Selling the State's Zoning Exemption?

With the state's approval, Crown planned to build two towers located on a Department of Transportation-owned right of way along the Hutchinson Parkway in the City of New Rochelle. Crown gave a public presentation of its plans to the mayor and city council, which voiced no immediate objections. Once construction began, however, and after Crown had entered into license agreements with a number of commercial wireless providers for space on the towers, the city issued a stop work order, contending that the towers were subject to the city's zoning ordinance, and required a special permit. Crown then brought a hybrid article 78 proceeding and declaratory judgment action, seeking to prevent the city from enforcing its zoning regulations against the towers, and seeking a declaration that the towers were exempt from local zoning regulations.

After first concluding that the towers were immune from local zoning regulations, the court, upon reargument, concluded that licenses to commercial providers were subject to zoning regulations, although the towers themselves were exempt. The Appellate Division modified to hold both the towers and the licenses exempt, citing the public nature of the use of the towers. The city appealed.

The Majority Opinion

The Court of Appeals affirmed in a 4-3 decision. Judge Victoria Graffeo's majority opinion relied heavily on the court's earlier opinion in Matter of County of Monroe, 72 NY2d 338. In that case, the court held that Monroe County's expansion of the Greater Rochester International Airport was not subject to the City of Rochester's site plan requirements. In County of Monroe, the court abandoned its prior framework, which had held that a municipality was immune from local zoning regulations when engaged in governmental use of land, but not when engaged in proprietary use. In place of the old framework, the court held that disputes about municipal immunity from zoning requirements should be resolved by a “balancing of public interests.” In County of Monroe itself, the court concluded first that section 350(1) of the General Municipal Law, which authorizes establishment of airports, impliedly exempted the county from the city's pre-approval requirements. The court went on to conclude that a balancing of public interests led to the same conclusion: immunity for the county from the city's ordinance.

While acknowledging that Crown Communications involved a dispute between a state project and a municipality rather than between two municipalities, Judge Graffeo's majority opinion nevertheless concluded that County of Monroe “informs the result.” In particular, she relied on one aspect of the County of Monroe's decision: the court's holding that the county's immunity extended to a terminal, freight facilities, and a parking lot, even though some of those facilities were to be leased to commercial entities. She argued that the shared use of the telecommunications towers in Crown Communications was analogous to use of the airport facilities by commercial enterprises. Because the private and public uses of the towers were so intertwined, exemption from local zoning regulations was justified.

The Dissent

Judge Ciparick, dissenting for herself and for Chief Judge Kaye and Judge Robert Smith, found little basis in County of Monroe to support the majority's conclusion. First, the dissent argued that County of Monroe's balancing of public interests standard applied only to disputes between governmental units, not to disputes between a governmental unit and private parties. Second, the dissent noted that only commercial uses in County of Monroe were accessory uses customarily incidental to operation of an airport operation — unlike the private providers using the towers in Crown Communications. Those private providers could have engaged in their business on any tower, whether state or private, and the state-run towers themselves could certainly function without the private providers.

In the dissent's view, the first question was whether the state had preempted local zoning control of telecommunications facilities, to which the clear answer is no. The dissent then concluded that local zoning control was in no way inconsistent with the state's goal of setting up a statewide wireless network. Finally, the dissent expressed concern that the state should not be permitted to sell its immunity from local zoning ordinances (citing Little Joseph Realty, Inc. V. Town of Babylon, 41 NY2d 738, and Omnipoint Communications, Inc. v. Common Council, 202 FSupp 210).

Implications for the Future

Although the court's decision resolves the future of the Crown Communications towers, the decision's implications for future cases are less clear. One reading of the opinion would suggest that whenever the state (or a municipality) leases or licenses facilities to a private entity, it is for the courts, on a case-by-case application of the amorphous “balancing of public interests” standard, to determine whether the private entities are subject to local zoning regulations. While such pervasive judicial intervention (unguided by legislative direction) might be tolerable in the small number of cases involving disputes between municipalities, the case-by-case inquiry would appear less attractive in the much broader set of cases in which the state might lease of license land to private entities.

Another reading of the court's decision — one the dissent suggests and criticizes– is that the revenue the state derives from licenses or leases to private entities itself constitutes a public interest sufficient to override local zoning ordinances. On this view, no case-by-case inquiry would be necessary; Crown Communications would represent a per se rule overriding local ordinances. Of course, the state legislature would be free to enact such a preemption rule, but the court's majority did not appear ready to embrace that view in the absence of statutory authority. In footnote 4, the majority opinion sought to avoid overbroad readings of the decision.

The result, then, is that the court has not provided an adequate answer to the question with which we started: when, and on what terms, can the state transfer to a private entity its exemption from local zoning restrictions. It appears certain that the court will be forced to confront the question again in the not-too-distant future.

The Court of Appeals recently confronted a significant zoning issue: When, and on what terms, can the state or a state agency transfer to a private entity its exemption from local zoning restrictions? In Matter of Crown Communication New York, Inc. v. Department of Transportation (NYLJ 2/14/05, p. 19, col. 4), a divided court held that telecommunications towers erected on state land were immune from local zoning regulations even when the much of the space on the towers had been leased to private companies. The court's decision, however, raises as many questions as it resolves.

