Development

Restriction on Identity of User Held Unenforceable

Matter of Middeland, Inc. v. City Council of the City of New York

NYLJ 1/17/07, p. 23, col. 1

Supreme Ct., Kings Cty

(Saitta, J.)

In an article 78 proceeding, landowners challenged the City Council's 2005 denial of their rezoning application and the Council's right to enforce 1975 restrictions on the use of their property. The court granted the petition in part, holding that the restrictions were unenforceable because they were invalid by their terms, and also worked a taking of landowners' land, but the court upheld denial of the rezoning application.

In 1975, landowners' land was rezoned from R6 and C2-3 districts into an M1-5 district. The rezoning was designed to facilitate a new IBM industrial facility that occupied the subject land and surrounding parcels. As part of the rezoning, the then-owners of the subject land agreed to a restrictive declaration permitting the properties to be used only as an accessory parking lot for the 'IBM Plant.' The IBM facility closed in 1993, and a Home Depot currently occupies the site of the former IBM plant. Owners of the subject land, which is adjacent to the Home Depot, sought in 2003 to rezone the land into an R6 district. The Community Board, the Borough President, the City Planning Commission, and ultimately the City Council, rejected the proposed zoning amendment. Landowners then brought this article 78 proceeding.

The court started by upholding the City Council's decision to deny the rezoning application. The court noted that the council's determination was a legislative act, which was entitled to a strong presumption of validity. The court also noted that
the existing classification left the landowner with many other uses, including retail and commercial uses. Hence, the court concluded that the council's determination was not arbitrary or capricious, and did not constitute an unconstitutional taking. The court then turned to the 1975 restrictive declaration, and concluded first that the declaration was invalid because it limited use of the land as a parking facility for the plant of a particular owner ' IBM. Because zoning may regulate only the use of property, and not the identity of the user, the court held that the restrictive covenant was unenforceable, and the court declined to rewrite the restriction in a way that would make it enforceable. The court then held that, in any event, the restrictive declaration constituted an unconstitutional taking because it left landowners with no economic use of their land. The IBM plant no longer existed, and even if the court were to read the restriction to permit parking for the benefit of the Home Depot, it was undisputed that Home Depot had adequate on-site parking, making landowners' land valueless for parking purposes. Moreover, the court held that in New York, a landowner may challenge a regulation as an unconstitutional taking even if the regulation was in force at the time the landowner purchased the regulated land.

COMMENT

Prior to the United States Supreme Court's decision in Palazzolo v. Rhode Island, 533 U.S. 606, New York cases held that an owner of property could not bring an 'as applied' takings challenge to a zoning regulation that pre-dated his ownership. Thus, in Gazza v. N.Y. State Dept. of Environmental Conservation, 89 N.Y.2d 603, the court held that an owner who had purchased land already encumbered by substantial wetlands restrictions could not bring a takings claim. The court reasoned that if the regulation had taken property of the prior landowner, that prior owner could not transfer the 'taken' property to a successor. As a result, a subsequent purchaser's initial title is limited to property interests not taken. Similarly, in Anello v. Zoning Bd. of Appeals of the Village of Dobbs Ferry, 89 N.Y.2d 535, the court held that the landowner's as applied takings challenge to the validity of a steep-slope ordinance failed because the regulation was enacted prior to her purchase.

In Palazzolo, the Supreme Court held that a subsequent purchaser's notice of a regulation prior to purchase of property could not serve as an absolute bar to a takings challenge. The court reversed a decision by the Rhode Island Supreme Court holding that landowner was barred from asserting a takings claim because landowner purchased with knowledge of the challenged regulation. The Court remanded for consideration of the claim on the merits, but two concurring opinions left the meaning of the Palazzolo holding somewhat unclear. Justice Scalia argued that notice of the restrictions at the time of purchase was constitutionally irrelevant to the takings claim, while Justice O'Connor contended that the state court could consider notice as a factor in evaluating the claim, but could not bar the claim based on notice alone.

Following Palazzolo, inPlanned Investors Corp. v. Massapequa Park, 5 Misc3d 1003A, at least one New York court continued to follow the rule articulated in Gazza and Anello. Without citing Palazzolo, the Planned Investors court held that the landowner's takings challenge failed because the landowner purchased the property while the restrictions were in place and therefore never owned an absolute right to build on the property.

