NY Appeallate Court Denies Claims Arising from Short-Term Rental Prohibition

This post was authored by Matthew Loescher, Esq.

In 2012, plaintiff purchased a single-family residence located in respondent-defendant Town of Grand Island for the purpose of renting it out on a short-term basis. Plaintiff never resided at the subject premises. In 2015, the Town enacted Local Law 9 of 2015, which amended the Town Zoning Code to prohibit short-term rentals in certain zoning districts, except where the owner also resided on the premises. Following the enactment of Local Law 9, plaintiff unsuccessfully applied for an extension of the amortization period and for a use variance permitting him to continue operating the subject premises as a short-term rental notwithstanding Local Law 9. Plaintiff then commenced this CPLR article 78 proceeding and declaratory judgment action. In this case, Plaintiff appealed from an order and judgment that granted defendants’ motion for summary judgement.

On appeal, the court found that contrary to plaintiff’s contention, defendants established their entitlement to summary judgment dismissing the regulatory taking cause of action, and that they were not required to show that Local Law 9 “substantially advanced a legitimate State interest. Specifically, plaintiff failed to submit evidence establishing that, due to the prohibition under Local Law 9 on short-term rentals, the subject premises was not capable of producing a reasonable return on his investment or that it was not adaptable to other suitable private use. Here, plaintiff’s submissions merely showed a diminution in the value of the property, which was insufficient to demonstrate a regulatory taking. Moreover, while plaintiff sought declaratory relief in the second cause of action, the court found that even if Local Law 9 effected a regulatory taking, the appropriate relief would be a hearing to determine “just compensation,” not a declaration that the law was invalid. Accordingly, the court affirmed the granting of defendants’ summary judgment motion seeking dismissal of the second cause of action.

Wallace v Town of Grand Island, 2020 WL 3161007 (NYAD 4 Dept. 6/12/2020)