Advisory Opinion #98

Download the PDF version.

Parties: Providence City and Sandra and Chris Checketts

Issued:  March 28, 2011

.

TOPIC CATEGORIES:

Q: Nonconforming uses and Noncomplying Structures

R(v): Other Topics (Interpretation of Ordinances)

.

A local government has discretion to determine if the requirements of an ordinance have been met.  A use that was not permitted cannot qualify as nonconforming, even if it has been allowed to continue.  Local governments have broad discretion over enforcement, and lack of enforcement in the past does not excuse a violation.

 

DISCLAIMER  The Office of the Property Rights Ombudsman makes every effort to ensure that the legal analysis of each Advisory Opinion is based on a correct application of statutes and cases in existence when the Opinion was prepared.  Over time, however, the analysis of an Advisory Opinion may be altered because of statutory changes or new interpretations issued by appellate courts.  Readers should be advised that Advisory Opinions provide general guidance and information on legal protections afforded to private property, but an Opinion should not be considered legal advice. Specific questions should be directed to an attorney to be analyzed according to current laws.

. 

Advisory Opinion

.

Advisory Opinion Requested by:                 Providence City

                                                                        Craig J. Carlston, City Attorney

Local Government Entity:                             Providence City

Applicant for the Land Use Appeal:            Sandra and Chris Checketts

Type of Property:                                           Residential Lot

Date of this Advisory Opinion:                     March 28, 2011

Opinion Authored By:                                    Elliot R. Lawrence, Attorney, 

                                                                        Office of the Property Rights Ombudsman

 .

Issues

May a granite countertop business be considered light manufacturing under a City’s ordinances?

When does a use qualify for nonconforming status?

Is a local government estopped from enforcing zoning and license ordinances because of building permits or because of business licenses that were erroneously issued?

When does enforcement of local ordinances constitute a taking of property rights under the U.S. and Utah Constitutions?

.

Summary of Advisory Opinion

The City has discretion to determine that the business may be approved as a conditional use under the city’s current ordinances allowing light manufacturing as a home business.  Even though the business may not have been allowed under prior ordinances, it can still be approved as a conditional use, if the City agrees that its ordinances have been met. Combining two lots, even in an unusual configuration, may satisfy a requirement that a home business be located on the same property as a residence.  The City’s ordinances do not limit the shape or configuration of a parcel, so even an unusual configuration may be considered a lot, provided that other requirements, such as setbacks, etc. can be met.

In order to qualify for nonconforming use status, a land use must have been allowed or permitted when it was undertaken, but then became illegal due to an zoning ordinance change.  A use that was not allowed at the time it was established cannot become a nonconforming use, even if its existence was acknowledged by the City.  Nonconforming status arises from zoning regulation, not licensing ordinances.  A change in a health and safety ordinance, including business license regulations, does not necessarily entitle a property owner to claim nonconforming use status. 

A local government is not estopped from enforcing its zoning and licensing ordinances because of valid building permit or erroneous business licenses.  Approval of a building permit does not constitute an act sufficient to justify reliance by a property owner that a particular use was allowed.  In addition, a local government does not forfeit the right to enforce its ordinances, even if it issues business licenses in error.

Finally, enforcement of zoning and licensing ordinances does not constitute a taking of a property interest, unless the regulation is so onerous that it becomes the functional equivalent of a physical appropriation of the property.  In general, regulation of land use and economic activity is not the functional equivalent of an appropriation of property rights.  Additionally, a property owner must show complete loss of economic value to demonstrate a taking under the Lucas decision.

.

Review

A request for an advisory opinion may be filed at any time prior to the rendering of a final decision by a local land use appeal authority under the provisions of Utah Code Ann. § 13-43-205.  An advisory opinion is meant to provide an early review, before any duty to exhaust administrative remedies, of significant land use questions so that those involved in a land use application or other specific land use disputes can have an independent review of an issue.  It is hoped that such a review can help the parties avoid litigation, resolve differences in a fair and neutral forum, and understand the relevant law.  The decision is not binding, but, as explained at the end of this opinion, may have some effect on the long-term cost of resolving such issues in the courts. 

A request for an Advisory Opinion was received from Craig J. Carlston, Providence City Attorney on January 18, 2011.  A copy of that request was sent via certified mail to Sandra and Chris Checketts, in care of their attorney, Christopher L. Daines.  The Checketts submitted a response to the Office of the Property Rights Ombudsman, which was received on March 7, 2011.

 .

 Evidence

The following documents and information with relevance to the issue involved in this advisory opinion were reviewed prior to its completion:

  1. Request for an Advisory Opinion, including attachments, filed January 18, 2011 with the Office of the Property Rights Ombudsman by Craig J. Carlston
  2. Response from Sandra and Chris Checketts, received on March 7, 2010.
  3. Custom Countertops Website, www.granitetopsofutah.com.
  4. Sections from the Providence City Code, including the former language of the Code.

.

Background

Sandra and Chris Checketts (“Checketts”) own two lots on East Canyon Road in Providence.  The Checketts reside in a home located on one lot (Lot Number 1, or the “Home Lot”), and they built a large garage or storage building on the other lot (Lot Number 5, or the “Business Lot”). The two lots are not contiguous, and are separated by three other lots with homes. The address for the Home Lot is 990 East Canyon Road, and the Business Lot’s address is 920 East Canyon Road.  The area is generally rural in character, with little development to the rear of the properties.[1]   The Checketts moved into their home prior to 1997.

