There's more litigation on this issue now, says Doug Peterson of the National League of Cities. "As residential property values have gone up in the last few years, people are more sensitive to things that have an impact on their property values."
Zoning coverage works like malpractice insurance, with insurers taking on the risk and legal expense of claims being filed against the zoning authority. The increase in lawsuits and the lack of success insurers have been having in the current financial markets are causing the cost of such insurance to become prohibitive in many places.
Some state municipal leagues are now offering pooled coverage to their members. Other municipalities are hoping for legal protection against further lawsuits. Michael Moran, a supervisor in Ann Arbor Township, Michigan, says he has recommended to a governor's panel studying the issue that municipalities be exempt from litigation if their decisions comply with master plans and that they should be able to recover attorneys' fees if they prevail in court.
Ann Arbor Township's insurance coverage was not renewed this year, even though there have been no successful challenges to its zoning decisions. "I've communicated to our planning department that they should not change their approach" as a result of losing coverage, Moran says, "but it does cause some disquiet."
