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In Peyton v. New York City Bd. of Standards and Appeals, (2018 N.Y. 06870, 166 A.D.3d 120 (1st Dept 2018), Petitioners-community residents (“Petitioners”) commenced a proceeding to challenge the City of New York (“City”) Board of Standards and Appeals’s (“Board”) resolution upholding the City Department of Buildings’s (“DOB”) decision to grant a permit for the construction of a twenty-story nursing home (“Project”) on the Upper West Side.  The main issue is the City’s “open space” mandate (“Open Space Law”) and whether the Project provides enough open space to suffice the requirement.  The Court rulings and the Project’s viability hinged entirely upon how to calculate compliance with the Open Space Law.

At the outset, it is crucial to note the difference between a building-by-building calculation for open space and an open space calculation in the aggregate.  The former calculates the required open space with respect to each individual building within a zoning lot, whereas the latter considers the open space requirement for all buildings existing on an entire zoning lot together.  This distinction is at the heart of the dispute.

Procedurally, as relevant herein, the DOB made its open space calculation for the Project based upon a “building-by-building” methodology and decided to issue the construction permit.  One or more of the Petitioners appealed the DOB’s decision to the Board.  The Board resolved to uphold the issuance of the permit and the calculation methodology, which resolution the Petitioners challenged in this proceeding.  The Supreme Court, New York County, denied the petition and affirmed the Board’s resolution.  Petitioners appealed and the Appellate Division, First Department, reversed.

The Project site is within a “superblock” zoning lot known as “Park West Village” comprising 308,475 square feet, or 7 acres (“Zoning Lot”) (between 97th and 100th Streets and Columbus and Amsterdam Avenues; the complex extends to Central Park, but that portion is not at issue).  The complex on the Zoning Lot was built in the 1950s and 1960s as part of a federally subsidized middle-income urban renewal project and includes residential buildings, a school, a church, a public library, a health center and commercial buildings.  There are four residential buildings: three original sixteen-story buildings and a more recently constructed twenty-nine-story mixed commercial and residential building (“Fourth Building”).

A forty-year deed restriction had prohibited construction on the Zoning Lot through 2006 and the present owner (“Owner”) acquired the land shortly before the prohibition expired.  Approving and constructing the Fourth Building was the center of controversy between Petitioners, Owner, the City and others, which controversy also revolved around the City’s open space requirements.

Since its inception in 1961, and despite amendments in 1977, the Open Space Law had no particular design or mode to address zoning lots improved with multiple buildings.  With respect to the Fourth Building, there was a disagreement over whether its rooftop open space could count towards the open space requirement for the entire Zoning Lot.  The Fourth Building’s rooftop space included a 42,500 square feet garden, with a mosaic tile saltwater pool, sundeck and lawn.  However, the rooftop garden provided access only to residents of the Fourth Building and did not allow access to occupants of other buildings within the Zoning Lot.  If the Fourth Building’s rooftop garden was included in the open space calculation, then the project met the requirements; if not, then the project would fail.

The DOB performed a building-by-building analysis for the Zoning Lot, included the rooftop garden in its calculation and issued a building permit in 2007.  Residents of Park West Village and others challenged the DOB’s approval based upon the fact that the Fourth Building’s rooftop garden did not provide access to all residents of the Zoning Lot and, thus, could not be included in the open space calculation.

In 2009, the Board resolved to affirm the DOB’s decision (“2009 Resolution”), wherein the Board noted that the Open Space Law’s language requires open space with respect to a “building,” not the zoning lot as a whole; therefore, open space among multiple buildings need not be common, centralized space shared by all occupants of the zoning lot, and the building-by-building methodology for calculating open space suffices.  The 2009 Resolution utilized the building-by-building methodology for the first time and stated: “as each of the buildings is allocated the amount of space that is in excess of that which would be required…if they were located on separate zoning lots, it cannot be seen how those residents would be deprived of an equitable share of open space by the proposed building.”  The Board’s resolution was challenged, but the challenge was settled out of court and the Fourth Building was completed.

Two years later, in February 2011, the City amended the Open Space Law (“2011 Amendments”).  The definition of “open space” has always been: “that part of a zoning lot, including courts or yards, which is open and unobstructed from its lowest level to the sky and is accessible to and usable by all persons occupying a dwelling unit or a rooming unit on the zoning lot.”  The 2011 Amendments modified several other provisions of the Open Space Law (e.g. “open space ratio,” “minimum open space,” etc.) by substituting the words “zoning lot” and “all zoning lots” for the words “building” and “any buildings,” focusing the law and its analysis upon the actual zoning lots – as opposed to individual buildings.

After the City enacted the 2011 Amendments, the Owner sought to utilize a former parking lot within the Zoning Lot, which Park West Village residents previously used.  The Owner entered into an exchange agreement with the Project’s developer (“Developer”) to swap the parking lot for another parcel of land located north of the Zoning Lot and owned by the Developer (“New Parcel”).  The New Parcel was large enough for the Owner to construct another luxury apartment building.  The Owner agreed to pay the Developer $35,000,000 and the Developer promised to complete the project on the former parking lot.  However, this exchange was contingent upon, among other things, the Developer obtaining a permit from the DOB for construction of the Project.

In March 2011, the Developer made its applications to the DOB, which expressly noted that the open space within the Project would be accessible to all persons occupying a dwelling unit on the Zoning Lot.  Developer’s open space calculations for the Project included all of the open space on the zoning lot, including the Fourth Building’s rooftop garden.  Petitioners objected and argued that, based upon the 2011 Amendments to the Open Space Law, the Fourth Building’s rooftop garden no longer counted towards the open space calculation for the Zoning Lot (due to restricted access) and that the building-by-building methodology was invalid.