In 1997, the Checketts applied for a permit to construct a building on the Business Lot.  In their application, they stated that the building would be used for “storage,” and its area would be 30 x 165 feet (4,950 square feet).[2]  In June of 2004, the Checketts applied for a permit to construct a 900 square-foot “Garage Addition” extending from the side of the existing building.[3]  The application states that the purpose of this addition was for “storage.”  This permit received “Planning Approval” and “Building Official Approval.”  The permit also includes this statement:  “Approved as a detached accessory use in the SFT zone as per PLC 10-8-1.”[4]  Despite these approvals, it appears that the addition was not built at that time.  In November of 2005, however, the Checketts obtained a permit for the addition.  This permit stated that the intended use of the new structure was “commercial.”  The permit received “Zoning Approval” and “Building Official Approval.”  The permit also referenced the 2004 application, although it stated that it was a “new application.”[5] 

In the meantime, the Checketts started a business, “Custom Countertops,” sometime in 2003.  As the name implies, the business involves building and installing countertops.  According to the Checketts, the business initially consisted of constructing the countertops at the homes where they were installed.  The Checketts ran the business out of their home, using the building on Lot 5 primarily for storing materials and tools.[6]  As the business grew, granite countertops became more popular, and the Checketts began using the storage building to cut and shape counters for delivery to homes.[7]   The 2005 addition was designed and built specifically to accommodate granite slabs, and was an investment in the business.[8]  The floor of the addition is sloped, to drain cutting fluids from the work area.  The addition houses a lift system to help manipulate the granite slabs while they are being prepared, as well as large saws and other equipment for stone cutting and polishing.  A portion of the building is used as a showroom for the public, and there are parking spaces for 3-4 cars.  Based on photographs at the Custom Countertops website, some of the granite slabs are stored outside, but it appears that none of the cutting or shaping is done outdoors.  The building has white siding, and there is some landscaping in the front. 

The City granted business licenses to the Checketts from 2003 to 2008.  The 2003 license application was for a home occupation license, and that the business activity was to “receiv[e] orders by fax or phone for countertops.  Assembles, delivers, and installs tops on site in homes . . . .”  The 2004 application stated described the business activity as follows: “[manufacture] and install solid surface counter tops.”  The 2005 building addition allowed the Checketts to intensify the activity on Lot 5, and the City renewed their business licenses annually through 2008.[9]  The Checketts state that they currently have one full-time and one part-time employee, in addition to family members who work for the business.

In the summer of 2008, the City received complaints from neighbors about Custom Countertops.  The legality of the business and its suitability in a residential neighborhood were questioned.[10]  In July of 2008, the City sent a letter to the Checketts, informing them that because their business was not a permitted home business, the City would not renew their business license for 2009.  In a letter dated September 12, 2008, the City’s attorney explained that Custom Countertops could not be considered a valid home business for two reasons: (1) The business was conducted on a separate parcel than the Checketts’ home; and (2) The type of business was not permitted in a residential neighborhood. 

In 2003, when Custom Countertops was first established, the City’s Home Business Ordinance required that a home business be located on the homeowner’s land.  The ordinance also prohibited equipment “not normally found in a residential neighborhood.”  The ordinance was amended in 2010.  The equipment prohibition was removed, and the location requirement was altered to require that the business activity be on the same parcel as the home.[11] 

After negotiations with the City, the Checketts proposed that they be given sufficient time to sell their home on Lot 1 and build a new home on Lot 5.  This would satisfy the City’s first objection, because both the home and the business operation would be on the same lot.[12]  The City eventually extended the time to sell the home through December 31, 2010, but the Checketts have been unable to find a buyer.[13]  In the summer of 2010, the Checketts state that they acquired one-foot wide strips across the lots between Lots 1 and 5, and so the Home and Business Lots could technically become one parcel.[14] 

The Checketts answer the City’s second objection by claiming that their activity is a legal home business, because they are “craftsmen,” which is a permitted home business under § 3-4-5(O) of the Providence City Code.  As alternatives, they claim nonconforming use status for the business from 2003; or they argue that the City is estopped from enforcing its zoning and home business ordinances because of building permit and business license approvals.  Finally, they argue that enforcing the City’s ordinances at this point constitutes a taking of their property interests, entitling them to compensation under the U.S. and Utah Constitutions.[15]

.

Analysis

I.     The City Could Approve and Regulate the Checketts’ Business as a Conditional Use.

A.      The Business Could Possibly be Approved as a Conditional Use

Because the City’s land use ordinance now allows “light manufacturing” as a conditional use in residential zones, the Checketts’ business could possibly be approved with conditions.  The City’s current land use chart includes “light manufacturing” as a conditional use in the SFT zone, provided it is approved as a home business as well as a conditional use.  See Providence City Code, § 10-6-1, footnote (Land Use Chart).  The City Code stipulates that light manufacturing

[s]hall include manufacturing and assembly processes that ordinarily do not create noise, smoke, fumes, glare, or odors that exceed the requirements of Title 3 Chapter 4 and Title 4 of [the City Code].  Light manufacturing includes processes which do not require extensive floor area or land areas (must comply with zoning requirements for the zone that are listed in other chapters . . . .) 

Id., § 10-1-4 (Definition of “Light Manufacturing”).  Since the use is conditional, the City may impose conditions to mitigate the detrimental impacts of the Checketts’ business. 

The City has discretion to determine that the Checketts’ business satisfies the definition of “light manufacturing, so that it can be considered as a conditional use.  This Opinion does not take a position on whether or not the City should so determine, but notes that such an interpretation is probably reasonable, and it is within the City’s discretion to adopt that reasoning.[16]  If the City chooses to allow the Checketts’ business as a conditional use, it must also adopt standards to guide the conditions that can be imposed.

