AVCO COMMUNITY DEVELOPERS INC v. SOUTH COAST REGIONAL COMMISSION (1975)

The California Coastal Conservation Act (the Act) which became effective November 8, 1972, created a California Coastal Zone Conservation Commission (the state commission) and various regional commissions of which the South Coast Regional Commission (regional commission) was one. (Pub.Resources Code, § 27000 et seq.) The primary function of these commissions is to develop a plan for future land use within a defined coastal zone.

Ancillary to the planning process, the Act provides for a ‘permit area’ within the coastal zone and requires that ‘On or after February 1, 1973, any person wishing to perform any development within the permit area shall obtain a permit authorizing such development from the regional commission . . ..’ (Pub.Resources Code, § 27400.)

The Supreme Court of California has interpreted the permit requirement to be applicable to construction commenced after February 1, 1973, but inapplicable to projects upon which substantial construction had been performed prior thereto. (San Diego Coast Regional Com. v. See the Sea, Limited, 9 Cal.3d 888, 109 Cal.Rptr. 377, 513 P.2d 129.) Further, Public Resources Code section 27404 sets out a ‘vested right’ exemption from the permit requirement.

Public Resources Code section 27404 provides: ‘If, prior to November 8, 1972, any city or county has issued a building permit, no person who has obtained a vested right thereunder shall be required to secure a permit from the regional commission; providing that any substantial changes may be made in any such development, except in accordance with the provisions of this division. Any such person shall be deemed to have such vested rights if, prior to November 8, 1972, he has in good faith and in reliance upon the building permit diligently commenced construction and performed substantial work on the development and incurred substantial liabilities for work and materials necessary therefor. Expenses incurred in obtaining the enactment of an ordinance in relation to the particular development or the issuance of a permit shall not be deemed liabilities for work or material.’

In April of 1973, Avco Community Development, Inc. (Avco) was in the process of developing a residential community on a tract of land owned by it in the Laguna Niguel area of Orange County, a tract which lies within the permit area. Regional and state commissions denied Avco's claim for exemption from the permit requirement. Avco then petitioned the Supetior Court of Los Angeles County for a writ of mandate. Avco appeals from a judgment denying its petition.

The trial court basing its findings of fact upon substantial evidence found that Avco had performed substantial lawful construction prior to February 1, 1973 and prior to November 8, 1972, had in good faith commenced construction, performed substantial work and incurred substantial liabilities for work and necessary materials.

The trial court concluded that under the circumstances basic fairness dictated that Avco be permitted to complete its project. With this we agree. However, the trial court further concluded that Avco ‘is barred from doing so under the law of the State of California as enunciated in Spindler Realty Corp. v. Monning, 243 Cal.App.2d 255 [53 Cal.Rptr. 7] solely by reason of its lack of a permit authorizing it to construct buildings.’ With this we disagree.

The property in question is designated as Tract 7479. It consists of 74 acres and is part of larger 836 acre parcel known as the Capron Property. The Capron Property is adjacent to the Pacific Ocean but only 473 acres are within the permit area. The Capron Property in turn is part of 7,936 acres comprising the area known as Laguna Niguel. Avco has been involved in a development of Laguna Niguel since 1968.

In 1968, Avco began to develop the entire Capron Property as an interdependent and interrelated project. By January of 1972, a substantial portion of the Capron development was completed. Between 1968 and 1971, Avco completed numerous planning tasks required for the development of Tract 7479 as an integral part of the Capron development.

During 1968, a borrow site was established, grading permits obtained, grading commenced and an updating of the Laguna Niguel General Plan reflected the start of Tract 7479 as a development.

In 1969, both tentative and final tract maps were developed and by 1970 were amended to reflect Tract 7479 as part of a recorded and approved tract map.

During 1971, various geological studies were undertaken, the maps showing the detailed configuration and development of Tract 7479 were revised following consultation with various county agencies and after hearings before the county planning committees. As a result of the submission of material and studies by Avco and close coordination with local officials, the county was informed regarding land uses, number of lots and their specific descriptions, proposed use of the lots plus information regarding all drains, roads, sewage disposal facilities, etc. In addition, Avco supplied a model of the buildings which they intended to construct with depiction thereon of the number, size, type and placement of the buildings proposed for Tract 7479. Within the larger area, of which Tract 7479 was an integral part, streets, pedestrian walkways, bicycle tracks, master utilities (including electricity, gas, water and sewers, storm drain facilities) and a portion of the Pacific Coast Highway were planned and developed as integrated systems for serving Tract 7479 as well as the rest of the property.

