Development

Adult Use Ordinance Requires Additional Support

For the People Theatres v. City of New York

2005 NY LEXIS 3349, 12/15/05, Court of Appeals

(4-3 decision; majority opinion by Read, J; dissenting opinion by Kaye, C.J.)

In an action by adult establishments for declaratory and injunctive relief from the provisions of the 2001 amendments to New York City's adult use zoning regulations, establishment owners appealed from an Appellate Division order upholding the ordinances and dismissing the complaint. The Court of Appeals modified to require the city to supplement the record to respond to evidence submitted by the theatres that disputed the factual findings made by the city to support the 2001 amendments.

In 1995, the city, after conducting a study, adopted an adult use ordinance that regulated the size and location of adult establishments, defined as “a commercial establishment where a substantial portion of the establishment includes” specified adult uses. Subsequently, the city buildings department issued guidelines interpreting “substantial portion” to mean “at least 40% of the floor and cellar area … accessible to customers.” The 1995 ordinance survived constitutional challenges, but a number of establishments took steps to bring themselves within the letter of the ordinance by adding substantial numbers of non-adult books in areas that customers were unlikely to visit. In response, the city in 2001 amended the ordinance to eliminate the “substantial portion” language in the 1995 ordinance, and otherwise to make it clear that “60/40″ did not provide a safe harbor. Before the amendments were enacted, the Department of City Planning conducted a study demonstrating that 101 “60/40″ businesses were operating. Adult establishments then brought this action, contending that the city had failed to conduct an adequate study demonstrating the “secondary effects” of the “60/40″ businesses. The Supreme Court declared the amendments unconstitutional, but the Appellate Division reversed and dismissed the complaint.

In modifying the Appellate Division's order, the Court of Appeals first concluded that the city was entitled, in justifying the 2001 amendments, to rely on the same evidence of negative secondary effects that supported the original 1995 ordinance. The court then noted, however, that the establishment owners had disputed the city's factual findings by offering expert testimony that would establish no relationship between presence of “60/40″ businesses and crime or decline in property values. The court held that this evidence shifted the burden back to the city to supplement the record with evidence justifying the ordinance. But the court majority made it clear that the city would not have to conduct a formal study or statistical analysis; it would be enough for the city to demonstrate that the focus of the “60/40″ businesses is essentially the same as the businesses the 1995 ordinance was designed to restrict.

Chief Judge Kaye's dissent argued that the city was obligated to “present some evidence demonstrating a nexus between the 60/40 businesses and the deleterious social effects supporting its 2001 regulation.” She noted that the 1995 ordinance was explicitly designed not to sweep too broadly, and she rejected the notion that the studies produces to support the 1995 ordinance could be used to justify the 2001 amendments.

East River Plaza Project Did Not Require Historic Preservation Review

Business and Residents Alliance of East Harlem v. Jackson

NYLJ 12/8/05, p. 18, col. 1

U.S. Court of Appeals

Second Circuit (Opinion by Katzmann, J.).

In an action for a judgment declaring that the federal departments of Housing and Urban Development (HUD) and Health and Human Services (HHS) were required to conduct a historic preservation review of the East River Plaza project, plaintiff community group appealed from District Court's grant of summary judgment dismissing the action. The Second Circuit affirmed, holding that the project was not within the direct or indirect jurisdiction of the federal departments.

Congress authorized HUD to designate urban empowerment zones that would receive tax incentives and up to $100 million in block grants from HHS to stimulate economic and social renewal. HUD designated the New York City Empowerment Zone, which comprises parts of Upper Manhattan and the South Bronx, and HHS made two $50 million grants to the Zone. Local entities — some of them essentially owned by New York State and New York City — manage the operation and funding of the Zone. A memorandum of agreement among HUD, the State, and the City provided that the State and City would submit semi-annual reports, and that HUD could revoke the empowerment zone designation if the State or City did not comply with requirements derived from the relevant federal statute. When a local developer proposed the East River Plaza project — a large shopping center development for East Harlem – the New York State Office of Parks, Recreation, and Historic Preservation determined that the project, which required demolition of an old wire factory — would have no impact on surrounding sites that would qualify for inclusion in the National Register of Historic Places. The Office determined that the wire factory itself did not qualify for inclusion. The National Park Service reviewed and concurred in that determination. Local agencies then approved a $15 million loan for the project, to come equally from city, state, and federal funds. Plaintiffs in this case then sought a declaratory judgment that the federal agencies involved were obliged to conduct a historic preservation review of the project. Federal district court granted summary judgment to the municipal defendants, and plaintiffs appealed.