(1)   A land use ordinance may include conditional uses and provisions for conditional uses that require compliance with standards set forth in an applicable ordinance.

(2)   (a) A conditional use shall be approved if reasonable conditions are proposed, or can be imposed, to mitigate the reasonably anticipated detrimental effects of the proposed use in accordance with applicable standards;

(b) If the reasonably anticipated detrimental effects of a proposed conditional use cannot be substantially mitigated by the proposal or the imposition of reasonable conditions to achieve compliance with applicable standards, the conditional use may be denied.

Utah Code Ann. § 10-9a-507. 

This statute distinguishes between “conditions” and “standards.” A condition is imposed on a use to control or mitigate a detrimental effect.  Standards establish the levels of performance to be accomplished by the conditions.  Standards may be viewed as goals, and conditions as the means to achieve those goals.  For example, if noise is a detrimental effect of a particular use, a local government may impose conditions to control or lessen the noise.  The standard would be the acceptable level of noise, as expressed in the local government’s ordinances.  The conditions imposed must be shown to reduce the noise to the levels established by the standard.  In essence, the Utah Code requires local governments to determine acceptable levels of performance that can be applied to all conditional uses, before the uses are proposed.[17]

It is therefore possible that the Checketts’ business may be approved as a conditional use.  This Opinion defers that decision to the City, which has discretion to determine (1) if the Checketts’ business should be considered “light manufacturing,” and, if so, (2) what standards apply and what conditions to impose on the use. 

B.      The Requirements of the Home Business Ordinance Must Also be Met.  

Along with considering the Checketts’ business as conditional use, the City must also decide whether to approve it as a home business.  A “Home Business” must meet these basic requirements:

  1. A business conducted on land containing the primary dwelling or on an adjacent parcel owned by the same owner;
  2. Business owner must be a resident of the primary dwelling;
  3. May employ family members residing in the primary dwelling;
  4. May employ no more than four (4) individuals that do not reside in the primary dwelling but work at the premises;
  5. Provide sufficient parking and needed facilities for employees and customers completely and entirely on homeowner’s land containing the primary dwelling or an adjacent parcel owned by the homeowner[;]
  6. Does not change the aesthetic character of the area and zone;
  7. No commercial display, other than an unlighted nameplate sign (see Chapter 15 [of Title 10]), which is two (2) square feet in area or less;
  8. Must comply with Title 3 Chapter 5 of [the City] Code;[18]
  9. Home businesses are subject to all licensing, inspections, laws and regulations, etc.

Providence City Code, § 10-4-1 (Definition of “Home Business”).  There are additional requirements found in § 3-4-5, which also must be satisfied, along with any conditions that may be imposed. 

A critical factor for home business approval is determining whether or not the Checketts’ business is “conducted on land containing the primary dwelling.”  Since its inception, “Custom Countertops” has been conducted on two parcels, the Home Lot (Lot 1) and the Business Lot (Lot 5).  The two lots are separated by other residential lots with homes.  The Checketts acquired a one-foot wide strip across the rear of those other lots, and have proposed using that strip to join Lots 1 and 5 into one lot.  Doing so, they argue, would satisfy the City’s requirement that a home business be conducted on the same parcel as the primary dwelling. 

The City has stated that it “will entertain” such a proposal, but did not commit to accepting the lot reconfiguration.  Although the Checketts’ proposal creates an unusually-shaped parcel, it, nevertheless, technically meets the definition of “lot” from the City Code: 

A parcel of land occupied, or to be occupied, by a main building, or group of buildings (main and accessory), together with such yards, open spaces, lot width and lot area as are required by this Title and having sufficient frontage upon, or access easement to, a public street. 

Id., § 10-1-4 (Definition of “Lot”).[19]  Nothing in this definition dictates a particular shape or configuration for a lot.  This Opinion does not take a position on whether or not the proposed configuration satisfies the requirements for a home business. Ultimately, that decision is the City’s.

The City may agree to accept the reconfigured lots as satisfying the home business ordinance if the lot consolidation is completed.[20]  If so, and if the Checketts are able to comply with the other requirements for a home business, and if the City approves the business as a condtional use, the Checketts may be able to maintain their business lawfully at its present location.  However, that depends on whether the City accepts the lot and the possibility of the business being a conditional use. 

II     Nonconforming Use is Not the Correct Analysis for This Situation.

Because it has not been shown that the Checketts’ business was lawfully established, but would now be prohibited, analysis under nonconforming use statutes is not applicable.  Property owners are entitled to nonconforming use status for a property use that

(a)    legally existed before its current land use designation;

(b)   has been maintained continuously since the time the land use ordinance governing the land changed; and

(c)    because of one or more subsequent land use ordinance changes, does not conform to the regulations that now govern the use of the land.

Utah Code Ann. § 10-9a-103(32).  Nonconforming use status allows a property owner to continue an established use even though the use has become prohibited.  Id., § 10-9a-511(1). 

A.      The Business was Never Authorized as a Land Use, so it Cannot Qualify for Nonconforming Use Status.       

The Checketts do not qualify for nonconforming use status because they have not shown that their business “legally existed” when it was first established.  The City Code prohibited industrial or manufacturing uses in 2003, when the business began, and in 2005, when the business activity on Lot 5 intensified.  The City’s zoning ordinances in place in 2003-2005 did not allow any type of industrial or manufacturing uses in the SFT zone.  These prohibited uses include “building maintenance and repair,” “cabinet shop,” “general contractor yard,” “welding/machine shop,” and “wholesale outlet/storage and sales.”  See Providence City Code, § 10-6-2 (former language effective in 2003 and 2005).[21]  The Checketts’ countertop business is an industrial or manufacturing use which could fit in any of these categories.[22]  In fact, the Checketts’ application for a business license in 2003 and 2004 described the business as “manufacture” or “assembly” of solid countertops.  However, the classification assigned to the business is not important, because no industrial or manufacturing use was allowed in the SFT zone.[23]  Since the use was not allowed, it could not have been “legally established” in 2003 or 2005.  Therefore, the Checketts are not entitled to claim nonconforming use status, even if they began operations at that time.

