Advisory Opinion 299

Parties: Virgin Property Rights Coalition, LLC and Virgin Town

Issued: December 13, 2024

...

Topic Categories:

Entitlement to Application Approval (Vested Rights)

Requirements Imposed on Development

Lot owners vest in the zoning regulations governing short-term rentals that were in effect at the time the subdivision plat application was submitted. Utah law directly addresses this issue for the relevant time period. Utah legislators passed and then repealed the following year a statute which “freezes” land use regulations in place for ten years following recording of the final plat.

DISCLAIMER

The Office of the Property Rights Ombudsman makes every effort to ensure that the legal analysis of each Advisory Opinion is based on a correct application of statutes and cases in existence when the Opinion was prepared. Over time, however, the analysis of an Advisory Opinion may be altered because of statutory changes or new interpretations issued by appellate courts. Readers should be advised that Advisory Opinions provide general guidance and information on legal protections afforded to private property, but an Opinion should not be considered legal advice. Specific questions should be directed to an attorney to be analyzed according to current laws.

Advisory Opinion

Advisory Opinion Requested by:

John Huber

Local Government Entity:

Town of Virgin
Property Owner:
Virgin Property Rights Coalition, LLC

Type of Property:

Residential

Date of this Advisory Opinion:
December 13, 2024

Opinion Authored By:

Marcie M. Jones, Attorney

Office of the Property Rights Ombudsman


 Issue

Are the lot owners vested in the zoning regulations governing short-term rentals that were in effect at the time the subdivision plat application was submitted?

Summary of Advisory Opinion

A developer secured approval for a residential subdivision development designed to take advantage of the favorable short-term rental regulations in place at the time the application was submitted. Buyers paid a premium for the lots to build homes which would sleep 16 to 56 people. During the subdivision approval process, the planned use was discussed at length with the town, and certain accommodations were built into the project in anticipation of the proposed large-occupancy, short-term rental use. However, after the final plat was approved and recorded, and some of the lots sold, the town adopted a new zoning ordinance which restricts short-term rentals to 3,500 square feet, 5 bedrooms, and a maximum of 10 occupants.

Lot owners claim that the new ordinance should not apply to them because they have vested rights in the laws that were in effect a the time the preliminary plat application was submitted. Utah’s vesting statute provides an entitlement to be reviewed under the land use regulations in effect at the time of a particular application – these regulations include both local ordinance and applicable state statutes.

Utah law directly addresses this issue for the relevant time period. Utah legislators passed and then repealed the following year a statute which “freezes” land use regulations in place for ten years following recording of a final plat. Under Utah Code Section 10-9a-509(4)(a) (2021), municipalities are prohibited from applying new land use regulations to building permit applications for single-family dwellings within a subdivision for ten years after the subdivision plat is recorded.

The subdivision plat application in question was submitted while this freeze was in effect, and the freeze applies throughout the plat review and approval process, including through to the recording of the final plat. Therefore, subsequent land use regulation changes, including those recently passed restricting short-term rentals, will not apply to the development in question, and may not be imposed on new construction within the identified ten-year period. Moreover, once the ten-year period has elapsed, then-existing short-term rentals would continue to be protected by legal non-conforming rights.

Evidence

The following document and information with relevance to the issue involved in this Advisory Opinion were reviewed prior to its completion:

  1. Request for Advisory Opinion submitted by John Huber on behalf of Virgin Property Rights Coalition, LLC, received March 7, 2024 with attachments.

Background

The following background information has been provided by the lot owners. The Town did not respond to the request for an advisory opinion, and as such, we are left to view these alleged facts as undisputed.

On April 27, 2022, John and Jeff Staples (Developer) submitted a preliminary subdivision plat application (Plat Application) to the Town of Virgin (Town) for a residential real estate project (the Subdivision). The property was and is zoned “Rural Residential with Short Term Rental Overlay,” and the proposed project was designed to take advantage of the existing overlay ordinance which at that time did not impose limits on the size of homes, number of bedrooms, or occupancy for short-term rentals.

Lot purchasers reportedly paid a significant premium of $150,000-250,000 per lot, compared to neighboring lots that had short-term rental restrictions. Throughout the plat approval process, the Developer clearly indicated to the Town their intention to sell larger lots (1 to 1.75 acres) at higher values, allowing the construction of very large homes intended to benefit from favorable short-term rental ordinances. Many lot purchasers engaged builders and architects to design homes capable of accommodating 16 to 56 occupants.

