Court Finds That Substantial Improvements And Expenditures Alone Do Not Create A Vested Right

In 2000, Plaintiffs Exeter Building Corp. and 17K Newburgh, LLC took ownership of a 29-acre parcel of real property in the Town of Newburgh. The property was zoned R-3, permitting multi-family housing. In 2002, Plaintiffs applied to the Town's Planning Board for approval of a site plan for a proposed project, Madison Green, consisting of 34 residential buildings, each with four single-family units (136 units total). On March 6, 2006, the Town Board enacted Local Law No. 3 (2006), its comprehensive plan, and the Plaintiffs’ property was rezoned to R-1. Plaintiffs commenced an action seeking to invalidate Local Law 3 and for a declaration that they have vested rights, under statute and common law, to develop Madison Green under the R-3 zoning regulations. In November 2006, a Supreme Court order invalidated Local Law 3, but also declared that Plaintiffs did not have vested rights to develop Madison Green under the R-3 zoning regulations. After further developments, Plaintiffs brought a second action in 2009, in which it was declared they had a vested right to develop Madison Green. Defendants appealed.

On appeal, the Appellate Division noted that in New York, a vested right is acquired when the landowner has demonstrated a commitment to the purpose for which the permit was granted, as demonstrated by making substantial changes and incurring substantial expenses for the development. Neither issuance of a permit nor the landowner's substantial improvements and expenditures alone can establish that right. Rather, the landowner's actions in reliance on the valid permit must be so substantial that the municipal action result in serious loss that renders the improvements essentially valueless. Here, the Court found that none of the permits acquired by Plaintiffs, either alone or in the aggregate, amounted to the Town's approval of Madison Green. Accordingly, the court held that the Supreme Court should have declared that the plaintiffs do not have a vested right to develop the property under the R-3 zoning regulations.

The case is Exeter Bldg. Corp. v. Town of Newburgh, 980 N.Y.S.2d 154 (App. Div. 2014).

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