The DOB disagreed and granted a building permit for the Project.  Petitioners appealed to the Board and the Board resolved to affirm (“2011 Resolution”), relying upon the 2009 Resolution: “in the case of a multi-building zoning lot, the open space definition could be read to allow some open space to be reserved for the residents of a single building as long as the residents of each building on the zoning lot have access to at least the amount of space that would be required…if each building were on separate zoning lots.”  The Board also noted that the 2011 Amendments did not dictate a change in the DOB’s or Board’s building-by-building methodology or open space analysis.

Petitioners challenged the Board’s 2011 Resolution by commencing this proceeding and argued that, even though the Fourth Building’s rooftop garden was arguably within the meaning of open space when it was constructed in 2009, it presently was not open space by virtue of the 2011 Amendments.  These changes to the Open Space Law eliminated any ambiguity as to how to calculate open space and the Fourth Building’s rooftop garden cannot be included because the area is not available to all occupants of the Zoning Lot.

It was undisputed that the Project sufficed the open space requirement with the inclusion of the Fourth Building’s rooftop garden.  It was also undisputed that the Project failed to provide adequate open space without the rooftop garden.  The Board’s main argument was that the City’s Open Space Law is ambiguous and, therefore, the DOB and the Board have discretion to construe it.  In particular, the Board argued that the definition of open space (with accessibility and usability for all residents within a zoning lot) is irreconcilable with the definition of “zoning lot,” which contemplated multiple buildings on a single lot.  Therefore, the Open Space Law was ambiguous and the DOB and the Board were free to interpret and reconcile this ambiguity, i.e. by utilizing the building-by-building methodology.  The Supreme Court denied Petitioner’s petition and dismissed the proceeding. Petitioners appealed and the Appellate Division reversed and annulled the 2011 Resolution.

On appeal, the Appellate Division disagreed with the Board and adopted the Petitioners’ argument that the 2011 Amendments removed the contextual basis upon which the Board relied.  Judicial deference should be given to an agency’s interpretation of a statute it is charged with implementing, unless the interpretation is unreasonable or irrational.  However, where the question is one of pure statutory interpretation, an agency’s interpretation is accorded much less weight and Courts are free to ascertain the proper interpretation from the statutory language and legislative intent.  Here, resolving the dispute concerning the 2011 Amendments does not implicate the expertise of the DOB or the Board as the implementing administrative agencies; instead, the resolution is one of pure statutory analysis and does not require deference to the agencies.

The Appellate Division held that the definition of “open space” is clear and unambiguous, requiring open space to be accessible to all residents of any residential building on the zoning lot – not only the building containing the open space in question.  The Court noted this clarity is further bolstered by the 2011 Amendments, which eliminated all references to “building” and replaced the term with “zoning lot” in the relevant Open Space Law provisions.  Therefore, any space, including a rooftop, that is to be considered “open space” for purpose of satisfying the requirement must be accessible and usable by all residents of the zoning lot.  In addition, the Court expressly invalidated the building-by-building methodology: “Lest there be any doubt, we find that the 2011 [A]mendments now preclude use of [this] methodology, which has been an exception to this clear statutory import.”

The Court also noted that absence of legislative history did not evidence an intent to accept the building-by-building methodology.  Rather, the 2011 Amendments replacement of the word “building” was an unmistakable rejection of the use of this formula.  Notably, one of the four Judges dissented, which may lead the case to the Court of Appeals.

In 1999, the Greenport Group, LLP (“Greenport Group”) acquired a 31 acre parcel of land located on the east side of Chapel Lane and the north side of the Main Road in Greenport in the Town of Southold. The southerly portion of the property was zoned “Limited Business” and the northerly portion was zoned “Hamlet Density”. When purchased, there were four buildings on the property, each containing two residential units that were part of a larger project to build multi-residence senior citizen housing, which had been approved for an additional 140 units. The Planning Board and Zoning Board of Appeals granted a conditional site plan and special exception approval for the construction of the multiple residence complex in or about 1976, with certificates of occupancy being issued for the four buildings on the property in 1984. The additional units were never built and no further construction took place on site.

On September 12, 2000, the Town Board of the Town of Southold adopted a local law, Local Law 20 of 2000, changing the zoning of the property to Residential Low Density, R-80. The R-80 designation increased the minimum lot size permitted on the property from 10,000 square feet to 80,000 square feet. The local law was filed with the Secretary of State on October 2, 2000. Thereafter, the Greenport Group filed a hybrid Article 78 proceeding and Declaratory Judgment action in Supreme Court on February 2, 2001, entitled Greenport Group, LLP and Adrienne Solof v. The Town Board of the Town of Southold, Index No. 01-2730, seeking a judgment declaring that the local law up-zoning the property was null and void. Greenport Group alleged that the Town Board’s actions were arbitrary and capricious, that the re-zoning subjected their property to disparate treatment and constituted reverse spot zoning, that they had vested rights in the prior zoning designations, that the rezoning was inconsistent with the goals of the Town Comprehensive Plan, and the rezoning constituted a regulatory taking of the property without just compensation. In response, the Town Board moved for summary judgment.

The Supreme Court, Suffolk County, by decision dated June 17, 2015, granted summary judgment in part, dismissing the Greenport Group’s claims that (i) the Town failed to comply with the notice requirements rendering the local law adoption invalid since plaintiff actually participated in the local law hearing, (ii) the Town’s adoption of the local law changing the zoning constituted impermissible spot zoning where Greenport Group failed to allege or offer evidence that the change was “for the benefit of the owner to the detriment of other owners”, (iii) that Greenport Group had vested property rights in the prior zoning of the property when no construction was performed on site in connection with the development prior to the zone change, and (iv) the re-zoning constitutes a taking without just compensation since Greenport Group citing an 80% diminution of the property’s value was deemed insufficient and failed to prove that the property was incapable of producing a reasonable return or that the economic value of the property was destroyed by the zone change.

