in its wake. So what are the best ways to protect the city against potential legal liability given the uncertainty in this area?

First, it is very important to have a severability clause not only in the zoning ordinance itself, but it is also probably worthwhile to include a clause in the section of your zoning ordinance which regulates signs. Just in case one section of the sign provisions is unlawful for some reason, doesn't mean that it should take down the entire system of sign regulation within the local government.

Second, and also a significant suggestion which has been around for many years, add a substitution clause to your sign regulations which would have the effect of allowing the substitution of a noncommercial message to replace commercial text on any sign. The basic idea is to allow the substitution of a noncommercial message in a situation where the sign regulations inadvertently allow a commercial sign to be larger, more numerous, or in some other way advantageous than the noncommercial. The substitution clause would allow a noncommercial message to be substituted on those signs and avoid giving a priority to commercial messages, which is clearly unconstitutional.

Third, careful review of exceptions to the sign regulations is of increased importance after Reed. To the extent that exceptions can be substantially reduced, that will also have the effect of substantially reducing litigation risk. In addition, defining numerous categories of signs, such as political signs, religious signs, real estate signs and so forth also increases risk; to the extent that those categories can be removed or at least reduced, particularly in light of the decision in Reed, the sign regulations will be less susceptible of attack.

Fourth, on the other hand, certain exceptions may be helpful. In the area of noncommercial speech, if the local government wishes sign applicants to obtain permits, the First Amendment requires adequate procedural safeguards including clear criteria to determine whether to issue the permit, and quick availability of review. An exception to the permitting process for noncommercial messages might be less prone to litigation.

Remember, that there are many valid ways to regulate signs without consideration of the message at all. Those clearly include:

• Size
• location
• lighted versus unlighted
• Static display versus electronic
• public versus private property
• commercial versus residential

I'm sure that a large number of local governments are hard at work rewriting sign regulations right now. If you work for a local government which has not yet begun this type of review, it is certainly worthwhile to examine your sign regulations, discuss them with legal counsel, and try to avoid First Amendment difficulties before they arise.

By the way, if you are interested in further reading, a very interesting article by Prof. Alan Weinstein and Brian Connolly is available on the Internet entitled "Sign Regulation after Reed: Suggestions for Coping with Legal Uncertainty." The authors suggest approaching sign regulations as an exercise in risk management: to the extent that the local government is risk averse, less regulation, fewer definitional categories and exceptions should be entertained; if the local government is willing to accept more risk, more aggressive policies can be pursued but with a conscious awareness that this is an evolving area of constitutional law and litigation is indeed expensive.

Reed v Town of Gilbert

In our last post, we talked a little bit more about the use of the strict scrutiny test in the Reed v Town of Gilbert decision. Today, let’s talk a little bit about some of the issues which may remain after the Reed decision.

First and foremost, is the issue concerning the continuing validity of the distinction between on premise and off premise regulations. The Reed decision itself only applied to temporary noncommercial signs. It did not discuss the regulation of on-site versus off-site signs. Justice Alito however in his concurring opinion, specifically indicated that that type of regulation was still appropriate. However there is no discussion of why or in what context. And of course, it was only a concurring opinion, not the opinion of the majority (although, spoke for three members of the court, leaving only three in the majority opinion).

The difficulty is the Reed analysis itself: in order to distinguish between an on premise versus an off premise sign, one must read the content of the sign. Does it relate to the goods or services provided on site or not? Thus, given the definition and the mode of analysis in the majority opinion, on-site versus off-site regulation seems to be drawn into question.

On the other hand, most people see this type of regulation as content neutral because it simply regulates where a sign can be located. Certainly, on-site versus off-site regulations have been around for as long as sign regulations have existed. They are part and parcel of every zoning sign ordinance.

It is furthermore important to remember, that the Supreme Court concluded in Metromedia Inc. V San Diego, 453 US 490 (1981), that on-site versus off-site regulations were appropriate in the context of commercial signs. In that case, the Supreme Court recognized that most noncommercial messages have no locational basis; for example, “Stop the Vietnam War!” Is really not an on site or an off-site concept. Therefore, Metromedia provided that commercial signs could not be favored over noncommercial.

It seems to me that most courts will certainly continue treating the on-site versus off-site distinction in the context of commercial signage as a valid locational restriction. However, it is certainly worth pointing out, that a District Court here in Tennessee has already suggested otherwise. Thomas v Schroer, 116 F. Supp. 3d 869 (WD Tenn. 2015). This opinion ordered injunctive relief and the court may ultimately change its mind. But there are at least in some judges who may take a different view of the on-site versus off-site regulation of commercial messages.

Another issue after the Reed decision concerns regulations of signed by classifications. Real estate signs, construction signs, directional signs, grand opening signs, are all basically defined by reference to the content of the signs themselves. There may not be a way around these issues, although several authors have suggested potential workarounds. Perhaps it is simply easier to omit the definitions, and simply regulate based on the number, location, and size of the signs.

Another problem after Reed is the vast array of exemptions in most sign ordinances. Those exemptions are normally based on definitions keyed to the content of the signs. Once again this is prohibited by the Reed decision itself. Even such nondescript and constitutionally insignificant signs as real estate signs and building name signs may run into significant difficulty. Once again, regulation simply by number and square feet, without reference to function or content may be most appropriate.

In the next post we will talk a little bit about some ways in which the local government can protect itself against challenges to the constitutionality of its sign provisions.