There is a split of authority regarding whether the addition of the sale of alcohol constitutes an unlawful expansion of a nonconforming restaurant as a matter of law. Courts in Alabama, California, Connecticut and Delaware have determined that such activity does constitute an unlawful expansion of the nonconforming use. Yet courts in Louisiana, Pennsylvania and New York have allowed nonconforming restaurants to add the sale of alcoholic beverages. The Iowa Supreme Court followed the authority in the latter states, concluding that the sale and service of alcoholic beverages at a nonconforming restaurant does not constitute an expansion of a nonconforming use.
Since 1958 when the property was used as a restaurant, alcoholic beverages were sold to patrons until 1994 when the restaurant owners allowed the liquor license for the restaurant to expire. In 1978 the property on which the restaurant operates was rezoned to single-family residential, making the restaurant a nonconforming use. In 2004 the restaurant was purchased and the current owner continues to operate the restaurant the same as in the past, but he applied for a liquor license to resume the sale of alcohol on the premises. The City denied the liquor license determining that the sale and service of alcoholic beverages at the restaurant would violate the zoning ordinance. The District court determined that the new owner could no longer sell alcoholic beverages to the public on the premises because that would constitute a separate and distinct nonconforming use and an expansion of a nonconforming use. The District Court also rejected the owner’s claim that the zoning ordinance constituted impermissible spot zoning.
The Iowa Supreme Court reversed, noted that while nonconforming uses cannot be enlarged or extended, “[l]andowners are given some latitude…and may change the original nonconforming use ‘if the changes are not substantial and do not impact adversely on the neighborhood.’” Citing Perkins v. Madison County, 613 N.W.2d 264 at 270 (Iowa 2000). The Court found that the City did not rely on any facts or circumstances in determining that sale and service of alcoholic beverages by a restaurant would substantially expand the nonconforming use, rather the City relied on the premise that this constituted a separate and distinct use from the use of the property as a restaurant. The Court rejected the conclusion of the District Court that this constituted an expansion of the nonconforming use, and the Supreme Court further rejected the conclusion that the service and sale of alcoholic beverages was a nonconforming use that was abandoned after the enactment of the ordinance.
The Court also found that the City did not address the sale and service of alcoholic beverages as an accessory use to a restaurant. The definition of “restaurant” in the zoning ordinance is silent as to alcoholic beverages, and the Court said that City’s interpretation of the ordinance basically ignores the doctrine of accessory uses of property. The zoning ordinance defines accessory uses as “a use or structure subordinate to the principal use of a building on the lot and serving a purpose customarily incidental to the use of the principal building…” The owner provided ample evidence that the restaurants in the area customarily serve alcoholic beverages to dining patrons. Therefore, the Court found this to be an accessory use to the principal use. The Court declared that the City ordinance does not prohibit a restaurant from serving alcoholic beverages as an accessory use, and that the sale and service thereof does not, by itself, constitute an unlawful expansion of a nonconforming restaurant. The Court expressed no opinion as to whether the owner was entitled to a liquor license.
City of Okoboji v. Okoboji Barz, Inc., 2008 WL 682403 (Iowa 3/14/2008).
The opinion can also be accessed at:
http://www.judicial.state.ia.us/Supreme_Court/Recent_Opinions/20080314/06-269.pdf
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