The Supreme Court denied the Town’s motion for summary judgment relative to the second and fifth causes of action asserted by Greenport Group. The second and fifth causes of action asserted by the Greenport Group alleged that the Town Board’s adoption was arbitrary and capricious representing an unconstitutional abuse of the Town Board’s zoning authority, and that the re-zoning was unjustified and failed to achieve the purported goals of the local law and land use plans. Here, the Court found that Greenport Group had raised triable issues of fact as to whether the Town Board’s stated intent of the re-zoning was the actual purpose for re-zoning Greenport Group’s property. The Supreme Court stated, “[p]arenthetically, since the re-zoning was enacted approximately 14 years ago, the witnesses’ recollection as to the zoning classification was legitimately less than ideal. Although the Town Board’s decision appears to be supported by the CR48 Land Use Study… and tremendous deference is given to the local municipality’s decision-making process and its authority, the Court will not simply rubberstamp a local municipality’s assertion that it was following the advice of its own consultant. Instead, the Court must examine the record, including the adopted legislation, to determine whether the legislation was reasonable and enacted in accordance with the municipality’s land use plan. Here, notwithstanding the documentary evidence supporting the Town Board’s claim, plaintiffs raise questions of fact concerning similarly situated properties included within the CCG studies but treated differently by the Town Board.” Therefore, the Supreme Court denied the Town’s motion for summary judgment with respect to these two causes of action.

The parties cross-appealed the matter and the Appellate Division, Second Department, in its decision entitled Greenport Group, LLC et al., v. Town Board of the Town of Southold, dated December 5, 2018, remitted the matter to the Supreme Court for “severance” of the causes of action asserted by Greenport Group and the entry of judgment declaring the Local Law that changed the zoning classification was valid. The Appellate Division reviewed and affirmed the lower court’s dismissal of each of Greenport Groups causes of action. However, the Court found that the Supreme Court should have granted the Town Board’s motion for summary judgement with respect to the second and fifth causes asserting that the rezoning of the property was arbitrary and inconsistent with the comprehensive plan. The Appellate Division cited the “heavy burden of countering the strong presumption of validity accorded the enactment [of local laws]” and further stated that “if the validity of the legislative classification for zoning purposes is even ‘fairly debatable,’ the classification must be sustained upon judicial review (citing, Matter of Town of Bedford v. Village of Mount Kisco, 33 NY2d at 186).” The Appellate Division also found that Greenport Group failed to raise a triable issue of fact, contrary to the Supreme Court’s findings, regarding the purpose and intent of the re-zoning stating, “[w]hile the courts must satisfy themselves that the rezoning meets the statutory requirement that zoning be in accordance with the comprehensive plan of the community, this does not entail examining the motives of local officials (Udell v. Haas, 21 NY2d 463, 471).” Ultimately, the Appellate Division found that the local law changing the zoning classification of the Greenport Group’s property was valid and remitted the matter to the Supreme Court for appropriate judgment.

 

 

In a decision dated October 30, 2018, Supreme Court Judge Joseph Pastoressa remanded a decision made by the Southampton Village Architectural and Historic Board (BARHP) for further consideration. Manger et al. v. Board of Architectural Review and Historic Review of the Village of Southampton.

 The property owner in Manger applied to the BARHP for a certificate of appropriateness to construct a single family dwelling and accessory structures on two separate lots in the Village of Southampton. The lots are in a Historic District which requires a Certificate of Appropriateness as a condition precedent to issuing a building permit.

During the public hearing process that resulted in an approval of the application, the Board stated that it could not consider the size of the house in its review of the proposed construction. The Board took this position because the house as proposed fully complied with the Zoning Code of the Village of Southampton. That position was supported by Board precedent and a prior decision in Ferrara v. Board of Architectural Review.

Immediate neighbors of the property brought the Article 78 proceeding and argued that scale and size were different measurements and the Board could consider the scale of houses and any corresponding impact on the neighboring properties. Alternatively, the property owner and Village argued that if a house complied with Zoning then the BARHP was powerless to require a reduction in size. Ultimately, Judge Pastoressa rejected that argument and sent the matter back to the Board for re-consideration.

This case highlights the tension between the Zoning Code and the Historic and Landmark Preservation Code. Historically, zoning was enacted to protect light and air between properties. This protection is accomplished through setbacks and the restrictions on the size of a structure. One of the stated considerations of the Historic and Landmark Preservation Law is the impact of new construction on the character of nearby properties.

As held by Judge Pastoressa, the BARHP now may consider the impact of new construction on surrounding properties. But, that consideration still must include an analysis of the new construction under Zoning Code provisions.

Since the Declaration of Purposes of the Zoning Code (§116-1) and the Legislative Findings and Intent (§65-1) in the Historic and Landmark Preservation Law share many common core goals, compliance with the Zoning Code is certainly compelling if not overwhelming evidence that the mass and scale of new construction is appropriate.  So, while the option to reduce the size of a structure is seemingly available to the BAHRP, it must show that the Zoning Code somehow failed to achieve one of its basic goals. There must be significant evidence showing an impact not addressed by the Zoning Code for the BARHP to reduce the size of a structure under that which is allowed by Zoning.

Ultimately, this leaves a potential purchaser of real property in a bind. Any advice by counsel to a purchaser must be given with a caveat that the BAHRP has final say and compliance with the Zoning Code does not guarantee approval.

