Can a Developer Win a Lawsuit Over a City’s Delay?
Businesses that develop property often spend months, sometimes years, working through a city’s zoning and licensing process. When a project collapses after enough of those delays, it is natural to ask whether the delay itself violated the developer’s constitutional rights. A recent Sixth Circuit decision, Rubicon Real Estate Holdings, LLC v. City of Pontiac, is a useful reminder that the answer is usually no.
When Can Government Delay Rise to a Constitutional Violation?
Claims against a city over a slow approval process are usually brought under 42 U.S.C. § 1983, but the statute does not turn ordinary government delay into a constitutional case. A due process claim generally requires a protected property interest, and discretionary approvals, like a permit the city may grant after weighing several factors, rarely qualify. Equal protection requires intentional differential treatment without a rational basis, and a takings claim requires the loss of a recognized property interest. Slow or frustrating processing rarely clears any of these bars on its own.
Why Doesn’t Difficult Permitting Usually Support a Claim?
Because most zoning and licensing decisions are discretionary, an applicant has no vested right to a particular outcome, and delay alone deprives it of nothing the Constitution protects. Even an official who takes a stubborn or mistaken position is not, for that reason, violating constitutional rights. Courts also examine who actually suffered the harm, since a developer asserting injuries felt by its prospective tenants may be raising someone else’s claim.
What Happened in the Case?
A developer set out to revive a vacant Pontiac property and lease space to medical marijuana growers and processors. The city rezoned the parcel and approved the permit the project needed, but licensing for the developer’s tenants dragged on for roughly a year and a half, with the interim city clerk repeatedly finding the applications deficient. The developer eventually won relief in state court, but by then its tenants had walked away and the project collapsed. The developer sued the city and the clerk for due process, equal protection, takings, and First Amendment retaliation violations. The district court granted summary judgment to the city and the Sixth Circuit affirmed, holding that the record showed city officials at worst lagged in granting discretionary approvals. As frustrating as that was, it did not clear the high bar of a constitutional violation, and because there was no violation, the clerk was also entitled to qualified immunity.
Lessons for Developers:
The Constitution is not a backstop for government delay. Developers should treat the risk of delay as something to negotiate up front, since lease and financing terms tied to government approvals are what actually decide who bears the cost when permitting stalls. It is also worth noting that the developer’s real relief came from a state court order directing the city to act, not from a federal claim. When a city slow-walks a discretionary approval, state remedies like mandamus or declaratory relief are often the more direct path than a § 1983 suit.