Curiously, New York courts have cited Vernon Park Realty v. City of Mount Vernon, 307 NY 493, as support for the proposition that a landowner may advance a facial takings challenge, irrespective of whether the landowner bought the property subject to the regulation. See, e.g., Gazza, 89 N.Y.2d 603; Anello, 89 N.Y.2d 535; and Middleland (allowing a subsequent purchaser of property to challenge an ordinance as facially invalid because it restricted the user rather than the use of property). However, in Vernon Park itself, the court, in holding that landowner could challenge zoning regulations enacted prior to his purchase, emphasized that the regulations, which limited landowner's use to parking, were invalid 'as they pertain to the plaintiff's property' 307 US at 499 ' suggesting that the challenge ' like the challenges in Gazza, Anello, and Planned Investors ' was an 'as applied' challenge.

ABC Law Pre-Empts Local Regulation

Amerada Hess Corp. v. Town of Oyster Bay

NYLJ 2/2/07, p. 39, col. 3

AppDiv, Second Dept

(memorandum opinion)

In landowner's action for a judgment declaring invalid a restrictive covenant imposed as a condition on a special use permit, the town appealed from Supreme Court's declaration that the covenant was invalid and unenforceable. The Appellate Division affirmed, holding that state regulation of the sale of alcoholic beverages pre-empted local regulation.

The town granted landowner a special use permit to operate a convenience store, but required as a condition that landowner file a declaration of restrictive covenants prohibiting the sale of alcoholic beverages in the convenience store. When landowner violated the restriction, the town revoked the special use permit, and landowner brought this hybrid action seeking a declaratory judgment, together with an article 78 proceeding challenging the town's revocation of the special use permit. Supreme Court granted the petition in the article 78 proceeding and declared the restriction unenforceable. The town appealed.

In affirming, the Appellate Division conceded that a zoning board may impose conditions and safeguards in conjunction with grant of a special use permit, but held that a board may not impose restrictions related to an area in which the state has pre-empted local regulation. The court concluded that the state has pre-empted regulation of the sale of alcoholic beverages, and that municipalities may not impose restriction related to sale of those beverages. The court also relied on the principle that a local board is not permitted to regulate the details of a business enterprise. As a result, landowner was entitled to continue selling alcoholic beverages in its convenience store.

COMMENT

Local municipalities may not use zoning to directly regulate the sale of alcohol because the state Alcoholic Beverage Control Law pre-empts local regulations. Thus, in Tad's Franchises. v. Incorporated Vil. of Pelham Manor, 42 A.D.2d 616, the court held invalid a provision in a local zoning code that allowed restaurants but prohibited them from selling alcohol. The court held than once a municipality permits businesses eligible to seek liquor licenses to operate in a zoning district, the State Liquor Authority has exclusive jurisdiction over whether those businesses may sell alcohol. The court noted that the only way the municipality could prohibit the sale of alcohol was to create a zoning district that banned all establishments that are eligible to seek liquor licenses. This suggests that municipalities may indirectly control the location of businesses that sell alcohol by limiting the location of entire classes of businesses to specific districts. For instance, in Sapakoff v. Town of Hague Zoning Board of Appeals, 211 A.D.2d 874, the court allowed a municipality to prohibit the operation of a restaurant in a residential zone.

When a municipality permits retail sales in a particular zoning district, it may not regulate the details of store operation except to mitigate a demonstrated negative impact on neighboring properties. In Matter of Texaco Refining & Marketing, Inc. v. Valente, 174 A.D.2d 674, the court disallowed a municipality from using its zoning authority to stop a gas station from opening a convenience store on the existing premises. The court stated that the municipality presented no evidence showing that operating the store 24 hours a day would disturb local residents or would result in more traffic than other allowed uses. By contrast, in Matter of Sheer Pleasure Lingerie v. Town of Colonie Planning Bd., 251 A.D.2d 859, the court allowed a municipality to limit the hours of operation of a business based on residents' complaints about increased crime, increased traffic, outdoor urination, vandalism and other disturbances, noting that these incidents took place during the period in which the business was open.

 

ZBA Interpretation Held Time-Barred

Mamaroneck Beach & Yacht Club, Inc. v. Zoning Board of Appeals

NYLJ 2/8/07, p. 20, col. 3

Supreme Ct., Westchester Cty

(Lippman, J.)

