Mitchell v City of Geneva, 105 N.Y.S.3d 323 (N.Y. A.D 4 Dept. 8/22/19).

This post was authored by Amy Lavine, Esq. 

A New York appellate court held in August that a city’s decision to provide funding assistance for renovations of a privately owned building did not amount to inverse condemnation or a de facto taking.

The plaintiff owned a restaurant and challenged the city’s decision to award public funds to a nearby property owner to renovate its building and open a new restaurant. The city’s support of the plaintiff’s business competitor, the plaintiff claimed, constituted a de facto taking of his property, misrepresentation, and tortious interference in business relations.

The court dismissed the plaintiff’s claims. As it explained, the plaintiff failed to state a cause of action for inverse condemnation or de facto appropriation because he didn’t allege any restraint on the use of his own property. His claim for negligent misrepresentation also failed, the court explained, because the complaint failed to allege the existence of any special duty on the city’s part. Finally, the plaintiff’s claim of tortious interference with business relations failed because the complaint failed to allege that the city acted with the intention of harming the plaintiff’s business.

 

 

 

This post was authored by Amy Lavine, Esq.

The City of Jamestown had sought to annex four acres of land located in the Town of Ellicott and the Village of Falconer, but both the town and the village objected on the basis that the annexation wouldn’t be in the overall public interest. The town and the village filed orders objecting to the annexation on September 13, 2017, and the city was required to commence proceedings to affirm the annexation within 30 days thereafter. Because the city didn’t commence its proceeding until Novemeber 8, 2017, its petition was therefore untimely.

As the court noted, the statute “does not require that the governing boards of all of the affected local governments must have filed their respective orders in the office of the county clerk in order to trigger the 30-day period.” The court also explained, contrary to the city’s argument, that the town and the village were not required under the statute to give notice of their filings for the 30-day time period to begin.

 

Matter of City Council of City of Jamestown v Town Council of Town of Ellicott, 105 N.Y.S.3d 321 (N.Y.A.D. 4 Dept. 8/22/19).

 

 

