NJ's Time of Decision Rule

On May 5 of this year, a new law took effect in New Jersey changing its “Time of Decision” doctrine. Up until then, New Jersey had always followed the rule that if a change in the law took place between the time of an application and the time of issuance of the approval, the new law was effective. This was true even if the new law was introduced and passed in direct response to the application. In other words, if the municipality changed the rules during the course of the game, that was okay.

The new law changes that. It reads:

Notwithstanding any provision of law to the contrary, those development regulations which are in effect on the date of submission of an application for development shall govern the review of that application for development and any decision made with regard to that application for development. Any provisions of  an ordinance, except those necessary for the protection of health and public safety, that are adopted subsequent to the date of submission of an application for development, shall not be applicable to that application for development.

NJSA 40:55D-10.5.

How the law will be interpreted will certainly be interesting. The last sentence, excepting new laws “necessary for the protection of health and public safety” could certainly be argued on virtually any municipal ordinance. But overall, this is a welcome advance and certainly something which would be appropriate here in Tennessee. We follow the same old rule, allowing municipal government to change the rules during the course of the game if it so desires. The trouble with that is that ultimately allows for abuse: the rules are changed simply to stop a particular project without really evaluating the project's desirability.

Tennessee should follow the bright line approach that a significant number of states are now following, including it would appear, the state of New Jersey. Once the application is filed, only the rules applicable at the time of the filing of the application would apply to the project. Any new rules would apply to new projects, but not to projects which have already submitted the application. Perhaps someday in the future legislation to that effect could be considered by the Tennessee General Assembly.

Cash v Wheeler: Appealing to the City Council

Yesterday’s decision by the Tennessee Court of Appeals in Cash v Wheeler continues the slow abrogation of the powers of local zoning boards. In Cash v Wheeler, the issue was whether or not the city of Knoxville could properly provide for an appeal from a decision of the zoning board up to its legislative body. While some states clearly hold that only the zoning board has the power to grant variances, the Tennessee court found that such an appeal was entirely appropriate under the Tennessee Zoning Enabling Statutes, Tenn. Code Ann. § 13-7-201 et seq. One state with enabling language very similar to ours in Tennessee experimented with these direct appeals but ultimately gave up on them. Surely the reason for this is the inherent difficulties of having political officers make determinations that are administrative in nature, requiring due process, not just political judgments.

In this particular case, the neighbors appear to have won, but given the political nature of the legislative body, perhaps this ruling is more advantageous to developers. If the zoning board won’t grant the variance, an appeal to the local legislative body may provide the desired relief. After that, the neighbors will have to appeal to court and the cost inherent in that process may make it more difficult for them to do so.

Only a short time ago, the Tennessee Court of Appeals found that the Metro Council has the power to consider a case before it went to the Metro Board of Zoning Appeals. The real issue in all of these cases has to do with the type of hearing afforded by the local legislative bodies. Those bodies, especially here in Metro Nashville, with its 40 person Council, is not really equipped to provide due process to an applicant for administrative relief. In fact, in the Metro case, no notice and no opportunity to be heard were provided at all.

The bottom line here is that land use planning issues and controversies are complicated enough without adding an extra layer of controversy when a legislative body attempts to make administrative decisions.

Exhaustion of Administrative Remedies

A question which comes up from time to time involves the issue of failure to exhaust administrative remedies in the context of nonconforming properties. The Tennessee Court of Appeals reaffirmed several previous cases requiring that the administrative remedies be exhausted before appealing to a court of law or equity in Ready Mix v Jefferson County (June 9, 2011). In this case, the plaintiff filed a declaratory judgment action alleging that it had a vested right to operate a quarry and that there was a pre-existing non-conforming use of the property for mining quarrying. The plaintiff alleged that the use was non-conforming under both the local ordinance and the Tennessee Non-Conforming Property Act, Tenn. Code Ann. § 13-7-208. The trial court found that the quarry was legally nonconforming and that there was no need to exhaust administrative remedies before filing the declaratory judgment.