In affirming, the Second Circuit first noted that the court had not yet decided whether the National Historic Preservation Act creates a private cause of action, but held that it need not determine that issue because of its conclusion that HUD and HHS involvement were not sufficiently significant to trigger an obligation to review under the NHPA. The court noted that the NHPA obligation arises when a federal agency has “direct or indirect jurisdiction” over an undertaking, and conceded that section 106 of the NHPA does not define direct or indirect jurisdiction. The court concluded, however, that the process by which federal funds were allocated to the East River Plaza project took place entirely at the state and local level, and held that the ultimate power to revoke the entire empowerment zone designation did not give the federal agencies direct or indirect jurisdiction, because that power could be exercised only if the federal agencies were to make threshold findings — none of which could be based on the decision to allocate funds to the East River Plaza project. As a result, the court awarded summary judgment to the defendants.

Neighbor Has Standing to Enforce Zoning Ordinance

Zupa v. Paradise Point Association, Inc.

NYLJ 11/14/05, p. 35, col. 4

AppDiv, Second Dept

(memorandum opinion)

In an action by neighbors to enjoin landowner's alleged violations of the zoning ordinance, and to enjoin landowner's operation of a private marina as a private nuisance, neighbors appealed from the Supreme Court's dismissal of the complaint for lack of standing. The Appellate Division modified to reinstate the complaint of an immediate neighbor, holding that the neighbor was within the zone of interest protected by the ordinance.

Landowner operates a private marina in a residential area. One immediate neighbor and one neighbor whose property is located one-half mile from the boat basin alleged that the marina violates zoning prohibitions on excessive lights, noise, pollution and smoke in residential areas. The neighbors also sought to enjoin the marina's activities as a private nuisance. The Supreme Court dismissed the complaint for lack of standing.

In modifying, the Appellate Division agreed that the distant neighbor lacked standing. The court, however, held that the complaint should not have been dismissed against the immediate neighbor. The court noted that the neighbors' property was subject to the excessive light, noise, pollution, and smoke prohibited by the zoning ordinance, and therefore concluded that neighbors were within the zone of interest protected by the ordinance. As a result, the court concluded that they had standing to bring a common law action against landowner without proof of special damages.

 

Adult Use Ordinance Requires Additional Support

For the People Theatres v. City of New York

2005 NY LEXIS 3349, 12/15/05, Court of Appeals

(4-3 decision; majority opinion by Read, J; dissenting opinion by Kaye, C.J.)

In an action by adult establishments for declaratory and injunctive relief from the provisions of the 2001 amendments to New York City's adult use zoning regulations, establishment owners appealed from an Appellate Division order upholding the ordinances and dismissing the complaint. The Court of Appeals modified to require the city to supplement the record to respond to evidence submitted by the theatres that disputed the factual findings made by the city to support the 2001 amendments.

In 1995, the city, after conducting a study, adopted an adult use ordinance that regulated the size and location of adult establishments, defined as “a commercial establishment where a substantial portion of the establishment includes” specified adult uses. Subsequently, the city buildings department issued guidelines interpreting “substantial portion” to mean “at least 40% of the floor and cellar area … accessible to customers.” The 1995 ordinance survived constitutional challenges, but a number of establishments took steps to bring themselves within the letter of the ordinance by adding substantial numbers of non-adult books in areas that customers were unlikely to visit. In response, the city in 2001 amended the ordinance to eliminate the “substantial portion” language in the 1995 ordinance, and otherwise to make it clear that “60/40″ did not provide a safe harbor. Before the amendments were enacted, the Department of City Planning conducted a study demonstrating that 101 “60/40″ businesses were operating. Adult establishments then brought this action, contending that the city had failed to conduct an adequate study demonstrating the “secondary effects” of the “60/40″ businesses. The Supreme Court declared the amendments unconstitutional, but the Appellate Division reversed and dismissed the complaint.

In modifying the Appellate Division's order, the Court of Appeals first concluded that the city was entitled, in justifying the 2001 amendments, to rely on the same evidence of negative secondary effects that supported the original 1995 ordinance. The court then noted, however, that the establishment owners had disputed the city's factual findings by offering expert testimony that would establish no relationship between presence of “60/40″ businesses and crime or decline in property values. The court held that this evidence shifted the burden back to the city to supplement the record with evidence justifying the ordinance. But the court majority made it clear that the city would not have to conduct a formal study or statistical analysis; it would be enough for the city to demonstrate that the focus of the “60/40″ businesses is essentially the same as the businesses the 1995 ordinance was designed to restrict.

