Posted by: Patricia Salkin | July 17, 2016

NY Court of Appeals Holds Reliance on Erroneously Issues Sign Permit Does Not Give Permit Holder Vested Rights

Petitioner Perlbinder Holdings relied on an erroneously issued permit for a large outdoor advertising sign that was later revoked by the New York City Department of Buildings (DOB). The petitioner maintained a large illuminated advertising sign on the side of its building for a number of years after receiving a permit from the DOB in 1980. Thereafter, the New York City zoning regulations were amended in such a way that no longer permitted the advertising sign. The original sign was, however, “grandfathered” in as a legal, nonconforming use. In 2002, the Board of Standards and Appeals approved petitioner’s variance request to develop a mixed-use building on the property including moving of the sign with modifications.  The building was never build and the new sign was not constructed under the 2002 variance. In 2008 the building and the sign were demolished following a procedure for failure to maintain the then-vacant building. Petitioner then sought a permit to erect a new structure and a new sign, and “the DOB granted the support structure application, but objected to the proposed sign on the bases that the new sign was different than the original sign because it was a double-sided sign; it was not located in the same position as the original sign; and the replacement sign was 25 feet lower than the original. The DOB noted that, in order to be “grandfathered” in as a legal nonconforming use, the new sign must be single-sided and in the same location as the original sign.” Following an application for reconsideration where the then borough building inspector overruled DOB and approved the sign permit, in the spring of 2010, after the sign had been installed, the DOB, in an audit, determined the sign had not been lawfully approved. The BSA agreed that the sign violated the zoning resolution and that nonconforming use status had been lost because the building and sign had been demolished, had not been used for more than two years, and petitioner’s good faith reliance on the DOB approvals did not estop the agency from enforcing its ordinances.

The Court of Appeals held that the Petitioner did not acquire a vested right to maintain the sign on its property and that “the proper procedure to resolve the issue of its asserted good faith reliance on the erroneously issued permit is an application for a zoning variance.”  The Court noted that while they have held that “[a]n owner of real property can acquire a common-law vested right to develop the property in accordance with prior zoning regulations when, in reliance on a ‘legally issued permit,’ the landowner ‘effect[s] substantial changes and incur[s] substantial expenses to further the development’ and ‘[t]he landowner’s actions relying on [the] valid permit [are] so substantial that the municipal action results in serious loss rendering the improvements essentially valueless’ ” (Matter of Exeter Bldg. Corp. v Town of Newburgh, 26 NY3d 1129, 1130-1131 [2016] [emphasis added and citations omitted]),” that “Vested rights cannot be acquired, however, where there is reliance on an invalid permit (see Matter of Natchev v Klein, 41 NY2d 833 [1977]; see also Matter of Perrotta v City of New York, 107 AD2d 320, 325 [1985], affd for reasons stated 66 NY2d 859 [1985]). When a permit is wrongfully issued in the first instance, the vested rights doctrine does not prevent the municipality from revoking the permit to correct its error.”  Since the 2008 permit was unlawfully issued, petitioner could not rely on it to acquire vested rights. The Court noted that the petitioner never sought a variance.

Matter of Perlbinder Holdings, LLC v Srinivasan, 27 NY3d 1 (3/24/2016)


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