On appeal, the Tennessee Court of Appeals reversed. Citing several cases from the appellate courts of Tennessee, the court concluded that at least as a matter of prudence, exhaustion of administrative remedies was required under Tennessee law so as to allow local officials to make an original decision concerning zoning controversies.

Certainly, the decision by the Court of Appeals is consistent with previous case law. However, under the circumstances relating to a non-conforming property, whether this line of cases is correct is open to question. Certainly, to the extent that the property owner relies on the local ordinance and its provisions relating to non-conforming properties, an appeal to the zoning board should be required before proceeding to court. The zoning board is empowered by the relevant statutes, in particular, Tenn. Code Ann. § 13-7-207 (1) to hear appeals where there may be an error in any order of the municipal zoning official.

Nevertheless, §13-7-208 is not an ordinance adopted pursuant to the enabling legislation, it is rather a part of the enabling legislation itself. Furthermore, it acts as a restriction upon the discretion of the local governmental officials. There is no indication anywhere that a local zoning board should be able to directly construe a provision of Tennessee state law such as this particular statute. Certainly, we don’t want different results in Nashville when construing this statute from the results obtained in Memphis when construing the same statute. Yet if local zoning boards are permitted to make those decisions, that’s exactly what we are asking to get. Inconsistent results.

Zoning boards don’t have the power or jurisdiction to construe Tennessee state law. They do have the power to construe the local zoning ordinance. But §208 is not part of the local zoning ordinance. It’s the Tennessee state statute and should be construed only by the courts of Tennessee.

For example, part of the statute requires that no expansion of a nonconforming property may be made if it creates a nuisance. Nuisance law is difficult enough when a trial judge is giving direct instructions to a jury; allowing a lay board to make decisions about what might be a nuisance seems totally inappropriate.

From my perspective, a declaratory judgment such as the one filed in this case should be allowed to proceed without exhausting administrative remedies because the state policy should be to allow Judges, not zoning boards, to construe Tennessee statutory provisions.

As I have mentioned above, at this point, it seems to me that the horse is out of the barn. Not only does the Ready Case itself rule against my argument, but there have been several others ruling similarly, and it’s unlikely now that any court would accept my argument.

However, attorneys representing property owners may switch to a different strategy. Instead of filing an action for declaratory judgment themselves, it may be far preferable to sit back and require the County to sue the property owner. Frankly, there are several advantages to this strategy. First, a court of law or equity will make the initial decision, not a board of zoning appeals. Second, an added benefit, is that the burden of proof will now be on the local government to prove a violation as opposed to placing the burden on the owner of the non-conforming property. Finally, the well-known rule of statutory construction, that zoning ordinances are to be strictly construed against the local government and in favor of the property owner is more likely to be enforced in accord of law as opposed to a board of zoning appeals.

In fact, when you consider that the property owner may ultimately get a better hearing in the court, there is often no incentive for the property owner to file suit on his own. Furthermore, it cast doubt on the efficacy of the doctrine of exhaustion of administrative remedies in the zoning context. If all the property owner has to do in order to get a hearing before a court of law is sit back and challenge the local government to sue in state court, there is often no reason to do otherwise. In fact, in these kinds of situations, I always make a judgment call as to whether I think I can more easily persuade the local board of zoning appeals of the correctness of my position versus how difficult it might be to persuade the local judge. These kinds of judgment calls have to be made on a case-by-case basis obviously, but frequently I find it easier to persuade a judge that I am correct.

