Legal Question in Business Law in California

I think what the city is trying to say is that the non-conforming (unpaved) storage yards are "grandfathered in" i.e., predate the pavement requirement. The city will probably prevail here, but you might want to ask if you can apply for a variance.

The city ordinance is most likely part of a zoning ordinance, as set forth by Mr. Whipple.

Grandfathered is a lay term for what is called a nonconforming use. "A nonconforming use is a lawful use existing on the effective date of the zoning restriction and continuing since that time in nonconformance to the ordinance." (Hill v. City of Manhattan Beach (1971) 6 Cal.3d 279, 285.) Nonconforming uses are provided in zoning ordinances because of the practical difficulaties and constitutional problems that would ensue if the nonconforming uses were forced to immediately cease. "Such a provision is ordinarily included in zoning ordinances because of the hardship and doubtful consitutionality of compelling the immediate discontinuance of nonconforming uses." (County of San Diego v. McClurken (1951) 37 Cal.2d 683, 686.)

You should speak to a competent real estate attorney to review the zoning ordinance and the property history to determine whether or not you are subject to an earlier nonconforming use, or need a variance. Nonconforming uses, even for your neighbors, are not permitted to continue indefinitely. Nonconforming uses cannot be significantly changed to another use or expanded. (Sabek, Inc. v. County of Sonoma (1st Dist. 1987) 190Cal.App.3d 163, 166-168.) A nonconforming use may terminate after a period of continued operation adequate for amortization of the owner's investment. (National Advertising Co. v. County of Monterey (1970) 1 Cal.3d 875.)