This post was reprinted with permission from Dwight Merriam, Esq.
There are three types of regulatory takings. The first is the physical invasion taking where a claim for inverse condemnation is made when the government enters or allows others to enter, your property. The leading physical invasion case is Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), where a landlord in New York was required to take a shoebox-sized junction box for a cable system on the roof of her apartment building. The U.S. Supreme Court held that even the smallest physical invasion taking is compensable. The test for a physical invasion taking is the simplest of all: if the government physically takes your property, they have to pay for it. Period. End of discussion. We call it the per se test.
The second type of taking, hardly ever seen, is a hybrid between the partial taking caused by overregulation and the Loretto-style physical invasion taking. These are called “categorical takings,” and the leading case is Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). David Lucas had two oceanfront lots in South Carolina, and the government told him that there was no way it would ever allow him to develop. The government also conceded that the property had no economic use as a consequence. Lucas sued and eventually made his way to the U.S. Supreme Court. The Court announced this new variant, the categorical taking, where property is rendered valueless as a result of government regulation. The test in Lucas, just like the one Loretto, is simply if your property is rendered valueless, the government has to write a check.
But nearly all inverse condemnation cases arise out of partial regulatory takings, as when a developer is required to set aside some large amount of open space in return for getting a subdivision approval or is permitted only a few townhouse units on a property that could easily be developed with 50 or more. In the most famous and first partial regulatory takings case, Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), Justice Holmes offered the rule that launched an untold number of lawsuits and thousands of articles by tenure-seeking academics: “the general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”
This test was expanded upon in Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978). Penn Central sought a “certificate of appropriateness” from the New York Landmarks Preservation Commission to erect a tower, some 53 stories high, on top of the beautiful Beaux Arts Grand Central Terminal building. The proposal was rejected. Penn Central claimed a partial regulatory taking from its inability to make use of its development rights in the airspace above the terminal.
The U.S. Supreme Court enunciated a three-part test for determining whether there’s a partial regulatory taking. (1) The “economic impact” of the government action, principally in the diminution of value (2) the extent to which the action “interferes with distinct investment-backed expectations,” and (3) the “character” of the government’s action. The three-part test has proved difficult to apply with any predictability.
The diminution in value must be substantial. In HFH, Ltd. v. Superior Court, 542 P.2d 237 (Calif.1975), there was an 80% loss in value as a result of the regulation. No taking, said the California Supreme Court.
The investment-backed expectations test raises issues of when did the property know of the restrictions, were new regulations foreseeable, for what purpose was the property purchased, and should it apply at all to inherited property.
The character of the government’s actions is even harder to apply as a test. It has so many interpretations. Maybe the simplest is balancing the need for the government’s action, such as saving a sole-source acquirer, versus the private interest of some loss in development potential, like giving up three lots out of 100 to maintain a buffer around a well site.
But now, the U.S. Supreme Court has an opportunity to address the problems with the Penn Central three-part test. The Court has been asked to review a decision by the Massachusetts Appellate Court in Smyth v. Conservation Comm’n of Falmouth, 94 Mass. App. Ct. 790 (App. Ct. 2019). The soundbite history of the case is this: Janice Smyth’s parents purchased a residential building lot in Falmouth on Cape Cod in 1975 for $49,000 ($216,000 today). Her folks never built on it, while all the other lots in the subdivision were developed.
Janice Smyth inherited the lot and decided to build on it, but the town wouldn’t approve it, invoking a regulation that was adopted after she acquired her interest in the property. The only use she had remaining in the property was to establish a “playground” or a “park,” or maybe sell rights to abutting owners, with the resulting loss of 91.5% of the value. The Massachusetts Appellate Court, applying the Penn Central three-part test, found no taking, and reversed the jury’s verdict below, which had awarded Smyth $640,000 in damages for the lot appraised at $700,000. The Appellate Court reasoned that Smyth’s parents had paid $49,000 (in 1975 dollars) to purchase the lot 44 years ago and because, even with the denial today, it was still worth $60,000 (in today’s dollars), there was no diminution in value. Really, that’s what the Massachusetts Appellate Court said, completely ignoring the time value of money.
Moreover, the Court held there were no investment-backed expectations because Smyth inherited the lot. Presumably, the expectations died with her parents. And as to the character of the government’s action, well, there was no physical invasion, and environmental benefits come from not building on it.
The questions presented in the Certiorari petition are these, spot on with the problems inherent in the Penn Central three-part test:
“1. Whether the loss of all developmental use of property and a 91.5% decline in its value is a sufficient “economic impact” to support a regulatory takings claim under Penn Central.
2. Whether a person who acquires land in a developed area, prior to regulation, has a legitimate “expectation” of building and, if so, whether that ii interest can be defeated by a lack of investment in construction?
3. Whether the Court should excise the “character” factor from Penn Central regulatory taking analysis.”
This will be the case to watch in the coming weeks. You can follow it, case number 2017-P-1189, at the Supreme Court’s website. If the Court takes it, given the 5-4 split in favor of private property rights, Penn Central may be derailed.

This post was authored by Matthew Loeser, Esq.

The 42.01 acres of land at issue in this case were annexed by the City of Iowa City in 1994 as part of the 422-acre tract of land owned by Sycamore Farms Company. Before the annexation, Iowa City and Sycamore Farms entered into a Conditional Zoning Agreement (“CZA”), which imposed several conditions on the land. Additionally, Sycamore Farms agreed “the development and use of the subject property would conform to” additional conditions, including taking steps to protect certain natural features of the land, creating a conservation easement with part of the land, giving the City fifteen acres to create a public school, and more. In this case, the current owners of the land, Sycamore, L.L.C. and Lake Calvin Properties, L.L.C. appealed the district court’s ruling annulling their writ of certiorari that challenged the City Council of Iowa City’s denial of their application to rezone the 42.01 acres of property.