 

Local zoning ordinances throughout New York State incorporate the flexible “accessory use” component so as not to unnecessarily restrict one’s use of property.  Accessory uses are incidental and customary to the principal use of property. Determining whether a use is actually “accessory,” however, is often debated – especially where the use is not specifically enumerated as such or where the ordinance does not define the use.

Recently, in Brophy v. Town of Olive Zoning Board of Appeals, 2018 N.Y. Slip Op. 07388 (3d Dept), the accessory use debate engaged the Appellate Division, Third Department.  Ashokan Dreams, a bed-and-breakfast on 28-acres in the Town of Olive (“Town“), began operating in 1998.  Ashokan Dreams was zoned “residential-rural-3A,” which permitted, among other uses, “tourist homes,” “boardinghouses” and “commercial recreation.”

The proprietors of the bed-and-breakfast first sought and obtained site plan approval, without conditions, from the Town Planning Board (“Planning Board“) for a single guest bedroom bread-and-breakfast operation in 1998.  Almost two-decades later, and without further approvals, Ashokan Dreams had expanded to three guest rooms and offered weddings – upwards of 12 each year – with limited lodging.  In 2015, the Town Zoning Enforcement Officer (“ZEO“) advised Ashokan Dreams in writing that site plan review was required because the weddings had grown to affect the health, safety and welfare of the neighbors and that site plan review would be a proper remedy via the imposition of certain limitations.

Ashokan Dreams submitted a site plan application to the Planning Board, which referred the matter to the ZEO and the Town Zoning Board (“ZBA“).  After a public hearing, the ZBA determined that the weddings were a “permitted special use to a bed-and-breakfast” requiring site plan review and remitted the matter back to the Planning Board.  Notably, the ZBA also reasoned that periodic seasonal events, including weddings, could be an “accessory use” at the site.  Neighboring property owners and a neighborhood association (collectively “Neighbors“) commenced an Article 78 proceeding seeking to annul the ZBA’s determination.  The Supreme Court, Ulster County, partially granted and partially dismissed the Neighbor’s petition, holding: the ZBA correctly determined weddings were an accessory use, but erred by legislating a “new use subject to a special permit requirement.”  The Neighbors appealed challenging, inter alia, the accessory use finding and the Appellate Division affirmed.

The Third Department noted that, generally, a zoning board’s interpretation of local zoning ordinance is afforded deference and will only be disturbed if it is unreasonable or irrational.   This deferential standard was applicable “because [determining] whether a proposed accessory use is incidental and customarily found in connection with the principal use of property is, to a great extent, fact-based.  Resolution of the accessory use question depends upon an analysis of the nature and character of the principal use of the land in question in relation to the accessory use, taking into consideration the over-all character of the particular area in question.”[1]

In its analysis of whether the wedding venue accessory use was customary and incidental to the bed-and-breakfast, the Court considered the character of the use and the area in question.  The district permitted “tourist homes,” “boardinghouses” and “commercial recreation.”  Tourist homes are dwellings which offer up to four rooms for transient guests.  Boardinghouses are dwellings occupied by one family and three or more lodgers.  Each of these uses permit the provision of services of a temporary residence.  Commercial recreation is defined as making use of mountain land, including resort hotels, seasonal commercial camps resort ranches, resort lodges and bungalow colonies.  Notably, another bed-and-breakfast in the same district offered similar weddings services.  The Court found held that the ZBA’s determination was not irrational or unreasonable and its reliance, in part, on the fact that another bed-and-breakfast within the same district also offered wedding services was not in error.

[1] The Town ordinance defined “accessory use” as one that is customarily incidental and subordinate to the principal use of the premises. And, for all residential districts, the Town ordinance authorized any other accessory buildings or use considered by the ZBA to be customarily incidental to any related principal use therein.

The Appellate Division, Second Department, issued a decision on October 10, 2018, which rejected a town’s attempt to saddle an applicant with over $17,000 in consulting fees supposedly incurred by the town in reviewing special use permit and area variance applications for an antenna tower to be used by an amateur radio (a/k/a ham radio) hobbyist. The installation of the tower was expected to cost less than $1,000.

In Matter of Landstein v. Town of LaGrange, Myles Landstein, the owner of residential property located in the Town of LaGrange (“Town”) in Dutchess County, sought the special use permit and area variance to install a 100-foot antenna tower on his property for his personal use in connection with his ham radio station. The Town Code limits towers to 35 feet in height.

Mr. Landstein had already obtained a license for his ham radio station from the Federal Communications Commission (“FCC”). After receiving the FCC license, Mr. Landstein applied to the Town and paid the $250 filing fee. Although the applications clearly indicated that all costs incurred by the Town for the review of the applications were the sole responsibility of the applicant, Mr. Landstein added a comment to the application requesting that he be advised in advance of the review cost amount.

The applicant indicated that the 100-foot tower, which would be 18-inches by 18-inches in dimension, was needed to operate the ham radio station effectively and would be barely visible above the tree line. Town residents objected, contending the tower would be an eyesore and interfere with cellular and internet service.

The applications were discussed at 14 separate public meetings over the course of 2 years. The applicant even agreed to decrease the height of the tower to 70 feet. However, he would not agree to pay the ever-increasing legal fees that the Town sought to recover from him, which at one point exceeded $17,000. Mr. Landstein’s attorney wrote to the Town complaining that the fees were excessive in light of tower’s modest installation cost and violated an FCC regulation. Thereafter, the Town Board passed a resolution indicating that it would review and audit its consultant costs to determine if they were “reasonable and necessary.”