The planned use as large-scale short-term rentals was apparently discussed at length at multiple public meetings and the Developer reports working extensively with the Town throughout the approval process. As evidence, the Developer cites a statement made during the July 27, 2022, Town Council meeting, where a council member clarified that all homes would include fire suppression sprinkler systems, as required by the Hurricane Valley Fire Authority for homes used as short-term rentals that exceed ten occupants. Consequently, Note 7 of the approved final plat mandates the installation of a 13D automatic sprinkler system for each home. Furthermore, the Town Council addressed parking requirements and settled on a stipulation for three off-street parking spaces for homes with more than four bedrooms. As discussed with the Town, this requirement was incorporated into the CC&Rs (Covenants, Conditions, and Restrictions) for the Subdivision.

The Subdivision Plat Application was approved, and on March 14, 2023, the final plat and CC&Rs were recorded with the county recorder. At the time of submission, and throughout the approval process, including the recordation of the final plat, the Town had no restrictions on the size, number of bedrooms, or occupancy of short-term rental homes in the development.

However, later in 2023, the Town began discussing limitations on occupants and the number of bedrooms within the short-term rental overlay zone. On September 14, 2023, the Town Council held a public meeting to discuss the proposed changes, which were formally adopted on January 16, 2024. The new ordinance restricts short-term rentals to a maximum of 3,500 square feet, 5 bedrooms, and 10 occupants. These new limitations directly contradict the use the Developer and purchasers had envisioned, as extensively discussed with the Town.

For reasons not clarified in the record, the Town subsequently re-adopted these changes as an Emergency Land Use Regulation on February 1, 2024.

The Developer has alleged that both the initial enactment of the Town’s new short-term rental ordinance, and the subsequent emergency ordinance re-adopting those regulations, are both invalid because they were enacted without proper notice, and that the lots are vested as to the Town’s short-term rental regulations that existed at the time the subdivision application was submitted and approved.

An additional legal consideration is relevant to this case: in 2021, House Bill 409 was passed, freezing land use regulations for a period of ten years after the final plat was recorded. This law took effect on May 5, 2021, but was repealed the following year with the passage of House Bill 303, effective May 4, 2022. The Subdivision Preliminary Plat Application was submitted while this protective law was in effect.

Relevant dates:

Date

Action

Why Significant

5 May 2021

H.B. 409(2021) goes into effect

Restriction imposed: Municipalities are prohibited from imposing new land use regulations on single-family building permit applications for ten years following the recordation of the final plat.

27 Apr 2022

Preliminary Plat application submitted

Application vests: The Preliminary Plat application is subject to the land use regulations in effect on this date, per Utah Code § 10-9a-509(1)(a)(i). This entitled the applicant to have an application reviewed and approved under the laws and ordinances then in effect, preventing retroactive application of any new ordinances after this date.

4 May 2022

H.B. 303(2022) goes into effect.

Restriction removed: Municipalities are no longer prohibited from imposing new land use regulations on building permit applications for ten years following the final plat recording.

14 Mar 2023

Final Plat and CC&Rs recorded

Land use regulation freeze: H.B. 409 (2021) which was in effect when the Plat Application was submitted prevents new land use regulations from applying to building permits for ten years following final plat recordation.

24 July 2023

Public notice: discussions to change short-term rental ordinances

New regulations under discussion: Land use applications submitted after this date are subject to any new regulations regarding short-term rentals adopted within 180 days of initiating changes (per Utah Code § 10-9a-509(1)(a)(ii)(B).[1]

16 Jan 2024

Town Council adopts new short-term rental ordinance

New restrictions adopted: The ordinance limits short-term rentals to 3,500 square feet, 5 bedrooms, and 10 occupants.

14 Feb 2024

Town Council adopts new short-term rental ordinance again as Emergency Land Use Regulation.

Retroactive application: This emergency adoption makes the new restrictions applicable to all land use applications under review, not just those submitted after July 24, 2023.

...

The Developer has requested this Advisory Opinion to answer whether the Town can lawfully impose the amended short-term rental ordinance restrictions on development within the Subdivision, given allegations that the ordinance was not properly noticed and that the Plat Application vests in the laws in effect at the time of submission.