As has already been discussed, the City’s zoning ordinances have changed, and the SFT zone now allows “light manufacturing” as a conditional use home business.  Ironically, the zone change is actually beneficial to the Checketts, because it provides a possible means to legitimize the land use rather than make it illegal.  The ordinance change does not automatically make the business “legally established,” because it is a conditional use, but it may become legal if it is approved by the City.  Nevertheless, nonconforming use analysis simply does not apply to this situation, regardless of whether the conditional use is approved or not. 

B.      Changes to the City’s Home Business Ordinance Do Not Entitle the Checketts to Nonconforming Use Status, Because the Changes do not Affect a Zoning Ordinance.

Both the City and the Checketts discuss changes to the City’s home business licensing ordinance, and whether the Checketts are entitled to claim vested rights under that ordinance’s former language.[24] The City explains that in 2005, the language of its home business ordinance provided that the business be entirely on the homeowner’s land.[25]  Since the Checketts owned both Lot 1 (the Home Lot) and Lot 5 (the Business Lot), their business arguably complied with that provision—it was entirely on “land belonging to the homeowner.”  That interpretation, however, has not been confirmed or accepted by the City.   That ordinance has been changed, and now a home business must be located on the same parcel as the primary dwelling, or on an adjacent parcel owned by the homeowner.  Since the Checketts’ business is located on a separate and non-adjacent parcel, it does not conform to the current ordinance.  The Checketts therefore argue that they are entitled to nonconforming use status because of the change to the Home Business Licensing Ordinance.[26]   

Nonconforming use analysis would not apply even if it is accepted that the Checketts’ business satisfied the prior requirement by being on “land owned by the homeowner” (and that is by no means settled).[27]  The Home Business Licensing Ordinance is not a land use ordinance.  Nonconforming use arises when an established legal land use becomes illegal because of a change to a land use ordinance.  Licensing and other health and safety ordinances are not land use ordinances and thus do not implicate nonconforming use analysis.  All land uses, including nonconforming uses, are subject to health and safety regulations meant to reduce or eliminate nuisances.  Although health and safety regulations may change from time to time, the land use would still be allowed if the land use ordinance has not changed.[28]

Simply put, the Checketts’ situation is not subject to nonconforming use analysis.  In order to claim the rights afforded to nonconforming uses, there has to be a nonconforming use.  If the use does not qualify for nonconforming status the statutes governing nonconforming uses do not apply.  In 2003 and 2005, the City’s land use ordinance prohibited manufacturing uses, including the Checketts’ business, in residential zones.  The use, therefore, could not have been “legally established,” and is thus ineligible for nonconforming use status. Compliance with licensing ordinances and other health and safety regulations has little to do with whether a land use is legal or not. 

III.  Building Permits and Business Licenses Do not Estop the City From Enforcing its Zoning and Licensing Ordinances.

Past business licenses and building permits do not estop the City from enforcing its home business ordinance, because such approvals do not entitle a property owner to estop enforcement of zoning laws.  Under the “zoning estoppel” doctrine, a property owner may claim entitlement to an otherwise-prohibited land use if the owner relied upon representations from a local government. 

The [zoning estoppel] principle estops a government entity from exercising its zoning powers to prohibit a proposed land use when a property owner, relying reasonably and in good faith on some governmental action or omission, has made a substantial change in position or incurred such extensive obligations or expenses that it would be highly inequitable to deprive the owner of his right to complete his proposed development.

Western Land Equities v. City of Logan, 617 P.2d 388, 391 (Utah 1980). 

The governmental acts relied upon by the Checketts do not estop the City from enforcing its zoning or home business ordinances. “To invoke the doctrine [the local government] must have committed an act or omission upon which the developer could rely in good faith in making substantial changes in position or incurring extensive expenses.”  Utah County v. Young, 615 P.2d 1265, 1267 (Utah 1980).  The Checketts claim reliance on the following:  (1) The 2005 building permit, which allowed them to build the addition to the storage building; and (2) Business licenses issued by the City from 2003 through 2009.  However, the permit and business licenses do not warrant enough reliance to justify blocking enforcement of the City’s zoning or licensing ordinances.

A.      Business Licenses Granted by the City do not Estop Enforcement of Zoning and Licensing Ordinances.

In November of 2005, the City granted a building permit to construct an addition onto the building which had been built in 1997.  The permit only approved construction of the addition, and cannot be construed as approving any sort of business activity.  There is no question that the building was allowed under the City’s zoning ordinance and that the permit was approved by the City, but the permit does not discuss or approve the installation of any equipment or the conduct of any business within that building.[29]  Therefore, approval of the building permit in 2005 should not be construed as an act upon which the Checketts could reasonably rely as also granting approval for their business activities.