The landowners argued on appeal that the district court erred in finding the City Council’s denial of the landowners’ application for rezoning was not illegal, asserting the Council was bound by the CZA to rezone the property once certain conditions of the CZA were met. The court found that any agreement binding a future council to rezone land a specific way would be void. Specifically, the court held “a municipal corporation may, by contract, curtail its right to exercise functions of a business or proprietary nature, but, in the absence of express authority from the legislature, such a corporation cannot surrender away its governmental functions and powers, and any attempt to barter or surrender them is invalid.”

The landowners also contended that the district court erred in finding substantial evidence supported the Council’s decision to deny their application to rezone. The record reflected that the density level requested by the landowners with the RM-20 zoning designation was inconsistent with both the 2015 South District Plan and the 2030 Comprehensive Plan. Additionally, concerns were expressed that the infrastructure was not yet ready for such a large population and that expending City dollars to ready the infrastructure might be ill-advised since the development was “leap frogging” over undeveloped land. Specifically, the disconnectedness of the development would pose a problem for the potential lower-income tenants because the closest bus stop was more than one mile away and there were no grocery stores in close proximity. The court found that these concerns were consistent with the zoning code, which provided that the RM-20 zone, “is particularly well suited to locations adjacent to commercial areas and in areas with good access to all city services and facilities.” Since the Council did not incorrectly apply the law and substantial evidence supports its decision to deny the landowners’ application for rezoning, the court affirmed the district court’s annulling of the landowners’ writ of certiorari.

Sycamore, LLC v City Council of Iowa City, 2019 WL 3716364 (IA App. 8/7/2019)

This post was authored by Matthew Loeser, Esq.

T-Mobile USA and T-Mobile Central LLC located their cellular equipment on the Village of Grafton water tower, which was across the road from Akerlund Acres, a horse farm. Although T-Mobile had a lease at the water tower that ran until 2031, T-Mobile sought to move their equipment to Akerlund Acres, about 1300 feet away. To this end, T-Mobile and Pyramid Network Services, LLC (collectively called Eco-Site) executed a contract to lease a portion of the southeast corner of the Akerlunds’ land. In 2015, Eco-Site and the Akerlunds applied to the Town for a CUP to erect a 120-foot metal monopole wireless communication tower and supporting 5600 square foot structure on Akerlund Acres. After its application was denied, Eco-Site filed a summons and a petition for certiorari or, in the alternative, a complaint for declaratory judgment. The circuit court upheld the Town’s denial of the application for a conditional use permit (CUP) for the tower, and Eco-Site appealed.

On appeal, Eco-Site claimed that the Town proceeded on an incorrect theory of law in determining that the tower would be incompatible with the adjacent land. Here, the Town zoned the area agricultural and the neighboring area residential, in an effort to keep this area rustic, rural, and populated. The court found that this intended use and lifestyle would be directly contradicted by the introduction of a 120-foot tall telecommunications tower with its substantial related structure and fencing. Eco-Site next argued that denying the application based on incompatibility contradicted the Town’s own zoning ordinance, which specifically allowed for the placement of mobile towers in an A-1 zoning district as a conditional use. The court rejected this claim, noting that simply because mobile towers could be considered in A-1 zoning districts did not necessarily mean that each one would pass scrutiny for compatibility.

Lastly, Eco-Site contended that the Town’s denial on the basis of not only incompatibility, but on the basis of lost property values and the detrimental effect on public health and safety and general welfare, equated to a denial based on aesthetic concerns. The court found that the visual impact of the tower was different than the broader impact of the tower on the uses and the lifestyle for which the neighborhood was zoned. Additionally, visual impact of the tower was different than the economic impact on the property values. As the impacts of these different “concerns” were not one and the same, and since the incompatibility standard is a valid basis to deny the application, the court held it did not matter that aesthetic comments were made. Accordingly, there was substantial evidence to support the Town’s decision.