One other thing is worthy of consideration here. Under the Tennessee Equal Access to Justice Act, Tenn. Code Ann. § 29-37-101 et seq., attorneys fees for a successful property owner may be recovered if the government acted arbitrarily capriciously. It is probably a little bit easier to recover the attorneys fees by demonstrating arbitrary action in the context of an appeal from a zoning board rather than an original action in state court. The reason for that is that in order to reverse decision of the zoning board, you must demonstrate that it acted arbitrarily and capriciously in any event. If you’ve already proven that, it’s easy for the court to award attorneys fees. In a direct enforcement action by the local government, the court may conclude that your client is not guilty of a zoning violation, but at the same time may not conclude that the local government acted arbitrarily and capriciously in bringing the enforcement action in the first place.

As you can see, the best strategy in these cases is often a judgment call by the attorney. A lot depends on who the members of the local zoning board might be, who local judge might be, the clarity of the factual situation and so forth. These are extremely interesting cases but also very complicated.

Can you lobby the Zoning Board?

A recent decision by the Tennessee Court of Appeals opens a can of worms concerning lobbying in the context of administrative decision-making once again. In Binkley v Metro Board of Zoning Appeals (June 1, 2011), the Tennessee Court of Appeals held that when considering a special exception, pursuant to Tenn. Code Ann. § 13-7-207 (2), the local city council could set up a procedure whereby the application had first to be considered by the city council and only after the application is approved by the council, can it be considered by the Board of Zoning Appeals. Of course, if the application is denied by the city council, the application never makes it to the board of zoning appeals.

In this particular case, no notice was given of the consideration of the proposal by the Metro Council, and there was no hearing and no opportunity to be heard given to the applicant. Unsurprisingly, the application was denied by the Metro Council. In justifying the lack of notice and opportunity to be heard, the Court of Appeals indicated in an almost off-hand fashion that the applicant have the right to contact any of the members of the Council to lobby for passage of the proposal.

This is an extraordinary conclusion. Surely, an application for special exception, where there are special conditions relating to that particular use, must be considered an administrative decision even if it’s being made by what is ordinarily a legislative body. This is after all the holding of the Tennessee Supreme Court in McCallen v City of Memphis, 786 S.W. 2d 633 (Tenn. 1990). After the decision in McCallen, most land use planning attorneys in Tennessee felt that the issue of ex parte contact (lobbying) in the context of administrative decision-making had been settled: it was strictly inappropriate.

But this new case from the Tennessee Court of Appeals, seems to indicate otherwise. It is at least now arguable that ex parte contact is appropriate given the opinion of the Court of Appeals. I’ve been asked to assist in an application for permission to appeal to the Tennessee Supreme Court, and it would seem appropriate for that court to review the case if only to clarify this issue.

However, the related question of whether procedural due process must be given under the circumstances of an administrative appeal seems also to be an important public policy. The statute requires a hearing before the Board of Zoning Appeals; in this case not only was there no hearing before the board, but there was no hearing before the Metro Council. No notice was given; the applicant had no idea that the issue would be decided on that particular night, and even if notice had been given, there is no procedure for the applicant to discuss why the application should be granted. This flies in the face of virtually every zoning statute in this state or any other state. Virtually every zoning decision requires at some point in the process notice and an opportunity to be heard. Yet here’s a case where an application was denied summarily without either.

Finally, to add insult to injury, the reliance by the Metro Council on its Solid Waste Plan is certainly suspect. The solid waste plan indicates that only two waste transfer stations are appropriate in Davidson County. The Metro Council apparently relied on the Solid Waste Plan to deny this application. The problem here is that it is totally anti-competitive. Who says which two waste transfer stations can be located in Davidson County? Why can’t a third waste transfer station come into the county and prove that it is more efficient and can provide the same service at a lower cost? There was no opportunity for the applicant in this case to raise these issues at all because there was no opportunity for him to be heard at all.

All of this seems to indicate the inappropriateness of this particular system used by Metro Government. The Metro Council should not act as some kind of clearinghouse for special exceptions. Special exception cases should go to the board of zoning appeals and be decided on conditions established in the zoning ordinance for that particular use. Interjecting the political process is an abuse of the process.