Landowner brought an article 78 proceeding challenging a determination by the Zoning Board of Appeals (ZBA) that the project described in its application for site plan review did not comply with the village zoning ordinance. Supreme Court granted the petition, holding that the determination by the ZBA was time-barred, and was also arbitrary and capricious.

Landowner's waterfront parcel is located in a Marine Recreation District, which permits membership clubs as principal uses, and which permits, as accessory uses, 'seasonal residences for club members and guests.' The village ordinance defines an accessory use as one that is 'customarily incidental and subordinate to' the principal use. Landowner, who operates a club on the premises, submitted an application for site plan approval for construction of 31 seasonal residences, to be located in the existing clubhouse and five new buildings on the site. The village building inspector determined that the application complied with the zoning ordinance, and submitted the application to the village planning board for review. A neighborhood group, in March 2004, appealed the decision of the building inspector to the ZBA. The application lay dormant for two years because: 1) the village enacted a moratorium on development in the Marine Recreation District so that the village could consider amendment of its ordinance; and 2) landowner and the village were engaged in litigation over whether the planning board had to consider landowner's application during the appeal of the building inspector's determination. When, in April 2006, the Supreme Court, in a separate proceeding, ordered the planning board to consider landowner's application despite the moratorium, the appeal before the ZBA was placed on the agenda. The ZBA determined that the application did not comply with the zoning ordinance because the proposed use was not 'customarily incidental and subordinate to' the principal use. Landowner then brought this article 78 proceeding.

In granting the petition, the court first held that the determination by the ZBA was untimely because the Village Law requires the ZBA to hear appeals from, determinations by administrative officials within a reasonable time (Village Law, section 7-712-a(7)). The court held that the two-year delay violated that provision. Turning to the merits, the court concluded that the ZBA's interpretation of the code was arbitrary and capricious. The court noted that the definition of accessory use did not appear in the section listing permitted accessory uses within the marine recreation district, and held that ambiguities in the ordinance must be resolved in favor of the property owner. As a result, the court held that the ZBA's determination was arbitrary and capricious.

Restriction on Identity of User Held Unenforceable

Matter of Middeland, Inc. v. City Council of the City of New York

NYLJ 1/17/07, p. 23, col. 1

Supreme Ct., Kings Cty

(Saitta, J.)

In an article 78 proceeding, landowners challenged the City Council's 2005 denial of their rezoning application and the Council's right to enforce 1975 restrictions on the use of their property. The court granted the petition in part, holding that the restrictions were unenforceable because they were invalid by their terms, and also worked a taking of landowners' land, but the court upheld denial of the rezoning application.

In 1975, landowners' land was rezoned from R6 and C2-3 districts into an M1-5 district. The rezoning was designed to facilitate a new IBM industrial facility that occupied the subject land and surrounding parcels. As part of the rezoning, the then-owners of the subject land agreed to a restrictive declaration permitting the properties to be used only as an accessory parking lot for the 'IBM Plant.' The IBM facility closed in 1993, and a Home Depot currently occupies the site of the former IBM plant. Owners of the subject land, which is adjacent to the Home Depot, sought in 2003 to rezone the land into an R6 district. The Community Board, the Borough President, the City Planning Commission, and ultimately the City Council, rejected the proposed zoning amendment. Landowners then brought this article 78 proceeding.

The court started by upholding the City Council's decision to deny the rezoning application. The court noted that the council's determination was a legislative act, which was entitled to a strong presumption of validity. The court also noted that
the existing classification left the landowner with many other uses, including retail and commercial uses. Hence, the court concluded that the council's determination was not arbitrary or capricious, and did not constitute an unconstitutional taking. The court then turned to the 1975 restrictive declaration, and concluded first that the declaration was invalid because it limited use of the land as a parking facility for the plant of a particular owner ' IBM. Because zoning may regulate only the use of property, and not the identity of the user, the court held that the restrictive covenant was unenforceable, and the court declined to rewrite the restriction in a way that would make it enforceable. The court then held that, in any event, the restrictive declaration constituted an unconstitutional taking because it left landowners with no economic use of their land. The IBM plant no longer existed, and even if the court were to read the restriction to permit parking for the benefit of the Home Depot, it was undisputed that Home Depot had adequate on-site parking, making landowners' land valueless for parking purposes. Moreover, the court held that in New York, a landowner may challenge a regulation as an unconstitutional taking even if the regulation was in force at the time the landowner purchased the regulated land.

