Development

AppDiv, Second Dept. (memorandum opinion)

In an article 78 proceeding to review a negative declaration under SEQRA and the grant of use and area variances and a special permit, all parties appealed from a Supreme Court judgment upholding the negative declaration but annulling the grant of a use variance to landowner. The Appellate Division affirmed, holding that landowner had not established an inability to obtain a reasonable return on the land without the requested variance.

Landowner owns a parcel of land, most of which is zoned for roadside business use, but the rear of which is zoned for residential use. Landowner filed a site plan with the town planning board for development of a car wash. The site plan proposed using the residential portion of the parcel as a driveway and parking lot. The planning board declared itself lead agency under SEQRA, considered the traffic reports prepared by the applicant and immediate neighbors, and commissioned its own traffic study, ultimately issuing a negative SEQRA declaration. Applicant then applied to the zoning board of appeals (ZBA) for use and area variances, and for a special permit. The ZBA granted the variance, concluding that landowner could not realize a reasonable return on the parcel without a variance. Neighbors then brought this article 78 proceeding challenging both the planning board's SEQRA determination and the ZBA's grant of the variances. Supreme Court upheld the SEQRA determination, but invalidated the use variance, concluding that landowner had failed to prove inability to realize a reasonable return.

In affirming, the Appellate Division acknowledged that applicant had submitted an appraisal showing that without a use variance for the residential portion of the property, the value of the development potential of the rest of the property would be reduced by 27% for carwash purposes, and by more for other purposes. But the court held that this was insufficient dollars-and-cents proof that landowner would not be able to obtain a reasonable return without the variance. Proof that the property would be more profitable with the variance is not equivalent to proof that the smaller project would not yield a reasonable return. As a result, the ZBA's use variance determination was arbitrary and capricious. The court then upheld the SEQRA determination because the planning board took a hard look at environmental issues and was not obligated to accept the conclusions of the neighbors' expert.

COMMENT

A court will not uphold a ZBA's determination to grant a use variance unless the landowner presented dollars-and-cents proof that no use permitted under the zoning ordinance would yield a reasonable return. In Village Bd. Of Village of Fayetteville v. Jarrold, 53 N.Y.2d 254 (1981) the Court of Appeals held that landowner's proof ' testimony from a real estate broker that the parcel would require special preparation in order to develop the land for residential use ' was insufficient to support the ZBA's grant of a use variance because the broker had failed to specify what the market value of a home on the premises would be. In upholding the Appellate Division's grant of neighbor's article 78 petition, the Court of Appeals emphasized that in the absence of evidence about the cost of site preparation, the cost of the property, and the potential value of a house on the site, there was not enough evidence in dollars-and-cents form before the ZBA to support the grant of a variance.

Moreover, a ZBA may only grant a use variance upon dollars-and-cents proof that not one of the uses permitted under the zoning ordinance would yield a reasonable return. In Ferruggia v. Zoning Bd. of Appeals of Town of Warwick, 233 A.D.2d 505 (2d Dep't 1996), the Second Department granted neighbors' article 78 petition challenging a use variance because the contract vendee, who did present evidence of inability to sell the property for residential purposes, failed to present dollars-and-cents proof that other permitted uses within the zoning district would fail to yield a reasonable return. In Ferrugia, the contract vendee of a vacant residentially zoned parcel had applied for a use variance to construct a two-story office building. Ferrugia, 233 A.D.2d 505. In overturning the ZBA's grant of the variance, the Second Department noted, in addition to the absence of evidence about permitted not residential uses, that the applicant had not established what uses had been permitted when landowner bought the land, a relevant fact in determining whether any hardship might be self-created.

When an applicant seeks a variance to expand a nonconforming use, the ZBA may not grant the variance unless the applicant demonstrates, with dollars-and-cents proof, that the parcel use cannot yield a reasonable return: 1) as a non-conforming use without the expansion; and 2) for any other use permitted in the zoning ordinance. In Nemeth v. Village of Hancock Zoning Bd. of Appeals, 127 A.D.3d 1360 (3d Dep't 2015), the Second Department granted neighbors' article 78 petition challenging a use variance permitting expansion of landowners a nonconforming industrial manufacturing business, emphasizing landowners' failure to present dollars and cents proof about the site's profitability without the expansion. The Second Department also noted that even if landowners had established the they could not operate their business profitably without the variance, they failed to meet their burden of showing dollars-and-cents proof about the financial implications of converting the entire tract of land into a residential use permitted by the zoning ordinance. Id. at 1362.