This conclusion is supported by a series Utah Supreme Court decisions explaining the zoning estoppel doctrine.  In the first decision, the court maintained that “[o]rdinarily a municipality is not precluded from enforcing its zoning regulations, when its officers have remained inactive in the face of such violations.”  Salt Lake County v. Kartchner, 552 P.2d 136, 138 (Utah 1976).  In Kartchner, a landowner was cited for violating setback ordinances.[30]  The county’s building inspectors became aware of construction on the property and notified the homeowner of the potential violation.  Nevertheless, the owner continued construction, and the county took no action for several months.  When the owner was finally cited for the setback violation (after construction was completed), he pointed to several similar violations on properties in the immediate area.  The county admitted that there were several violations that had not been cited.[31]  On appeal, the Utah Supreme Court held that it would be inequitable to enforce the requirement when there were so many other violations that had been ignored.[32]  Under the unique circumstances of the case, the owner was allowed to keep the building.

A few years later, the court considered two cases involving construction in Utah County.  The Checketts cited to the first, Utah County v. Young, 615 P.2d 1265 (Utah 1980).  In that case, the property owner obtained a building permit to construct a barn in an agricultural area.[33]  He intended to use the barn for a commercial auction business, which was prohibited under the county zoning ordinances.  The building was designed with an auction block, bleachers, public restrooms, and commercial-type wiring.  Id., 615 P.2d at 1265-66.  After construction was completed, the county denied the owner’s application for a business license, because the area was not zoned for commercial activities.

On appeal, the owner argued that the county was estopped from enforcing its zoning and licensing ordinances.  He claimed that the county was aware that he intended to operate commercial business in the barn, and that by approving the building permit, he was induced to believe that the county approved the commercial use, and so he proceeded with construction.  The court rejected his argument, because there was little evidence that the county had misled or induced him to invest in the construction.[34]  The court also held that the owner had a duty to investigate the county’s ordinances, and that he could not claim ignorance of the restrictions.  The court expounded on the type of reliance necessary to claim zoning estoppel:

The action upon which the developer claims reliance must be of a clear, definite and affirmative nature.  If the claim be based on an omission of the local zoning authority, omission means a negligent or culpable omission where the party failing to act was under a duty to do so.   Silence or inaction will not operate to work an estoppel.  Finally, and perhaps most importantly, the landowner has a duty to inquire and confer with the local zoning authority regarding uses of the property that would be permitted.

Id., 615 P.2d at 1267-68.[35]  The property owner could not prove that he had relied upon an act or omission of the county, so his argument that he was entitled to a business license under a theory of zoning estoppel failed. 

About one year after the Young decision, the court issued another zoning estoppel decision, Utah County v. Baxter, 635 P.2d 61 (Utah 1981).  In Baxter, the property in question had two structures, a restaurant and a small home.  Both structures had been built many years earlier, but both were prohibited under the zoning ordinances in place at the time.[36]  In 1978, the restaurant burned down.  The county allowed the building to be rebuilt, even though it was a noncomplying structure.  The property owner and a partner reconstructed and reopened the restaurant.  In the meantime, the property owner also applied for a permit to remodel the home, which was granted by the county.  The owner and her partner had a falling out over the restaurant, so she remodeled the home to serve as a restaurant and tavern, using the permit granted by the county.[37]  The county later denied a business license to operate a restaurant or tavern, although it accepted an application and fee for a beer license.  For a short period, the property owner sold beer in the remodeled home.[38]  The property owner appealed the denial of the business license.

On appeal, the property owner argued that the county should be estopped from enforcing its zoning and licensing ordinances because she claimed that she told the county that she planned to use the home for a commercial business.  In addition, the county had issued a beer license, albeit mistakenly.  Id., 635 P.2d at 65.  The court rejected this estoppel argument, holding that there was no evidence that the owner had been induced or misled by any actions by the county.  “[T]o successfully state a defense of equitable estoppel in a zoning case, exceptional circumstances must be present such as the intentional discriminatory application of the ordinance.”  Id. 

The three cases just discussed provide invaluable guidance for the situation faced by the Checketts and Providence City.  The Checketts have not shown the type of extraordinary circumstances necessary to invoke zoning estoppel.  Like the property owner in Young, the Checketts obtained a permit to construct an addition to a building.  The zoning ordinances allowed the addition, and its construction is not necessarily at issue.  However, the permit did not approve any business activities in the building, and the Checketts cannot argue that the City should have been aware of their intent to use the addition for commercial purposes.[39]  The Young and Baxter decisions lead to the conclusion that the Checketts cannot claim reliance on the City’s approval of the 2005 building permit that induced or misled them into believing that the business activity would be allowed.[40]

B.      The City is Not Estopped From Enforcing its Licensing and Zoning Ordinances by the Business Licenses Issued to the Checketts.

The business licenses issued to the Checketts also do not operate to estop enforcement of the City’s ordinances.  There is no question that the City issued business licenses to “Custom Countertops” from 2003 through 2008.  The 2003 and 2004 license applications list the Checketts home (on Lot 1) as the business address, and they both list assembly or manufacture of solid countertops as the business activity.[41]  From 2005 through 2008, the business licenses were automatically renewed upon payment of the business license fee.[42] 

These approvals, however, are not acts or omissions which justify good faith reliance by the Checketts sufficient to estop the City from enforcing its zoning and licensing ordinances.  At its core, the estoppel doctrine grants rights to a property owner based on tacit or implied approval of a particular use, coupled with detrimental reliance on that approval.  It follows that the governmental entity must have some awareness or knowledge of the use in order to warrant reliance on an act or omission implying approval.[43]  Automatic renewal of a business license is not sufficient awareness or knowledge to justify reliance by a property owner. 

It would be unreasonable to conclude that a clerk or a ministerial officer having no authority to do so, could bind [a local government] to a variation of a zoning ordinance duly passed, to which everyone has notice by its passage and publication, because a ministerial employee erred in characterizing the type of property.

