Koontz v St. John's River WMD

The US Supreme Court recently decided an extremely interesting mandatory exaction case involving wetlands development. Without going into the factual details to any great extent, in Koontz v St. Johns River Water Management District, the court invalidated a requirement that the developer pay to improve other properties belonging to the district as a condition of obtaining a permit to build on his own property. Because his property was burdened with wetlands restrictions, the district wanted improvements to their own in order to offset any harmful impacts the development might cause.

Of course, this brings up the interesting question of the applicability of Nollan v California Coastal Commission and Dolan v City of Tigard.  Nollan requires an essential nexus between any such condition involving real estate development; Dolan mandates that there be a rough proportionality between the amount of the condition and any negative impact the development might have.

In the world of land use planning law, these issues come up almost all the time in the context of subdivision applications. It is indeed a rare subdivision which does not require either a dedication of real property or some mandatory exaction.

However, in both Nollan and Dolan, not only was the required condition the dedication of real property, but also those cases both involve situations where the application was granted subject to the condition. In Koontz, the condition was that money be paid for off-site improvements, and the application was turned down when Mr. Coons indicated that he would not make the payments. In the federal courts, there was a division of authority. The Supreme Court took care of that.

First, with regard to the distinction between a monetary exaction and the dedication of real property, the court found that to be a difference without any meaning. From the perspective of the majority, an administrative agency can always substitute a monetary exaction in lieu of a real property dedication and in that way avoid the constitutional impropriety at any time.

Second, with regard to the distinction between granting approval with the condition and turning it down, the court also found that to be a distinction without any real significance. Once again, the administrative agency could clearly trapped its findings as a denial of the application if that was all it would take to render the decision constitutional. The court did not find that granting an application subject to the condition, as opposed to denying the application because the condition would not be complied with, had any significant; the real point is that the owner is deprived of a property right without just compensation either way.

Remember that under Nollan and Dolan, the burden of proof is reversed: the property owner does not have the burden of demonstrating that there is an essential nexus and rough proportionality; rather, the administrative agency must articulate why there is an essential nexus and rough proportionality at the time of the agency decision. Under the Koontz’s decision, it is now clear that the same reversal of the burden of production and persuasion applies whether the condition is for money or real property, and whether or not the application was granted or denied. Ultimately, all planning commissions should required the staff to prepare such justifications for every case in which a dedication or exaction is involved. Without some evidence in the record to justify the condition, there is a significant possibility of the decision being overturned on appeal.

As the court noted:

Nollan and Dolan involve a special application of this [unconstitutional conditions] doctrine that protects the Fifth Amendment right to just compensation for property the government takes when owners apply for land-use permits . . . 

Land-use permit applicants are especially vulnerable to the type of coercion that the unconstitutional conditions doctrine prohibits because the government often has broad discretion to deny a permit that is worth far more than property it would like to take. By conditioning a building permit on the owner's deeding over a public right-of-way, for example, the government can pressure an owner into voluntarily giving up property for which the Fifth Amendment would otherwise require just compensation. So long as the building permit is more valuable than any just compensation the owner could hope to receive for the right-of-way, the owner is likely to accede to the government's demand, no matter how unreasonable. Extortionate demands of this sort frustrate the Fifth Amendment right to just compensation, and the unconstitutional conditions doctrine prohibits them.

Legislative and Testimonial Immunity

There have been a number of interesting new land use cases over the last 20 or 30 days, both here in Tennessee and across the country as a whole. Over the next couple of weeks, I’ll try to address some of the more interesting cases. Today will start with a very interesting legislative and testimonial immunity case, Issa v Benson, (Tenn. App. June 24, 2013). A developer seeking a zoning change in Chattanooga sued a City Councilman for defamation, alleging that the Councilman had falsely accused the developer of offering him a bribe to support the zoning change. The Councilman later informed the Council, during argument concerning the zoning change on the floor of the Council, and not surprisingly, the zoning change was defeated. In addition, there was an earlier conversation between the two men where the developer warned that he would have to contest in court any decision denying the zoning change and the Councilman responded that if there was a lawsuit filed, he would testify that the developer had offered him a bribe in order to gain his support.

After the zoning change was defeated, the developer filed a defamation lawsuit and the Councilman filed a motion to dismiss based on both legislative and testimonial immunity (the court calls the latter litigation privilege). First, the court makes clear that the legislative immunity applies to lesser legislative bodies, such as local County and municipal legislatures. The developer tried to argue first that because there may have been a violation of the Open Public Meetings Act that was not an appropriate legislative session and therefore the privilege did not attach. Further he argued that bribery was beyond the bounds of the privilege itself.

The court found both arguments unavailing. First, the applicability of the Open Public Meetings Act was irrelevant to the issue of legislative immunity. Even if there had been a violation of the act, that would not render comments made by a local legislator potentially actionable. The privilege applied regardless of the Open Public Meetings Act.

Second, while certainly bribery is illegal and not to be condoned, the court noted that in a bribe had been offered, the other members of the local legislative body would be interested in that and it would certainly have an effect on the proposed legislation. As a result, the comments concerning the alleged bribery or well within the protection of the privilege and no liability could result.

Finally, the developer’s allegations concerning the earlier meeting took place outside the context of a legislative Council meeting. As a result, the developer argued that the legislative immunity did not apply. The court however ruled that there was a “litigation privilege” or as I usually call it, a testimonial immunity. The court held that since the developer had threatened litigation, the comments of the legislator were protected as “preliminary to proposed or pending litigation.” Since there was a threat of a lawsuit, this comment about the alleged bribery, was preliminary to the defamation lawsuit which was in fact file. As a result, the comments were protected by virtue of the litigation privilege or testimonial immunity.

A final couple of notes are in order. First, you might be wondering whether a witness in a zoning board hearing is protected by the testimonial immunity. In fact, they are. In Evans d/b/a Riverwood Riding Academy of Nashville v Nashville Banner, 1988 WL 105718 (Tenn. App. 1988), the court held:

Tennessee courts have extended this privilege to meetings of local legislative bodies, and to "quasi-judicial" proceedings conducted by state departments and agencies . . .  Zoning boards are generally considered to be "quasi-judicial" bodies having "quasi-judicial" functions. The Tennessee Supreme Court has followed the general rule. The Court has held that a county board of adjustment is acting as a "quasi-judicial" body when it grants a zoning variance. It has also held that "determinations made by a Board of Zoning Appeals are administrative determinations, judicial or quasi-judicial in nature."

The policy underlying the privilege is to encourage the public to speak freely at public, governmental hearings without the fear of a defamation suit. Local boards of zoning appeals take actions which affect not only . . . homes and neighborhoods but also the quality of people's lives. When these boards hold hearings, all interested persons should feel free to express their views without fear of a recriminating lawsuit. To this end, statements made at a public governmental meeting should be absolutely privileged.

Of course, the same safeguards of relevance apply in hearings conducted by local zoning boards that apply to full-fledged trials or legislative proceedings. Thus, before the privilege will apply, the statements must be related to the subject matter of the hearing.

Since the witness who testified against the applicant at the zoning board hearing was immunized, and the newspaper articles describing the hearing faithfully recounted the details, neither the witness who testified nor the newspaper which published the report had any liability for defamation.

Finally, one wonders what the Tennessee Anti-Slap Act of 1997,  Tenn. Code Ann. §4-21-1001, adds in this context. The protection purportedly offered by the statute seems less inclusive than the common law rule described above. As a result, it’s not entirely clear what the impact of the 1997 statute really is.

Generally, we can conclude that a defamation action against either a local legislator or a witness before a local zoning board or planning commission (or legislative body) is likely privileged. In the case of the witness, the testimony must have been generally relevant to the issues before the administrative body, but assuming that, no defamation action can be successfully maintained.