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Positive SEQRA Determination Not Ripe For Judicial Review

Ranco Sand and Stone Corp. v. Vecchio

NYLJ 4/1/16, p. 23, col. 1

Court of Appeals (Opinion by Rivera, J.)

In landowner's article 78 proceeding challenging a positive declaration under SEQRA, landowner appealed from the Appellate Division's affirmance of Supreme Court's dismissal of the proceeding. The Court of Appeals affirmed, holding that the positive SEQRA determination was not ripe for judicial review.

Landowner owns two contiguous parcels of land in Smithtown. Parcel Two, not the subject of this litigation, was rezoned from residential to heavy industrial use pursuant to a stipulation of settlement in a prior litigation instituted by landowner's predecessor. In 2002, landowner applied to rezone Parcel One from residential to heavy industrial use. Parcel One has been used as a nonconforming bus yard and trucking station. The town's planning director recommended approval and, in 2004, the town planning board also recommended approval. Five years later, the town board, acting as lead agency under SEQRA, adopted a positive declaration, concluding that the rezoning might have a significant effect on the environment. Landowner then brought this article 78 proceeding challenging that determination. Supreme Court dismissed, finding the matter not ripe for review, and the Appellate Division affirmed.

In affirming, the Court of Appeals acknowledged that the positive declaration would impose significant costs on landowner (estimated at between $75,000 and $150,000), and that those costs could not be recouped if landowner prepared a draft environmental impact statement that courts subsequently determined was unnecessary. The court concluded, however, that the financial burden on landowner was not by itself enough to justify immediate judicial review, noting that any preliminary administrative action had the potential to impose costs on the applicant. The court emphasized that holding landowner's claim ripe in this case had the potential to generate piecemeal review of every step in the SEQRA process, resulting in significant delays. The court indicated that only in limited circumstances, such as where the agency issuing the positive declaration is not empowered to act as lead agency, or where a prior negative declaration appeared to obviate the need for further review, would a challenge to a positive declaration be ripe for judicial review.

COMMENT

A positive declaration under SEQRA, involving the expenditure of time and resources ' generally not a final agency action ' is ripe for review when the government entity was not entitled to conduct a SEQRA review. In Gordon v. Rush, 1 00 NY2d 236. The Court of Appeals found a property owner's challenge to a Town Board's positive declaration ripe because the Department of Environmental Conservation (DEC) had previously conducted a coordinated review in which the Town Board failed to participate. The court rejected a “bright-line” rule that a positive declaration is never final or ripe for review, emphasizing the unfairness that would result in requiring preparation of a DEIS after the applicants had “already been through the coordinated review process and a negative declaration had been issued by the DEC.”

The Third Department had read Gordon broadly to permit a case-by-case determination of ripeness when landowner challenges a positive declaration. For instance, in Ctr. of Deposit, Inc. v. Vill. of Deposit, the court found a landowner's challenge ripe when the to a positive declaration ripe when the Village Board issued a positive declaration with respect to landowner's request to subdivide one parcel of land into two. 90 A.D.3d 1450. The court suggested that a positive declaration is ripe when a question exists as to whether the particular nature of a landowner's application is a proper subject for a DEIS in the first instance ' a test that would effectively make nearly all challenges ripe. Ranco Sand casts doubt on this broad reading of Gordon. Although the Court of Appeals cited Center of Deposit (with a “cf.” signal), the court cited the case for the proposition that a claim may be ripe “when the proposed action is not subject to SEQRA” ' a far narrower class of cases than those in which the landowner contends that the agency should not have issued a positive declaration.

To date, no New York court has held a negative declaration ripe for review. In Young v. Bd. of Trustees of Vill. of Blasdell, although the Court of Appeals did not address the issue of ripeness on appeal as the issue was rendered moot, the Fourth Department held that a negative declaration was not a final action subject to review. 221 A.D.2d 975. In Young, the declaration was part of the application process for a permit and no final determination with respect to the construction was made .

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