The audit revealed that the town attorney’s charges were not solely attributed to the specific area variance application before the Town Zoning Board of Appeals (“ZBA”) but were more generic. They included charges for: (1) attendance at the ZBA hearings, (2) travel time, (3) telephone calls with ZBA members, (4) internal conferences at the town attorney’s law firm, (5) drafting the ZBA agendas, (6) reviewing the applicant’s files, and (7) legal research. Upon completion of the audit, the Town Board passed a resolution reducing the legal fees from more than $17,000 to $5,874. The resolution also required the applicant to maintain a $1,000 minimum balance in an escrow fund for future costs incurred with the applications, which would need to be replenished as the balance fell below that amount. The resolution indicated that the applications would not be further reviewed absent the payment of the fees and the establishment of the escrow fund.

The applicant sued. The trial court denied the Article 78 proceeding, but the applicant prevailed at the Appellant Division. The appellate court found that the Town’s fee provision exceeded state statutory authority. The Appellate Division noted that such fees needed to be “reasonable and necessary.” The Court found that the definition of “reasonable” in the Town Code was appropriate as it required a reasonable relationship to customary charges of similar consultants in the region in connection with similar land use applications. The Town Code definition of “necessary,” however, was rejected by the Appellate Division as it was way too broad, and was out of step with established precedent. The Town Code defined necessary consulting fees as those required “to assist in the protection or promotion of the health, safety or welfare of the Town or its residents; to assist in the protection of public or private property or the environment from potential damage…to assure or assist in compliance with laws, regulations, standards or codes which govern land use and development; to assure or assist in the orderly development and sound planning of a land use or development;…or to promote such other interests that the Town may specify as relevant.” The Appellate Division found the “to assist” language particularly troubling. The Court was equally troubled by the actions of the Town, first insisting that it be paid in excess of $17,000 in legal consulting fees, and its later reduction to $5,874, which was achieved by the Town merely striking entries from the invoices, without regard to their content or connection to the applications. The Appellate Division noted that the Town imposed liability without making any attempt to determine if similar charges were imposed by other municipalities for similar applications.

The Appellate Division also took aim at the escrow fund with its minimum $1,000 balance. The Court found this perpetual replenishment fund to be an impermissible effort to avoid having the Town’s taxpayers shoulder their share of the cost of governmental functioning.

Municipalities would be wise to examine their own codes to make sure that they seek reimbursement of costs that are reasonable and necessary in light of the specific project at issue, and not use that provision to dissuade or discourage land use applicants or as a means of underwriting the cost of government.

On October 17, 2018, the Supreme Court, Appellate Division, Second Department (“Second Department”) issued two (2) companion decisions arising out of three different attempts by Petitioners, Kleinknechts (“Petitioners”)  to construct a dock at their waterfront property.  Each of the attempts resulted in a Supreme Court litigation.  As we blog about these cases today, no dock has been constructed despite a directive in 2013 that a permit be issued upon submission of the proper application!

In the first matter, the Second Department upheld a decision of the Village of Lloyd Harbor’s Zoning Board of Appeals (“ZBA”) denying certain variances requested by Petitioners to construct a dock along their waterfront property finding that the ZBA properly applied the five-factor test set forth in Village Law 7-712-b(3).  Further,  Petitioners’ expert testified that he had prepared an alternative completely code compliant plan.  Since a code compliant dock plan provided a reasonable alternative for Petitioners to explore, the Second Department upheld the trial court’s dismissal of the underlying Article 78 proceeding stating that the “need” for the variances was self-created.  In light of the ZBA’s proper application of Village Law, the ZBA’s denial was not arbitrary or capricious.  See, Kleinknecht v. Brogan, 2018 WL 5020285 (Oct. 17, 2018)

In the second matter, and following denial of the above-mentioned variance application, the Appellate Division vacated a 2013 directive to the Building Inspector requiring the Building Inspector to issue a building permit to Petitioners for the alternative code compliant dock permit application.  The Second Department stated “[m]andamus . . . is an extraordinary remedy that, by definition, is available only in limited circumstances.”  “A party seeking mandamus must show a ‘clear legal right’ to [the] relief [requested]'”  Here, no clear legal right existed.  See, Kleinknecht v. Siino, 2018 WL 5020282 (2018).

Prior to 2013, Petitioners’ property was subject to an open space easement precluding construction of a dock at the property.  Petitioners commenced an action seeking to have the open space easement extinguished.  The trial court issued a judgment holding that the open space easement was no longer necessary and directed that the Building Inspector issue a building permit to Petitioners upon submission of the “required” application.  The Village did not appeal the judgment.

As such, upon submission of a code compliant building permit application (as noted above an application for variances was denied and upheld), Petitioners sought an approved building permit.  Although the Second Department held that the Building Inspector had no basis to deny issuing the permit based on the existence of the open space easement, the Second Department did vacate the 2013 trial court directive to issue a permit upon submission of the “required” application stating that the Village Code requires every Village building permit application be referred to the “Site and Building Permit Review Board” (“Review Board”).  Finding that the trial court’s directive to the Building Inspector bypassed a necessary referral step to the Review Board, the Second Department ordered the Building Inspector to refer Petitioners’ application to the Review Board.   The Second Department did not then direct the Building Inspector to issue a building permit to Petitioners if the Review Board approves that application..

Instead, the Second Department decision states “[t]he Building Inspector may issue a building permit only upon approval by the” Review Board.  As a litigation and land use attorney,  it has become painfully apparent that courts do not always weigh the import of the language used when crafting relief for the parties.   Maybe it is of little consequence that the Second Department said that the Building Inspector “may” approve the building permit if approved by the Review Board.  However, it would  provide the Petitioners, and their attorney(s), greater comfort and certainty if the chosen words were “must” approve the building permit, instead of “may” approve the building permit.

