In Miranda Holdings v. Town Board of Town of Orchard Park, ____ N.Y.S. 3d, ____, 2017 WL 2884633 (4th Dept. July 7, 2017), Petitioner, Miranda, proposed a commercial structure that included a restaurant with a drive-through window. The Town Board was not happy.  Not only did the Board improperly declare the proposed restaurant with a drive-through as a Type I action under SEQRA, but also it required a full-blown EIS.  Further,  the Town enacted a local law specifically declaring that, going forward, all restaurants with a drive-through would be categorized as Type I actions.

Although the Appellate Division upheld the trial court’s determination that that law does not allow the Town to reclassify actions in a manner that is contrary to the DEC classification, the Court, without any real explanation, remitted the matter back to the Town for further findings consistent with its opinion.

In Miranda’s favor, the Appellate Division upheld the trial court’s decision to invalidate the local law, which reclassified all restaurants with a drive-through as Type I actions wholly inconsistent with the DEC’s Type II designation.

The Town’s Actions

At first, the Town determined that the project was an Unlisted action under the State Environmental Quality Review Act (“SEQRA”) and SEQRA Regulations. See, 6 NYCRR Part 617. The Town issued a “positive declaration” requiring that Miranda prepare an Environmental Impact Statement (“EIS”). A full-blown EIS is difficult, time consuming and expensive. Unsurprisingly, Miranda claimed that the proposed project was a Type II action under the regulations and, therefore, was exempt from all environmental review and from preparing an EIS. In response, the Town passed a resolution making a drive-through restaurant project a Type I action, so that it was presumed to require an EIS. Miranda sued, arguing that the Town (1) was out of bounds, (2) was not allowed to make the project a Type I action because by its nature, it is a Type II action and (3) could not require that Miranda prepare an EIS.

What a mess! The Court’s decision does not add a lot of clarity.

The Trial Court Decision and SEQRA

Like ancient Gaul, all SEQRA actions are divided into three parts – Type I, Type II and Unlisted. A Type I action “carries with it the presumption that it is likely to have a significant adverse impact on the environment and may require an EIS. Type II actions are just the opposite – they are exempt from environmental review under SEQRA and thus not only is an EIS not required, but no review is technically required. “Unlisted” actions are everything that is neither Type I nor Type II, thus allowing latitude in what additional review is necessary.

Most Type I and Type II projects are defined in the NY Dept. of Environmental Conservation (“DEC”) Regulations. For example, all permits and variances regarding single-family homes are Type II actions. However, municipalities may also adopt their own lists of Type I and Type II actions, so long as they do not conflict with the DEC’s lists. In particular, a municipality “may not designate as Type I any action identified as a Type II” in the DEC Regulations.

One of the actions identified as a Type II under the DEC Regulations is a commercial facility (or extension) of up to 4,000 sq. ft., which otherwise meets zoning, such as use restrictions, setbacks or height limits. When the Town initially determined that the proposed drive-through restaurant was “Unlisted,” the developer argued that this 4000-sq. ft. commercial facility provision made the project a defacto Type II action exempt from SEQRA. The Town’s reaction in passing the local law was to make all drive-through facilities into Type I actions – spurring the developer’s lawsuit, claiming that the Town could not convert a Type II action into a Type I action.

The trial court decided in Miranda’s favor, holding that because a drive-through facility was a Type II action under SEQRA, the Town could not automatically make it a Type I action.

The Court acknowledged that the Regulations do not specifically list drive-through facilities as Type II actions. However, the SEQRA Handbook published by the DEC does mention fast food facilities as being within the contemplation of the 4,000 sq. ft. Type II and also gives as an example of a Type II, the expansion of a commercial restaurant where the project is less than 4,000 sq. ft. The Court also noted that the Final Generic Environmental Impact Study prepared by DEC in connection with the 1995 adoption of proposed amendments to the Regulations – including the 4,000 sq. ft. commercial project as a Type II – directly referenced a “drive-through window” as part of the commercial expansion that would be exempted if the 4,000 sq. ft. limitation were met. Therefore, the Court concluded that the DEC “contemplated restaurants with drive-through windows as Type II actions.”

The Appellate Division Determination

However – and here is the mystery – the Appellate Division held that the Supreme Court should not have found that the proposed restaurant was a “4,000 sq. ft.” Type II – without “a revised review” by the Town. What is there to review?

