Development

Grant of Use Variance Overturned

Matter of Nemeth v. Village of Hancock Zoning Board of Appeals

2015 WL 1565749, 4/9/15

AppDiv, Third Dept.

(3-1 decision; opinion by Peters, P.J.; dissenting opinion by Lynch, J.)

In neighbors' article 78 proceeding challenging grant of a use variance, neighbors appealed from a Supreme Court judgment denial of the petition and dismissal of the proceeding. A divided Appellate Division reversed, holding that applicant had not produced enough dollars-and-cents evidence to justify the use variance.

Neighbors own property adjacent to landowners' industrial manufacturing business. That business is operated as a non-conforming use in a residential district. In 2001, landowners built an addition to their plant. In an earlier proceeding, the Appellate Division held that the addition constituted an impermissible expansion of a pre-existing non-conforming use. Landowner then sought a use variance to maintain the addition, and the zoning board of appeals (ZBA) granted the variance. Neighbors then brought article 78 proceeding challenging the variance. Supreme Court denied the petition, and neighbors appealed.

In reversing, the Appellate Division majority emphasized that to justify the use variance, landowners had to establish that the property could not yield a reasonable rate of return either as a residential use or as the pre-existing manufacturing use without the unlawful 800-square-foot addition. The majority concluded that landowner had produced no evidence about the financial implications of converting the entire property to residential use. Landowner did submit evidence about the cost of converting the unlawful addition to residential use, but the court held that landowner could not segment the parcel to argue that without the addition, landowner could not earn a reasonable return on the addition alone. Similarly, the court's majority concluded that landowner had not submitted sufficient evidence that the parcel as a whole could not yield a reasonable return for manufacturing purposes if the addition were removed. As a result, the court held that the ZBA improperly granted the use variance.

Justice Lynch, dissenting, emphasized the limited scope of review of ZBA decisions, and concluded that the evidence presented about the cost of converting the addition to residential use, and the cost of relocating the manufacturing facility, was sufficient to support the ZBA's determination.

COMMENT

When neighbors challenge grant of a use variance, courts typically hold that expert opinion testimony, unsupported by detailed financial analysis, does not constitute the statutorily required “competent financial evidence” that no permissible use will yield a reasonable return. For instance, in Village Board of Village of Fayetteville v. Jarrold, 53 N.Y.2d 254, the Court of Appeals overturned the zoning board's grant of a commercial-use variance where applicant's architect and real estate broker both testified that the property's topography would render a house built on the property competitively unsellable due to special construction costs. In rejecting the zoning board's decision as unsupported by substantial evidence, the court noted that applicant failed to provide evidence of the amount of special construction costs, the total residential construction costs, or the area's market value. In contrast, in SoHo Alliance v. NYC Board of Standards and Appeals, 95 N.Y.2d 437, the Court of Appeals found applicant satisfied the “competent financial evidence” requirement by submitting calculations of potential returns from the property's permitted uses and additional market data, including recent condominium sales in the area. Thus, the court upheld the zoning board's grant of a use variance allowing applicant to build mixed-use residential buildings on properties zoned for artist use.

Where an applicant seeks a use variance for only a portion of the property, courts generally require the applicant to show that the applicant can obtain no reasonable return from permitted uses of the entire property. Financial evidence that the portion of property fails to yield a reasonable return, absent similar evidence for the rest of the property, is not enough to justify a use variance. For example, in Matter of Citizens for Ghent, Inc. v. Zoning Board of Appeals of the Town of Ghent, 175 A.D.2d 528, the Third Department held that applicant, who conditioned the purchase of 13 acres from a 56-acre property on a commercial-use variance, was not entitled to the variance where applicant submitted an appraisal report showing only that permitted uses of the 13-acre site failed to provide a reasonable return. The court also found applicant's evidence that property owners were previously unable to sell 26 acres of the 56-acre property for permitted uses did not meet the “competent financial evidence” required to show that no permissible use of the entire 56-acre property would yield a reasonable return.

Improper Annexation Claim

Rural Community Coalition, Inc. v. Village of Bloomingburg

2015 WL 1470832, 4/2/15

AppDiv, Third Dept.

(Opinion by Lahtinen, J.)

In an action by community residents to invalidate a local law annexing part of a town to the village, developers appealed from Supreme Court's invalidation of the law. The Appellate Division modified to dismiss, on statute of limitations grounds, the cause of action based on the allegedly improper annexation.