 

A use variance is arguably one of the most difficult zoning approvals to obtain and is rarely granted.  Petitioners in 54 Marion Ave., LLC v. City of Saratoga Springs, 2018 N.Y. Slip Op. 04611, 162 A.D.3d 1341 (3d Dep’t 2018),  commenced a hybrid proceeding/action to challenge and annul a determination of the Zoning Board of Appeals (“ZBA“) of City of Saratoga Spring (“City”) to deny  a use variance application to allow commercial use of residential property and for Section 1983 damages based upon the theory of regulatory taking. The Respondents moved to dismiss and the Supreme Court, Saratoga County (“Motion Court“), granted the motion. Petitioners appealed and the Appellate Division, Third Department (“Appeals Court“), reversed in part and affirmed in part, and found hardship which was not self-created.

Petitioner 54 Marion Avenue, LLC (“Owner“) owns a vacant parcel of real property situated in the City’s Urban Residential-2 District, where single-family residences are permitted as of right, where other uses are allowed with a special use permit and site plan review and where commercial uses are generally prohibited. Petitioner Maple Shade Corners, LLC (“Purchaser“) contracted to purchase the subject parcel contingent upon obtaining a use variance to allow a dental practice to operate thereon. An application was made to the ZBA for a use variance to allow the dental practice in Urban Residential-2 and the ZBA denied the application because the alleged hardship was not unique and was self-created. Petitioners brought this litigation to annul the ZBA’s decision denying the use variance and to seek damages for regulatory taking. Respondents moved to dismiss based upon Petitioners’ failure to state a cause of action, which the Motion Court granted.

In order to qualify for a use variance, an applicant must meet the very difficult task of demonstrating the following four elements: (i) it cannot realize a reasonable return if the property is used for a permitted purpose; (ii) the hardship results from unique characteristics of the property; (iii) the proposed use will not alter the essential character of the neighborhood; and (iv) the hardship has not been self-created. The ZBA found that the Petitioner met the first and third elements, but failed to meet the second and fourth elements – that the hardship was unique and was not self-created. On appeal, the Appeals Court reversed the Motion Court as to the hardship issues.

In its review of the ZBA’s determination, the Appeals Court noted that the subject property lies next to the intersection of a major thoroughfare and a side street. Petitioners substantiated their claim that this location imposes a unique financial hardship because of the commercial development and increasing traffic along the thoroughfare (occurring over the prior 30 years) with statements from prior owners and real estate professionals.  These statements recounted previous failed attempts to sell the subject parcel for permitted residential use and opined its location rendered it unmarketable for residential use, among other things. In light of this proof, the Appeals Court found that the need for a use variance was not self-created because it only arose after the property was acquired and due to the gradual shift in the character of the area, which rendered the residential use requirement onerous and obsolete. Moreover, the Appeals Court noted that even the ZBA agreed the location of the parcel on the corner might impact its value; the ZBA’s ultimate conclusion that the financial hardship was not unique was contrary to that observation. On a motion to dismiss, Courts must accept the allegations presented as true and, based upon the foregoing, the Appeals Court held that Petitioners set forth a viable challenge to the ZBA’s denial and reversed the Motion Court.

With respect to the regulatory taking claim, the Appellate Division affirmed dismissal. In order for a taking claim to be ripe, a claimant must demonstrate that it has received a final decision regarding the application of the challenged regulations to the subject property from the governing entity and that it has sought compensation through the appropriate state procedures. Although the ZBA’s denial of the use variance satisfied the final decision prong, the Appeals Court found that there is no indication the Petitioners sought compensation under State law.

In Real Estate Bd. of New York, Inc. v. City of New York, Petitioner-Plaintiff Real Estate Board of New York, Inc. (“REBNY”) commenced a hybrid article 78 proceeding and plenary action against the City of New York (“City”) challenging the City’s adoption of Local Law No. 50 of 2015 (“Local Law”), which placed a moratorium on the conversion of hotel rooms to residential units.

REBNY’s article 78 claims sought to annul the Local Law and permanently enjoin the City from enacting similar legislation unless it complied with the City Charter’s Uniform Land Use Review Process (“ULURP”) and the State Environmental Quality Review Act (“SEQRA”). REBNY’s plenary claims sought compensation for taking and for due process and equal protection violations under the State and Federal constitutions.

The City moved to dismiss REBNY’s claims based on standing, among other things. The Supreme Court, New York County (“Motion Court“), granted the City’s motion and dismissed all of REBNY’s claims for lack of standing.  On appeal, the Appellate Division, First Department (“Appeals Court“) effectively reversed the Motion Court’s decision.  The Appeals Court held that REBNY had standing to bring its article 78 claims, except under SEQRA.  The Appeals Court also held that REBNY had standing to assert its plenary causes of action, but held that REBNY abandoned its claims under 42 U.S.C. 1983 because REBNY did not address them on appeal.

The City enacted the Local Law in June 2015 to allow for the study of the effect of the conversion of hotel rooms from transient guest spaces to full-time residential units on the City’s economy. Its legislative findings asserted that large hotels are essential to vacation and business travelers, important generators of well-paying jobs and anchors for surrounding economic activity. The findings also expressed concern that the conversions are occurring quickly and may be irreversible. In addition, the legislative intent noted the current market conditions, the profitability of conversions and the City’s developers’ rush to convert.

The Local Law placed a two-year moratorium (extended to four years, i.e. June 2019) on the conversion of Manhattan hotel rooms to residential units. More specifically, the Local Law applied to hotels with at least 150 units and prohibited the conversion of more than 20% of hotel rooms. The Local Law provided an exemption for conversions begun in the two years preceding its effective date and allowed owners to seek a waiver from the City’s Board of Standards and Appeals (“BSA”), which waiver was not as-of-right.

