October 10, 1997
RE: Zoning Ordinances
In accordance with our telephone conversation of today, I am writing in response to your request for an opinion as to enforcing a residential zoning classification on two parcels of real property that were annexed some time ago by your city. It is my understanding that one of the parcels has been used by its owner to store junked cars and that the other is a vacant field at this time. It is also my understanding that the parcels were not regionally zoned as either commercial or residential by the county prior to being annexed.
In my opinion the city has the authority to require that the annexed property owners/developers comply with all ordinances of the city, including obtaining a business licence, complying with zoning requirements, etc.
The general rule in the case of annexation is that the ordinances of the annexing municipality extend to the newly annexed area immediately after the annexation becomes final. As stated in one treatise:
When territory is annexed to a municipal corporation it thereby becomes subject to all the laws and ordinances by which the municipality is governed unless there is some statutory provision to the contrary...or unless the application of such ordinances in a particular case would impair the obligation of a contract.... C.J.S. Municipal Corporations, Section 73. See also 41 ALR 2d 1463.
Additionally, in Tennessee, unless general statutes provide otherwise, even property that is zoned for a particular use under the county or regional zoning codes loses its zoning classification upon being annexed and the annexing municipality has the choice to either continue the old classification or rezone the property. The only exception to this rule is where the builder/developer has made a substantial economic investment in his property relying on previously issued permits or the pre-existing zoning classification by, for example, beginning construction. This is known as having a "vested interest."
In Tennessee, the possession of a valid business licences and building permit is a prerequisite in determining whether there is a "vested interest" in continuing the particular use or finishing a particular project. Chickering Ventures Inc. v. Metropolitan Government of Nashville and Davidson County, 14 TAM 4-16 (Tenn.Ct.App. 1988). Further, absent a statute providing otherwise, annexation into a city is an automatic revocation of county building permits and validly issued county building permits, without substantial expenditures by the property owner, do not confer any vested rights in the continued application of the county zoning ordinance. Schneider v. Lazarov, 390 S.W.2d 197 (Tenn. 1965).
What constitutes a "substantial expenditure" also differs jurisdiction to jurisdiction. In Howe Realty Co. v. City of Nashville, 141 S. W.2d 904, 906 (Tenn. 1940), the Tennessee Supreme Court reviewed the case law on the subject of "vested rights" and concluded that "the degree to which actual construction may have progressed... appears to play a very important part in the attitude of the courts....There is no Tennessee case that has directly ruled whether more than a foundation must be laid but, most jurisdictions require that walls or a single story be constructed before a right to continue building vests." The courts require "substantial construction or substantial liabilities be incurred" before rights vest. Howe Realty Co. v. City of Nashville, 141 S. W.2d 904, 906 (Tenn. 1940) citing 82 Am Jur. 2d Zoning and Planning § 240.
When the property owner has a "vested interest" in the pre-existing permit or zoning classification, the courts generally do not allow the municipality to apply zoning regulations to prohibit the proposed use, allow the municipality to revoke a valid pre-existing permit or to impose new zoning or building code regulations that would have the affect of depriving the landowner/developer of his investment-backed expectations.
However, in this situation the property owner was not the holder of a valid business license and been storing his automobiles on a lot that was never zoned commercial. You have also said that this property owner has done no building on either parcel. In this regard, you are not attempting to impose requirements that would in any way deny this property owner of any "vested interest," even if the owner were to argue one did exist.
Tennessee Code Annotated, Section 6-54-501 gives municipalities the authority to adopt standard codes. The City, by this state enabling legislation, has adopted building and other health and safety codes and a zoning ordinance. A property owner that fails to comply with a zoning ordinance, as required by the municipal code, is violating the municipal ordinance and this statute and can be enjoined from doing so. Again, only when there is a vested interest or property right to continue in violation of the municipal code, or some other statutory exception will the municipality be estopped from enforcing its ordinances. It does not appear that this property owner has made the substantial investment necessary to have the right to continue using the real property, zoned residential, in a commercial manner.
Very truly yours,
Pamela M.M. Bingham