Regulatory Takings

The Tennessee Court of Appeals has released another interesting case related to zoning, land use planning law, and regulatory takings. In Phillips v Montgomery County, the issue was whether or not the denial of subdivision approval by the county because the location of the subdivision would essentially block the extension of a state highway, was unconstitutional.

Unfortunately, the plaintiff chose to sue solely under the terms of the Tennessee state constitution but did not include a cause of action under the federal Constitution. An interesting question, related to this issue, is whether or not you need the name either constitutional provision. Perhaps it’s safer to mention both, but it seems to me that the Tennessee Rules of Civil Procedure to not require it.

In any event, in this particular case, the Tennessee Constitution was specifically referenced as a result any potential claim concerning regulatory takings under the federal Constitution were waived. In addition, since the doctrine of regulatory takings has not yet been recognized by the Tennessee Supreme Court, the Court of Appeals was reluctant to make new law by concluding that there was a Tennessee doctrine prohibiting regulatory takings. The court did specifically note its earlier decision, B & B Enterprises of Wilson County, LLC v. City of Lebanon, 318 S.W.3d 839 (Tenn. 2010), and since that case was authored by Justice Koch, it may be that this decision was the Court’s way of suggesting that this case be appealed to the Tennessee Supreme Court, where this issue could be fully addressed. Certainly, one would assume that the state courts could entertain a theory based on a regulatory taking.

However, since the plaintiff had also sued under the theory of inverse condemnation, the Tennessee Court of Appeals dismissed the other claims and remanded based on the inverse condemnation claim under Tennessee law.

Although not involved in this case, the three United States Supreme Court decisions, Nolan v California Coastal Commission, Dolan v City of Tigard, and Koontz v St. James River Management Utility, the latter of which was only decided in late June of this year, clearly establish that if an application is denied based on what amounts to an unrelated requirement of the local government, that it is not only a take, but that the burden of proof is reversed and shifts to the local government itself.

For example, in this Phillips case, the government admitted that the only reason for the denial of the preliminary plat was the proposed future extension of the state highway. Presumably, the only reason to deny the plat approval would be to prevent construction and thereby hold down the amount of money which the state or local government would have to pay in order to condemn the property for the extension. But again, this is inappropriate. The single property owner should not have to pay, by having his project delayed, for a project of this nature. This is a cost of the entire government, state or local, and should be borne by the taxpayers of government. It is simply unacceptable for a local government to deny plat approval under those circumstances.

Koontz v St. Johns River Water Management District

There is an extremely interesting land use case pending before the United States Supreme Court which will most likely be decided before the end of this month. In Koontz v St. Johns River Water Management District, the issue is whether remediation required by the district effects a taking of the owner’s property.

The Florida Supreme Court found that it did not.

Mr. Koontz owns about 15 acres in Orange County Florida. Much of the land was wetlands and he needed permits to develop the property. In 1994 he applied for permits for dredging to use approximately 3.4 acres of the wetlands. He proposed to offset the impact on the wetlands by imposing a conservation easement on the remainder of his property. However, Florida has a “no net impact” policy and his proposal would only limit the degree of net loss, not add any additional wetlands or enhance any existing wetlands.

The district rejected his proposal but suggested several alternatives including design modifications on his property, reducing the scale of the development to 0.7 acres, as well as two off-site mitigation options. It’s not clear what the cost of the off-site mitigation options might’ve been; the trial court estimated a cost from $90-$150,000.

Coons was not interested in any of the development option suggested by the district, and after informing the district of his position, the district denied the application. He filed suit in 1994. He alleged a taking under the Florida Constitution. The trial court found that there was a violation of Nolan and Dolan and that the off-site mitigation options resulted in a regulatory taking.

The case eventually wound up in front of the Florida Supreme Court, which reversed because Koontz was not required to dedicate real property in exchange for the approval of the permit; and because the application was denied (instead of approved as was the case in Nolan and Dolan), nothing was ever taken.

The US Supreme Court granted certiorari. We await the decision.

Caffey v Metro BZA (Tenn. App. June 2013)

We have discussed in the past the difficulties encountered by property owners attempting to obtain variances under Tennessee law. Tenn. Code Ann. §13-7-207 (3) requires that there be some exceptional physical feature which justifies the relaxation of the zoning requirements as to any particular property, and that that exceptional physical feature not the shared by other properties in the general vicinity.

In Caffey v Metro Board of Zoning Appeals, the property owner requested basically an extension of a previously granted variance in the required side yard. The side yard, as required by the zoning ordinance, had only to be 5 feet wide; previously, the zoning board had granted a variance of 4 feet, and the property owner now returned with a request to extend that variance by one more foot, allowing construction right up to the property line.

The decision by the Court of Appeals, does not discuss the factual basis for the variance granted by the zoning board in any detail. Frankly, two very practical considerations seem to be at play here: first, that there was an assumption that there was a unique physical feature on the property by virtue of the original zoning board decision (something which probably should never be assumed); and second, that a 12 inch variance was nothing to get too excited about.

Although the adjacent property owner protested and appealed, the zoning board granted the variance, the trial court affirmed the variance, and the Court of Appeals reach the same conclusion.

This might perhaps be viewed as an exception to the general rule of great difficulty in obtaining variances under Tennessee law, but more likely it is explained by the two factors above: the zoning board had already granted a variance so there must’ve been some exceptional physical feature, and to extend that variance only another 12 inches, did not seem like any particular problem.

It’s an interesting case, and worth review. It’s unusual to find a property owner returning for an extension of the original variance. In fact, I can’t think of any case that I know of where that has happened before in my experience. But, if you have a client who has a similar situation, the difficulty obtaining an extension may not be that great.

Ghost Houses

Looking around the Internet the other day, I chanced on an article about two married architects in Knoxville who had essentially rehabilitated an existing home in Old North Knoxville, and in order to remain true to the historical roots of the building, sought and obtained approval for the construction of two more homes immediately adjacent to their project.  They now have three structures, one of which they use as their home, and I think that they rent the other two out for income, especially earmarked for improvements to the continuing renovations on their own home.

It’s an interesting article and part of the difficulties stemmed from the customary zoning provision that only one principal structure was permitted on any one zoning lot. It’s not clear how they overcame that obstacle, whether by a zoning change, or by some type of special approval through the board of zoning appeals, but overcame it they did, and construction went forward.

It’s an interesting article and one well worth reading. I admire the dedication of these young professionals as well as their ability to design and implement the project. I have no talent along any of those lines, and trying to rehab an old structure to me sounds like an insurmountable challenge.

By the way, the "Ghost Houses" nickname comes from the coloring both inside and outside the homes.

Read the article here.

Also, there are some interesting photographs of the homes on this blog from Knoxville.

The Islamic Mosque: Adequate Notice Given

The Tennessee Court of Appeals released an interesting opinion on Wednesday relating to the well-known Islamic Mosque controversy in Murfreesboro. As you may recall, the Rutherford County Regional Planning Commission approved a site plan for the development of the mosque. A group of neighbors sued the planning commission alleging various constitutional law violations as well as a violation of the Tennessee Open Public Meetings Act, Tenn. Code Ann. §8-44-101 et seq.  Fisher v Rutherford County Regional Planning Commission, Tennessee Court of Appeals, May 29, 2013; copy posted here.

The trial court dismissed all claims but the Open Public Meetings Act challenge and refused to issue a temporary injunction. But after the final hearing, concluded that there was in fact a violation of the Open Public Meetings Act, and enjoining the county from issuing any further permits with respect to the development of the property.

As the Court of Appeals explained, shortly after the trial court's final decision, suit was filed in federal court under the terms of the Religious Land Use and Institutionalized Persons Act, and a federal court in Nashville issued a mandatory injunction requiring the County to allow completion of the mosque.