In September of 1971, Avco and the county entered into an agreement known as the ‘Beach Agreement’ whereby Avco sold to the County of Orange approximately eleven acres of sandy beach for a less than fair market price and 23 acres of land for parking at fair market price. Certain disputed public access to the beach was granted by Avco. Avco also agreed to grade and improve the land to conform to Orange County plans and specifications. In return the county was to (a) approve the master plan amendment including Tract 7479 approval; (b) approve Avco's request for planned community zoning upon its property including Tract 7479; (c) approve Avco's grading plan; and (d) seek enactment of Assembly Bill No. 1668 approving the Beach Agreement. The Beach Agreement was executed as proposed, following approval by the state Legislature in October 1971.

During 1972, Orange County issued a grading permit to Avco. Under Orange County's system of issuing buildings permits, the county first issues a grading permit and after rough grading is completed, issues a building permit. (Orange County Code, section 7–1–64(2f) p. 1956.) Since grading was still underway at the time the Act become effective, Avco never received a permit labelled ‘building permit’ to construct buildings on Tract 7479.

By April 1972, under the grading permit, Avco had expended the sum of $676,954.00 and had incurred liabilities in the amount of $747,700.00 in connection with the development of Tract 7479. As work continued throughout the year 1972, storm drains and culverts were constructed. From April 1972 to November 8, 1972, work continued apace. Storm drains and box culverts were completed. The Pacific Coast Highway was widened in accordance with agreement with the state. By November 8, Avco had expended some $7,503,031.00 in costs and had incurred approximately $6,052,794.00 in liabilities in connection with development of property within the permit area. And by February 1, 1973, the effective date of the Act, these costs and liabilities had risen to $9,071,794.00 and $5,818,153.00 respectively in the Capron Property. In the single Tract 7479, $2,082,070.00 in costs had been expended and $740,468.00 in liabilities had been incurred.

The trial court found that Avco had performed work as stated above, had expended monies and incurred obligations as previously recited and had done so in reliance upon approval of the General Plan, the development plan for Laguna Niguel, tentative and final tract maps and in reliance upon various permits, licenses and representations by the county that Avco could proceed with the subdivision, construction and improvement of Tract 7479 including the construction of buildings thereon.

In brief, Avco was led reasonably to believe that no further discretionary governmental approval was necessary before it could proceed to construct buildings upon Tract 7479.

The trial court noted that, although there was no on-site construction on Tract 7479, the substantial subdivision improvement such as streets, bridges, revetments, etc. were reasonably intended to accommodate buildings to be erected upon Tract 7479 and could not reasonably be used for any other purpose. At all material times the maximum number, size and type of buildings that would be allowable on the tract could be ascertained by reference to the tract map, planned community district regulations and the model submitted by Avco.

The trial court further found that Tract 7479 was one interrelated, integrated and comprehensive project in conjunction with the Laguna Niguel project, the remainder of the Capron Property and the Niguel Beach Park which came into being as a result of the aforementioned Beach Agreement.

Spindler Realty Corp. v. Monning, supra, 243 Cal.App.2d 255, 53 Cal.Rptr. 7, which the trial court viewed as controlling is the high water mark of harsh results which the courts have countenanced in upholding the exercise of the police power in zoning and is factually and legally distinguishable.

Public Resources Code section 27404 is a codification of the concept of ‘vested rights' which was recognized but found inapplicable in Spindler. Section 27404 is not a codification of the Spindler result. In short, Spindler does not fix the parameters of the vested rights doctrine for all time and under all circumstances. All that Spindler held was that the City of Los Angeles was not estopped to change the zoning on property unless the property owner had commenced construction pursuant to a building permit issued under the existing zoning and that grading, albeit substantial, performed pursuant to a grading permit did not under the applicable Los Angeles City ordinances satisfy the requirement.

Spindler in turn relied on Anderson v. City Council, 229 Cal.App.2d 79, at page 90, 40 Cal.Rptr. 41 at page 48, where the court held that property owners ‘did not acquire a vested right, as against future zoning, merely be purchasing the property in reliance on the existing zoning and thereafter making certain endeavors to develop it for a specified use. Since all of these acts were performed prior to the date upon which [property owners] sought to obtain a building permit, they could not have been performed in reliance on the required official action, or the granting of a license or privilege, by the city. It follows that [property owners] never acquired any privilege which could ripen into a vested right . . ..’ (Emphasis added.)

The doctrine of ‘vested rights' whether under common law or as codified in Public Resources Code section 27404 is essentially based on the equitable doctrine of estoppel. Where the government by its action has induced a good faith reliance in a property owner that he has approval to develop his property in a certain manner causing the latter to substantially alter his position to his detriment, the government is estopped to deny its approval.

The Attorney General, with commendable fairness and an appreciation of reality has taken the position here and in other cases that in determining whether a property owner or developer has acquired a vested right to proceed, a ‘building permit’ is not necessarily the sine qua non of such right. In large scale subdividing, government approval of various phases of the development may constitute the final discretionary approval upon which the developer may justifiably rely even though that approval may not be in the form of a ‘building permit.’

