Development

Supreme Ct., N.Y. Ct

(Schlesinger, J.)

In landowner's article 78 proceeding to annul a variance to permit an interior staircase between two apartments in his apartment building, intervenor-neighbors moved to dismiss the proceeding. The court denied the motion to dismiss, holding that a hearing was necessary to determine whether landowner had acted in good faith reliance on an earlier permit.

Landowner owns a four-story Manhattan townhouse, and lives with his family in the first two stories. Because the only connection between those stories was by way of a public stairway, landowner applied to the Department of Buildings (DOB) in 1998 for a permit to construct a glass-enclosed stairwell at the rear of the building for the use of his family. DOB granted the permit and issued a final approval on June 25, 1999. Landowner obtained necessary approvals from the Community Board and the Landmarks Preservation Commission, and completed the staircase in August 1999 at a cost of $200,000. Eighteen months later, neighbors asked DOB to reissue its decision. When DOB did so, neighbors appealed to the Board of Standards and Appeals (BSA), which granted the appeal and revoked the permit. Landowner brought an article 78 proceeding, but the court upheld the permit revocation. Landowner then applied to BSA for a variance, which neighbors opposed. BSA denied the variance, concluding that landowner had failed to prove a unique physical condition or financial hardship, and concluding that any practical difficulties were self-created. Landowner then brought this article 78 proceeding.

The court started its analysis by indicating that a strict application of the zoning ordinance is inappropriate when there has been good-faith reliance on a permit. In good-faith reliance, cases a board considering a variance should consider expenditures incurred prior to revocation of the permit. In this case, the court concluded that it had insufficient basis to determine whether landowner had acted in good-faith reliance, because the BSA had not made a finding on that point. Hence, the court indicated that a hearing would be necessary to determine whether BSA's determination was arbitrary and capricious. .

COMMENT

In Town of Orangetown v. Magee, 88 N.Y.2d 41, the Court of Appeals held that a landowner acquires a vested right when, pursuant to a legally issued permit, the landowner effects substantial changes and incurs substantial expenses to further the development of the project. In Magee, the defendant-town revoked a validly issued building permit due to community protest even though the plaintiffs had already expended more then four million dollars on the project. The court invalidated the revocation holding that landowner's rights had vested. The court indicated that neither the issuance of the permit nor the landowner's substantial improvements or expenditures, standing alone, would establish the right; the landowner needed also to prove that the revocation of the valid permit had rendered the improvements essentially valueless.

Often, when determining if expenditures are substantial, the court will compare the amount expended to the amount of the proposed project as it did in Reichenbach v. Windward at Southampton, 80 Misc2d 1031. In Reichenbach the court upheld the revocation and subsequent demolition of the building after only 1% ($3000) of the estimated project cost had been expended. Because the expenditure had not been substantial, no rights had vested.

When the permit that is issued to a landowner is invalid, the landowner cannot acquire vested rights under the permit. If, however, landowner applies for a variance, “unnecessary hardship” resulting from reliance on the permit is a relevant factor in evaluating the application. In Jayne Estates, Inc. v. Raynor, 22 N.Y.2d 417, the defendant-village revoked a building permit granted by improper authorities as invalid after the plaintiff had expended more than $100,000. The Court of Appeals held that a variance should be granted after determining that the plaintiff's “good-faith” reliance on the invalid permit was pertinent to the determination of whether “unnecessary hardship” would occur if the variance were denied.

In Pantelidis, plaintiffs completed an internal staircase at a cost of $200,000 before the defendant, on the insistence of disgruntled neighbors, revoked their permit. Prior to bringing this suit to annul the defendant's revocation, Pantelidis requested and was denied a variance. Magee suggests that Pantelidis acquired vested rights by relying on the validly issued permit. Hence, no variance should have been necessary. Unfortunately for Pantelidis, however, in the earlier proceeding, a court had upheld revocation of the permit. As a result, although Magee would be controlling if the permit had been valid, the court relied on Jayne Estates in holding that a “good-faith” inquiry must be made to determine if Pantelidis was entitled to a variance.

