Thursday, April 12, 2018

STRP Bill -- to Conference?

The Tennessee House of Representatives evidently did not agree with the Senate version of the Short Term Rental Properties legislation, and presumably, the House and Senate will need to meet to resolve the issues. It's not clear what particularly concerned members of the House. Most likely, that there was not enough protection for short term rental property owners, but that's not entirely clear. Presumably, over the next several weeks, we will get a final bill and be able to understand more completely how it will impact local zoning and land use regulations.

Tuesday, April 3, 2018

California Prohibits Public Land Sale without First Refusal

Yesterday, the US Attorney General filed suit on behalf of the United States against the state of California arguing that the adoption by California of a statutory provision which required the federal government to give notice to and obtain from the state documentation that the state did not want to buy for itself or arrange a sale to a third party before selling federal public lands. A number of news outlets, including the New York Times have reported on the filing of the lawsuit and a copy can be found here.

I have not actually read the California statutory provision but it purports to be summarized in the complaint filed by the US. Obviously, California feel strongly about the sale of federal public lands and the conversion of open land in its natural state to developed land. On the other hand, that desire to protect federal land runs not only into the Supremacy and Public Property Clauses of the federal Constitution, but also into various federal statutory provisions relating to the use and sale of federal public lands.

Ideologically, the state desire to protect federal public land against the conversion of at least a portion of the land by the Trump administration represents a basic conflict between two points of view regarding the use of federal public land. Unfortunately, this may be more of a political decision-making process than a legal one: federal constitutional and statutory law would at least seem to have the upper hand here.

It is interesting to read the 1940 case involving the city of San Francisco: US v City and County of San Francisco, authored by one of my favorite Supreme Court Justices, Hugo Black, who noted, after quoting the Public Property Clause:
The power over the public land thus entrusted to Congress is without limitations. And it is not for the courts to say how that trust shall be administered. That is for Congress to determine. Thus, Congress may constitutionally limit the disposition of the public domain to a manner consistent with its views of public policy.
In any event, it should be interesting following the arguments of both parties.

Saturday, March 31, 2018

Challenging the Historic Zoning Commission

In an opinion issued just yesterday by the Tennessee Court of Appeals, a decision of the Metro Historic Zoning Commission is reviewed and illustrates several important points when challenging decisions of the historic zoning commission. The case involves a property located on Lower Broadway here in Nashville. MJM v Metro Historic Zoning Commission, Tenn. App. 2018.

Both the procedural and substantive aspects of this case are worth noting. First, the case was appealed pursuant to the statutory writ of certiorari, specifically authorized in the historic enabling legislation. Tenn. Code Ann. § 13-7-409 states that "anyone who may be aggrieved by any final order or judgment of the historic zoning commission… may have such order or judgment reviewed by the courts by the procedure of statutory certiorari." As the MJM court noted, review pursuant to the statutory writ means that the trial court may hold a new hearing based upon the administrative record and any additional or supplemental evidence which either party wishes to produce at trial. Furthermore, although the appellate court did not expressly say this, the statutory writ allows the trial court to substitute its judgment for that of the administrative body and make whatever decision the court feels is appropriate based on all of the evidence. Tenn. Code Ann. § 27-9-111(d).

Almost every other species of administrative appeal in land use planning and zoning cases here in Tennessee are pursuant to the common law writ of certiorari, which is much different. In a case brought pursuant to the common law writ, no new evidence may be submitted to the trial court (absent exceptional circumstances), and the trial court may only disturb the ruling of the administrative body upon a finding of illegal, fraudulent, or arbitrary and capricious action. This makes it difficult to reverse any administrative decision which must be appealed pursuant to the common law writ, which is in fact most zoning decisions.

