In Richeson v. Helal, (— Cal.Rptr.3d —, 2007 WL 4200765, Cal.App. 2 Dist., Nov. 29, 2007), a California Court of Appeal considered whether a city was compelled to close a neighborhood market where the city had negotiated with the previous owners of the property to only allow for a conditional use for a specified time period. The Court of Appeal held that the city could not negotiate away its future power to change the permitted use or zoning for the property.
Fair Market, a neighborhood grocery market in Santa Monica (“City”), was built in 1928. The building predates the first zoning of the property. When it was first zoned, the property was zoned “Class B-Income,” but that classification was later changed to “R2.” Under the “R2” designation, the operation of a market was a nonconforming use. In 1948, City adopted an ordinance that required all commercial uses to be removed from residential zones within 25 years. Although the 25-year period expired in 1973, City issued Fair Market a conditional use permit to operate for three more years. City extended the permit in 1976, 1979, and 1984.
In 1985, City issued a conditional use permit, CUP 381, which was effective until October 23, 2000. In 1987, Fair Market’s owner sought to build two condominiums behind the market and obtained another conditional use permit, CUP 435, which allowed the owner to develop the rear portion of the property. However, CUP 435 required that the market be made part of the common area and that a “Declaration of Covenants, Conditions, Restrictions and Reservation of Easements” (“CC&R’s”) must be created to provide that ownership of the market must be tied to one of the condominium units and that, when the market is destroyed or removed, the area must be landscaped as part of a common area. The approvals for CUP 435 also provided that “the market use was subject to the time limits and conditions set forth in CUP 381 and required the recording of the CC&R’s.”
An Agreement Imposing Restrictions on Real Property (“AIR”) was also entered into between the property owner and City which stated that the market had a conditional use permit that was valid until October 23, 2000, and that City was approving the permit and parcel map “subject to conditions which are imposed for the public and surrounding landowners and without which no permit would be issued.” The AIR provided that the market should be removed and the area landscaped when retail use is discontinued for one year or when the conditional use permit expires, or is revoked, whichever occurs first.
The condominiums were built on the property. In April 2000, an application was filed to authorize the operation of Fair Market beyond October 23, 2000. Juanita Richeson, the owner of the condominium not tied to Fair Market, supported the request to extend the life of Fair Market. While the application was pending, Haque Helal purchased the market and the other condominium. City ultimately issued CUP 00-010 which did not contain a durational limit and allows Fair Market to stay open indefinitely subject to certain conditions.
After Richeson learned that the latest conditional use permit allowed for an indefinite extension, Richeson brought suit to compel closure of Fair Market based on the AIR and the CC&R’s. The trial court found that Helal may not operate a market on the property, the building housing the market must be removed, and the area must be landscaped. Helal appealed the trial court’s decision.
The Court of Appeal reversed the decision of the trial court that required Fair Market to be closed. Richeson had asserted that the AIR and the CC&R’s mandate that Fair Market could not continue operating after October 2000, even if the City later extended the nonconforming use indefinitely. The appellate court found that neither the AIR nor the CC&R’s could be interpreted as prohibiting City from changing the permitted uses or zoning for the property. Furthermore, if the AIR or the CC&R’s were interpreted to contain such a prohibition, the court concluded they “would be invalid as an attempt by the City to surrender its future right to exercise its police power respecting the property.”
Cities have been granted “broad and flexible power to promote the public welfare.” A city’s power to zone derives from its police power. The AIR in this case is a regulatory agreement between the former owner of Fair Market and the City that memorialized “for the public’s benefit a conditional use.” The CC&R’s and the AIR did not contain express provisions that restrict City’s power to legislate in the future. However, even if the documents had contained an implied provision restricting City’s power to legislate, it would be unenforceable. “Land use regulations involve the exercise of the police power and the right to exercise the police power cannot be contracted away in the future.” Therefore, the CC&R’s and AIR can not be interpreted as contracting away City’s right to exercise its power to extend the life of Fair Market.
Furthermore, neither the AIR nor the CC&R’s provided Richeson with any vested right in the termination of the property as a market. “Just as a landowner has no vested right in existing or anticipated zoning . . . the owner of [the condominium not attached to ownership of the market] had no vested right in the existing conditional use permit.”