How a Colorado County Pulled the Zoning Rug from under a Developer’s Feet; Rezoning Upheld notwithstanding $2.6 Million in Land Preparation Costs

The 10^th Circuit recently determined that a Colorado county's decision to rezone land did not deprive landowners of a constitutionally protected property interest, even though the landowners had paid approximately $2.6 million in capital development costs in preparation for selling the land. The court held that a protected property interest could not be established under Colorado's Vested Property Rights Act (VPRA), Colo. Rev. Stat. § 24-68-101, et seq. or under Colorado common law.

Arapahoe County approved a preliminary development plan (PDP) that rezoned the landowners' property and allowed for "Automotive Sales and Repair." Thereafter, the landowners paid $2.6 million in capital development costs for (a) street construction, (b) site preparation and grading, (c) water channel drainage improvements, and (d) sanitary sewer installation, all in preparation for selling their land to a buyer interested in using it for an automotive dealership.

After the landowners agreed to sell their land to CarMax, which intended to operate a car dealership, the County altered the zoning, making it impossible to build the dealership on the land. In Jordan-Arapahoe, LLP v. Bd. of County Comm'r, 2011 U.S. App. LEXIS 2359 (10th Cir. Colo. Feb. 8, 2011) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law], the landowners argued that the County's zoning decision had deprived them of a protected property interest without due process. To demonstrate a vested property interest, the landowners pointed to the VPRA and Colorado common law.

The 10^th Circuit refused to find a vested property interest under the VPRA, holding that the County had discretion under its zoning code to reject or modify proposed developments until it approved a final development plan. As contemplated by the VPRA, vesting could not occur until the County's final approval.

In support of common law vesting, the landowners pointed to Eason v. Bd. of County Comm'rs of Boulder, 70 P.3d 600 (Colo. Ct. App. 2003) [enhanced version / unenhanced version], claiming Colorado law allowed property rights to vest by virtue of a zoning classification (as opposed to a building permit) and detrimental reliance thereupon. The landowners contended that they had detrimentally relied on the County's representations or affirmative actions when they developed the land for sale to CarMax.

Noting that the facts showed detrimental reliance, the court was left to resolve whether the landowners had relied on the County's representation or affirmative action. In addressing the question, the court recognized that:

Eason does, however, stand for the principle that once a planned development in a zoning classification is backed by affirmative actions or representations by county officials-such as active acquiescence by word or deed or through some other unequivocal confirmation-then parties who rely on those affirmations will have vested property rights under the common law. But the analysis will be case-by-case and factually intensive.

Under the facts of the case, the court refused to find an affirmative action. The court noted that approval of the PDP alone could not qualify as an affirmative action or representation because the landowners could not have reasonably relied on the PDP approval as creating a vested right absent the second-step final approval.

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