The appeal in this case was brought by the county itself, concerned that the trial court’s determination that it had violated the Open Public Meetings Act might have a lasting effect on how it conducted business. The trial court had concluded that at least under the circumstances of this particular case, the use of the Murfreesboro Post to give notice was inappropriate, and that the terms of the notice in the Post under the circumstances was also deficient.

The Court of Appeals reversed. The court first examined the issue of mootness, concerned that because the federal court had already ruled that construction could be completed under the terms of the federal act, that the case no longer could serve as a means of providing relief. The court however concluded that because of the public interest in this matter, that the exception to the mootness doctrine applied.

As anyone who has ever dealt with the Tennessee Open Public Meetings Act, Tenn. Code Ann. §8-44-101 knows, the statute is not particularly helpful in so far as understanding what notice must be given. In fact, §103 only indicates that “adequate public notice” must be given. There’s not a whole lot of direction there.

But as the Court of Appeals points out, the adequate public notice is of the meeting, not of the items on the agenda of the meeting. The trial court seemed to conclude that because of the great public interest in the Islamic Mosque, that there was some higher degree of notice which must’ve been provided by the county. Of course, it’s difficult for the county to know before hand which cases may engender the most public interest. There must be some basic notice which is adequate under the terms of the statute, and which does not change based on the nature of the application.

In any event, the Court of Appeals concluded that the fact that the notice did not specify that the Islamic Mosque would be considered on the agenda within the terms of the notice, was not a defect.

In addition, the court also concluded that the circulation of the Murfreesboro Post was too small and limited to suffice in terms of adequate public notice. However, in a similar case involving the Nashville Record, the Court had looked at four factors in order to conclude that it was a newspaper sufficient for the purposes of notice. Those included (1) whether it is published at regular intervals; (2) whether it is intended for circulation among the general public; (3) whether it contains matters of general interest; and (4) is it in the form of a newspaper? The court concluded that the Murfreesboro Post met these requirements and summarized:

In reaching the conclusion that publication in the MURFREESBORO POST was insufficient, the trial court cited evidence “that few opportunities existed for those who lived near the proposed site to receive a copy of the MURFREESBORO POST because there was no home delivery in the area, and the nearest free distribution rack was some three miles away.” The evidence also showed, however, that the newspaper was published weekly, was intended for circulation to the general public, and contained matters of general interest. Over 21,000 copies were distributed throughout the county on Sundays in May 2010. This was the customary location for the county planning commission’s notices, and any interested person could obtain a copy at a distribution rack or on the newspaper’s website. We conclude that the county’s publication of the notice in the MURFREESBORO POST was sufficient under the [Open Public Meetings Act]. 

The failure to publish the agenda, and the use of the Murfreesboro Post, both were sufficient under the terms of the Open Public Meetings Act. The court reversed the trial court to the extent that it had held that the notice given contravened the act, but upheld the other holdings of the trial court.

Local Government Standing

I mentioned back in late April that there were two local decisions of the Davidson County Chancery Court dealing with the standing of the local government to sue its own board of zoning appeals. One of our judges ruled that Metro Nashville could sue its own zoning board, while another ruled the other way. I have just obtained a copy of the latter decision, and it is posted here for review.

It is likely that both cases will be reviewed by the Tennessee Court of Appeals so that they can be decided consistently.

Use Variances: Takings issues

Recently, in Hejna v Board of Appeals of Village of Amityville, 2013 WL 1442463 (NY App Div 4/10/2013), the New York Appellate Division reversed the decision of the local zoning board granting any use variance. Although this is certainly not new law in New York, and bearing in mind that New York allows both use and bulk variances, the holding this case is interesting in that it follows the established rule in New York that in order to obtain the use variance, the landowner must show, based on competent financial evidence, that it cannot yield a reasonable rate of return absent the requested variance.

In the New York case, it was clear that there was no proof at all of any financial nature which would demonstrate the property owner’s inability to obtain a reasonable return on investment. In effect, the New York courts permit this as an administrative means of demonstrating a taking of the property.

Here in Tennessee, there have been a couple of cases over the years which have suggested that in Tennessee, even when granting a variance to bulk regulations (and in Tennessee, as I have frequently said, use variances are most likely illegal anyway) there needs to be some showing that the property is incapable of financial return in the absence of a variance. I have always believed that this adds a component which is not in the enabling legislation and as a result is inappropriate. It also worries me inasmuch as it is very difficult for the judiciary to understand when there is a taking of property; it is that much more difficult for a zoning board, composed mostly of lay members, to understand what a taking might be. Thus, adding that requirement onto the difficult requirements that are already statutorily required (for example, see Tenn. Code Ann. §13-7-207 (3)) makes it a lot harder to get a variance in Tennessee, and it’s already hard enough.

If you have to show all the other things that are required here in Tennessee and that the financial return is insufficient on top of that, it just becomes almost impossible. And it’s pretty close to impossible now. Let’s not add another requirement that is not statutorily mandated.

TNCPA §208(g):Discontinuation

We have only two sections left for discussion: TNCPA §208 (g) and §208 (d) (2). This post will talk about §208 (g), the discontinuation clause. This subsection of the statute is complicated but certainly that is not unusual in the context of this statutory provision. Legislatively, there had been a debate about the discontinuation of non-conforming properties. Under the common law of most states, if the owner of a non-conforming property abandons the property with no intent to resume, the non-conforming aspect is lost and future activities on the property must conform to the zoning regulations. Many cities across the country, and in Tennessee, adopted discontinuation provisions which would limit the time that the property could be inactive, and once that time had elapsed, any renewed activity had to comply with local zoning. Notice the difference however: under the common law, the property owner had to abandon the use, implying a conscious and voluntary waiver of the right to use the non-conforming property; under the discontinuation provisions, even if the owner intended to resume the activity, if the inactivity lasted beyond the length of time specified in the ordinance, the non-conforming aspect was lost. Some cities had relatively reasonable discontinuation periods, including Metro Nashville which allowed inactivity for two years; others, were much shorter, like Chattanooga with its 60 day provision.

In order to bring some uniformity to this area, the Tennessee General Assembly once again amended the act, this time in 2004. I have posted a copy of the public act, Chapter 775 of the Public Accept 2004 on the Internet at this location. The reason to post the original public chapter is to highlight a key difference between the statutory codification in the original public chapter.

If you compare the two, specifically §208 (g) (4), you will note that the original Chapter 775 ends subsection (g) (4) with the period before the words “provided, however…” Those words then begin the next sentence and the formatting is such that it is clear that they apply to the entirety of subsection (g). In fact, I have included a copy of subsection (g) (4) here as originally adopted by the Tennessee General Assembly.

This is critically important. Because essentially, the final proviso of (g)(4) seems entirely to reverse the previous provisions of the paragraph. The early provisions of §208 (g) seem to indicate that the TNCPA “shall not apply if an industrial, commercial, or other business establishment ceases to operate for a period of thirty (30) continuous months…” The next sentence provides: “Anytime after the thirty-month cessation, any use proposed to be established on the site, including any existing or proposed on-site sign, must conform to the provisions of the existing zoning regulations.”

Based on this language at the beginning of §208 (g), it seems that the Tennessee General Assembly had chosen the objective approach: instead of requiring an intentional and voluntary waiver, if the non-conforming property remains inactive for 30 months or more, the non-conforming aspect of the property is forever lost. Then there are four subsections which explore situations in which the 30 month time frame may be tolled because of extenuating circumstances.

But then there’s the final proviso, which, in the original legislation appears as follows in relationship to subsection (4):

. . .

(4) The reactivation of the non-conforming use any time prior to the end of the thirty (30) month period.