Developers began pursuing a townhouse development project in 2006. As part of the project, a portion of the property located in the Town of Mamakating was annexed to the Village of Bloomingburg. The Town and the Village both supported the annexation, but no formal vote of affected residents ever occurred. In 2014, after the development project was approved and construction started, community residents brought this action contending that the annexation was invalid for failure to conduct the requisite vote of affected residents. The town and the village now agreed with the community residents, contending that the annexation was invalid. Supreme Court agreed and the developers appealed.

In reversing, the Appellate Division conceded that a formal, secret vote is necessary to annex area to a village. But the court noted that in 2006, at the time the challenged local law was enacted, there was authority to the contrary. The court then concluded that the failure to bring the challenge to the local law for more than seven years ' almost six years after the Court of Appeals clarified the law in this area ' required dismissal of the challenge on statute of limitations grounds.

Regulatory Authority over Beach Area

Semlear v. Incorporated Village of Quogue

NYLJ 4/24/15, p. 24, col. 1

AppDiv, Second Dept.

(memorandum opinion)

In an action by the Town of Southampton to enjoin the Village of Quogue from engaging in dune restoration and erosion control projects within the Village, the latter appealed from Supreme Court's order declaring that the town had the right to regulate activities south of the crest of the primary dune and north of the high water mark. The Appellate Division reversed, holding that an 1818 statute divested the town trustees of regulatory authority over the beach area.

When the Village of Quogue set out to engage in dune restoration and erosion control projects within the village's borders, the Town (in which the village is located) brought this action for a declaration that the village was required to comply with the town's permit requirements. The town contended that a 1686 grant issued by the royal governor granted the town's trustees authority to regulate activity on ocean beach lands. The village, however, contended that an 1818 law divested the town of regulatory authority other than authority over the waters, the seaweed, and the fisheries. This law also gave town residents the privilege of taking seaweed from the shores of any common lands of the town. Supreme Court relied on the 1818 law to grant the village's summary judgment motion dismissing the complaint, but then, upon request of the town, added a declaration that the town had the right to regulate activities between the high water mark and the crest of the primary dune in order to protect the easement of the town's inhabitants. The village appealed.

In reversing, the Appellate Division held that the Supreme Court's broad declaration exceeded the authority reserved to the town's trustees under the 1818 law. As a result, the village was entitled to a declaration that the town has not lawful governmental or regulatory power to grant or deny permits in connection with the placement and grading of sand and earth, and the development, construction, maintenance and use of structures and lands located on ocean beaches within the village.

'

Grant of Use Variance Overturned

Matter of Nemeth v. Village of Hancock Zoning Board of Appeals

2015 WL 1565749, 4/9/15

AppDiv, Third Dept.

(3-1 decision; opinion by Peters, P.J.; dissenting opinion by Lynch, J.)

In neighbors' article 78 proceeding challenging grant of a use variance, neighbors appealed from a Supreme Court judgment denial of the petition and dismissal of the proceeding. A divided Appellate Division reversed, holding that applicant had not produced enough dollars-and-cents evidence to justify the use variance.

Neighbors own property adjacent to landowners' industrial manufacturing business. That business is operated as a non-conforming use in a residential district. In 2001, landowners built an addition to their plant. In an earlier proceeding, the Appellate Division held that the addition constituted an impermissible expansion of a pre-existing non-conforming use. Landowner then sought a use variance to maintain the addition, and the zoning board of appeals (ZBA) granted the variance. Neighbors then brought article 78 proceeding challenging the variance. Supreme Court denied the petition, and neighbors appealed.

In reversing, the Appellate Division majority emphasized that to justify the use variance, landowners had to establish that the property could not yield a reasonable rate of return either as a residential use or as the pre-existing manufacturing use without the unlawful 800-square-foot addition. The majority concluded that landowner had produced no evidence about the financial implications of converting the entire property to residential use. Landowner did submit evidence about the cost of converting the unlawful addition to residential use, but the court held that landowner could not segment the parcel to argue that without the addition, landowner could not earn a reasonable return on the addition alone. Similarly, the court's majority concluded that landowner had not submitted sufficient evidence that the parcel as a whole could not yield a reasonable return for manufacturing purposes if the addition were removed. As a result, the court held that the ZBA improperly granted the use variance.

Justice Lynch, dissenting, emphasized the limited scope of review of ZBA decisions, and concluded that the evidence presented about the cost of converting the addition to residential use, and the cost of relocating the manufacturing facility, was sufficient to support the ZBA's determination.