Alta v. Ben Hame Corp., 836 P.2d 797, 803 (Utah Ct. App. 1992) (quoting Morrison v. Horne, 363 P.2d 1113, 1114 (Utah 1961)). 

In Alta v. Ben Hame, the Utah Court of Appeals rejected a property owner’s estoppel argument based on business licenses which had been granted.  The property owner had leased a home for short term rentals for some time, even though such rentals were prohibited by the town’s zoning ordinances.  For three years, the town granted the owner a business license for a “lodging facility,” before the error was discovered.  The court of appeals held that the licenses erroneously issued by the town’s clerk did not justify reliance sufficient to estop enforcement of the town’s ordinance. Id.   The court also noted that “failure to enforce zoning for a time does not forfeit the power to enforce.”  Id., See also Kartchner, 552 P.2d at 138. 

Like the business owner in Alta v. Ben Hame, the Checketts were granted business licenses that the City now says they should not have received.  Each year, the license was automatically renewed, with little or no investigation into the nature or scale of the business.[44]  As the Court of Appeals explained in Alta v. Ben Hame, the City has not forfeited the right to enforce its zoning or licensing ordinances because it mistakenly issued business licenses.  To conclude, the Checketts cannot estop the City because of the building permits or the business licenses.

IV.    The City’s Regulation of the Checketts’ Property Does Not Constitute a Taking.

The City’s regulation of the Checketts’ property and business activity do not constitute a taking, because reasonable regulation of property use and economic activities is permissible.  Both the Federal and Utah Constitutions provide that private property shall not “be taken for public use, without just compensation.”  U.S. Const. amend. V.[45]  The legal doctrine of a property takings includes regulation that is “so onerous that its effect is tantamount to a direct appropriation or ouster—and that such ‘regulatory takings’ may be compensable . . ..”  Lingle v. Chevron U.S.A. Inc., 544 U.S.528, 537 (2005).[46]  However, it is difficult to determine when a regulation is that onerous.  “In Justice Holmes’ storied but cryptic formulation, ‘while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.’  The rub, of course, has been—and remains—how to discern how far is ‘too far.’”  Id., 544 U.S. at 537-38 (quoting Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922)).

A set formula for analyzing regulatory takings has not been created, except in limited circumstances.[47]  In the absence of a set formula, takings jurisprudence “aims to identify regulatory actions that are functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his domain.”  Lingle, 544 U.S. at 539.[48]  The Utah Supreme Court has held that property may be regulated, even if the regulation impinges on an individual’s right to enjoy and use property.

[T]he exercise of proper police [i.e., health and safety] regulations may to some extent prevent enjoyment of individual rights in property or cause inconvenience or loss to the owner, [but that] does not necessarily render the police law unconstitutional, for the reason that such laws are not considered as appropriating private property for a public use, but simply as regulating its use . . ..

Colman, 795 P.2d 627-28 (quoting Bountiful City v. DeLuca, 292 P. at 199-200).  Or, stated more directly by the Utah Supreme Court:  “[A] landowner cannot complain because he is inconvenienced in the use of his property, where such inconvenience arises out of the proper enforcement of the police power to protect the public health, and where such enforcement does not amount to a taking or destruction of his property.”  Colman, 795 P.2d at 628 (quoting Salt Lake City v. Young, 145 P. 1047, 1051 (Utah 1915)). 

The guidance provided by both state and federal cases mandates a very high standard that must be met before a regulation may require compensation as a taking.   Thus, it does not appear that the City’s regulation of the Checketts’ property and business is the functional equivalent of a direct appropriation of the property.  The City is asserting its right to regulate uses on property to promote the health, safety, and welfare of the public.  The City’s zoning and licensing regulations may limit the Checketts’ use of their property, but that limitation is not the functional equivalent of an appropriation.  Even with the City’s regulation, the property could be put to any number of uses, including business activities.[49] 

“Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law.”  Pennsylvania Coal, 260 U.S. at 413.  In other words, property uses and economic activities are subject to reasonable regulation, and such regulation does not constitute a taking of private property.  The City has reasonable regulations of land use and business activity, intended to promote the health and welfare of the public.  Although those regulations limit, to an extent, the uses and activities on the Checketts’ property, those limits are not a taking of any property rights. In conclusion, therefore, the Checketts have simply not shown that the City’s regulation constitutes a compensable taking.

.

Conclusion

Because the City’s ordinances allow light manufacturing in residential zones, the countertop business may be approved as a conditional use home business.  The City may determine that the business is light manufacutring, and that the joinder of the two lots satisfies the requirement that a home business be conducted on the same parcel as the residence. 

The business cannot qualify for nonconforming use status, because it was not allowed in residential zones to begin with.  Even if licensing ordinances change, if a use was not allowed, it cannot claim nonconforming use status.  The use may now be approved as a conditional use, and be a valid home business.

A valid building permit does not justify reliance estopping the City from prohibiting a particular use.  Estoppel only arises when a property owner can claim reliance on an act implying that a use would be approved.  The City is also not estopped from enforcing its ordinances due to business licenses issued in error.

Finally, the City’s enforcement of its zoning and licensing ordinances does not constitute a taking of private property, because the regulation is not the functional equivalent of a physical appropriation of the property.  The City may enforce its reasonable regulations without implicating the Takings Clause.  The property owner has not shown a complete loss of economic value, and thus cannot claim a taking under the Lucas decision.

.

Brent N. Bateman, Lead Attorney

Office of the Property Rights Ombudsman

.