COMMENT

Prior to the United States Supreme Court's decision in Palazzolo v. Rhode Island, 533 U.S. 606, New York cases held that an owner of property could not bring an 'as applied' takings challenge to a zoning regulation that pre-dated his ownership. Thus, in Gazza v. N.Y. State Dept. of Environmental Conservation, 89 N.Y.2d 603, the court held that an owner who had purchased land already encumbered by substantial wetlands restrictions could not bring a takings claim. The court reasoned that if the regulation had taken property of the prior landowner, that prior owner could not transfer the 'taken' property to a successor. As a result, a subsequent purchaser's initial title is limited to property interests not taken. Similarly, in Anello v. Zoning Bd. of Appeals of the Village of Dobbs Ferry, 89 N.Y.2d 535, the court held that the landowner's as applied takings challenge to the validity of a steep-slope ordinance failed because the regulation was enacted prior to her purchase.

In Palazzolo, the Supreme Court held that a subsequent purchaser's notice of a regulation prior to purchase of property could not serve as an absolute bar to a takings challenge. The court reversed a decision by the Rhode Island Supreme Court holding that landowner was barred from asserting a takings claim because landowner purchased with knowledge of the challenged regulation. The Court remanded for consideration of the claim on the merits, but two concurring opinions left the meaning of the Palazzolo holding somewhat unclear. Justice Scalia argued that notice of the restrictions at the time of purchase was constitutionally irrelevant to the takings claim, while Justice O'Connor contended that the state court could consider notice as a factor in evaluating the claim, but could not bar the claim based on notice alone.

Following Palazzolo, inPlanned Investors Corp. v. Massapequa Park, 5 Misc3d 1003A, at least one New York court continued to follow the rule articulated in Gazza and Anello. Without citing Palazzolo, the Planned Investors court held that the landowner's takings challenge failed because the landowner purchased the property while the restrictions were in place and therefore never owned an absolute right to build on the property.

Curiously, New York courts have cited Vernon Park Realty v. City of Mount Vernon, 307 NY 493, as support for the proposition that a landowner may advance a facial takings challenge, irrespective of whether the landowner bought the property subject to the regulation. See, e.g., Gazza, 89 N.Y.2d 603; Anello, 89 N.Y.2d 535; and Middleland (allowing a subsequent purchaser of property to challenge an ordinance as facially invalid because it restricted the user rather than the use of property). However, in Vernon Park itself, the court, in holding that landowner could challenge zoning regulations enacted prior to his purchase, emphasized that the regulations, which limited landowner's use to parking, were invalid 'as they pertain to the plaintiff's property' 307 US at 499 ' suggesting that the challenge ' like the challenges in Gazza, Anello, and Planned Investors ' was an 'as applied' challenge.

ABC Law Pre-Empts Local Regulation

Amerada Hess Corp. v. Town of Oyster Bay

NYLJ 2/2/07, p. 39, col. 3

AppDiv, Second Dept

(memorandum opinion)

In landowner's action for a judgment declaring invalid a restrictive covenant imposed as a condition on a special use permit, the town appealed from Supreme Court's declaration that the covenant was invalid and unenforceable. The Appellate Division affirmed, holding that state regulation of the sale of alcoholic beverages pre-empted local regulation.

The town granted landowner a special use permit to operate a convenience store, but required as a condition that landowner file a declaration of restrictive covenants prohibiting the sale of alcoholic beverages in the convenience store. When landowner violated the restriction, the town revoked the special use permit, and landowner brought this hybrid action seeking a declaratory judgment, together with an article 78 proceeding challenging the town's revocation of the special use permit. Supreme Court granted the petition in the article 78 proceeding and declared the restriction unenforceable. The town appealed.

In affirming, the Appellate Division conceded that a zoning board may impose conditions and safeguards in conjunction with grant of a special use permit, but held that a board may not impose restrictions related to an area in which the state has pre-empted local regulation. The court concluded that the state has pre-empted regulation of the sale of alcoholic beverages, and that municipalities may not impose restriction related to sale of those beverages. The court also relied on the principle that a local board is not permitted to regulate the details of a business enterprise. As a result, landowner was entitled to continue selling alcoholic beverages in its convenience store.