Chief Judge Kaye's dissent argued that the city was obligated to “present some evidence demonstrating a nexus between the 60/40 businesses and the deleterious social effects supporting its 2001 regulation.” She noted that the 1995 ordinance was explicitly designed not to sweep too broadly, and she rejected the notion that the studies produces to support the 1995 ordinance could be used to justify the 2001 amendments.

East River Plaza Project Did Not Require Historic Preservation Review

Business and Residents Alliance of East Harlem v. Jackson

NYLJ 12/8/05, p. 18, col. 1

U.S. Court of Appeals

Second Circuit (Opinion by Katzmann, J.).

In an action for a judgment declaring that the federal departments of Housing and Urban Development (HUD) and Health and Human Services (HHS) were required to conduct a historic preservation review of the East River Plaza project, plaintiff community group appealed from District Court's grant of summary judgment dismissing the action. The Second Circuit affirmed, holding that the project was not within the direct or indirect jurisdiction of the federal departments.

Congress authorized HUD to designate urban empowerment zones that would receive tax incentives and up to $100 million in block grants from HHS to stimulate economic and social renewal. HUD designated the New York City Empowerment Zone, which comprises parts of Upper Manhattan and the South Bronx, and HHS made two $50 million grants to the Zone. Local entities — some of them essentially owned by New York State and New York City — manage the operation and funding of the Zone. A memorandum of agreement among HUD, the State, and the City provided that the State and City would submit semi-annual reports, and that HUD could revoke the empowerment zone designation if the State or City did not comply with requirements derived from the relevant federal statute. When a local developer proposed the East River Plaza project — a large shopping center development for East Harlem – the New York State Office of Parks, Recreation, and Historic Preservation determined that the project, which required demolition of an old wire factory — would have no impact on surrounding sites that would qualify for inclusion in the National Register of Historic Places. The Office determined that the wire factory itself did not qualify for inclusion. The National Park Service reviewed and concurred in that determination. Local agencies then approved a $15 million loan for the project, to come equally from city, state, and federal funds. Plaintiffs in this case then sought a declaratory judgment that the federal agencies involved were obliged to conduct a historic preservation review of the project. Federal district court granted summary judgment to the municipal defendants, and plaintiffs appealed.

In affirming, the Second Circuit first noted that the court had not yet decided whether the National Historic Preservation Act creates a private cause of action, but held that it need not determine that issue because of its conclusion that HUD and HHS involvement were not sufficiently significant to trigger an obligation to review under the NHPA. The court noted that the NHPA obligation arises when a federal agency has “direct or indirect jurisdiction” over an undertaking, and conceded that section 106 of the NHPA does not define direct or indirect jurisdiction. The court concluded, however, that the process by which federal funds were allocated to the East River Plaza project took place entirely at the state and local level, and held that the ultimate power to revoke the entire empowerment zone designation did not give the federal agencies direct or indirect jurisdiction, because that power could be exercised only if the federal agencies were to make threshold findings — none of which could be based on the decision to allocate funds to the East River Plaza project. As a result, the court awarded summary judgment to the defendants.

Neighbor Has Standing to Enforce Zoning Ordinance

Zupa v. Paradise Point Association, Inc.

NYLJ 11/14/05, p. 35, col. 4

AppDiv, Second Dept

(memorandum opinion)

In an action by neighbors to enjoin landowner's alleged violations of the zoning ordinance, and to enjoin landowner's operation of a private marina as a private nuisance, neighbors appealed from the Supreme Court's dismissal of the complaint for lack of standing. The Appellate Division modified to reinstate the complaint of an immediate neighbor, holding that the neighbor was within the zone of interest protected by the ordinance.

Landowner operates a private marina in a residential area. One immediate neighbor and one neighbor whose property is located one-half mile from the boat basin alleged that the marina violates zoning prohibitions on excessive lights, noise, pollution and smoke in residential areas. The neighbors also sought to enjoin the marina's activities as a private nuisance. The Supreme Court dismissed the complaint for lack of standing.

In modifying, the Appellate Division agreed that the distant neighbor lacked standing. The court, however, held that the complaint should not have been dismissed against the immediate neighbor. The court noted that the neighbors' property was subject to the excessive light, noise, pollution, and smoke prohibited by the zoning ordinance, and therefore concluded that neighbors were within the zone of interest protected by the ordinance. As a result, the court concluded that they had standing to bring a common law action against landowner without proof of special damages.