The Appellate Division may have had some empathy with the Town’s concerns and afforded it the opportunity to look more closely at the proposed project. More fundamentally, the “4,000 sq. ft.” Type II is very broad and can easily include projects that pose potential for significant impacts, like traffic and air quality. Despite the fact that the DEC determined that projects of this limited size “do not rise to the level of significance envisioned by [SEQRA] as requiring an EIS,” perhaps other aspects of the proposed development needed further review by the Town.

What the Appellate Division did unequivocally declare is that a municipality cannot reclassify a project from a Type II to a Type I, as this is prohibited under SEQRA.  Invalidation of the local law was upheld.

The bottom line lesson is that municipalities should address planning and zoning concerns for their ordinary development through zoning and planning; not by a short cut in trying to stretch environmental review beyond the DEC regulations specific to each project.

 

East Hampton Town restricts the size of accessory structures to 600 s.f. (each) with no plumbing.   However, because of a long history of artists in the Town (e.g., Pollock, Willem and Elaine DeKooning), an artist’s studio is allowed to have a sink and to be as large as 2,500 s.f., depending on the size of the main house. Of course, you have to be an artist to have an artist’s studio: an “artist’s studio” may be “used only by an individual working in the fine arts on a professional basis.”

shutterstock_596874467For a long time, the building inspector’s office approved artists and their respective artist’s studio expanded accessory structure (greater than 600 s.f.).  The building inspector’s office was a bit loosey-goosey, allowing, for example, studios for knitting sweaters and the like. A few years ago, the Town tightened up the standards and required town board approval of the “artist”  in accordance with the definition set forth in the town code.  The approval is now being transferred to the planning board.

Approval of an artist’s studio requires recording a covenant stating that the non-conforming aspects of the approved studio (the sink and size over 600 s.f.) must be removed once the approved artist’s studio use is discontinued – usually because of the sale of the property to someone without an approved artist in the family. These covenants were almost universally ignored – until recently. The Town is now on a tear to get rid of artists’ studios without artists. The town is screening properties and owners and sending letters to non-artist owners of properties with an approved artist’s studio advising that the approval will expire in six months and that they must cease and desist from occupancy when the artist’s use ceases. The requirement to cease occupancy is usually included in the recorded covenant that was required when the use was approved.

There has been no litigation over the cease and desist regime, at least not so far.  For those who have received the cease and desist letter, or expect to receive one at some time in the future, the available remedies are as follows:

  1. Town board (or planning board) approval of the new owner as a bona fide artist.  This is notably harder than it used to be when applicants pushed the envelope to include studios for knitting sweaters or home repair of furniture.  The standards for compliance set forth in the Code include an application by the artist, who must then comply with the definition of an “artist” set forth in the code.   A person with training, but without exhibitions, might get approval; this is probably not the case for the sweater-knitter or home furniture repair ‘artist’.
  2. Obtain a variance to keep the existing building.  This probably would not work to keep the sink, but might work in particular circumstances – such as keeping a second floor studio space due to the  cost associated with removing it.  The normal balancing test for zoning variances (benefit to applicant v. detriment to neighborhood and community) would apply.  The town planners argue that building owners should not get a variance simply because of the inconvenience of achieving compliance  – especially because buyers had notice of the restrictions through the covenants filed.  The only variance granted recently was for a 150-year old cottage that had been converted to an artist’s studio and then sold by the artist to a non-artist.
  3. Achieve compliance – removing plumbing and reducing size to 600 square feet.
  4. Size reduction by conversion.  Actually making the whole building smaller (or the whole second floor smaller) can be both difficult and expensive. Size reduction by converting a part of the structure to storage might work. In the past, the building department has issued updated certificates of occupancy when a portion of the artist’s studio is converted to non-habitable storage space and is separated from the rest of the studio.  That portion is then not counted as habitable gross floor area, reducing the habitable size of the accessory structure to 600 s.f., thereby conforming to the accessory limits.  This may require a separate entrance to the storage area, no connection between the storage area and the remaining 600 s.f. portion, removal of insulation, etc. and even lowering the joists/cross beams to a non-habitable height, such as five feet.
  5. Litigation challenging the statute on fundamental constitutional issues is feasible. No one wants to go that route, at least so far, because the time and cost is impractical.