REBNY, a non-profit corporation comprised of 17,000 members (property owners, developers, lenders, managers, architects, designers, appraisers, attorneys and brokers), asserted that 175 hotels, including 29 REBNY members, were affected by the Local Law. REBNY argued that by restricting the rights of affected hotels, the Local Law reduced the value of the properties, among other things.

The City moved to dismiss on the basis that REBNY lacked organizational standing.  To have organizational standing to challenge the enactment of the Local Law, REBNY must satisfy three elements : (i) one or more of its members must have standing; (ii) the interest it asserts must be germane to its purpose; and, (iii) neither the claim asserted nor the relief sought requires the individual members’ participation (ensuring the organization is the proper petitioner/plaintiff). Standing requires injury-in-fact which falls within the zone of interests and which is different in kind or degree from the public at-large.

The Appeals Court ultimately held that REBNY sufficed the injury requirement. Owners of property subject to new zoning restrictions are presumptively affected by the change. REBNY member hotels were negatively affected by the Local Law, including but not limited to, the diminution of property value and the costs associated with applying for a waiver. These negative effects satisfied the injury-in-fact requirement.

One of the bases cited for this finding was the Local Law’s own legislative intent, which noted that the Local Law would not be necessary if conversions were not so profitable. Thus, with respect to first part of the three-prong test for organizational standing, the Appeals Court held one or more member’s sustained sufficient injury-in-fact within the zone of interests and different in kind from the public at-large.

However, REBNY satisfied the second and third prongs for organizational standing on only some its claims.  Pertinently, with respect to the article 78 claims, the Appeals Court held REBNY had standing for all claims, except under SEQRA. REBNY focuses on the economic and political health of the real estate industry. The Court rejected REBNY’s argument that it sought to protect its member’s environmental interests in air quality and traffic. REBNY’s only “environmental” focus is on the economic environment.  Economic interests – alone – are insufficient to confer SEQRA’s zone of interests. While economic interests are germane to REBNY’s purpose to the extent it is a real estate industry advocacy group, environmental interests are not.  Therefore, REBNY is only a proper petitioner for the non-SEQRA claims.

Notably, the sole dissenting Judge opined, among other things, that REBNY did not have standing for any claim. The dissent argued that REBNY’s allegations of potential future economic harm were amorphous and did not suffice an injury-in-fact. REBNY’s members have neither attempted to convert nor sought exemption by waiver form the BSA. REBNY did not provide competent proof, e.g. appraisals, evaluations, etc. Additionally, the waiver application fee is de minimis and does not constitute an injury.

In SEQRA parlance, a “Negative Declaration of Environmental Significance”, or “Neg. Dec.”, is a lead agency’s finding that the proposed Type I or Unlisted Action under review will not result in any significant adverse environmental impacts. An applicant whose project receives a Neg. Dec. is spared the (often) considerable time and expense of preparing an environmental impact statement (EIS) and the gauntlet of procedural steps that follow a positive declaration. However, a Neg. Dec. must be accompanied by a “reasoned elaboration” of the bases for the determination along with references to supporting documentation in the record. A Neg. Dec. which lacks a reasoned elaboration is invalid on its face, see, e.g., New York City Coal. to End Lead Poisoning, Inc. v. Vallone, 100 N.Y.2d 337 (2003), and reviewing courts will not conduct an independent search of the record to discern the lead agency’s rationale and salvage the determination. See, e.g., Matter of Healy, 2018 N.Y. Slip Op. 28261, — N.Y.S.3d —- (Sup. Ct. Nassau Co. 2018) (wherein the court commended the lead agency on a thorough SEQRA review, but was constrained nonetheless to set aside the agency’s negative declaration because it did not contain a written reasoned elaboration).

In Vill. of Ballston Spa v. City of Saratoga Springs, 163 A.D.3d 1220, — N.Y.S.3d —- (Decided July 12, 2018), the Third Department struck a careful balance between SEQRA’s rigid “strict compliance” standard and consideration for practical mistakes that sometimes occur when a lead agency moves through the SEQRA process on a particular application. In 2017, the City of Saratoga Springs sought to condemn a stretch of land adjacent to a heavily-trafficked road for the creation of a new pedestrian/bicycle trail. The City Council, as lead agency, classified the project as a Type I Action and completed parts 1 and 2 of a full Environmental Assessment Form (EAF).

Eventually, the City Council adopted a resolution finding that the project would not result in any significant adverse environmental impacts and issued a negative declaration. It was then brought to the Council’s attention that its resolution did not include information explaining the basis for the determination. Two months later, the Council adopted a supplemental resolution reaffirming its Neg. Dec. for the project. This time, the resolution included specific information addressing each potential environmental impact identified in part 2 of the EAF and the Council’s rationale for why those issues would not result in any significant adverse environmental impacts. Opponents of the project challenged the Neg. Dec. contending that the supplemental resolution was not a permitted action under SEQRA.

On Appeal, the Appellate Division found that the City complied with SEQRA’s procedural requirements. In doing so, the Court expressly rejected the petitioners’ argument that the supplemental resolution would have been proper only under one of the enumerated situations set forth in 6 NYCRR 617.7(e) and (f) of the SEQRA regulations, which govern the amendment and rescission of negative declarations. The Court held that while 6 NYCRR 617.7(e) and (f) dictate a lead agency’s response to certain developments following the adoption of a Neg. Dec., those provisions are not exhaustive and do not preclude a lead agency from correcting a mistake in process under other circumstances.