Crown Communications: Background

In 1997, the State Police, on behalf of themselves and other state agencies, contracted to provide Castle Tower an exclusive license to construct and operate telecommunications towers on state-owned rights of way. Castle Tower subsequently assigned its license to Crown Communications. Under the terms of the license agreement, the state retained the right to locate its own communications equipment on the towers, but Crown was permitted to lease space on the towers to other localities and commercial wireless providers.

With the state's approval, Crown planned to build two towers located on a Department of Transportation-owned right of way along the Hutchinson Parkway in the City of New Rochelle. Crown gave a public presentation of its plans to the mayor and city council, which voiced no immediate objections. Once construction began, however, and after Crown had entered into license agreements with a number of commercial wireless providers for space on the towers, the city issued a stop work order, contending that the towers were subject to the city's zoning ordinance, and required a special permit. Crown then brought a hybrid article 78 proceeding and declaratory judgment action, seeking to prevent the city from enforcing its zoning regulations against the towers, and seeking a declaration that the towers were exempt from local zoning regulations.

After first concluding that the towers were immune from local zoning regulations, the court, upon reargument, concluded that licenses to commercial providers were subject to zoning regulations, although the towers themselves were exempt. The Appellate Division modified to hold both the towers and the licenses exempt, citing the public nature of the use of the towers. The city appealed.

The Majority Opinion

The Court of Appeals affirmed in a 4-3 decision. Judge Victoria Graffeo's majority opinion relied heavily on the court's earlier opinion in Matter of County of Monroe, 72 NY2d 338. In that case, the court held that Monroe County's expansion of the Greater Rochester International Airport was not subject to the City of Rochester's site plan requirements. In County of Monroe, the court abandoned its prior framework, which had held that a municipality was immune from local zoning regulations when engaged in governmental use of land, but not when engaged in proprietary use. In place of the old framework, the court held that disputes about municipal immunity from zoning requirements should be resolved by a “balancing of public interests.” In County of Monroe itself, the court concluded first that section 350(1) of the General Municipal Law, which authorizes establishment of airports, impliedly exempted the county from the city's pre-approval requirements. The court went on to conclude that a balancing of public interests led to the same conclusion: immunity for the county from the city's ordinance.

While acknowledging that Crown Communications involved a dispute between a state project and a municipality rather than between two municipalities, Judge Graffeo's majority opinion nevertheless concluded that County of Monroe “informs the result.” In particular, she relied on one aspect of the County of Monroe's decision: the court's holding that the county's immunity extended to a terminal, freight facilities, and a parking lot, even though some of those facilities were to be leased to commercial entities. She argued that the shared use of the telecommunications towers in Crown Communications was analogous to use of the airport facilities by commercial enterprises. Because the private and public uses of the towers were so intertwined, exemption from local zoning regulations was justified.

The Dissent

Judge Ciparick, dissenting for herself and for Chief Judge Kaye and Judge Robert Smith, found little basis in County of Monroe to support the majority's conclusion. First, the dissent argued that County of Monroe's balancing of public interests standard applied only to disputes between governmental units, not to disputes between a governmental unit and private parties. Second, the dissent noted that only commercial uses in County of Monroe were accessory uses customarily incidental to operation of an airport operation — unlike the private providers using the towers in Crown Communications. Those private providers could have engaged in their business on any tower, whether state or private, and the state-run towers themselves could certainly function without the private providers.

In the dissent's view, the first question was whether the state had preempted local zoning control of telecommunications facilities, to which the clear answer is no. The dissent then concluded that local zoning control was in no way inconsistent with the state's goal of setting up a statewide wireless network. Finally, the dissent expressed concern that the state should not be permitted to sell its immunity from local zoning ordinances (citing Little Joseph Realty, Inc. V. Town of Babylon , 41 NY2d 738, and Omnipoint Communications, Inc. v. Common Council , 202 FSupp 210).

Implications for the Future

Although the court's decision resolves the future of the Crown Communications towers, the decision's implications for future cases are less clear. One reading of the opinion would suggest that whenever the state (or a municipality) leases or licenses facilities to a private entity, it is for the courts, on a case-by-case application of the amorphous “balancing of public interests” standard, to determine whether the private entities are subject to local zoning regulations. While such pervasive judicial intervention (unguided by legislative direction) might be tolerable in the small number of cases involving disputes between municipalities, the case-by-case inquiry would appear less attractive in the much broader set of cases in which the state might lease of license land to private entities.

Another reading of the court's decision — one the dissent suggests and criticizes– is that the revenue the state derives from licenses or leases to private entities itself constitutes a public interest sufficient to override local zoning ordinances. On this view, no case-by-case inquiry would be necessary; Crown Communications would represent a per se rule overriding local ordinances. Of course, the state legislature would be free to enact such a preemption rule, but the court's majority did not appear ready to embrace that view in the absence of statutory authority. In footnote 4, the majority opinion sought to avoid overbroad readings of the decision.

The result, then, is that the court has not provided an adequate answer to the question with which we started: when, and on what terms, can the state transfer to a private entity its exemption from local zoning restrictions. It appears certain that the court will be forced to confront the question again in the not-too-distant future.