COMMENT

Local municipalities may not use zoning to directly regulate the sale of alcohol because the state Alcoholic Beverage Control Law pre-empts local regulations. Thus, in Tad's Franchises. v. Incorporated Vil. of Pelham Manor, 42 A.D.2d 616, the court held invalid a provision in a local zoning code that allowed restaurants but prohibited them from selling alcohol. The court held than once a municipality permits businesses eligible to seek liquor licenses to operate in a zoning district, the State Liquor Authority has exclusive jurisdiction over whether those businesses may sell alcohol. The court noted that the only way the municipality could prohibit the sale of alcohol was to create a zoning district that banned all establishments that are eligible to seek liquor licenses. This suggests that municipalities may indirectly control the location of businesses that sell alcohol by limiting the location of entire classes of businesses to specific districts. For instance, in Sapakoff v. Town of Hague Zoning Board of Appeals , 211 A.D.2d 874, the court allowed a municipality to prohibit the operation of a restaurant in a residential zone.

When a municipality permits retail sales in a particular zoning district, it may not regulate the details of store operation except to mitigate a demonstrated negative impact on neighboring properties. In Matter of Texaco Refining & Marketing, Inc. v. Valente, 174 A.D.2d 674, the court disallowed a municipality from using its zoning authority to stop a gas station from opening a convenience store on the existing premises. The court stated that the municipality presented no evidence showing that operating the store 24 hours a day would disturb local residents or would result in more traffic than other allowed uses. By contrast, in Matter of Sheer Pleasure Lingerie v. Town of Colonie Planning Bd., 251 A.D.2d 859, the court allowed a municipality to limit the hours of operation of a business based on residents' complaints about increased crime, increased traffic, outdoor urination, vandalism and other disturbances, noting that these incidents took place during the period in which the business was open.

 

ZBA Interpretation Held Time-Barred

Mamaroneck Beach & Yacht Club, Inc. v. Zoning Board of Appeals

NYLJ 2/8/07, p. 20, col. 3

Supreme Ct., Westchester Cty

(Lippman, J.)

Landowner brought an article 78 proceeding challenging a determination by the Zoning Board of Appeals (ZBA) that the project described in its application for site plan review did not comply with the village zoning ordinance. Supreme Court granted the petition, holding that the determination by the ZBA was time-barred, and was also arbitrary and capricious.

Landowner's waterfront parcel is located in a Marine Recreation District, which permits membership clubs as principal uses, and which permits, as accessory uses, 'seasonal residences for club members and guests.' The village ordinance defines an accessory use as one that is 'customarily incidental and subordinate to' the principal use. Landowner, who operates a club on the premises, submitted an application for site plan approval for construction of 31 seasonal residences, to be located in the existing clubhouse and five new buildings on the site. The village building inspector determined that the application complied with the zoning ordinance, and submitted the application to the village planning board for review. A neighborhood group, in March 2004, appealed the decision of the building inspector to the ZBA. The application lay dormant for two years because: 1) the village enacted a moratorium on development in the Marine Recreation District so that the village could consider amendment of its ordinance; and 2) landowner and the village were engaged in litigation over whether the planning board had to consider landowner's application during the appeal of the building inspector's determination. When, in April 2006, the Supreme Court, in a separate proceeding, ordered the planning board to consider landowner's application despite the moratorium, the appeal before the ZBA was placed on the agenda. The ZBA determined that the application did not comply with the zoning ordinance because the proposed use was not 'customarily incidental and subordinate to' the principal use. Landowner then brought this article 78 proceeding.

In granting the petition, the court first held that the determination by the ZBA was untimely because the Village Law requires the ZBA to hear appeals from, determinations by administrative officials within a reasonable time (Village Law, section 7-712-a(7)). The court held that the two-year delay violated that provision. Turning to the merits, the court concluded that the ZBA's interpretation of the code was arbitrary and capricious. The court noted that the definition of accessory use did not appear in the section listing permitted accessory uses within the marine recreation district, and held that ambiguities in the ordinance must be resolved in favor of the property owner. As a result, the court held that the ZBA's determination was arbitrary and capricious.