Eco-Site, LLC v Town of Cedarburg, 2019 WL 3310403 (WI App. 7/24/2019)

This post was authored by Matthew Loeser, Esq.

In April 2016, the Pennington County Board of Commissioners passed a moratorium on construction permits for alternative energy and mining operations in Pennington County, and formed a committee to review Section 507-B of the Pennington County Zoning Ordinance (“PCZO”) regulating mining permits. After the committee compiled its work into a proposed ordinance amendment, OA 17-02, Duane Abata, Donald Burger, and Barrett Wendt brought a declaratory judgment action challenging the validity of the zoning ordinance amendment. The parties filed cross-motions for summary judgment. The circuit court granted the Citizens’ motion, finding the ordinance void for lack of compliance with statutory notice requirements.

The Board first argued on appeal that Citizens did not have standing to bring this action. The record reflected that Citizens resided near Perli Quarry, a mining operation owned and operated by Croell Redi-Mix. The court held that the landowners neighboring Perli Quarry could be affected by mining operations by impacting water quality, creating dust, and increasing traffic. Additionally, in the hearings before the Board dealing with OA 17-02, the Citizens emphasized that due to their proximity to Perli Quarry, the mining operations there would adversely affect them by causing “traffic problems, health issues, environmental concerns, and reduced property values.” Thus, the court determined that Citizens had demonstrated an actual or threatened injury affecting their property if OA 17-02 was enacted in violation of Citizen’s due process rights.

Next, the Board contended that “Citizens waived any argument they may have to the adequacy of notice by appearing at the public hearings and being heard.” Specifically, the Board claimed that any possible error in the publication process did not prejudice the Citizens, as Citizens and their attorneys attended and were heard at nearly every hearing held regarding OA 17-02. The court found, however, the mere fact that Citizens were present and heard did not inherently validate OA 17-02; notice requirements, the court noted, were set forth to provide notice to all citizens potentially impacted by the enactment, not just those who later bring legal challenges. Therefore, the court held it was the Board’s burden to comply with those statutes, and any violation of them would render a zoning ordinance amendment void.

Here, the notice for the Board hearing on OA 17-02 was inadequate as the legal notice advertised the Board’s discussion of the amendment as taking place on January 2, 2018. Despite this, the Board did not consider OA 17-02 until February 6, which was never advertised in a legal newspaper. The court found this failure to comply with SDCL 11-2-30 rendered OA 17-02 void and the circuit court’s ruling was affirmed.

Abata v. Pennington County Board of Commissioners, 2019 WL 3022361 (SD 7/10/2019)

This post was authored by Matthew Loeser, Esq.

In 1995, the City Council of Houston adopted the Historic Preservation Ordinance (“HPO”) that provided for the creation of historic districts and required that property owners in those designated historic districts must apply to the Houston Archeological and Historical Commission (“HAHC”) for a “certificate of appropriateness” before demolishing, modifying, or developing property situated within a historic district. Homeowners, Kathleen Powell and Paul Luccia, owned homes in a designated historic district, the Heights East area of the City of Houston. The Homeowners sued the City, asserting that the City’s Historic Preservation Ordinance (“HPO”) violated the Houston City Charter’s prohibition against zoning regulations. Following a bench trial, the trial court rendered a take-nothing judgment in favor of the City on the Homeowners’ claims.