The first thing to notice here is that most people either do not realize or do not understand that review pursuant to the statutory writ of certiorari is available. Ordinarily, from my perspective, this gives an advantage to the applicant because a wide array of proof which might have been too expensive to adduce at the administrative hearing may be more easily available for a trial court hearing. However, that is not to say that an attorney handling such a case should not be aware of a choice between the common law and statutory writs in such cases. If the attorney seeking the appeal believes that the record below is much better for the appellant as a result of some failure of the Historic Zoning Commission to have sufficient proof which ruling in front of it, it may be worthwhile to file a request for review under the common law writ of certiorari. Without objection, the court will ordinarily here the case as a common law writ, preventing the presentation of additional proof by the historic zoning commission. Bear in mind, that is the historic zoning commission is aware of the law in Tennessee, and frankly, that is often not the case, the commission can argue to the court that the case should be opened up, an additional proof permitted. In my experience, that is not happen very often. For example, in Byron Avenue v Metro Historic Zoning Commission, a case in which I was tangentially involved, review was pursuant to the common law writ of certiorari because that was the type of review requested by the petitioner. No objection was made and although the standard of review was higher (the arbitrary and capricious standard), because the proof was so one-sided in favor of the petitioner, the Court of Appeals ultimately reverse the decision of the historic zoning commission and remanded for further proceedings, where the petitioner ultimately prevail.

Obviously, this is a judgment call that must be made by the attorney based on his or her evaluation of the proof as it was adduced before the administrative agency. In most instances, I believe that the statutory writ of certiorari, with the lower burden of proof and the ability to introduce additional evidence is far superior; but there are certainly cases where the attorney representing the party seeking review might decide that at least asking for the common law writ without bothering about the statutory writ, might be a better strategy.

Finally, there is one other aspect of the statutory vs. common law writ of certiorari which should be noted here. To the extent that the statutory writ of certiorari is made available to review actions of a legislative or executive nature, it is not constitutional. The leading case, decided back in the 50s, is Hoover v Public Utilities Commission, 195 Tenn. 592, 261 S.W. 2d 233, 238 (1953). Why is the historic zoning commission in applying its rules and regulations to a particular piece of property any different from the board of zoning appeals in administering the zoning ordinance as applied to a particular piece of property? In fact, there would appear to be no difference yet the board of zoning appeals decisions are appealed pursuant to the common law writ of certiorari, and the historic zoning commission is subject to the statutory writ of certiorari. So far as I know, no one has ever brought this up and as a result, it has not been addressed by any Appellate Ct. in Tennessee. But if, for example, the attorney for the petitioner, was seeking a common law writ and the attorney for the historic zoning commission argued that the statutory writ was available pursuant to the specific statutory authority, the constitutionality of that statute would be worth challenging. It is certainly an interesting question of administrative law.

Substantively, this case is interesting as well. Essentially, the petitioner/property owner wanted to make various changes to the exterior of the building. The historic zoning commission approved many of the proposed changes, but rejected proposed changes to the front windows, and required a parapet wall on the roof as opposed to a railing.

The petitioner argued that because substantial changes had previously been made to the property, much of the historic value had been lost. The trial court perhaps said it best:
There is an implicit grandfather provision in the [Historic Preservation] Guidelines and in the statutes which indicate that the property or preexisting condition of property in 2007 [when the historic district was created] may be preserved by the owner, but when alterations and additions and other changes, replacements, take place, then those alterations, replacements, and buildings must be in keeping with the 1935, that is the historic building….And the Court finds here that since [Petitioner] wants to alter its year 2000 windows that it used to replace the historic windows…it must now alter them in compliance with the historic guidelines. And [Petitioner] has not carried its burden to show that it is entitled to a Preservation Permit allowing those roll-up windows, because they are not historic.
The petitioner argued that the historic zoning commission based its denial of the proposed replacement windows upon their function, but the testimony at the hearing by one of the commission staff members clearly indicated that the windows proposed when open would appear vacant and inconsistent with the historical construction elsewhere on Lower Broadway.

With regard to the required parapet wall on the roof, the same staff member testified that a railing would allow our view of the additional stories which were being added to the building but that a parapet wall would prefer that view and the more consistent with the adopted guidelines for the area.

Is there any lesson which can be gleaned from these conclusions? First, it is very difficult to launch a direct attack on guidelines for any historic area. A review of any historic zoning ordinance and guidelines for any particular area will quickly demonstrate that the language is very ambiguous and difficult to apply in an objective manner. Most courts are going to lean heavily on the historic zoning commission and its staff regarding the proper application of the guidelines and regulations.