Of particular relevance for the Court were the facts that the Council had conducted an earnest review of the relevant environmental issues; held another public meeting to discuss the contents of the supplemental resolution, and took additional procedural steps before reaffirming its negative declaration for the project. The supplemental resolution was also adopted before the Council took final action to approve the project. The Court observed that, as a practical matter, nullification of the Neg. Dec. would only have resulted in a redundant SEQRA process that would have undoubtedly reached the same conclusion. Thus, the Court ruled that the supplemental resolution was a proper means to correct the omission of the reasoned elaboration from the original Neg. Dec.

The Third Department’s decision in Ballston Spa lends itself to the proposition that a lead agency can, at times, correct the fatal defect of omitting a reasoned elaboration from a negative declaration.  This is not to say, however, that any writing presented after the adoption of a Neg. Dec. will be sufficient.  In Matter of Dawley v. Whitetail 414, LLC, 130 A.D.3d 1570, 14 N.Y.S.3d 854 (4th Dept. 2015) (cited in contrast in Ballston Spa), the Fourth Department ruled that a written attachment presented after the adoption of a negative declaration could not serve as a reasoned elaboration where the respondent town board, serving as the lead agency, never reviewed the attachment and never voted to have it included as a supplement to its negative declaration. See, also, Rochester Eastside Residents for Appropriate Dev., Inc. v. City of Rochester, 150 A.D.3d 1678, 54 N.Y.S.3d 484 (4th Dept. 2017) (also cited in Ballston Spa) holding that a document containing the purported reasoning for the lead agency’s determination, prepared subsequent to the issuance of the negative, did not fulfill the statutory mandate. It is therefore uncertain how another court might rule if presented with a similar set of facts.  Careful and thorough drafting continues to be the best hope of insulating a negative declaration from legal challenge.

If you have questions regarding SEQRA regulations or procedure, please contact me at pbutler@farrellfritz.com.

The Breakers Motel has been a fixture in Montauk since the 1950’s. Situated at 769 Old Montauk Highway, Montauk New York, the motel has 26 units, a pool and restaurant and is located across the street from the ocean.

In 2015 a building permit was issued by the Town of East Hampton Building Department approving renovations to the existing restaurant inside the motel, including an updated dining area, adding a bar, improving the kitchen facilities and more. The neighboring property owner, a revocable trust, unsuccessfully appealed the Building Department’s determination to issue the April 27, 2015 building permit to the Town of East Hampton Zoning Board of Appeals.

In an Article 78 petition and plenary action entitled Jane H. Concannon Revocable Trust v. The Building Department of the Town of East Hampton, Town of East Hampton Zoning Board of Appels, and Breakers Motel, Inc., Index No. 4297/2016, dated February 5, 2018, the revocable trust (“Petitioner”) appealed the Zoning Board of Appeal’s determination to the Supreme Court.

At the Zoning Board of Appeals, Petitioner argued that because a restaurant had not operated on site since the 1970’s, an application for a special permit under the current Town Code was required before the building permit for renovations could have been issued. The Breakers Motel argued that the restaurant has always been a permitted use and was in place prior to the current Town Code provisions requiring special permits.

Breakers submitted that the restaurant fixtures had never been removed from the site, and a prior Certificate of Occupancy issued in 2005 and Site Plan approval issued in 2010 both referenced and approved the restaurant. All parties conceded that the restaurant was never pre-existing nonconforming and was, in fact, always permitted.

Prior to 1984, the subject property was zoned Multiple Residence District (“MD”), which permitted a restaurant as accessory to a motel. After 1984, the zoning was amended to Resort District (“RS”), which permitted restaurants pursuant to a special permit. The Zoning Board of Appeals denied petitioner’s appeal and declined to consider the merits of petitioner’s appeal, finding that the appeal was untimely pursuant to the 60 day statute of limitations set forth in NYS Town Law §267-a and East Hampton Town Code §255-8-35(A).

Petitioner brought the above referenced proceeding by order to show cause seeking a judgment annulling the Zoning Board of Appeals decision, revoking the building permit and imposing a permanent injunction enjoining further renovations to the restaurant without a special permit.

The Court held that a special permit was not required for the restaurant use, since the use had been in place prior to the 1984 adoption of the RS Zoning District. The Court stated,

“Simply stated, the concept of “use” in the context of zoning regulations is not the equivalent of “in use” or “used” as is made clear in the following definitions in the East Hampton Town Code sections 255-1-14(G) and (H)…” The Court further found that the East Hampton Town definitions of use were consistent with “what is generally accepted in New York zoning law,” stating,

“USE: The specific purpose for which land or a building is designed, arranged, intended, or for which it is or may be occupied or maintained. The term “permitted use,” or its equivalent, shall not be deemed to include any nonconforming use. USE: The purposes for which a structure or premises, or part thereof is occupied, designed, arranged or intended,” citing, Salkin, N.Y. Zoning Law and Prac., 3d Edition §38:05, Sample definition.

The Court relied upon the fact that the restaurant configuration on site was never changed; and the kitchen fixtures and equipment had remained in place since the 1970’s, stating, “the area in question was designed, arranged and intended to be a restaurant; i.e., the use continued even though it was not “used” as a restaurant.”

The Court went on to distinguish the special permit restaurant use from pre-existing nonconforming uses that can be abandoned after time since the special permit use was not rendered illegal after the zone change to RS. Relying on Town Code §255-5-25, which states in relevant part that “special permit uses which either lawfully exist on the effective date of this article…shall, in all respects, constitute lawful and conforming uses under this chapter,” the Court held that the Breakers Motel restaurant use was legal, even under the new RS zoning, and did not require a special permit to be maintained or altered.

The Court denied the request for the permanent injunction and dismissed the proceeding. Petitioner submitted a Notice of Appeal to the Appellate Division, Second Department, while patrons of the Breakers Motel enjoyed the newly renovated restaurant and bar.