On February 14th, the Court of Appeals decided Sunrise Check Cashing and Payroll Services, Inc. v. Town of Hempstead, – – N.E.2d – -, 2013 WL 530640 (N.Y.), 2013 N.Y. Slip Op. 00949 (Feb. 14, 2013). At issue was a provision of the Town of Hempstead Building Zone Ordinance (“BZO”) which prohibited check cashing establishments in districts other than the Town’s industrial or light-manufacturing districts. The ordinance in question, Section 302(K) of the BZO, legislated check cashing businesses out of the general business district and out of “downtowns.”
The Court of Appeals looked at the Town’s stated purpose in adopting the ordinance, which was set forth in a memorandum entitled “Public Policy behind Check Cashing Ordinance” that criticized check-cashing establishments on social policy grounds. It says that such establishments make it convenient for young and lower income people “to remain in the cash-only economy” and adds: “This is bad for society as a whole.” The memorandum refers to studies finding that “check-cashing establishments actually exploit the poor and African Americans.” It concludes that the proposal under consideration “encourages young and lower income people to open up bank accounts, save their money, and develop a credit rating” and “also removes a seedy type of operation, akin to pawnshops and strip clubs, from the commercial areas of the Town.”
The Court determined that Section 302(K) of the BZO was not a proper exercise of the Town’s zoning power. Relying on the fundamental principle that a zoning board is charged with the regulation of land use and not with the person who owns or occupies it, the Court of Appeals held:
It is clear from the memorandum of the deputy town attorney that section 302(K) was directed at the perceived social evil of check-cashing services, which were thought to exploit the younger and lower income people who are their main customers. Whatever the merits of this view as a policy matter, it cannot be implemented through zoning (emphasis added).
The Court determined that Section 302(K) was concerned not with the use of the land but with the business done by those who occupy it. On that basis, the Court affirmed the Appellate Division, Second Department’s decision which remitted the matter to the Nassau County Supreme Court for the entry of a judgment declaring that Section 302(K) of the BZO was void and of no effect.