Provided, however, that the restrictions of subsections (g) & (i) shall only apply if the property owner intentionally and voluntarily abandons the non-conforming use of the property. In any contested matter on the use of such property, the government has the burden of proving an overt act of abandonment in such matter.

I have spoken to a number of the legislators and lawyers involved in the amendment to this provision in 2004, and evidently this final proviso to (g) was added at the last minute. But the implication of this section is clear: the 30 month discontinuation provision is of little impact; first, before (g), or for that matter (i) applies, there must be some evidence that the property owner intentionally and voluntarily abandoned the non-conforming property and the government has the burden of proving an overt act of abandonment. If there is no demonstration of intentional and voluntary abandonment, then even if the property remains inactive for five years, the non-conforming aspect may be resumed regardless of the local zoning provisions.

By the way, I don’t know of any appellate court decisions interpreting this final proviso; I do know of one trial court decision here in Davidson County where the court seemed to give precedence to the requirement of intentional and voluntary abandonment, but also found that the 30 months have been tolled by litigation involving the property. If anyone knows of any other case law with regard to the apparent inconsistency between the final proviso and the remainder of subsection (g), I’d love to hear about it.

Let’s start from the top and review §208 (g) in its entirety. The subsection first indicates, as mentioned above, that the three principal sections of the act, (b)-(d) will not apply if the business “ceases to operate” for a period of 30 continuous months. After that, “any use proposed to be established… must conform to the provisions of the existing zoning regulations.”

Subsection (g) then lists four circumstances under which the discontinuation provision would be tolled. Those include (1)litigation; (2) construction, reconstruction, or renovation; (3) application for a building permit; and (4) reactivation of the non-conforming use prior to the end of 30 months.

There is, however, another provision which seems to undercut entirely the original restriction. The final lines of §208 (g) (4) read:

Provided, however, that the restrictions of this subsection (g) and subsection (i) shall only apply if the property owner intentionally and voluntarily abandons the non-conforming use of the property. In any contested matter on the use of such property, the government has the burden of proving an overt act of abandonment in such matter.”

This leaves us with something of a dilemma. The first sentence of subsection (g) requires nothing more than 30 months of inactivity in order for the protections of the statute to lapse. The last sentence requires voluntary abandonment by the owner and the government has the burden of proving “an overt act of abandonment” in order to prevail. Although this section has been on the books for almost 10 years, we still have no appellate court decisions. The lower court decisions in which I have been involved, have all deferred to the intent of the owner. The difficulty with that approach is that the four circumstances which toll the time of discontinuation are unnecessary if everything turns on the owner’s intent. In fact, the 30 months themselves are unnecessary. If the owner does not intentionally abandon the non-conforming property, it is merely inactive, and if the owner intends at some point to resume the activity, why couldn’t 10 or 15 years go by so long as there was an intention to resume those activities? Subsection (g) is notably difficult understand.

Perhaps we’ll get an answer this question one day. As it stands now, it’s difficult understand subsection (g). Obviously, there was a late amendment in the state capital when this provision was passed, tacking on the final proviso. Equally as evidently, no one really thought through how the final proviso would affect the preceding language. And, as it happens, the final proviso is almost contradictory to the foregoing provisions of the subsection.

Remember one other thing: as we have discussed previously, subsections (g), (h), and (i) do not apply to home rule municipalities unless the municipality has opted in by action of its legislative body. TNCPA §208 (j). That means that Memphis, Knoxville, and Chattanooga may all specify their own time of discontinuation as applied to commercial and industrial businesses, and related rules. This three cities are not bound (unless they choose to do so) by the final proviso or even by the length of time specified in subsection (g) for inactivity.

Airbnb

Airbnb made quite a bit of news yesterday when a New York City Judge ruled that transient occupation of an apartment or condominium is illegal under the city’s condominium laws. Several other charges were brought, including a zoning violation, but because ostensibly one of the uses permitted in the district included transient residency, those other charges were dismissed.

Airbnb is an Internet company that enables rental of various residential housing to guests who are traveling in the area. In essence, the traveler uses the Airbnb website to find temporary housing in the city that he or she will be visiting. There is a brief description of the unit, together with the price, and if it appeals to the traveler, s/he can arrange to rent the unit and pay Airbnb, who takes out its fee, and then pays the owner of the unit.

The difficulty with this arrangement is that most cities have zoning regulations which preclude short-term residential occupancy in most residential districts. So if the zoning district allows apartments, condominiums, single family residences and so forth, there is a pretty good chance that it precludes residential occupancy on a less than 30 day basis.

As a result, it may very well be that this arrangement for housing rentals is illegal in many cities across the country.

Here’s the court’s decision.

In Tennessee, we've already seen one example of this type of case.In Wade v Patterson, a homeowner in Hamilton County was doing just about the same thing. He advertised his home for short-term occupancy on the Internet and elsewhere, and would lease the home to visitors to the Chattanooga area for periods of less than 30 days. He was charged with violation of the local zoning regulations,and the trial court concluded that he was in fact in violation of the zoning provisions. However, on appeal to the Tennessee Court of Appeals, the trial court was reversed. Although the court found that there was a specific land use "tourist home," which provided for this use, the local legislative body had never zoned any property in the county for that particular use. As a result, applying the well-known zoning rule of construction, that any ambiguity is resolved in favor of the property owner, the court concluded that the local legislative body had intended to allow this type of activity, but having failed to specify exactly where that would be permitted, the property owner did not have to pick and choose and guess about it. As a result, the court concluded that the regulations were unconstitutionally vague and reversed the decision of the trial court.

The interesting question here is how many of the local governmental zoning regulations in middle Tennessee have the same failing? In a quick review of the Metro Zoning Ordinance, it wasn't entirely clear to me how this difficulty is handled. Under the terms of its predecessor, COMZO, adopted in 1974 and repealed in 1998, there were express provisions for transient occupancy prohibiting such uses in residential districts. Although Metro does have provisions for hotels and motels, I assume the same would've been true in Hamilton County; those uses are it would seem quite dissimilar. In any event, cases such as Wade v Patterson make it clear that local regulations should carefully be drawn to address and resolve this kind of issue.

TNCPA §208 (k) & (l): Used Car Lots and Industrial Sales to the Government

We last spoke about the after-acquired property provision of the Tennessee Non-Conforming Property Act, Tenn. Code Ann. §13-7-208 (e). Today we will shift focus once again, and take a look at two relatively unused sections of the act, the exemption for industrial establishments making government sales (§208 (k)) and the Metro used car sales provision (section 208 (l)). In my practice, I have never used the former, and only occasionally use the latter. Certainly because the Metro used car sales provision only applies to Metro Nashville, it doesn’t get a lot of use and other sections of the state. In any event, let’s take a look at these two unusual sections of the TNCPA.

We’ll begin with the industrial sales to governments provision, TNCPA §208 (k). This section limits the applicability of the discontinuation provision, the TNCPA §208 (g) to any industrial property which:
(1) makes 25% of its gross sales to local, state, or federal governments, their contractors, or subcontractors; or
(2) makes 75% of its gross sales to agricultural or construction businesses.

The real question here is what does this accomplish? It is certainly not very clear. In fact, it may be that the provisions of the TNCPA have gotten so complicated, that the General Assembly wound up making an exemption which makes little or no sense. As we will discuss shortly, the discontinuation provision under subsection 208 (g) is deceptive and probably will ultimately be interpreted to require an intentional and voluntary abandonment of a non-conforming use. Presumably, none of the industrial establishments which would be subject to §208 (k) would intentionally and voluntarily abandon the industrial use of the land unless they actually wanted to stop operations. What I think may have happened is that someone misread subsection (g), and believed that 30 months of discontinued activities worked an abandonment of the non-conforming property.

