Land Use Update: Virginia Judicial and Legislative Changes

May 13, 2009

Vested Rights as a Double-Edged Sword

Under Virginia Code § 15.2-2307, a landowner may take certain steps to establish vested rights for a development under a zoning law and then retain those rights even if the zoning law changes. Generally, to establish the vested rights the landowner must (1) receive a “significant affirmative governmental act” allowing the development, (2) rely on that governmental act in good faith, and (3) incur substantial expense or obligations in diligent pursuit of the development. The Virginia Code outlines other details for vesting rights. Among those, the Code lists various significant governmental acts, including when “the governing body has accepted proffers or proffered conditions which specify use related to a zoning amendment.”

In the recent decision of Hale v. Board of Zoning Appeals, the Virginia Supreme Court strictly interpreted the requirement for “specify[ing] use.” In Hale, a developer rezoned property in Blacksburg for a mixed-use retail/commercial/residential development. The rezoning included various proffered conditions, but none that specifically conditioned a large commercial use. As the developer’s plans became clear, some residents opposed the big-box component of the development. Before final site plans were approved, the Town passed a new “Walmart-buster” ordinance requiring a special use permit for stores larger than 80,000 square feet. The developer challenged the need for a special permit, claiming to have vested rights based on the proffered rezoning. The Supreme Court disagreed, stating that “[t]he plain meaning of [the statutory] language is that the proffers must affirmatively identify the use for which a vested right is sought.”

The decision emphasizes the double-edged sword of specificity when rezoning property. If a developer rezones property with proffers relating to a specific use, the property may have vested rights for that use, but he loses marketability and flexibility with regard to developing the property. If the proffers are more general with regard to use, the developer likely will have more options for developing the property, but risks having rights undercut by zoning changes, as in the Hale case.

Extended Validity for Permits

In response to the housing crisis and the current economic downturn, the General Assembly extended the expiration period for certain site development plans and permits. Certain plans and permits approved before January 1, 2009 have been extended to July 1, 2014 (or later dates as determined by localities). Subject to certain exceptions, the new law applies to:

  • Subdivision plats
  • Recorded plats
  • Final site plans
  • Any plan or permit associated with such plats or site plans
  • Any proffered condition requiring a developer to incur significant expense upon an event related to a stage or level of development
  • Any deadline for commencing projects according to a: Special exceptionSpecial use permitConditional use permit
  • Special exception
  • Special use permit
  • Conditional use permit

In order to extend deadlines, performance bonds or other financial guarantees of completion of public improvements must remain in force.

Note that some special use permits have set expiration dates, while other special use permits simply set project deadlines for commencing certain activities. As noted above, project deadlines specified within special use permits are extended to 2014. Separate legislation, however, affects expiration dates on special use permits themselves. For any special use permit valid and outstanding as of January 1, 2009, the expiration date is extended to July 1, 2011, or longer by application of the developer to the locality.

Typically plats and plans would be valid for five years. So, for example, a final site plan approved on July 1, 2005 would be set to expire on June 30, 2010. Under the new law, however, that site plan will remain valid until July 1, 2014. Notably, the new laws do not address their relation to vested rights and the need for “diligent pursuit of the specific project” as required by the Virginia Code.

More Reasonable Standard for Zoning Variances

Previously, under the Virginia Code a board of zoning appeals (BZA) could approve a variance only if the applicant could show that there was a hardship “approaching confiscation” that necessitated the variance. The Virginia Supreme Court decision in Cochran v. Fairfax County Board of Zoning Appeals emphasized the limited powers of BZAs. In Cochran and prior decisions, the Court interpreted Virginia statutes to allow variances only when strict application of a zoning ordinance would be constitutionally impermissible (amounting to a governmental taking).

The General Assembly acted to make the standard for granting a zoning variance more reasonable. The Code change deletes the phrase “approaching confiscation,” so under the new provision, a BZA need only find that the variance “will alleviate a clearly demonstrable hardship.” In practice, the former standard made the BZA process an act of futility; the requirement was simply too steep. The new standard allows the BZA process to serve its proper function—to alleviate burdens unfairly imposed by strict application of zoning ordinances.

Transfer of Development Rights

In 2006 the Virginia General Assembly passed legislation authorizing local governments to adopt ordinances for transferrable development rights (TDRs). Limited localities have adopted such ordinances. Now, the General Assembly has adopted various changes to the TDR authorization that will affect those certain localities.

Previously, the law required immediate transfer of development rights from the sending property to the receiving property. The recent change allows localities to permit severing rights from a sending property without a receiving property. The amendments also allow localities to permit development rights to be purchased and retired. Localities are authorized to implement a 25-year tax abatement for the retirement of such development rights.

For more information on these laws and opportunities for positioning your projects, please see our Land Use practice or contact the authors.