Zoning Board of Appeals Not Obligated to Hear Second Appeal of Same Determination

Village of Chestnut Ridge v. Rofino

NYLJ 7/22/03, p. 21, col. 3

AppDiv, Second Dept

(memorandum opinion)

In village's action for an injunction restraining landowner from using his land in violation of the village's zoning law and a prior determination of the Zoning Board of Appeals, the village appealed from Supreme Court's dismissal of the action. The Appellate Division reversed, reinstated the complaint, and granted a preliminary injunction, holding that the Zoning Board of Appeals was not obligated to hear a second appeal of the same determination by the village building inspector.

Landowner's parcel lies in a “neighborhood shopping” zoning district. The parcel is improved by a residential structure with a three-car garage, and has historically been used for residential and commercial purposes. In 2000, landowner applied to the building inspector for a certificate entitling him to use the premises for the retail sale and repair of power equipment. When the building inspector denied the certificate, landowner appealed to the Zoning Board of Appeals, which denied the appeal. Supreme Court upheld the denial. Landowner nevertheless began to use the property for the prohibited purposes, and the village issued violations. When the violations did not cause landowner to stop, the village brought this action for injunctive relief. Landowner, who had previously proceeded pro se, then retained counsel and filed a second notice of appeal with the Zoning Board of Appeals – seeking to review the initial decision by the building inspector. The village rejected the notice of appeal on the ground that there had been no new determination by the building inspector. When the village then moved for a temporary injunction, Supreme Court denied the motion, holding that the village should not have rejected the second notice of appeal, and that the second appeal triggered the automatic stay of Village Law section 7-712(a)(6), prohibiting the village from issuing violations or instituting any action. As a result, Supreme Court dismissed the action without prejudice to renewal after the zoning board of appeals made its determination on the second appeal. The village appealed Supreme Court's determination.

In reversing, the Appellate Division concluded that landowner's second appeal was barred by res judicata because landowner was essentially seeking relief from the same determination. As a result, the appeal did not trigger the automatic stay provision, and the village was entitled to reinstatement of its complaint. Moreover, the court granted the village a preliminary injunction because the village had demonstrated a likelihood of success on the merits, and the court could not find that the equities balanced in favor of landowner, who had deliberately flouted the prior determination and court order.

Landowner's Good-faith Reliance Backfires

Matter of Pantelidis v. New York City Board of Standards and Appeals

NYLJ 7/30/03, p. 18, col. 2

Supreme Ct., N.Y. Ct

(Schlesinger, J.)

In landowner's article 78 proceeding to annul a variance to permit an interior staircase between two apartments in his apartment building, intervenor-neighbors moved to dismiss the proceeding. The court denied the motion to dismiss, holding that a hearing was necessary to determine whether landowner had acted in good faith reliance on an earlier permit.

Landowner owns a four-story Manhattan townhouse, and lives with his family in the first two stories. Because the only connection between those stories was by way of a public stairway, landowner applied to the Department of Buildings (DOB) in 1998 for a permit to construct a glass-enclosed stairwell at the rear of the building for the use of his family. DOB granted the permit and issued a final approval on June 25, 1999. Landowner obtained necessary approvals from the Community Board and the Landmarks Preservation Commission, and completed the staircase in August 1999 at a cost of $200,000. Eighteen months later, neighbors asked DOB to reissue its decision. When DOB did so, neighbors appealed to the Board of Standards and Appeals (BSA), which granted the appeal and revoked the permit. Landowner brought an article 78 proceeding, but the court upheld the permit revocation. Landowner then applied to BSA for a variance, which neighbors opposed. BSA denied the variance, concluding that landowner had failed to prove a unique physical condition or financial hardship, and concluding that any practical difficulties were self-created. Landowner then brought this article 78 proceeding.

The court started its analysis by indicating that a strict application of the zoning ordinance is inappropriate when there has been good-faith reliance on a permit. In good-faith reliance, cases a board considering a variance should consider expenditures incurred prior to revocation of the permit. In this case, the court concluded that it had insufficient basis to determine whether landowner had acted in good-faith reliance, because the BSA had not made a finding on that point. Hence, the court indicated that a hearing would be necessary to determine whether BSA's determination was arbitrary and capricious. .