But, in fact, by exempting properties with industrial sales to governments from subsection (g), in fact that leaves it up to the local government as to how to address such non-conforming properties. As a result, the local government could require that the use of the property be deemed abandoned after inactivity of six, 12, 18 or 24 months, or any time in between. As a result, the industrial property has less protection by virtue of this subsection then it would have give the industrial sales to governments provision did not exist. This seems a very strange statutory amendment. I’m sure that there was a specific reason for this particular provision; I’m not privy to what was. If anyone reading this knows, I’d be interested to learn the circumstances which gave rise to this provision.

The second provision for review today, the Metro used car lot provision, gives the zoning board of a Metro Government, with more than 500,000 population in the 2000 federal census, (that means it only applies to Metro Nashville) the ability to terminate a non-conforming used car lot, after notice and hearing, if:

(1) it is within 1000 feet, on the same block as, or on the block across the street from another used car dealer;

(2) it has less than 250 feet of frontage; and

(3) greater than 10% of its inventory is composed of flood damaged, rebuilt, or salvage titled cars.

In order to determine whether a particular used car dealer is within the third requirement, the owner must make the titles for all of the vehicles located on the lot available within three days of a request by the local zoning official. A failure to comply results in a rebuttable presumption that at least 10% of the inventory consists of flood damaged, rebuilt or salvaged titles.

Several observations are worthwhile here. First, it seems to me that there is a significant question as to whether or not this results in a taking of the property if there is a zoning board order requiring the non-conforming property to terminate. To shut down an ongoing business which at one time complied with all the zoning regulations and which but for this unusual code section, singling out used car lots, seems to me confiscatory.

Second, there is a significant issue regarding proof before the board of zoning appeals. Let’s first assume that our used car dealer had 50% of his titles in the flood damaged, rebuilt, or salvaged category. He receives the notice from the zoning board, but by the time he appears for the hearing, he has sold or otherwise disposed of all but 10% of those used vehicles. If the used car dealer now complies, even if at some point, he did not, must the board terminate the activity? Again, it seems to me that this puts the board in a difficult situation, and certainly given the prospect that the decision might be confiscatory, the viral the board, I’d certainly vote in favor of the used car lot.

Third, it seems to me that under the circumstances, any appeal from the decision of the board of zoning appeals should be by virtue of the statutory writ of certiorari, with a trial de novo before the circuit or Chancery courts, rather than pursuant to the common law writ of certiorari, where the findings of fact by the zoning board are sacrosanct. In Judge Ben Cantrell’s landmark article in the University of Memphis Law Review, he indicates that where a species of property right is at stake, the appropriate appellate mechanism is the statutory writ and not the common law writ. The theory is that to the extent that an administrative body may be depriving a party of a property right, that’s a judicial decision, and reviewable by the statutory writ. That means ultimately that a real judge will make a final decision.

On a related point, you might not even have to sue under either version of the writ of certiorari; perhaps you simply sue in federal court for taking of your property without just compensation. That seems to me to be a very powerful compensatory mechanism for this unfortunate regulation.

Fourth, one other little tidbit. This requirement that the titles be produced within three days may well be a violation of the Fourth Amendment to the federal Constitution. To avoid this, the authors of the amendment created the rebuttable presumption in the papers were not produced. But from my perspective, to increase the probability that the owner might lose a property right based on a statute which requires a violation of his or her fourth amendment rights is inappropriate and unconstitutional. As a result, is not clear to me that this statutory provision is enforceable in the least.

There is another constitutional objection it seems to me. Singling out a single land use, right down to the external inventory kept on the lot, seems not to be a zoning regulation in the first place. There is at least a significant equal protection argument (if I have 251 feet of frontage I’m okay, but if I have 249 feet of frontage I’m not), as well as a substantive due process argument (don’t all used car lots have the same deleterious impact on surrounding land uses, and if so, why have these small ones been singled out for different treatment?). In any event, the enforceability of this Metro used car lot provision is significantly in doubt.

Finally, I’ve talked about this particular section many times with the Metro Nashville codes staff, and they all find it to be extremely irksome. It is not really codes enforcement. It basically winds up being an enforcement of used car lots. Enforcement is difficult and administratively challenging.

In our next installment, we’ll tackle the discontinuation provision, TNCPA §208 (g). In many ways this is an important part of the act, but it is unnecessarily complicated it would seem. We’ll see if we can shed some light next time.

TNCPA §208(e): No Expansion on After-Acquired Property

In our last post, we discussed two of the principal exceptions to the Tennessee Non-Conforming Property Act, Tenn. Code Ann. §13-7-208, specifically subsections (f) and (j). To summarize, the act simply doesn’t apply to a premier type resort city (Gatlinburg), nor do subsections (g), (h), and (i) apply to home rule municipalities. A list of those home roominess Pawleys is included with the last post.

In a similar vein, this post will briefly discuss a significant restriction on the generally favorable treatment given non-conforming properties by the act. That restriction is found at TNCPA §208(e), which reads as follows:

Subsections (b)-(d) apply only to land owned and in use by such affected business, and do not operate to permit expansion of existing industry or business through the acquisition of additional land.

Therefore, while a non-conforming property is permitted to continue, including replacement and repairs, as desired under subsection (b)(1); to expand, including the construction of additional facilities under subsection (c); and to destroy and rebuild under subsection (d)(1); the continuation, expansion, or reconstruction cannot take place on after a acquired property. Once the property becomes legally non-conforming, purchase of any additional property cannot be used in a manner which expands the non-conforming activities.

There is a case directly on point. 421 Corporation v Metro Nashville, 36 SW 3d 469 (Tenn. Ct. App. 2000), involves the proposed expansion of an adult entertainment establishment (“The Purple Onion”) located at 2807 Nolensville Road in Nashville. The owner had purchased some additional property adjacent to the Purple Onion and wanted to expand the operations of the establishment into the adjacent buildings. The city refused issue a permit, and on appeal to the Metro Board of Zoning Appeals, the denial was upheld. An appeal was taken to Davidson County Chancery Court where the zoning board decision was affirmed, and the same result was obtained before the Tennessee Court of Appeals.

The owner’s argument was that his application was made pursuant to the Metro Zoning Ordinance and its language was less restrictive than the state statute. Judge Koch, writing for the court, concluded that the territorial restriction was mandatory and that even if the local ordinance could be interpreted so as to permit such an expansion it conflicted with the state statute and was not permissible. As a result, the decision of the lower court and the zoning board were both upheld.

As a final footnote, this subsection (e) was part of the original 1973 Tennessee Non-Conforming Property Act. The original act was comprised, generally speaking, of what is now §208 (b)(1), (c), (d)(1), and (e). In addition, with regard to both subsections (b) and (d), additional language was later added which necessitated new numbered paragraphs. In each instance, the retained paragraph became (1), and the new language is included in the paragraph marked (2). In the case of subsection (b), the newly added language deals with off-premise signs and in the case of subsection (d), the newly added language deals with multifamily residential land use.

In our next post, we’ll take a look at a couple of provisions of the act which are not used all that often.

TNCPA §208 (f) and (j): Special Exemptions

We have now reviewed the three main sections of the Tennessee Non-Conforming Property Act, Tenn. Code Ann. §13-7-208 (b)-(d). There is one additional section of great importance subsection (g), but we will defer discussion of that subsection for a few posts.

Today we will talk about two subsections which provide exemptions from the applicability of the statute. Sections 208 (f) and (j) are special provisions limiting the local governments to which the statute applies. Section 208(f) makes clear that sections (b)-(e) do not apply to “premier type tourist resorts” as defined by Tenn. Code Ann. §67-6-103 (a) (3) (B). Mainly, this means that those sections do not apply to Gatlinburg.