On appeal, the Homeowners first contended that the HPO constituted a zoning law. The court rejected this contention, finding that nothing in the ordinance addressed building usage or identifies building “classes” or types specifically. The scope of the HPO explicitly stated that it only applied to the “alteration, rehabilitation, restoration, construction, relocation and demolition of any building, structure, object or site” located in a designated historic district. It further stated, “nothing in this article shall be construed to authorize the city to regulate the use of any building, structure or property,” and  “nothing in this article shall be construed to authorize the city to regulate the interior characteristics of any building or structure” provided that any alteration or use of the interior did not affect the outward appearance of the building. Thus, pursuant to the plain language of the ordinance, the purpose and function of the HPO was primarily to protect and preserve areas of historical significance in isolated areas of the City, and did not contain any provisions implementing a comprehensive plan for community development that would implicate zoning regulations. Moreover, there was no evidence that the HPO applied to the City in a comprehensive manner. The court therefore held that the Homeowners failed to show that the HPO was an improper zoning ordinance.

Since the court held that the HPO is not a zoning ordinance, it therefore also held that the HPO not violate the City Charter’s limitations on the City’s zoning power or the provisions of chapter 211. Accordingly, the court overruled the Homeowners’ second and third issues, and affirmed the judgment of the trial court.

Powell v. City of Houston, 2019 WL 2588104 (TX App. 6/25/2019)

This post was authored by Matthew Loeser, Esq.

In 2015, applicant 777 17th Street, LLC submitted to the Zoning Commission an application for review and approval of a consolidated planned-unit development (“PUD”) and a PUD-related zoning map amendment. The application proposed construction of a mixed-use residential/ground-floor-retail development located at the intersection of Benning Road, 17th Street, and H Street, N.E. The building – which was ten floors at its greatest height on the west end, and six floors at its eastern end – would be constructed on lots that currently were a vacant lot and a used-car lot. The planned residential component would consist of approximately 180 rental units, with eight percent of the residential floor space set aside for affordable-housing units for the life of the development. In this case, petitioner Sharon Cole, who resided in a building adjacent to the proposed construction site, sought review of the Commission’s decision approving the application.

At the outset, the court noted that although petitioner did not raise before the Commission the issues relating to gentrification, land value destabilization, and displacement, the issues of “gentrification” in the community in which the proposed PUD was located and the associated “displacement of low-income residents” were raised by Equitable and Respectful Reinvestment in its submission to the Commission. As such, the adequacy of the Commission’s consideration of those issues was preserved for review. As to the merits of these contentions, the record reflected that the Commission explicitly noted that “no residential uses would be displaced by the Project.” Additionally, the Commission referred to the units to be set aside for households with incomes less than 50% or 80% of the area median income as IZ units. Since the Commission was guided by the PUD in assessing the application’s compatibility with the publicly developed plans for the area in which the PUD site was located, the court rejected the contention that the Commission failed to acknowledge issues of gentrification.

Petitioner next argued that the Commission did not adequately consider that existing residents needed protection from construction and loading-dock nuisances such as noise, refuse, odors, emissions, and other environmental impacts. The record reflected that pursuant to the Commission’s decision, the applicant would be required to abide by the terms of a construction management plan that limited construction-work hours and required the applicant to adhere to a loading management plan. As to petitioner’s complaint about the height of the proposed building, the court found that the Comprehensive Plan specifically contemplated that “height step downs,” could be used to mitigate adverse effects of building height. The Commission concluded that the proposed building height was appropriate because it was consistent with the planned redevelopment designated in the Benning Road Plan and the expected similar massing of additional developments being planned for the neighborhood. Accordingly, the decision of the Zoning Commission was affirmed.

Cole v. District of Columbia Zoning Commission, 2019 WL 2637728 (DC App. 6/27/2019)

This post was authored by Matthew Loeser, Esq.