NOTE:

This is an advisory opinion as defined in § 13-43-205 of the Utah Code.  It does not constitute legal advice, and is not to be construed as reflecting the opinions or policy of the State of Utah or the Department of Commerce.  The opinions expressed are arrived at based on a summary review of the factual situation involved in this specific matter, and may or may not reflect the opinion that might be expressed in another matter where the facts and circumstances are different or where the relevant law may have changed. 

While the author is an attorney and has prepared this opinion in light of his understanding of the relevant law, he does not represent anyone involved in this matter.  Anyone with an interest in these issues who must protect that interest should seek the advice of his or her own legal counsel and not rely on this document as a definitive statement of how to protect or advance his interest. 

An advisory opinion issued by the Office of the Property Rights Ombudsman is not binding on any party to a dispute involving land use law.  If the same issue that is the subject of an advisory opinion is listed as a cause of action in litigation, and that cause of action is litigated on the same facts and circumstances and is resolved consistent with the advisory opinion, the substantially prevailing party on that cause of action may collect reasonable attorney fees and court costs pertaining to the development of that cause of action from the date of the delivery of the advisory opinion to the date of the court’s resolution.

Evidence of a review by the Office of the Property Rights Ombudsman and the opinions, writings, findings, and determinations of the Office of the Property Rights Ombudsman are not admissible as evidence in a judicial action, except in small claims court, a judicial review of arbitration, or in determining costs and legal fees as explained above.

,

Endnotes 


[1] Lot 5 is approximately .81 acres.  There is some landscaping in the front yard.

[2] The height of the building was not indicated, but it appears to be about the same as nearby homes.

[3] In 1999, the Checketts constructed a “lean-to” on the side of the building for hay storage.  That structure was later removed.

[4] Providence City Permit Number 2004-74 (June 4, 2004).  “PLC” evidently refers to the Providence Land Code.

[5] Providence City Permit Number 2005-229 (November 14, 2005).

[6] The Checketts still use their home as the “headquarters,” or offices of the business.

[7] The Checketts’s response implied that the business incorporates other countertop materials, but did not state how much of their business is granite countertops, which requires specialized equipment. It appears that Custom Countertops also works in other types of stone, and is not exclusively limited to countertops.

[8] The Checketts state that the 2005 addition cost more than $130,000.00, plus uncompensated labor provided by Mr. Checketts himself.

[9] The licenses were renewed upon payment of the license fee.  It is not clear whether the City required additional information for the licenses, or if there was any inspection of the premises.

[10] The complaint also identified noise, dust, odors, late-night operations, traffic, safety concerns, environmental damage, and visual appearance.

[11] The present language of the code allows for home businesses on the same parcel, or on an adjoining parcel owned by the same owner.  Providence City Code § 10-1-4 (Definition of Home Business)

[12] Lot 5 is large enough to accommodate both a home and the business. 

[13] The City issued annual business licenses through December of 2010.

[14] The Checketts admit that they have not obtained subdivision approval for the lot changes.

[15] These arguments will be explored more fully in the Analysis section.

[16] It is noted that the City Code expressly prohibits “cabinet shop, general contractor yard, lumber yard, and welding/machine shop” in residential zones.  The Checketts’ business could be classified under any of these uses, particularly “cabinet shop.”  However, none of those uses are defined, and there is no reason to believe that the City could not reasonably apply the definition of “light manufacturing” to the Checketts’ business.

[17] The standards should be objective, and have a reasonably reliable basis.  The procedure established by the Utah Code envisions standards that apply to all similarly-situated conditional uses, rather than “inventing” standards on a case-by-case basis.  Local governments would be wise to adopt standards sooner rather than later.

[18] That is how Section 10-1-4 reads. However, Chapter 5 of Title 3 governs “Canvassers, Peddlers, and Itinerant Merchants.”  It is possible that the correct cite is to Chapter 4, “Conditional Businesses.” That chapter includes § 3-4-5, which is specifically applicable to home businesses.

[19] It is not known if the combined lot meets the yard, open space, width, area, and frontage requirements for the zone.  The one-foot wide strip may not satisfy width and setback requirements, but those requirements could possibly be varied.

[20] The Checketts submitted deeds showing that they had acquired the strips across the neighboring properties  Creating those strips is a subdivision of the affected lots, which must be approved by the City, along with the lot consolidation.  See Utah Code Ann. § 10-9a-603.

[21] The City provided a copy of the former section 10-6-2, which includes a chart of permitted, conditional, and prohibited uses for all zones.

[22] Section 10-6-2(A) provides a procedure to propose and approve land uses not specifically listed.

[23] The City code allowed several types of professional offices and retail uses, but all must comply with the City’s home business regulations.  

[24] A nonconforming use is essentially a vested right.

[25] The City did not provide the exact language of the former ordinance.

[26] Both the Checketts and the City focus on the former language prohibiting equipment not ordinarily found in residential areas.  However, that language has been repealed, and could no longer be applied to prohibit the Checketts’ business.

