Court Estops Township From Revoking Governmental Approval for Real Estate Development Project
Written by: Alan Nochumson
The meaning of the phrase “communication is key” was demonstrated by the Pennsylvania Commonwealth Court’s recent ruling in Mclogie Properties Inc. v. Kidder Township Zoning Hearing Board, 2003 Pa. Commw. LEXIS 90 (June 30, 2023).
In an extensive opinion issued by Judge Christine Fizzano Cannon, the Commonwealth Court prevented a township from compelling a property developer to modify an already constructed building structure that technically ran afoul of local zoning ordinances based upon the doctrines of variance by estoppel and equitable estoppel due to the failure of township officials to provide the property developer with proper guidance during the real estate development project.
In 2019, the property developer in Mclogie Properties purchased an unimproved lot in Kidder Township, the opinion said.
A couple months later, the property developer in Mclogie Properties applied for a zoning permit to construct a three-story single-family residence on the property, the opinion said.
At that time, in Mclogie Properties, the township’s code enforcement officer coordinated with the property developer during preliminary inspections of the property, the opinion said.
After that code enforcement officer retired, he was replaced by individuals who separately served as a zoning officer and a building code enforcer, with no one in the township informing the property developer of this change in responsibilities, the opinion said.
Subsequently thereafter, the zoning and building permits for this real estate development project were issued, the opinion said.
After construction began, the zoning officer discovered that the foundation’s front elevation for the building structure at the property was 11 feet lower than in the original plans and drawings which the zoning officer had approved, the opinion said.
As a result, the property developer halted construction and sought guidance from the building code enforcer, the opinion said.
The building code enforcer instructed the property developer to submit updated plans and drawings to the township that the building code enforcer approved, the opinion said.
According to the opinion, the building code enforcer did not notify the zoning officer or revoke the building permit that was already in place.
Construction then renewed at the property and township officials inspected the building structure multiple times and ultimately issued a certificate of occupancy to the property developer.
Afterwards, the zoning officer learned of the revised plans and drawings in a phone call with the building code enforcer that ran afoul of the township’s zoning ordinance.
Soon thereafter, the zoning officer sent an enforcement notice to the property developer, asserting that the building structure was more than the allowed three stories high (which included the basement) and taller than 35 feet in height allowed under the township’s zoning ordinance, the opinion said.
The property developer appealed the enforcement notice to the Zoning Hearing Board (ZHB) and sought a variance for the building structure as constructed.
At the hearing before the ZHB, the property developer testified that bringing the building structure into compliance with the strict mandates of the township’s zoning ordinance would cost more than $50,000.
Nonetheless, after the hearing, the ZHB denied the request for a variance, finding that the approval by the building code enforcer was “neither credible nor probative” and that the township only needed to provide sufficient reasons for issuing its enforcement notice.
The property developer appealed this administrative ruling to the trial court which affirmed the ZHB’s decision.
The property developer then appealed the trial court’s ruling to the Commonwealth Court.
Ultimately, the Commonwealth Court concluded that the property developer was entitled to a variance by estoppel and that the township was equitably estopped from enforcing the zoning ordinance against the property developer.
Citing to Skarvelis v. Zoning Hearing Board of Dormont, 679 A.2d 278, 281 (Pa. Cmwlth. 1996), the Commonwealth Court stated that, in order to establish a variance by estoppel, the party seeking a variance must establish the following: the municipality’s failure to enforce the zoning ordinance for a long period when the municipality knew or should have known of the violation but acquiesced in the illegal use; good faith and innocent reliance by the property owner on the validity of the use throughout the proceedings; substantial expenditures by the property owner in reliance on the belief that the use was permitted; and unnecessary hardship from denial of the variance, such as the cost to demolish an existing building structure.
Regarding the first element, while there was only a single year of inaction by the township, the Commonwealth Court in Mclogie Properties found acquiescence by the ongoing construction, the township’s knowledge regarding the construction, the express approval by the building code enforcer of the revised plans and drawings, the multiple inspections, and the issuance of the certificate of occupancy for the constructed building structure.
That only one year was sufficient in light of the actions and omissions of the township was telling in that the Commonwealth Court cited its other rulings where a variance by estoppel was granted for governmental inaction ranging in time from seven to 36 years.
Regarding the second element, the Commonwealth Court in Mclogie Properties found good faith reliance by the property developer because no one had informed the property developer that the former township’s zoning and building code enforcement officer’s work functions had been divided between separate township officials and that the property developer did not know that it should have received governmental approval from both of these township officials.
Regarding the third element, substantial expenditures in reliance on the validity of the use, the Commonwealth Court in Mclogie Properties pointed out that property developer built a basement with a 8.5 foot ceiling while relying upon the validity the building permit issued by the building code enforcer, which the Commonwealth Court determined as sufficient reliance.
Finally, regarding the fourth element, unnecessary hardship from denial of a variance, the Commonwealth Court in Mclogie Properties found that the cost of $50,000 in filling in the basement was a sufficient unnecessary hardship.
Quoting Walnutport Borough Zoning Hearing Board, 2009 Pa. Commw. Unpub. LEXIS 549, the Commonwealth Court in Mclogie Properties emphasized that Pennsylvanian courts have stated that unnecessary hardship must be more than “mere economic or personal hardship” and must be both “unique to the property” and that the “zoning restriction sought to be overcome must render the property practically valueless.”
That the Commonwealth Court in Mclogie Properties found that $50,000 was unnecessary hardship perhaps highlighted that it was the township’s lack of communication which made the expense “unnecessary,” refusing to impose that cost unto the property developer.
Additionally, the Commonwealth Court in Mclogie Properties held that the township was equitably estopped from imposing what it determined to be an untimely zoning requirement.
Relying upon In re Jackson, 280 A.3d 1074, 1083 (Pa. Cmwlth. 2022), the Commonwealth Court stated that equitable estoppel may arise from an informal promise implied by one’s words, deeds, or representations that induces reasonable reliance by another to the promisee’s detriment.
The Commonwealth Court in Mclogie Properties found reliance from a number of pertinent facts—the property developer relied, to its detriment, on the building code enforcer’s approval of the revised plans and drawings; the building permit was not revoked upon revision of the plans and drawings; the property developer was not notified that additional zoning approval would need to be sought; multiple inspections occurred during the construction which seemed to indicate that there were no issues; and, lastly, a use and occupancy permit was issued when construction was complete.
It was also determined by the Commonwealth Court in Mclogie Properties that the ZHB’s enforcement of the zoning ordinance would be to the property developer’s detriment as the property developer would have to incur additional expenses if it was forced to comply.
As a result, the Commonwealth Court in in Mclogie Properties concluded, in the alternative, the township was estopped from enforcing the township’s zoning ordinance against the property developer.
Cameron Cummins, a second-year law student at Washington & Lee University School of Law, who is interning at the firm, assisted in the preparation of this article.
Alan Nochumson is the principal of Nochumson P.C., a legal services firm with a focus on real estate, land use & zoning, litigation, and business counseling for the people of Pennsylvania and New Jersey. Nochumson is a frequent author and lecturer on issues commonly confronting businesses, individuals and professionals. You can reach him at 215-399-1346 or firstname.lastname@example.org.
Alex Goldberg is an associate attorney at the firm. You can reach him at 215-399-1346 or email@example.com.