Section 208 (j) limits the applicability of subsections (g), (h) & (i) so that they do not apply to home rule municipalities. We will discuss the substantive impact of those subsections soon, but for now they relate mainly to discontinuation of the non-conforming property. There are few home rule municipalities here in Tennessee and they include some of the biggest cities in the state such as Memphis, Knoxville, and Chattanooga. Metro Nashville is a consolidated form of government but not home rule so that the limit does not apply to Nashville.  Of course, a home rule city may opt in to those provisions by action of its local legislative body. The other home rule municipalities are as follows:

Clinton
East Ridge
Etowah
Johnson City
Lenoir City
Mt. Juliet
Oak Ridge
Red Bank
Sevierville
Sweetwater
Whitwell

This list is from the Municipal Technical Advisory Service (MTAS) website which can be found here.

Of course, these exemptions just make the application and enforcement of the statute that much more difficult.

There is another interesting question with regard to this subsection (j). Can a home rule municipality opt in to only one of these three subsections, or if it intends to opt in, must it opt in and accept all three? This is important because subsection (i) specifically requires that any structure rebuilt on the property must conform to the bulk regulations. It might be helpful for a home rule municipality to opt in regarding subsection (i) if you did not also have to accept the complexities of subsection (g). The same is true with regard to subsection (h) which limits the expansion of a billboard. But, if the home rule municipality must accept all three together, that makes the decision quite a bit harder. Generally speaking, both subsections (h) and (i) place restrictions on expansion and reconstruction. Subsection (g) seems to limit their applicability as we will describe in a future post. But if you could adopt subsection (h) and (i) without adopting subsection (g), that might be a favorable position for a home rule municipality. In that way, the municipality would get the limitations on expansion and reconstruction, but not have to deal with the complexities and confusion which seemed to surround subsection (g).

In our next entry, we will briefly discuss TNCPA §208 (e), which restricts expansion of any non-conforming  property  beyond the land at the time the property became non-conforming.

Funeral Homes & Crematoria

New construction of crematoria, either as an accessory to an existing funeral home or freestanding, continues to be controversial. Last month, in Loudon, Tennessee, an application for a special exception for a crematorium was deferred by the local zoning board. Recently, Knoxville adopted tighter restrictions on operation and placement of crematoria. There been several instances of requests in and around Nashville which have raised neighborhood concerns.

Knoxville’s new regulations made most existing crematoria legally non-conforming. It also evidently had the effect of allowing an existing funeral home to add a crematorium.

Certainly, requests for cremation services are on the increase in the funeral industry. Regulations which adequately protect surrounding land uses from adverse impact are obviously worthwhile. However, much of the concern may be attributable more to actual operations rather than external impact. Regulations of the internal operation are best left to the state agencies charged with that responsibility.

Take a look at the recent news article found here.

TNCPA §208 (d): Demolition/Reconstruction of NCFPs

We’ve been discussing, over the last week or so, the Tennessee Non-Conforming Property Act, Tenn. Code Ann. §13-7-208 (TNCPA). Last time we considered the expansion of a non-conforming property under §208 (c); in this post, we will take a look at the demolition/reconstruction of a non-conforming property under §208 (d).

Section 208 (d) allows the destruction and reconstruction of any structures on the non-conforming property. There is one important additional requirement that is not present in either §208 (b) or (c), and that is that the demolition/reconstruction must be “necessary to the conduct” of the commercial or industrial business. Under certain circumstances then, it may be best simply to expand under §208 (c) rather than destroy/reconstruct under §208 (d); sometimes business necessity is difficult to prove. Further, guidance from the courts has not been clear on what constitutes business necessity for this purpose. I believe that the business necessity test should be leniently construed, otherwise it actually encourages the property owner to expand the business rather than tear down and reconstruct. Let’s take a quick example.

If I have a business that makes widgets and I’d like to tear down my building and build a new one to improve efficiency and output, I would normally have to show business necessity under §208 (d). But suppose I simply decide to build a new building and leave the first one standing (assuming I have sufficient room on the property). I use the new building to make my widgets, and convert the original building to office and storage space. I submit that this expansion is permitted under §208 (c), and I need not make any showing of business necessity under §208 (d). But in effect, my business has expanded more than I actually needed, and to the extent that any case can be made that the use of the property is inconsistent with the surrounding land uses, the situation is probably even worse than if I had torn down the original building and replaced it with another. Thus perhaps a lenient position with regard to business necessity is called for.

Furthermore, under §208 (i), not only must the demolition and reconstruction be necessary for the continuation of the business, but in addition, the reconstructed facilities must comply with the bulk regulations contained in the zoning ordinance. Section 208 (i) expressly mentions setbacks, height, bulk, or requirements as to the physical location of a structure upon the site as existing zoning regulations which must be met if reconstructed under subsection (d). Again, compliance with these bulk regulations is often difficult and frequently the best advice is to simply expand under subsection (c) as opposed to reconstructing under subsection (d). Remember that under subsection (d), the reconstructed buildings must meet the bulk regulations. But under subsection (c), any additional facilities constructed do not need to meet the bulk regulations, and only in fact need to avoid becoming a nuisance. Obviously, the latter is a much lower standard to meet.

There is an express exception concerning off-site signs in subsection (i); the bulk regulations do not apply to reconstructed off-premise signs. There remains a significant question in my mind as to whether this distinction is constitutionally reasonable. It seems difficult to come up with an explanation as to why an off-site sign need not comply with the bulk regulations when another structure, such as, for example, an on-site sign does.

But perhaps my constitutional concern is groundless. Perhaps §208 (i) doesn’t really apply in the first place. Take a look at the final proviso of subsection (g)(4) which provides in part: the restrictions of subsection (i) shall apply only “if the property owner intentionally and voluntarily abandons the non-conforming use of the property.”  It is difficult to make any sense of this whatsoever. Subsection (g) (4) deals with discontinuation clauses and we will discuss it in detail in a later post. Why suddenly, at the end of the subsection, there is a reference to subsection (i) is hard to fathom. Furthermore, subsection (i) would ordinarily require that a property demolished and then reconstructed comply with the bulk regulations. Yet subsection (g) indicates that if the owner does not intentionally abandon the use, subsection (i) is inapplicable.

Seemingly, this makes no sense. If the property owner has demolished the structures on the property with the intent of rebuilding pursuant to subsection (d), then there is certainly no present intent to voluntarily abandon the non-conforming property. Yet, if there is no such intent, subsection (i) seems inapplicable. If that is true, then when would it ever apply?

Or is it possible that the statutory intent was that subsection (i) applied only after some period of inactivity. Again, that doesn’t help us much. If that’s the answer, then any owner wishing to invoke the protection of the statute and remove the restrictions of subsection (i), would simply cease operations for a few days or months and then begin the reconstruction process. If inactivity is necessary in order to invoke the proviso, that is easily done and once again it simply undermines the entire intent behind subsection (i).  

One other interesting comment is worth noting here. Let’s assume for a moment that the use of the property was permitted but the regulations which changed had only to do with the location of the structure on the property, that is, the bulk regulations were changed. For example, perhaps the local government now requires a greater setback from the street, or a larger side yard. Assume further that the non-conforming activity stops, perhaps because of a fire rendering the interior of the building unusable. The owner intends to demolish and reconstruct the entire building but allows it to sit for a year before applying for a building permit. Does subsection (i) permit the reconstruction of the building at the same location in violation of the bulk regulations? It would appear not. Even under subsection (g)(4)’s final proviso, the bulk regulations do not apply only if the property owner abandons the non-conforming use of the property. Since the use of the property in this hypothetical actually conforms, it would appear that the bulk regulations apply to the new construction. These are some very strange and convoluted statutory provisions. Hopefully, the courts will at some point give us additional instruction and how they are to be applied.

