Early Vesting v. Late Vesting

A perennial controversy in land use law is the distinction between early-vesting and late-vesting policies for land development rights.  The issue: whether the right to build on a parcel, in accordance with the current zoning specs, vests at the time of the initial application for a building permit (early vesting), or only at the time when the permit is issued (late vesting), or even later.  The former approach gives property owners and developers a predictable set of guidelines that, if followed, will allow the project to go forward; the latter approach allows local governments to change the rules of the game once a development proposal is made that politicians or neighbors do not like.

Public comment is not always favorable.  Source: AP

It strikes me that this distinction presents such a clear-cut issue of basic fairness that early-vesting ought to be the universal rule.  After all, a municipality is free to revise its zoning ordinances at any time it likes.  So, why should a builder be subjected to a sudden rezoning that occurs only after (and presumably, in response to) his permit application?  And yet, in the majority of American states, the rule favors late vesting.  Such a policy allows local government to sit on its right to act, and to avoid any land use controversy until an unpopular proposal is actually made; and it shifts the costs and risks of political uncertainty to property owners and developers, who can never be sure that their investment will be viable until a period of political purgatory has been allowed to run.

Of course, before the million-dollar question is ever answered, developers are required to invest in optioning the property; hiring engineers, architects, environmental consultants, and land use planners; and hiring lawyers to advocate for the proposal’s approval.  Now, I’m all for professional services being kept in high demand.  But I think it’s fair to say that those services should be retained pursuant to projects that are predictably going forward, and not for work that’s going to end up in the proverbial circular file.  An early-vesting rule would provide an incentive for local governments to maintain zoning policies that are up to date, and which provide honest reflections of local priorities.  It would also be favorable to competition, by allowing smaller, less well-connected investors to manage the risk of making development proposals.