RUSSIAN HILL IMPROVEMENT ASSN. v. BOARD OF PERMIT APP.

TOBRINER, J.

The present controversy involves an attempt by the Board of Permit Appeals to authorize the construction of a building which would rise to over twice the maximum height permitted by the governing ordinances of the City and County of San Francisco.

The trial court granted a writ of mandate directing the board to revoke a permit purporting to authorize such construction. Defendants appeal, contending that the permit in question was "lawfully granted" within the meaning of section 150 of the City Planning Code of San Francisco1 in time to immunize the proposed project from the operation of a newly enacted height limitation.2 [1a] Since the permit application was still pending before the Board of Permit Appeals when the new height limitation became effective, we hold that the permit was not "lawfully granted" in time to confer immunity under section 150, and that the trial court properly ordered the permit revoked.

I

Beginning in 1961, a number of public and private agencies investigated possible height limitations for the northern portion of San Francisco. After holding public hearings in late 1963 and early 1964, the City Planning Commission and the Public Buildings, Lands and City Planning Committee of the Board of Supervisors approved enactment of an ordinance to establish a maximum legal height of 105 feet for buildings constructed in the area involved in this litigation.

On January 22, 1964, HAP Development Company, HAP Development Partnership, and Haas & Haynie Corporation (hereinafter collectively referred to as "the developers") filed with the Central Permit Bureau (hereinafter referred to as "the permit bureau") an application for a site permit, seeking permission to construct a 235-foot-high apartment building at the corner of Polk and Greenwich Streets in San Francisco. On February 10, while the permit bureau was still considering the developers' application, the Board of Supervisors enacted the ordinance recommended by the City Planning Commission and by the Public Buildings, Lands and City Planning Committee. By its terms, the height ordinance was to take effect on March 23, 1964. Since the structure which the developers proposed would rise far above the maximum height permitted at that location by the newly-enacted ordinance, the Director of City Planning recommended that the developers' application be denied. Notwithstanding that recommendation, the City Planning Commission voted on March 12 to approve the application.

On March 19, just four days before the effective date of the new height limitation and several weeks after its endorsement by the mayor,3 the permit bureau entered an order which approved the developers' application and transmitted to them a document described on its face as a "permit issued subject to appeal within 10 days to Board of Permit Appeals." The document admonished the developers to incur no expense until the right of appeal had lapsed.

Plaintiff Russian Hill Improvement Association (hereinafter referred to as "the association") filed a timely but unsuccessful appeal to the Board of Permit Appeals protesting the permit bureau's order; on May 4 the board denied the association's application for a rehearing.4 On the association's petition, the superior court ordered the developers' site permit revoked.

Defendants contest the order of revocation on the theory that the Board of Permit Appeals acted properly in testing the permit application under the law which was in effect when the permit bureau approved that application on March 19. Plaintiffs concede that no law then operative rendered the bureau's action unlawful.5 By the time the matter had reached the Board of Permit Appeals, however, the governing law clearly prohibited the structure described in the developers' application. [2] Since the permit bureau had made no record of the reasons underlying its March 19 order,6 and since that order had been suspended by operation of law,7 the entire controversy necessarily came before the Board of Permit Appeals de novo. Accordingly, the question facing the board was whether the permit should be granted, not whether the suspended order of the permit bureau had been lawful.

[3a] Since de novo review by the Board of Permit Appeals is an integral part of the entire permit procedure,8 the board, as an agency entrusted with broadly discretionary power, would ordinarily be bound to apply the zoning ordinances in force at the time of the final administrative decision, rather than the ordinances in effect at the time of preliminary proceedings before the permit bureau.9

[1b] Defendants contend only that section 150, by immunizing outstanding permits from subsequent changes in the zoning ordinances, created an exception to this uniformly recognized principle of administrative law. As defendants interpret the section, it clothes a permit with statutory immunity the moment such a permit is issued by a lawful order of the permit bureau, notwithstanding any change in the governing law pending de novo review of the permit application by the Board of Permit Appeals.10 We have concluded, however, that section 150 requires no such departure from traditional principles of administrative law since that section contemplates only the protection of those permits which have attained finality in the administrative process.11

II

Prior to the enactment of section 150, even a permit which had achieved administrative finality could be revoked on the basis of a subsequent change in the zoning laws.12 The permittee could win immunity from such "ex post facto" revocation only by constructing a substantial portion of the structure authorized by his permit in good faith reliance upon the prior law.13 A permittee who delayed construction in the face of an impending amendment to the zoning laws might find that he had not progressed far enough in time to qualify for immunity;14 one who proceeded with unseemly haste ran the risk that his conduct might bear the stigma of bad faith.15 No facile formula informed the permittee how to strike the delicate balance which would afford the desired immunity.