[27] It is not entirely clear that such an interpretation is reasonable.  The language of the Home Business Ordinance includes reference to business uses being “incidental” to a residential use, that the “residential character” of a neighborhood be preserved, and that uses are allowed in “accessory” buildings.  Given these references, and the ordinance’s overall intent to allow and regulate home-based businesses, it is reasonable to interpret the provision about a home business being located entirely on the homeowner’s property as referring to activity on the same property as the residence.  See Mountain Ranch Estates v. Utah Tax Comm’n, 2004 UT 86, ¶ 11, 100 P.3d 1206, 1209 (“[t]he plain language of the statute [should be read] as a whole, . . . [interpreting] its provisions in harmony with other statutes in the same chapter and related chapters.”)  A business cannot be “incidental” to residential use if the residence is on a separate parcel.  Moreover, restricting the meaning of the prior language to businesses located on the same parcel as residences avoids the absurd result of making nearly any business a home business simply by showing that a business is located on land that is also owned by a homeowner.  See Millet v. Clark Clinic Corp., 609 P.2d 934, 936 (Utah 1980) (“[I]nterpretations are to be avoided that render some part of a provision nonsensical or absurd.”)  Ultimately, of course, the City may decide how to interpret its ordinances. 

[28] It is important to recognize the distinction between an ordinance which allows a land use, and one which merely regulates that use.  If a land use is prohibited, compliance with health, safety, or licensing regulations does not make it “legal.”  Conversely, if a land use is allowed, noncompliance with such regulations does not make it illegal.  See e.g., Vial v. Provo City, 2009 UT App 122, ¶ 16, 210 P.3d 947, 951 (Noncompliance with building permit requirements has little to do with whether a land use is legally established.)

[29] The permit approved in June of 2004 stated that the addition was “approved as [a] detached accessory use in the SFT zone as per PLC 10-8-1.”  The Checketts did not construct the addition approved by the 2004 permit, but the 2005 permit was for the same addition. 

[30] The construction at issue enclosed an existing carport, and was undertaken without a building permit.

[31] The front yard setback was supposed to be 30 feet.  The county acknowledged that several property owners had violated that standard, and that the average front yard in the area was 26 feet.

[32] Kartchner is thus based more on the laches doctrine (i.e., failure to enforce similar violations), rather than zoning estoppel.  The particular facts of Kartchner also supported the conclusion, because of the inequity involved. 

[33] The area was zoned for agricultural uses only.  There was nothing prohibiting construction of a barn on the property, but the proposed business use was prohibited.  See Young, 615 P.2d at 1265-66. 

[34] The court specifically noted that the structure was permissible, it was only the commercial use that was prohibited.  Id., 615 P.2d at 1267.

[35] See also Stucker v. Summit County, 870 P.2d 283, 290 (Utah Ct. App. 1994) (Opinion of local government official or employee insufficient to constitute an “act” of the government entity.)

[36] Both structures were considered nonconforming or noncomplying, and the restaurant in particular was a nonconforming use.  Baxter, 635 P.2d at 62-63. 

[37] The remodeling plans showed a kitchen, living room, bedrooms, and closets.  The decision states that the permit identified the use as a single family residence.  Id., 635 P.2d at 63. 

[38] The county revoked the beer permit, and refunded the license fee. Id., 635 P.2d at 63.

[39] Like the property owner in Young, the Checketts were obligated to research the City’s zoning ordinances for themselves.

[40] Unlike the property owner in Kartchner, the Checketts cannot claim that the City ignored similar situations on other properties.

[41] The 2004 license application described the business as: “Receives orders by fax or phone for countertops.  Assembles, delivers and installs tops on site in homes mostly in the Cache Valley area.”  The 2005 application included this description:  “Mfg [manufacture or manufacturing] and install solid surface counter tops.”

[42] See Providence City Code, § 3-1-8(A):  “Business licenses will automatically be renewed upon receipt of the renewal fee and proof of a valid professional license, if required.”

[43] See e.g., Baxter, 635 P.2d at 65 (Estoppel may be invoked in exceptional circumstances).

[44] It is significant that the Checketts’s business activity in 2003, when they first obtained a business license, was substantially different from the activities from 2005 through 2010.  In 2003, the Checketts stated that the countertops were assembled at the homes where they were installed.  Beginning in 2005, however, cutting and shaping granite slabs was performed on Lot 5.  This is a substantial intensification of business activity that was not anticipated in the 2003 license application.

[45] See also Utah Const., art I, § 22:  “Private property shall not be taken or damaged for public use without just compensation.”

[46] See also Colman v .Utah State Land Board, 795 P.2d 622, 626-27 (Utah 1990) (Government may regulate property, but regulation may rise to the level of a taking); Bountiful City v. DeLuca, 292 P. 194, 201 (Utah 1930). 

[47] A regulation that requires an owner to suffer permanent occupation of property is a compensable taking.  See Loretto v. Manhattan CATV Corp., 458 U.S. 419 (1982).  Complete deprivation of all economically beneficial use is also a compensable taking.  See Lucas v. South Carolina Coastal Comm’n, 505 U.S. 1003 (1992).  Permanently damaging private property may also be a taking.  See Hamblin v. City of Clearfield, 795 P.2d 1133, 1136 (Utah 1990); Sanguinetti v. United States, 264 U.S. 146 (1924).

[48] See also Colman, 795 P.2d at 627 (“Only when governmental action  rises to the level of a taking or damage under article I, section 22 [of the Utah Constitution] is the [government] required to pay compensation.”)

[49] The Checketts argue that the City’s regulation deprives them of all economically beneficial use of their property, and that the City’s actions are “worse than the Lucas case.”  See Lucas, 505 U.S. 1003 (regulation which destroys all economically beneficial use constitutes a taking).  Other than this assertion, however, the Checketts have provided no objective evidence that their property would have no economically beneficial value due to the City’s regulation.  It seems very unlikely that their property’s value would be completely devastated simply because the City imposed some regulation on a certain type of business activity.  Even if no business activity is allowed, the property still has value as a residential lot.  Therefore, the Checketts cannot sustain a claim for the type of “total taking” envisioned by Lucas.

Advertisements