In the meantime, we can say that with regard to §208 (d) a non-conforming property can be demolished/reconstructed if the reconstructed facilities are necessary to the continuation of the business. It may be that the reconstructed buildings must comply with the bulk regulations of the local zoning ordinance, although this is unclear. Furthermore, it is certainly true that the destruction/reconstruction of an off-site sign need not comply with the local bulk regulations, but that any expansion of an off-site sign (under §208 (c) or (d)) must comply with the provisions of §208 (h) regarding the permitted size of any expansion.

TNCPA §208(c): Expanding NCFPs & Constructing new facilities

We’ve been talking about the Tennessee Non-Conforming Property Act, Tenn. Code Ann. §13-7-208, and in our last post, we talked specifically about §208 (b) which allows a non-conforming property to continue its non-conforming activities. Today, we’ll take a look at §208 (c), which allows non-conforming property to expand its operations and even construct additional facilities so long as there is no change in the use of the property.

Section 208 (c) allows the expansion of the non-conforming property, including the construction of additional facilities as desired for expansion. It is important to note that under this subsection, there is no requirement that the expanded facilities comply with other bulk regulations such as front, side, and rear setbacks. The expansion may go so far as desired so long as it does not create a nuisance to adjoining landowners. So, to the extent that there may be other regulations in the zoning ordinance which might restrict the expansion, those do not apply. This provision specifically prevents a local government from denying a building permit when a commercial or industrial business seeks to expand its current operations.

There is one important restriction on this right to expand: under §208 (h) off-site signs are not permitted to expand beyond certain dimensions specified in the statute. This section does make clear that the protective provisions of the act do apply to off-site signs, and it even defines such signs as “any sign that advertises or gives direction to any business, product, service, attraction or any other purpose or interest, other than the industrial, commercial or other business establishment located on the site where the sign is located.” Thus if you represent a sign interest, these restrictions are of significant importance.

Since §208 (h) limits only the size of off-site signs, presumably the expansion of an on-site sign is permitted without limitation, so long as the sign does not need to be destroyed and entirely rebuilt (see §208 (d) which we will discuss in our next entry). For example, if the structure holding the sign face aloft remains, and the sign face is replaced with a larger sign face, this would appear to be an expansion under §208 (c), and no matter how much larger the sign face of the on-site sign happens to be, it is permitted (unless it’s so big that it causes a nuisance to adjoining property owners).

Let’s take another example of the application of this section of the statute. Assume that you own a funeral home and while at the time of its initial construction, the property was owned for that use, the zoning is now changed in the mortuary is legally non-conforming. However, you want to expand the services provided by the funeral home by including cremation, which means that you will have to add a crematorium. Unfortunately, the local zoning ordinance does not allow a crematorium in the zoning district where you are located, just as it doesn’t allow the funeral home itself. In fact, a crematorium is permitted only in the industrial zoning district in your city. Does §208 (c) allow the expansion of the funeral home by the construction of a crematorium? It does.
Clearly, the funeral home is a commercial business establishment and also clearly under the terms of our hypothetical, it was in operation and permitted operate before the zoning changed making it legally non-conforming. Under those circumstances, §208 (c) says that the commercial business establishment “shall be allowed to expand operations and construct additional facilities which involve an actual continuance and expansion of the activities of the… business which were permitted and being conducted prior to the change in zoning…” Given the language of the statute, the only remaining question would be whether the construction of a crematorium involves a continuation and expansion of the mortuary services. Probably no one would disagree but that cremation is a mortuary service and thus the expansion is permitted. This is exactly what happened in BMC Enterprises v Mt. Juliet,  273 S.W. 3d 619 (Tenn. App. 2008; perm app den Oct 27, 2008). This case is interesting not just because it is a good example of the application of §208 (c), but in addition it involves what would seem to be a fairly significant expansion in the operations of the mortuary and significant construction of additional facilities. Finally, this was all done in the face of an outright prohibition by the city zoning regulations .

Finally, I cannot be emphasized enough that the expansion in business operations and construction of additional facilities must all relate to the same business use. If the use changes as a byproduct of the construction of additional facilities, then §208 provides no protection. A good example of this was a bed-and-breakfast in Winchester, Tenn., which applied for and received permission to expand its operations ostensibly to allow for modest dining facilities for guests and friends. The expansion however turned out to be a bar with live entertainment. The Tennessee Court of Appeals had no difficulty whatsoever in concluding that §208 offered no protection in the face of the change in use. Lafferty v Winchester, 46 S.W. 3d 752 (Tenn. App. 2000).


One final issue that is worthy of investigation here is by what standard is the land use evaluated. For example, in the Mt. Juliet case, should we look to the local zoning regulations to determine what a funeral home is, or should some other standard apply? The courts really haven’t reached a decision with regard to this issue, although in BMC Enterprises, the court did note that the local zoning regulations did not have a definition of funeral home, and as a result it looked to Tennessee state law for a definition.

Some land uses are defined in § 208 itself, such as the definition of off-site signs in §208 (h). Certainly it seems to me that since the Non-Conforming Property Act applies across the entire state of Tennessee (with certain limited statutory exemptions which we will review in a post later in this series), that there should be general definitions applicable across the state and not grounded in local zoning provisions. Otherwise, and expansion which is permitted in Mt. Juliet might not be permitted in Gallatin. Surely, this state limitation on local zoning powers should apply across local government boundaries to allow commercial and industrial businesses to continue operation, expand operations, and destroy and rebuild their facilities in like manner no matter where they are located. I’m sure that the Tennessee appellate courts will address this issue sometime in the not-too-distant future and will get an answer to this somewhat perplexing question.

Next time, we'll discuss §208(d) of the TNCPA, one of the most interesting provisions of the statute.

TNCPA §208(b)(1): Continuation of the Non-Conforming Property

We spoke last time about the Tennessee Non-Conforming Property Act, Tenn. Code Ann. §13-7-208 (b)-(l), which I abbreviate as TNCPA. We noted that it applies both to cities and counties, and that a non-conforming property runs with the land so that each subsequent owner has the right to continue if s/he so chooses. Finally, we also noted that for the most part, the TNCPA applies only to commercial and industrial businesses.

Today, we’ll simply discuss the first important section of the statute. Note that Tenn. Code Ann. §13-7-208 (a) is a general enforcement provision which was part of the original Tennessee Zoning Enabling Statutes. In 1973, the Tennessee General Assembly added the TNCPA, beginning with §208(b). by the way, originally subsection (b) was comprised of only one paragraph. In recent years it was amended to add an additional subsection (2), which we will discuss later on in this series.

Overall, the statute allows a non-conforming property to continue under subsection (b)(1), to expand under subsection (c), and to demolish and reconstruct the entire facility under subsection (d)(1). Each of these provisions has its own level of detail. Let’s start with the easy one.

Section 208 (b)(1) allows the continuation of the non-conforming property. Presumably, because of the background of the legislation, continuation also permits replacement of deteriorating structures, substitution of new and/or more technically advanced components, and other changes which have the purpose and effect of maintaining the non-conforming property. This is quite different from other states where replacement, especially of structural components, is normally not permitted because ultimately, it is hoped that the non-conforming property will become so badly deteriorated that the owner moves it to a new location where the zoning permits it. In Tennessee, the owner need not do that. The owner has the right to continue the non-conforming activities on the property and at least impliedly, that means that he has the right to maintain the non-conforming property, repair the non-conforming property, and replace components of the non-conforming property. In fact, §208 (g) (2) & (3) both refer to alteration, renovation, and refurbishment of non-conforming properties. That makes it very clear that the Tennessee General Assembly intended that a non-conforming property could continue under subsection (b) (1), including the right to make alterations, renovations, repair and refurbish. It's simply a part of the right to continue the non-conforming property.