COMMENT

When neighbors challenge grant of a use variance, courts typically hold that expert opinion testimony, unsupported by detailed financial analysis, does not constitute the statutorily required “competent financial evidence” that no permissible use will yield a reasonable return. For instance, in Village Board of Village of Fayetteville v. Jarrold, 53 N.Y.2d 254, the Court of Appeals overturned the zoning board's grant of a commercial-use variance where applicant's architect and real estate broker both testified that the property's topography would render a house built on the property competitively unsellable due to special construction costs. In rejecting the zoning board's decision as unsupported by substantial evidence, the court noted that applicant failed to provide evidence of the amount of special construction costs, the total residential construction costs, or the area's market value. In contrast, in SoHo Alliance v. NYC Board of Standards and Appeals, 95 N.Y.2d 437, the Court of Appeals found applicant satisfied the “competent financial evidence” requirement by submitting calculations of potential returns from the property's permitted uses and additional market data, including recent condominium sales in the area. Thus, the court upheld the zoning board's grant of a use variance allowing applicant to build mixed-use residential buildings on properties zoned for artist use.

Where an applicant seeks a use variance for only a portion of the property, courts generally require the applicant to show that the applicant can obtain no reasonable return from permitted uses of the entire property. Financial evidence that the portion of property fails to yield a reasonable return, absent similar evidence for the rest of the property, is not enough to justify a use variance. For example, in Matter of Citizens for Ghent, Inc. v. Zoning Board of Appeals of the Town of Ghent, 175 A.D.2d 528, the Third Department held that applicant, who conditioned the purchase of 13 acres from a 56-acre property on a commercial-use variance, was not entitled to the variance where applicant submitted an appraisal report showing only that permitted uses of the 13-acre site failed to provide a reasonable return. The court also found applicant's evidence that property owners were previously unable to sell 26 acres of the 56-acre property for permitted uses did not meet the “competent financial evidence” required to show that no permissible use of the entire 56-acre property would yield a reasonable return.

Improper Annexation Claim

Rural Community Coalition, Inc. v. Village of Bloomingburg

2015 WL 1470832, 4/2/15

AppDiv, Third Dept.

(Opinion by Lahtinen, J.)

In an action by community residents to invalidate a local law annexing part of a town to the village, developers appealed from Supreme Court's invalidation of the law. The Appellate Division modified to dismiss, on statute of limitations grounds, the cause of action based on the allegedly improper annexation.

Developers began pursuing a townhouse development project in 2006. As part of the project, a portion of the property located in the Town of Mamakating was annexed to the Village of Bloomingburg. The Town and the Village both supported the annexation, but no formal vote of affected residents ever occurred. In 2014, after the development project was approved and construction started, community residents brought this action contending that the annexation was invalid for failure to conduct the requisite vote of affected residents. The town and the village now agreed with the community residents, contending that the annexation was invalid. Supreme Court agreed and the developers appealed.

In reversing, the Appellate Division conceded that a formal, secret vote is necessary to annex area to a village. But the court noted that in 2006, at the time the challenged local law was enacted, there was authority to the contrary. The court then concluded that the failure to bring the challenge to the local law for more than seven years ' almost six years after the Court of Appeals clarified the law in this area ' required dismissal of the challenge on statute of limitations grounds.

Regulatory Authority over Beach Area

Semlear v. Incorporated Village of Quogue

NYLJ 4/24/15, p. 24, col. 1

AppDiv, Second Dept.

(memorandum opinion)

In an action by the Town of Southampton to enjoin the Village of Quogue from engaging in dune restoration and erosion control projects within the Village, the latter appealed from Supreme Court's order declaring that the town had the right to regulate activities south of the crest of the primary dune and north of the high water mark. The Appellate Division reversed, holding that an 1818 statute divested the town trustees of regulatory authority over the beach area.

When the Village of Quogue set out to engage in dune restoration and erosion control projects within the village's borders, the Town (in which the village is located) brought this action for a declaration that the village was required to comply with the town's permit requirements. The town contended that a 1686 grant issued by the royal governor granted the town's trustees authority to regulate activity on ocean beach lands. The village, however, contended that an 1818 law divested the town of regulatory authority other than authority over the waters, the seaweed, and the fisheries. This law also gave town residents the privilege of taking seaweed from the shores of any common lands of the town. Supreme Court relied on the 1818 law to grant the village's summary judgment motion dismissing the complaint, but then, upon request of the town, added a declaration that the town had the right to regulate activities between the high water mark and the crest of the primary dune in order to protect the easement of the town's inhabitants. The village appealed.

In reversing, the Appellate Division held that the Supreme Court's broad declaration exceeded the authority reserved to the town's trustees under the 1818 law. As a result, the village was entitled to a declaration that the town has not lawful governmental or regulatory power to grant or deny permits in connection with the placement and grading of sand and earth, and the development, construction, maintenance and use of structures and lands located on ocean beaches within the village.

'