[4a] To eliminate the uncertainty and waste inherent in these rules, a number of municipalities enacted ordinances which predicated immunity from permit revocation upon some clearly defined action of a municipal agency.16 Under section 150, that action was the "lawful granting" of a permit.

Nothing in the history of section 150 lends the slightest support to the suggestion that it was designed to protect the mere hope that a pending permit application would ultimately receive final approval. We have long held that one who is not yet armed with a presently effective municipal license to proceed with construction must assume the risk that. "before final action [has] been taken on [his] application" (Brougher v. Board of Public Works, supra, 205 Cal. 426, 435), the law might be changed so as to require that his application be denied. (See, e.g., Anderson v. City Council (1964) 229 Cal.App.2d 79, 88-90 [40 Cal.Rptr. 41]; O'Rourke v. Teeters (1944) 63 Cal.App.2d 349, 352 [146 P.2d 983].) Defendants have suggested no reason, historical or otherwise, to suppose that section 150 contemplated a departure from this established rule.

As counsel for the developers acknowledged in oral argument before this court, the central purpose of section 150 is to set a definite date as of which a permittee's rights may be ascertained with certainty. Thus, once a permit has been "lawfully granted" within the meaning of section 150, that section automatically empowers the permittee to complete the approved structure subject only to a requirement of diligent performance.17 To constitute the "lawful granting" of a permit, an action must therefore confer a fixed right, not subject to divestment pursuant to future legislation. Yet the action of the permit bureau in issuing a permit cannot in itself confer such a right. Even after a permit has been lawfully issued by the bureau, the Board of Permit Appeals necessarily retains discretionary power to order that the permit be denied because of a pending change in the law.18 At most, therefore, the lawful issuance of a permit by the bureau can confer a conditional immunity, hardly the kind of shield contemplated by a statute designed to fix the rights of a permittee upon a certain date.

If we were to construe the statute to afford this sort of partial protection for permit applicants in addition to the total protection which it undeniably provides to permits which have become final, we would achieve nothing germane to the purposes of section 150. Such a construction would simply arm the Board of Permit Appeals with discretionary authority to ignore laws which become effective during the pendency of a permit application. The addition of this option to the already broad arsenal of discretionary weapons available to the board would only compound the uncertainty of all interested parties, a result which would subvert rather than subserve the legislative purpose.

III

[5a] Without seriously disputing this analysis, defendants advance two independent arguments in support of their interpretation of the section. They suggest first that, unless we adopt their view, we shall encourage repeated petitions for rehearing before the Board of Permit Appeals by those who wish to postpone the granting of a permit until a new ordinance has become operative. This argument relies upon defendants' unsupported assertion that the Board of Permit Appeals is empowered to grant rehearings without limitation as to time.19 In point of fact, the Board of Permit Appeals possesses no such authority. Sections 8 and 14 of part III, article 1, of the Municipal Code both provide that the Board of Permit Appeals must enter its final order not later than 40 days after the filing with it of the first appeal.

Defendants secondly suggest that the words "issue" and "grant" are synonymous. They insist that those words are used interchangeably in the San Francisco Charter and Municipal Code, and they conclude that, as a linguistic matter, section 150 should be read to protect permits as soon as they have been lawfully "issued" by the permit bureau.20 In approaching this argument, we recall the admonition of Learned Hand: "[I]t is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary...." (Cabell v. Markham (2d Cir.1945) 148 F.2d 737, 739, affd. sub nom. Markham v. Cabell (1945) 326 U.S. 404 [90 L.Ed. 165, 66 S.Ct. 193].)