Analysis

This Advisory Opinion request asks whether the recently adopted short-term rental restrictions were validly enacted and apply to building permits and the subsequent use of homes within the Subdivision. Utah law establishes that the Subdivision Plat Application vests in the laws in effect at the time of submission. The central issue is whether subsequent building permits for homes within the Subdivision and ultimate short-term rental use is likewise vested in those laws.

Where no response was received from the Town, the issue of whether the short-term rental ordinance and emergency ordinance were properly noticed and enacted is not fully briefed. As a result, we do not have enough information to provide a sufficiently thorough and informed opinion on these allegations.

Fortunately, however, as to the underlying question of whether these subdivided lots are vested as to the Town’s existing short-term rental regulations, Utah law directly addresses this question. Specifically, for the period between May 5, 2021, to May 4, 2022, state law prohibited municipalities from imposing new land use regulations on building permit applications for a period of ten years following the recording of the final subdivision plat. This restriction was enacted as part of House Bill 409 (2021) at lines 689 – 694 which reads in relevant part:

“. . . for a period of 10 years after the day on which a subdivision plat is recorded, a municipality may not impose on a building permit applicant for a single-family dwelling located within the subdivision any land use regulation that is enacted within 10 years after the day on which the subdivision plat is recorded.”[2]

House Bill 409 (2021) became effective May 5, 2021; however, this restriction was repealed the following year with the passage of House Bill 303 (2022) at lines 749 - 754. House Bill 303 (2022) became effective May 4, 2022, and deleted the protective language entirely. Accordingly, for the period between May 5, 2021, and May 4, 2022, state law prohibited municipalities from imposing new land use regulations, for a period of ten years following recordation, on building permit applications for single-family dwellings within subdivisions which vested in laws in place during this restricted period.

In the present case, the Subdivision Plat Application was submitted April 17, 2022. The Subdivision Plat vests in the laws in place when the Application was submitted pursuant to Utah Code §10-9a-509(a) which states:

An applicant who has submitted a complete land use application . . . is entitled to substantive review of the application under the land use regulations: (A) in effect on the date that the application is complete; and (B) applicable to the application or to the information shown on the application.

(ii)       An applicant is entitled to approval of a land use application if the application conforms to the requirements of the applicable land use regulations, land use decisions, and development standards in effect when the applicant submits a complete application and pays application fees. . .

Thus, the laws in effect at the time of submission govern the review and approval of the Subdivision Plat. Recording the subdivision is the final step of the subdivision approval process  therefore, the vested entitlements that accompanied the approved subdivision enjoy continued validity at the time of recordation.[3]

At the time the Subdivision Plat Application was submitted, those laws included the language of House Bill 404 (2021), which amended UTAH CODE § 10-9a-509(4)(a) (2021) to provide that for a period of ten years after the recording of the subdivision plat, municipalities may not impose any land use regulations on building permit applicants for single-family dwellings within the subdivision that were enacted after the plat was recorded.

We note that while the ten-year freeze was in effect when the Subdivision Plat Application was submitted on April 17, 2022, it was no longer in effect when the final plat was recorded on March 14, 2023. Regardless, the application vests in the laws in place at the time of submission, not at the time of plat recording. The reference to “ten years from recording the final plat” simply establishes the duration during which municipalities are restricted from applying new land use regulations.

As the final plat was recorded on March 14, 2023, the Town may not lawfully apply any new land use regulations until ten years after the recording of the final plat, or March 14, 2033. For clarity, note that at the conclusion of the ten-year freeze, homes that are built and occupied as large-scale short-term rentals will be recognized as legal non-complying structures and legal non-conforming uses and the use may continue in accordance with state law. See Utah Code § 10-9a-511.The definition of “land use regulation” in Utah law reads:

“Land use regulation”: (a) means a legislative decision enacted by ordinance, law, code, map, resolution, specification, fee, or rule that governs the use or development of land; (b) includes the adoption or amendment of a zoning map or the text of the zoning code.

Utah Code §10-9a-103(34). The modifications to the ordinances governing short-term rentals constitute an amendment to the zoning code and, therefore, qualify as a land use regulation subject to the ten-year freeze.

Because the issues are resolved directly by state law in effect when the Plat Application was submitted, the questions of whether the Town’s subsequent ordinances were validly enacted is not directly relevant to resolution of this dispute, as they cannot be applied to this subdivision, even if validly enacted. We will therefore forgo further analysis of these allegations by the developer.