COMMENT

In Town of Orangetown v. Magee, 88 N.Y.2d 41, the Court of Appeals held that a landowner acquires a vested right when, pursuant to a legally issued permit, the landowner effects substantial changes and incurs substantial expenses to further the development of the project. In Magee, the defendant-town revoked a validly issued building permit due to community protest even though the plaintiffs had already expended more then four million dollars on the project. The court invalidated the revocation holding that landowner's rights had vested. The court indicated that neither the issuance of the permit nor the landowner's substantial improvements or expenditures, standing alone, would establish the right; the landowner needed also to prove that the revocation of the valid permit had rendered the improvements essentially valueless.

Often, when determining if expenditures are substantial, the court will compare the amount expended to the amount of the proposed project as it did in Reichenbach v. Windward at Southampton, 80 Misc2d 1031. In Reichenbach the court upheld the revocation and subsequent demolition of the building after only 1% ($3000) of the estimated project cost had been expended. Because the expenditure had not been substantial, no rights had vested.

When the permit that is issued to a landowner is invalid, the landowner cannot acquire vested rights under the permit. If, however, landowner applies for a variance, “unnecessary hardship” resulting from reliance on the permit is a relevant factor in evaluating the application. In Jayne Estates, Inc. v. Raynor, 22 N.Y.2d 417, the defendant-village revoked a building permit granted by improper authorities as invalid after the plaintiff had expended more than $100,000. The Court of Appeals held that a variance should be granted after determining that the plaintiff's “good-faith” reliance on the invalid permit was pertinent to the determination of whether “unnecessary hardship” would occur if the variance were denied.

In Pantelidis, plaintiffs completed an internal staircase at a cost of $200,000 before the defendant, on the insistence of disgruntled neighbors, revoked their permit. Prior to bringing this suit to annul the defendant's revocation, Pantelidis requested and was denied a variance. Magee suggests that Pantelidis acquired vested rights by relying on the validly issued permit. Hence, no variance should have been necessary. Unfortunately for Pantelidis, however, in the earlier proceeding, a court had upheld revocation of the permit. As a result, although Magee would be controlling if the permit had been valid, the court relied on Jayne Estates in holding that a “good-faith” inquiry must be made to determine if Pantelidis was entitled to a variance.

Zoning Board of Appeals Not Obligated to Hear Second Appeal of Same Determination

Village of Chestnut Ridge v. Rofino

NYLJ 7/22/03, p. 21, col. 3

AppDiv, Second Dept

(memorandum opinion)

In village's action for an injunction restraining landowner from using his land in violation of the village's zoning law and a prior determination of the Zoning Board of Appeals, the village appealed from Supreme Court's dismissal of the action. The Appellate Division reversed, reinstated the complaint, and granted a preliminary injunction, holding that the Zoning Board of Appeals was not obligated to hear a second appeal of the same determination by the village building inspector.

Landowner's parcel lies in a “neighborhood shopping” zoning district. The parcel is improved by a residential structure with a three-car garage, and has historically been used for residential and commercial purposes. In 2000, landowner applied to the building inspector for a certificate entitling him to use the premises for the retail sale and repair of power equipment. When the building inspector denied the certificate, landowner appealed to the Zoning Board of Appeals, which denied the appeal. Supreme Court upheld the denial. Landowner nevertheless began to use the property for the prohibited purposes, and the village issued violations. When the violations did not cause landowner to stop, the village brought this action for injunctive relief. Landowner, who had previously proceeded pro se, then retained counsel and filed a second notice of appeal with the Zoning Board of Appeals – seeking to review the initial decision by the building inspector. The village rejected the notice of appeal on the ground that there had been no new determination by the building inspector. When the village then moved for a temporary injunction, Supreme Court denied the motion, holding that the village should not have rejected the second notice of appeal, and that the second appeal triggered the automatic stay of Village Law section 7-712(a)(6), prohibiting the village from issuing violations or instituting any action. As a result, Supreme Court dismissed the action without prejudice to renewal after the zoning board of appeals made its determination on the second appeal. The village appealed Supreme Court's determination.

In reversing, the Appellate Division concluded that landowner's second appeal was barred by res judicata because landowner was essentially seeking relief from the same determination. As a result, the appeal did not trigger the automatic stay provision, and the village was entitled to reinstatement of its complaint. Moreover, the court granted the village a preliminary injunction because the village had demonstrated a likelihood of success on the merits, and the court could not find that the equities balanced in favor of landowner, who had deliberately flouted the prior determination and court order.