Even on its own rigidly formalistic level, however, defendants' position proves to be untenable. [6a] Contrary to defendants' assertions, the relevant portions of the San Francisco Charter and the Municipal Code do not use the words "issue" and "grant" interchangeably; instead, they employ the "issuance" concept to describe the initial departmental action which is reviewed by the Board of Permit Appeals, but reserve the "granting" concept for the final disposition of the matter pursuant to the board's orders.21

Defendants correctly note that the Board of Permit Appeals cannot itself "grant" a permit but can only direct the permit bureau to do so. They add, quite properly, that if the order of the permit bureau were not appealed, that action rather than any action taken by the Board of Permit Appeals would constitute the final decision relative to the granting or denial of the permit in question. Although this observation might be of some interest if we were concerned with the question of which agency may grant a permit, it casts no light upon the problem presented by the case before us, since we are here concerned not with who granted the permit but with when it was granted. On that issue, the statutory language is inconclusive; it strongly suggests, however, that a permit has not been "lawfully granted" within the meaning of section 150 until the jurisdiction of the Board of Permit Appeals has been exhausted.22

IV

Finally, by holding that a permit is not "lawfully granted" until all administrative action with respect to the permit application has been completed, we preserve municipal power to prevent the circumvention of newly enacted zoning laws. "Given the objective of zoning to eliminate nonconforming uses, courts throughout the country generally follow a strict policy against their extension or enlargement [footnote omitted]." (County of San Diego v. McClurken, supra, 37 Cal.2d 683, 687.)23 In light of this basic policy, we are loathe to extend the lure of statutory immunity to all who would obtain the permit bureau's preliminary approval during the inevitable interval between the enactment of a zoning ordinance and its effective date. Yet the interpretation of section 150 espoused by defendants would hold out precisely that promise of protection and would thus encourage eleventh-hour evasions of the zoning laws.

By interpreting the section to protect only those permits which have become final, however, we enable municipalities to deter the vast majority of last-minute efforts to race through the gamut of permit procedures. Thus, upon the enactment of a new zoning ordinance, a municipality may simply set the effective date of that ordinance so that it will become operative before any permit thereafter issued becomes final.24 Surely, section 150 was not intended to frustrate this method of discouraging the exploitation of the delays inherent in the municipal legislative process. Under the circumstances of this case, the private interest of the developers must therefore "yield to the public interest in the enforcement of a comprehensive zoning plan." (County of San Diego v. McClurken, supra, 37 Cal.2d 683, 690.)

Special Height District Ordinance No. 35-64 became effective on March 23, 1964. On that date, the permit which the developers sought had not yet been granted; after that date, no agency could lawfully grant it. Were the Board of Permit Appeals empowered to do so, a tightening of zoning regulations by legislative decree could always be nullified by administrative fiat.

We summarize here the considerations which compel our conclusion that a permit is not "lawfully granted" in the sense envisioned by section 150 until all administrative action regarding the permit application has been completed, and that the developers' permit therefore granted no immunity under section 150: [3b] Under traditional principles of administrative law, the Board of Permit Appeals in its de novo review is bound to apply the zoning ordinances in effect at the time of its final decision, not those in force at the time of preliminary proceedings before any subordinate agency. Defendants have failed to demonstrate that section 150 of the City Planning Code enacted an exception to this basic rule. [4b] Although section 150 contemplated the protection of final permits against revocation pursuant to subsequent changes in the zoning ordinances, and although the section sought to eliminate the uncertainty inherent in previous rules governing such "ex post facto" revocation, section 150 did not create any protection for a mere expectancy that a pending application might be finally approved.

[5b] Defendants' two arguments in opposition to this interpretation cannot stand. The first erroneously assumes that repeated petitions for rehearing could indefinitely postpone the effective date of a valid building permit; yet the Municipal Code precludes that possibility by fixing the date when a final order must be entered. [6b] Defendant's second argument, an attempt to equate a permit that is "issued" with one that is "granted," overlooks the separate treatment accorded those two words in the City Charter and Municipal Code: "issuance" there connotes a preliminary departmental action, whereas "granting" designates the final disposition of the matter by the Board of Permit Appeals.

Our ruling that a permit is not "lawfully granted" until the appropriate channels of administrative review have been exhausted enables cities to deter last-minute efforts to circumvent changes in the zoning laws. More broadly, our interpretation of section 150 serves to prevent the proliferation of nonconforming structures. A contrary construction of that section would subvert these objectives, both of which are vital to the achievement of order in the volatile development of modern urban centers.

For the foregoing reasons, we do not read section 150 to endow an appealable order of a subordinate administrative agency with a premature attribute of finality in disregard of the basic purpose of that section and of the City Planning Code of which it is a part.

The judgment is affirmed.

Traynor, C.J., Peters, J., Mosk, J., Burke, J., and Peek, J.,* concurred.

McComb, J.

I concur in the judgment.

The petition of appellants HAP Development Co., Haas & Haynie Corp. and HAP Development Partnership for a rehearing was denied March 22, 1967.