Plaintiffs Shari and Paul Yetto were the two of the founders of a non-profit religious organization known as the Temple of the Ancient Ones. Plaintiffs Shari and Paul Yetto filed this action against the City of Jackson, Tennessee, Mayor Jerry Gist, in his official capacity, and City Planner Elvis Hollis, in his official capacity, under the equal-terms provision of the Religious Land Use and Institutionalized Persons Act (“RLUIPA”) and a violation of the First Amendment’s Free Exercise Clause. Plaintiffs also sought a declaratory judgment ruling that the Zoning Ordinance at issue did not regulate the type of religious gatherings held by them in their home, and a permanent injunction prohibiting the enforcement of the Zoning Ordinance against them and their religious gatherings. The court granted Defendants’ motion for summary judgment on Plaintiffs’ §1983 claim on the ground that the claim was barred by the statute of limitations and denied both motions for summary judgment on the RLUIPA claim as there were disputed issues of material fact that precluded summary judgment.  The case was tried without a jury on February 28, 2019.

In this case, Plaintiffs sought a declaratory judgment that the RS-1 Zoning Ordinance did not apply to their small religious gatherings because these gatherings did not constitute a “church or similar place of worship” within the meaning of the Zoning Ordinance. The court found that no inquiry regarding the definition of this term was necessary since both Hollis and Pilant testified that the RS-1 Zoning Ordinance did not apply to small religious gatherings such as those held at Plaintiffs’ residence. As a result, the Yettos were not required to obtain a special-use exception in order to operate the Temple of the Ancient Ones on their property. The court therefore issued a permanent injunction enjoining Defendants and their agents from enforcing or threatening to enforce the RS-1 Zoning Ordinance against Shari and Paul Yetto for holding small religious gatherings in their home and on their private residential property.

Plaintiffs next contended that if the court found that Plaintiffs’ gatherings fell within the definition of “church or similar place of worship,” then this an interpretation would cause the Zoning Ordinance to violate RLUIPA by facially differentiating between religious and nonreligious assemblies or institutions. Since the court found that the gatherings did not fall within that definition, Plaintiffs’ facial challenge to the Zoning Ordinance failed. Finally, the court declined to determine if the comparators identified by Plaintiffs were proper because the as-applied claim was not ripe for judicial review as a decision was never made as to Plaintiff’s request for a special-use exception.

Yetto v City of Jackson, 2019 WL 2715545 (WD TN 6/28/2019)

Petitioners wished to lease their land for the operation of a dog training facility in an R-2 Residential District where such use was not specifically permitted.  The zoning board determined a use variance was required, and in granting one, attached a condition that the business could not have more than six dogs at any one time and it could not provide overnight boarding.  The Court below upheld the determination.  On appeal, Petitioners claimed they did not need a use variance and that a condition could not be imposed. The appellate court disagreed with the Petitioners, pointing out that the use was not allowed in the District. Further, the Court concluded that “the proposed dog training business does not qualify as a ‘customary home occupation’ permitted in an R–2 district.”  The Court also noted with respect to the home occupation argument that, “petitioners do not dispute that the proposed dog training business is not the sort of occupation customarily carried on in a dwelling unit, and our conclusion is further justified by the fact that petitioners here are not attempting to carry on a typical home occupation but instead propose to lease a portion of their property, but not the dwelling, for use by others…” The Court held that, “Because the proposed business is not permitted in an R–2 district, respondent properly required petitioners to obtain a use variance and was authorized to place on that variance such ‘reasonable conditions and restrictions as are directly related to and incidental to the proposed use of the property[,] … consistent with the spirit and intent of the zoning ordinance or local law, … [and] imposed for the purpose of minimizing any adverse impact such variance may have on the neighborhood or community’” (Town Law § 267–b [4] ).”

Lastly, the Court rejected the argument that “the conditions placed on their use variance are improper because the zoning code allows one “animal unit” per 40,000 square feet of “open, unused land” in R–2 districts (Ordinance § 180–16[D][2] ),” explaining that, “The zoning code’s allowance for a certain ratio of “animal units” to “unused land” explicitly applies to “customary agricultural operations,” and thus does not apply to petitioners’ proposed dog training business.”

McFadden v. Town of Westmoreland Zoning Board, 2019 WL 3955311 (NYAD 4 Dept. 8/22/2019)