In San Diego Coast Regional Com. v. See the Sea, Limited, 9 Cal.3d 888, 109 Cal.Rptr. 377, 513 P.2d 129, the Supreme Court specifically declared that the Act did not impose any moratorium on building or construction. Thus for projects and developments commenced under the aegis of local authority and which, prior to the effective date of the Act, have proceeded to the point where by virtue of the approval of the local agency the land owner and developer has attained a vested right to proceed, there can be no superimposition of a requirement of further discretionary approval of the regional commission.

Thus the question in this case is narrowed to a determination of whether Orange County would be estopped to refuse to issue a ‘building permit’ or deny Avco the right to proceed to complete its project. If the answer is no then Avco must seek a permit from the regional commission with the attendant risk that that body may so condition the issuance of the permit as to render the project economically unfeasible. If the answer isyes, the project may proceed as if the Act had not been adopted.

We hasten to point out that there is not the slightest hint in this record to indicate that Avco acted in other than complete good faith. There was no attempt to ‘beat the clock.’

Avco in response to multiple demands from many agencies of the Orange County government attempted to provide a planned environment which would satisfy all foreseeable needs of the citizens of the area as well as preserving the area in as nearly the same natural condition as possible. The condition precedent for governmental approval for Avco was compliance with a time-phased and intricately fashioned scheme for realization of an optimum life style for future inhabitants of the area. Such requirements could not be encompassed within the narrow ambit of a ‘building permit,’ as that document was conceived under Orange County's regulatory scheme.

Without the work performed under the grading permit, no construction could have taken place and by the same token it would have been sheer folly to expend such a staggering effort on grading, drainage, roads, etc., if the culmination of the effort was not to be the erection of homes as described by Avco in its plains and models. Necessarily government imposed conditions on the grading of a particular development are dictated by the structures which are proposed to be built on the ground. Grading is an integral and inseparable part of construction.

The requirement that grading be performed pursuant to a grading permit prior to the issuance of a building permit is simply a device to permit an inspection of the grading before commencement of the actual construction of any building. The inspection thus assures that the grading is properly performed before foundations are installed. This procedure then is similar to what occurs after construction is commenced when, as various stages of the building are completed, i. e., pouring of the foundation, framing, installation of plumbing, etc., inspections are required before the next phase is commenced. This is the usual procedure in most constructions.

The issue to be determined by the various inspections is the conformance of that phase of the construction to building requirements. The county does not at each step at which an inspection is required, retain the power to totally disapprove the building, but retains only the power to compel compliance with building requirements.

Thus on completion of the grading the issue is compliance with the conditions required for the proposed construction and not approval or disapproval of the proposed construction.

We conclude that the exemption provided by Public Resources Code section 27404 applies where the property owner has performed substantial work in good faith reliance on the final discretionary approval of the controlling governmental entity, regardless of whether that approval is designated a ‘building permit’ or some other type of permit.

Under the trial court's findings which are well supported by the record, Orange County had given its final discretionary approval prior to November 8, 1972 and would be estopped to now deny Avco the right to complete its project.

The construction performed here by Avco even though it was not actually on the end product, the houses, was substantial and was performed lawfully and in good faith prior to November 8, 1972, and thus well before February 1, 1973. By force of Public Resources Code section 27404 or the rationale in San Diego Coast Regional Com. v. See the Sea, Limited, supra, no commission permit was required. (Also see Pacific Palisades Property Owners Assn. v. City of Los Angeles, 42 Cal.App.3d 781, 117 Cal.Rptr. 138.)

We agree with Avco when it states in its brief that to block completion of this project ‘is wrong whether viewed from a factual, legal, equitable or societal point of view. A tremendous amount of resources—both public and private, have been invested in a partially completed project. If [completion is prevented] that investment will have been wasted.’ And we might add a hardship would be visited on a private property owner that even the most zealous advocate of land use regulation could not in good conscience advocate.

The judgment is reversed and the trial court is directed to issue the writ of mandate as prayed for.

I dissent.

Not only was no building permit obtained by 1 February 1973 but no building plans had been prepared or filed. Nothing in the record indicates how many units Avco was planning to build or to that height its buildings were to be constructed. Unlike San Diego Coast Regional Com. v. See the Sea, Limited, 9 Cal.3d 888, 109 Cal.Rptr. 377, 513 P.2d 129, there has been no good faith reliance upon the issuance of a building permit prior to the critical date of 1 February 1973. (pp. 890, 891, 893, 109 Cal.Rptr. 377, 513 P.2d 129.) No good reason appears for the creation of further exemptions to the act. I would require Avco to comply with the act and apply to the Regional Commission for a permit.

COMPTON, Associate Justice.

BEACH, J., concurs.