Do Development Rights Vest so that Future Traffic Impact Fee (“TIF”) Legislation is Inapplicable?

When wrestling with the judicial morass that is Hawaii’s vested rights case law, it is sometimes helpful to look at what sister courts are doing in other jurisdictions.

Washington, in particular, takes the guesswork out of vested rights by statute. In Washington, a project vests when a fully completed application for preliminary plat approval is submitted. RCW 58.17.033. Consequently, when a developer challenges the applicability of a law to a proposed project on the theory of vested rights, the only question left for a court is whether the challenged law is a "zoning law."

According to New Castle Invs. v. City of LaCenter, 98 Wn. App. 224 (1999), a TIF ordinance is not a zoning law. The court reasoned as follows:

At common law, "[t]he purpose of the vested rights doctrine [was] to provide a measure of certainty to developers and to protect their expectations against fluctuating land use policy." . . .

But although the vested rights doctrine was to protect developers, there are "important competing policy concerns regarding vested rights for land use":

[D]evelopment interests protected by the vested rights doctrine come at a cost to the public interest because the practical effect of recognizing a vested right is to sanction the creation of a new nonconforming use. If a vested right is too easily granted, the public interest is subverted. However, we also recognize developers' needs for certainty and fairness in planning their developments. . . .

. . . With these concerns in mind, it is important that the vested rights doctrine not be applied more broadly than its intended scope. The cost of a development, which is the only aspect of development affected by TIFs, is a large part of the developer's decision making. Certainly it is to the developer's advantage if the cost can be determined early in the process and with some degree of certainty. But it does not necessarily follow that the cost of development is the type of expectation the vested rights doctrine was intended to protect.

The right that vests . . . is "the right to have the uses disclosed in [the applicant's] application considered by the county or local government under the laws in existence at the time of the application." According to legal commentators, "[t]he vested rights rule is generally limited to those laws which can loosely be considered 'zoning' laws." WASH. STATE BAR ASS'N, WASHINGTON REAL PROPERTY DESK BOOK, § 97.8(2)(d) (3rd ed. 1996). A TIF does not limit the use of land, nor does it resemble a zoning law. Instead, a TIF merely affects the ultimate cost of the development. Thus, it is not the type of right that vests under the vested rights doctrine.

By creating clarity and predictability in the law, municipalities avoid liability for ad hoc decisions unmoored by judicial and legislative guidance, landowners benefit from predictability in the law, and communities benefit from projects and housing that can be sold at a lower price.