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November 16, 2011
Vested Rights Doctrine: What Washington Developers Can Learn From The Supreme Court’s Recent Abbey Road Group LLC V. City Of Bonney Lake Decision
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In a recent case, the Washington Supreme Court significantly limited the “vested rights doctrine” affecting land use applications. In a 5-4 split decision, the Court held that developer Abbey Road Group, LLC failed to vest its rights to develop a 575-unit condominium complex in the City of Bonney Lake by filing a site plan review application without concurrently filing a complete building permit application for each of the project’s 24 buildings. What lessons can other Washington developers take away from this long-fought case to preserve their own development rights and entitlements?

Background

In general terms, Washington’s vested rights doctrine requires local jurisdictions to consider land use applications using the statutes and ordinances in place at the time a completed application is submitted. The Washington vesting rule allows for early vesting of development rights compared to all other United States jurisdictions, many of which do not recognize vested rights until after construction itself is substantially completed.

In 1987, the Washington Legislature codified vested rights doctrine as to plats (RCW 58.17.033) and building permits (RCW 19.27.095). These statutes allow local jurisdictions to enact vesting ordinances specifying when vesting occurs, and the types of applications which can vest, as long as the ordinance provides for vesting no later than provided for under state law (filing of a complete plat or building permit application). In the absence of a local vesting statute, state law determines vesting issues.

Over the years, Washington courts have extended vested rights beyond the plats and building permits specified by statute to a number of other land use applications, including planned unit developments, development agreements, conditional or special use permits, shoreline substantial development permits and grading permits. The Abbey Road case presented the Court with the question of whether vested rights should be extended further – to site development permit applications, or more broadly to all land use applications. The Court’s answer to both of these questions was a clear and resounding “No.”

The Case

In 2005, Abbey Road submitted a site development permit application for a 575-unit condominium project within the City of Bonney Lake. At the time, Bonney Lake did not have a local vesting ordinance, meaning that applications in the City defaulted to the state statute providing for vesting upon submission of a complete building permit application.

During the pre-submission phase, City officials advised Abbey Road that a site development application would not vest Abbey Road’s development rights. Abbey Road proceeded with development, filing an application for site development permit three months after the presubmission. On the very same day, the City of Bonney Lake passed an ordinance rezoning the Abbey Road property to a new zoning category that prohibited Abbey Road’s proposed condominium development.

Following the rezone, the City denied Abbey Road’s site development permit application because the proposed use was no longer permitted, finding that Abbey Road had not secured vested rights because it had not also filed complete building permit applications for the condominium buildings. Subsequent to a series of lower court appeals, the Washington Supreme Court granted Abbey Road’s petition for review.

On appeal, Abbey Road argued that the Court should extend vested rights protections to the site development review application for the project – despite the lack of complete building permit applications – because the significant cost to prepare the studies and supporting materials for the application demonstrated a level of commitment to complete the project that entitled it to vested right protections. Abbey Road also argued that having to submit 24 complete building permit applications was too onerous, and should not be required to achieve vested rights. Finally, Abbey Road contended that under City procedure, it could not have filed building permit applications without first obtaining site development review (a contention the City disputed).

The Court ultimately rejected all of Abbey Road’s arguments and found that there was nothing precluding Abbey Road from simultaneously filing the building permit applications with its site development permit application. Similarly, the Court did not find the requirement for Abbey Road to submit 24 completed building permit applications unduly oppressive, reasoning that it was Abbey Road that had selected the size of the project, and that size alone was not a reason for altering existing vesting doctrine. Finally, the Court declined Abbey Road’s invitation to set a bright-line rule and expand vested rights doctrine to all land use applications, reasoning that such a broad reform would be more properly undertaken by the legislature.

Conclusion

There are two key lessons that developers should take away from Abbey Road. First, the default statutory rule remains that a complete building permit application is necessary to vest development rights, unless vesting is otherwise provided for by statute (plats), local ordinance, or prior court decision. Second, it is vitally important to carefully consider the development options for property before proceeding with land use applications to ensure vesting occurs.

There is no question that the reports, plans, and plan review fees for site plan review and building permit applications for projects of even modest size can be substantial in today’s market. Given those costs, platting the property may be a more practical alternative to absolutely secure vested development rights if subdivision of land is possible.

Disclaimer

This advisory is a publication of Eisenhower Carlson PLLC. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.

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