In summary, because the Subdivision Plat Application was submitted during the one-year period where state law “froze” land use regulations, the Town may not apply new land use regulations to building permits within the Subdivision for a period of ten years after the final plat was recorded. This prohibition includes the newly adopted short-term rental restrictions, regardless of whether they were validly enacted. Therefore, the Town may only impose land use regulations on development within the Subdivision in effect at the time the application was submitted, for a ten-year period from when the final plat was recorded.

Conclusion

The applicable subdivision plat application was submitted during the one-year period where state law “froze” land use regulations, therefore, the town may not apply new land use regulations to building permits within the subdivision for a period of ten years after the final plat was recorded. This prohibition would include the newly adopted short-term rental restrictions within that ten-year window. Therefore, the Town may only impose land use regulations on development within the Subdivision in effect at the time the application was submitted, for a ten-year period from when the final plat was recorded.

 ...

Jordan S. Cullimore, Lead Attorney

Office of the Property Rights Ombudsman

 ...

NOTE:

This is an advisory opinion as defined in § 13-43-205 of the Utah Code. It does not constitute legal advice and is not to be construed as reflecting the opinions or policy of the State of Utah or the Department of Commerce. The opinions expressed are arrived at based on a summary review of the factual situation involved in this specific matter and may or may not reflect the opinion that might be expressed in another matter where the facts and circumstances are different or where the relevant law may have changed.

While the author is an attorney and has prepared this opinion in light of his understanding of the relevant law, he does not represent anyone involved in this matter. Anyone with an interest in these issues who must protect that interest should seek the advice of his or her own legal counsel and not rely on this document as a definitive statement of how to protect or advance his interest.

An advisory opinion issued by the Office of the Property Rights Ombudsman is not binding on any party to a dispute involving land use law. If the same issue that is the subject of an advisory opinion is listed as a cause of action in litigation, and that cause of action is litigated on the same facts and circumstances and is resolved consistent with the advisory opinion, the substantially prevailing party on that cause of action may collect reasonable attorney fees and court costs pertaining to the development of that cause of action from the date of the delivery of the advisory opinion to the date of the court’s resolution. Additionally, a civil penalty may also be available if the court finds that the opposing party—if either a land use applicant or a government entity—knowingly and intentionally violated the law governing that cause of action.

Evidence of a review by the Office of the Property Rights Ombudsman and the opinions, writings, findings, and determinations of the Office of the Property Rights Ombudsman are not admissible as evidence in a judicial action, except in small claims court, a judicial review of arbitration, or in determining costs and legal fees as explained above.

The Advisory Opinion process is an alternative dispute resolution process. Advisory Opinions are intended to assist parties to resolve disputes and avoid litigation. All of the statutory procedures in place for Advisory Opinions, as well as the internal policies of the Office of the Property Rights Ombudsman, are designed to maximize the opportunity to resolve disputes in a friendly and mutually beneficial manner. The Advisory Opinion attorney fees and civil penalty provisions, found in § 13-43-206 of the Utah Code, are also designed to encourage dispute resolution. By statute they are awarded in very narrow circumstances, and even if those circumstances are met, the judge maintains discretion regarding whether to award them.

...

Endnotes:

__________________________________________________________________

[1] Information provided from the Developer indicates that the Town Council first discussed amending the short-term rental ordinance on September 14, 2023. However, the pending ordinance statute starts the clock not when Town Council first hears the matter, but rather when “in the manner provided by local ordinance and before the applicant submits the application, the municipality formally initiates proceedings to amend the municipality’s land use regulations in a manner that would prohibit approval of the application as submitted.” Utah Code §10-9a-509(1)(a)(ii)(B). Therefore, arguably, the pending ordinance triggered when the issue was first noticed for consideration by the Virgin Town Planning and Zoning Commission. This Planning Commission meeting was held on August 9, 2023, but noticed, and therefore initiated, on July 24, 2023.

[2] These restrictions do not apply to any changes in the requirements of the applicable building code, health code, or fire code, or other similar regulations. Id.

[3] This presumes that the developer has proceeded after subdivision approval to “implement the approval with reasonable diligence” by recording the plat, the vested entitlements that accompanied the approved subdivision enjoy continued validity at the time of recordation. See, Utah Code 10-9a-509(1)(f) (continued validity of approval conditioned on implementing the approval with reasonable diligence).