Striking an Equitable Balance: Placing Reasonable Limits on Retroactive Zoning Changes after Kittery Retail Ventures, LLC v. Town of Kittery

Thirty years ago, a developer who wanted to build a shopping center had to do little more than obtain a building permit to go forward with the project. Today, however, the regulation and review of development projects involves a lengthy process of securing a series of permits, often including site plan or subdivision approvals, traffic studies, and environmental impact reviews. Navigating this review process forces developers to negotiate with the community and design their projects to fit the applicable standards adopted by the local, state, and federal regulations, arguably improving the quality of development in our communities. But the lengthy review process also forces developers to invest enormous amounts of money in the planning phase of development, a phase during which the developer in most states has few (if any) vested rights and in which land use ordinances can be changed in a manner that would prevent the entire project. In Kittery Retail Ventures, LLC v. Town of Kittery, the Maine Supreme Judicial Court, sitting as the Law Court, upheld a citizen-initiated zoning change that had this very effect-a retail development project was blocked. The project had been proposed and was being reviewed by the town\u27s planning board under then-existing ordinances, before the referendum proposal was filed. Indeed, the referendum was a direct effort to defeat the developer\u27s proposal. Rather than acknowledging the increasingly complex development process, the Law Court adhered to traditional vested rights rules, holding that a developer does not obtain a vested right to develop until a valid building permit has been issued and physical construction has actually begun. After rejecting the developer\u27s argument that the targeted nature of the zoning change should give the developer an equitable vested right, the court found that retroactive application of the zoning change did not violate the developer\u27s right to substantive due process because the developer did not have a vested property right in the project. Thus, the zoning change was permitted to reach back and bar a project that had been proposed months before the citizen-initiated referendum at issue in the case had been proposed. By validating a virtually unlimited reach-back power, the Law Court has failed to properly balance the equities that underlie a traditional vested rights analysis. Instead of strik[ing] a fine balance between the competing interests of the developer and the municipality, the court has virtually ignored the interests of the developer. At the same time, by allowing municipalities to enact zoning changes with unlimited reach-back provisions, the court has removed any incentive for meaningful, comprehensive planning. Instead, municipalities are free to change their standards at will to disapprove individual projects that a group of citizens happen not to like. Ultimately, this power to zone retroactively renders any attempts at prospective planning completely meaningless. At roughly the same time that the Law Court was undermining the importance of prospective planning with its holding in Kittery Retail Ventures, the Maine Legislature, like many other legislatures across the country, was sending precisely the opposite signal, mandating prospective planning by enacting a revised comprehensive planning statute. The Law Court should remove the serious disincentives to planning it has created, by reconsidering its holding in Kittery Retail Ventures. Unless the court does so, the Maine Legislature should act to reinforce the importance of comprehensive, prospective planning by enacting a statute that limits the retroactive application of changes in land use standards