In an interesting new case, the Second Circuit Court of Appeals has ruled that the City of New York violated the equal terms provision of RLUIPA. This provision prohibits a “government [from] impose [ing] or implemt[ing] a land use regulation in a manner that treats a religious assembly on less than equal terms with a nonreligious assembly or institution." Keep in mind that the new Tennessee RFRA does not contain such a provisison: it only affects a regulation which "substantially burdens" religious exercise.
In the 2nd Circuit case, the church wanted to rehabilitate its building but lacked funds. It arranged a deal with a catering company to allow the use of its facilities for catering events in return for the catering company to pay for the church improvements. The city said this use was beyond the permitted uses in the zoning district and issued a notice of revocation of the church's permit. The catering business appeared to be the principal use and not merely accessory.
The church contended that two hotels in the vicinity had a similar arrangement whereby caterers used hotel facilities for events. The city issued notices of violation for the hotel caterers but the trial court found that to be a very different remedy than revocation and concluded that there was a violation of the equal terms provision.
On appeal, the 2nd Circuit upheld the lower court. All the catering activities were within the same zoning category and neighborhood, and all were significant catering activities. The city never threatened to shut down the hotel operations as it had the church. That violated the act.
This outcome is somewhat odd. It seems that the city's argument was that the catering use was not accessory to the religious use of the property. On the other hand, the city felt like a catering operation was accessory to a hotel use. Those observations generally appear to be reasonable. The court ruled against the city because the certificates of occupancy for the two hotels did not expressly include the accessory catering use. Therefore, the court concluded that the accessory catering use was illegal at the hotel locations.
But surely that misses the point. Essentially, the city was arguing that the hotel catering functions were permitted, and only needed a technical amendment to the certificate of occupancy to be in total compliance; whereas, the church catering function was simply a ruse to utilize church facilities and shoehorn in a caterer in an area where was otherwise prohibited. The analysis of the Second Circuit Court is certainly not deferential to the planning function. On the other hand, perhaps we have to expect this in the application and administration of the RLUIPA.
Third Church of Christ v New York, 2010 WL 4869763 (2nd Cir. Dec 2010).