Second, that means to me that the argument to be constructed should usually be to demonstrate that the proposed alterations are consistent with the historic guidelines. While that is often difficult to do at the level of the administrative decision maker, hiring an outside expert, beyond someone who simply has an engineering or architectural degree, is frequently the best way to go. Hiring an expert with the historical background to support your position will at least give the court an additional view on the way the guidelines should be interpreted and applied. To my way of thinking, that is the preferable approach but of course it assumes that you can find a preservationist who supports the proposed alterations suggested by the property owner.

This is an interesting case, but I fear very typical in the area of historic zoning. Because the statutes, ordinances, and regulations (frequently called guidelines, but if you read those guidelines carefully, you will see that the staff always really thinks of them as regulations) are often ambiguous, the court relies on the staff to understand their meaning. Typically, in the context of other zoning decisions subject to review, there are objective criteria which must be met and if they are met, the permit should issue. For example, in the case of a special exception/conditional use permit, if the applicant demonstrates compliance with the required conditions, the permit should issue. To the extent that a number of neighbors may appear and oppose, causing the zoning board for example to deny the application, there is a significant chance of reversal on appeal. Look at it from another perspective, from the point of view of the neighbors: in a variance case, if the developer does not demonstrate compliance with the requirements of the statute for variances, then if the variance is granted it is also subject to reversal on appeal. In both of those instances there are usually objective criteria by which to make the decision. Because the historic zoning regulations generally are much less objective, it increases the difficulty of successfully appealing a decision of the historic zoning commission, whether you are the applicant/landowner or a neighboring property owner.

Friday, March 30, 2018

Takings cases created by non-enforcement of regulations

Assume for a moment that your neighbor is illegally using his property for some type of commercial activity. Let’s assume it’s a barbershop. Can you sue the local government for the diminution in the value of your property as a result of its failure to enforce the local zoning regulations? We looked at a case that is very similar to this a short while back. In Beech v City of Franklin, the Sixth Circuit Court of Appeals dismissed the claim against the city, although in that case, the plaintiff only alleged failure to enforce the zoning regulations and asked for mandamus to force the city to enforce the code provisions. The Sixth Circuit emphasized that there was no takings claim made against the city in the original lawsuit which was filed in Chancery Court in Williamson County. As a result, under both state and federal takings law, the case was not ripe for review.

But let’s suppose that such a claim had been made in the Chancery Court. Would the plaintiffs have prevailed? It would certainly seem very difficult from my perspective.

However, there is a very interesting recent article about “Non-Enforcement Takings,” which makes the point that although these types of cases are difficult, to be consistent, non-enforcement takings cases should be reviewed carefully and under the right circumstances may form a justifiable basis for relief. The neighbor complaining about the barbershop is a good example: certainly, having a barbershop next door to your residential property may cause a significant decrease in the value of the land, may increase noise, traffic, and cause other harm to the property owner. It is difficult however usually to get the courts to seriously review such claims.

The article is by Tim Mulvaney, Non-Enforcement Takings (February 20, 2018). Boston College Law Review, Vol. 59, No. 145, 2018, and is available at SSRN.

Of course, the property owner can sue the neighboring property owner for nuisance, including a request for damages and injunctive relief. Perhaps in the case of a failure to enforce the zoning regulations by the local government, there is the possibility of an additional takings claim? Obviously, one of the counter arguments is the extent to which such failure to enforce takings cases might subject the local government to an onslaught of damage claims.

The article is quite interesting and certainly the argument is worth considering seriously.

Tuesday, March 27, 2018

Short Term Rentals: Amendment 2 to Senate Bill

Last week I mentioned that the Senate here in Tennessee had considered an amendment to the short terminal bill but at the time I did not have access to the amendment because it had not yet been posted online. The amendment is now posted and is worth a look. It is less broad than the original legislation.  Take a look at it here.

In general, the amendment looks to keep existing short-term rental properties but allow local governments to control and regulate short-term rentals in the future. Originally, the legislation appeared to take virtually all control of short-term rentals from local governments, but it would appear, given the language of the second amendment to the bill, that there weren't enough votes for that broad-based regulation, and so instead, the bill is amended simply protects existing short-term rental properties.

If you work in this area, it's certainly worth a look.