## Facts

- Alex and Martha Stone bought about six acres in Wilton, Iowa, intending to build a federally subsidized, low-income multi-family housing project.
- At purchase, roughly one-fourth of the tract was zoned R-1 (single-family) and the remainder R-2 (multi-family).
- The Stones incurred predevelopment expenses (including architectural and engineering work) and obtained a Farmers’ Home Administration loan commitment.
- After a public meeting, the planning and zoning commission recommended rezoning the area, including the Stones’ tract, to single-family use due to claimed inadequacies in sewer, water, and electrical services.
- The city denied the Stones’ building-permit application while the rezoning recommendation was pending.
- The city council adopted an ordinance rezoning the Stones’ land (and other nearby tracts) from multi-family to single-family residential.
- The Stones sued for declaratory and injunctive relief and sought damages (including anticipated lost profits) based on alleged arbitrariness, conflicts of interest, and an unconstitutional taking.
- The district court dismissed the petition, including striking the lost-profits claim; the Stones appealed.

## Issues

1. Whether the rezoning ordinance from multi-family to single-family residential was arbitrary, unreasonable, or otherwise invalid.
2. Whether the Stones had a vested right to develop under the prior zoning such that the rezoning constituted a compensable taking.
3. Whether the Stones could recover damages, including anticipated lost profits, based on the rezoning and permit denial.
4. Whether alleged conflicts of interest or procedural irregularities invalidated the rezoning action.

## Decision

- The Iowa Supreme Court affirmed the district court.
- The rezoning was upheld as a valid exercise of municipal police power supported by a rational public-welfare basis (infrastructure capacity concerns).
- The Stones lacked a vested right in the prior multi-family zoning because their expenditures and commitments were not sufficiently substantial and were largely preparatory.
- The rezoning did not constitute an unconstitutional taking because the property retained economically viable use under single-family zoning.
- The trial court properly rejected lost-profit damages in the absence of a taking or vested right and given the contingent, speculative nature of the claimed profits.
- Allegations of improper motive, discrimination, or disqualifying conflicts of interest were not proven on the record.

## Legal Principles

- Zoning and rezoning are legislative acts presumptively valid and are sustained if reasonably related to legitimate public purposes and not arbitrary or discriminatory.
- A property owner’s vested right to continue a use under existing zoning depends on the project’s nature, location, ultimate cost, and primarily the amount of good-faith expenditures made while the use conformed to existing zoning.
- Preparatory expenditures and financing arrangements, without substantial irreversible commitment (such as commencing construction), generally do not create vested rights against later rezoning.
- A down-zoning that leaves reasonable residential use does not, without more, amount to a compensable taking.
- Damages for anticipated lost profits are unavailable where no vested right or taking is established and the claimed profits depend on unresolved regulatory and market contingencies.

## Conclusion

The court upheld Wilton’s down-zoning of the Stones’ tract to single-family residential based on infrastructure concerns, held that the Stones’ preconstruction expenditures did not create vested rights in the prior multi-family classification, found no compensable taking, and rejected speculative lost-profit damages.


Stone v. City of Wilton, 331 N.W.2d 398 (Iowa 1983)