For example, suppose the property is in the floodplain of a 500 year event, and is damaged by a large storm. The damage does not require total replacement of the building, but significant renovation is required. Because the owner is not destroying and replacing his building, but only repairing damage done by the flooding, it seems most likely that §208(b)(1) would apply. Certainly, it seems highly probable that the General Assembly intended this type of renovation to be permitted as a continuation of the business activity, especially where the next two sections allow expansion of the business activity including the construction of additional facilities, and the total demolition and total reconstruction and replacement of those facilities. Of those latter to options are available, then certainly renovation after a natural disaster which surely seen within the ambit of §208(b)(1).

It would also seem that this section or alternatively, subsection 208(d)(1) would protect the property owner where a fire or other natural disaster partially destroyed the property. There are many local government zoning regulations which attempt to restrict the right of the owner to reconstruct under circumstances involving a natural disaster or fire. Surely, to the extent that those regulations are based upon the zoning enabling statutes, the Tennessee Non-Conforming Property Act overrides those provisions and permits the reconstruction, repair, and renovation. But not expansion: §208 (c) does that and we’ll talk about that in our next post.

The Tennessee Non-Conforming Property Act

One of the most interesting aspects of land use planning law in Tennessee is the Tennessee Non-Conforming Property Act, Tenn. Code Ann. §13-7-208 (b)-(l). The TNCPA is outrageously complicated and it cuts against the interests of most local governments. That is, it allows non-conforming properties, those properties which do not comply with the local zoning regulations because they legally predate them, to remain almost in perpetuity. In most other states in the country, non-conforming properties are greatly restricted with a view towards eliminating them entirely. Here in Tennessee, the General Assembly decided in 1973 that non-conforming properties could remain, could expand, and even tear down and replace old facilities as necessary for the continuation of the business.

Over the next week or so, I hope to discuss the statute in some of its ins and outs. There are four important points to be made in this first entry.

First, the TNCPA applies both to municipal and county governments. Although it is codified as though it only applies to municipal governments, the Supreme Court has held that it applies to both. Smith County Regional Planning Commission v Hiwassee Village Mobile Home Park, 304 S.W. 3d 302, 311 (Tenn. 2010).

Second, the right to continue activities on non-conforming properties runs with the land and is not specific to any individual. As a result, upon the sale of the land to a new owner, the right to continue the non-conforming activity passes along with the property to the new owner. Smith County Regional Planning Commission v Hiwassee Village Mobile Home Park, 304 S.W. 3d 302, 310 (note 13) (Tenn. 2010).

Third, the TNCPA applies for the most part to commercial and industrial businesses only. It does not protect the residential use of land or other uses which may not be commercial or industrial. There is one specific provision which does protect multifamily residential, Tenn. Code Ann. §13-7-208 (d) (2), but the protections are rather limited. The TNCPA is most effective when applied to commercial or industrial properties.

Fourth and finally, because of the way the TNCPA has been amended over the years, and because the original legislation was obviously drafted by someone who did not work extensively in the area of land use law, the legislation in most of its sections appears to apply both to non-conforming land uses, and also to non-conforming (or as it is sometimes said here in Tennessee, noncomplying) structures. That is, if you have a business use which preexisted the effective date of the new zoning regulations, let's say a small convenience store, and which does not now, as a result of the new zoning regulations, comply, it is a non-conforming property and subject to the protection of the statute. Also, if you have a land use such as that same convenience store which continues to be legal under the new zoning regulations, but the store building is constructed, let's say hypothetically, too close to the street as a result of the new zoning regulations, the store building also is protected as a non-conforming property under the statute. There are several exceptions to this, but many of the provisions of the TNCPA apply both to use regulations as well as to both regulations. I simply refer to non-conforming properties, meaning thereby to encompass both types of non-conformities.

That’s enough for now. We’ll come back and try to take the statute section by section and discuss its implications for land use planning law.

Tennessee Zoning Statutes v. Standard State Act

One of the most interesting aspects of the adoption of the Tennessee Zoning Enabling Statutes, Tenn. Code Ann. §§13-7-101 (county zoning) and 13-7-201 (municipal zoning) is the differences between the Tennessee legislation and the so-called Standard State Zoning Enabling Act of 1924 (and revised in 1926) promulgated by a Blue Ribbon committee, under the supervision of the federal Department of Commerce. Interestingly, the Blue Ribbon committee included Ed Bassett and more importantly to Tennesseans, Alfred Bettman, who drafted the legislation which was to become the Tennessee Zoning Enabling Statutes.

Although Bettman felt that the Standard Act was reasonably well done, he had a number of significant concerns with its formulation. As a result, the Tennessee provisions are something of an amalgam of the Standard Act, the Bettman proposal, and some native Tennessee provisions tossed in for good measure.

I thought that I would discuss some of the differences over the next months in installments of my little writings here. I have copies of many of the original documents prepared by Alfred Bettman and much of the discussion will be based on those documents. Those are available, thanks to the archives at the University of Cincinnati, where there is extensive amount of material devoted to the Bettman family.

In addition, and of some significant interest, Bettman was involved in writing a book along with Ed Bassett published in 1935 and entitled Model Laws for Planning Cities, Counties, and States. The book was published by Harvard University Press. The format is broken basically into two parts: first, Ed Bassett discusses his thoughts and concerns regarding planning and zoning, followed by a group of legislative forms drafted by him which are suggested as model laws for states to adopt. The second part of the book is authored by Bettman, with a similar brief recitation of his thoughts and concerns, followed by the legislative forms authored by Bettman.

The Tennessee statutory provisions were based largely on Bettman’s model forms, although as I have mentioned above, several changes were made, sometimes to more closely correspond to the Standard  Act, and sometimes to provide greater protection to property owners, particularly the agricultural exemption in the county legislation.

Hopefully, over the next several weeks, we can discuss these proposals and distinguish them from the final Tennessee versions.

I might finally add, that Bettman was hired to draft the Tennessee legislation, and the terms of the agreement included not only zoning legislation, but also planning and subdivision legislation as well. I’m not going to discuss the provisions dealing with planning or subdivisions, but will limit myself to what became the Tennessee Zoning Enabling Statutes, passed in 1935.

Can a local government sue its own zoning board?

The legal question concerning whether a local government can sue its own board of zoning appeals seems to be gaining steam. First, my own case, Cheatham County v Cheatham County Board of Zoning Appeals and Randall and Margaret Mooneyhan, was decided last November. The issue was not directly addressed in that one however by the Court of Appeals because the County withdrew its appeal shortly before the oral argument before the court, and the only issue which remained was whether attorneys’ fees should be awarded to the Mooneyhans. However, in addressing this issue, both the majority and concurring opinions seem to clearly indicate significant doubt about the ability of a local government to sue its own board.

Meanwhile, over in Collierville, in a case involving the non-conforming status of billboards, the zoning board evidently voted not to require the owner to take the offending billboards down, and the Board of Mayor and Alderman have voted to sue the zoning board in order to have the billboards removed. This turn of events arises out of an interesting decision issued previously by the Tennessee Court of Appeals, Abbington Center v Town of Collierville (Tenn. App. 2012). We previously discussed this case.

Here in Nashville, there are two other cases with the same issue involved. In Metro Nashville v Metro BZA and Lamar, the local government suit its own board of zoning appeals arguing that its decision finding the replacement of a mechanical sign face with a digital sign face was not permitted under the terms of the local zoning ordinance and was not protected by the Tennessee Non-Conforming Property Act, Tenn. Code Ann. §13-7-208. Among the issues raised, was the propriety of a suit by the local government against its own zoning board. The Davidson County Chancellor, Claudia Bonnyman, ruled in favor of Metro Nashville, finding that the local government could sue.

However, just last Friday, in a case styled Metro Nashville v Metro BZA and CBS Outdoor Inc., CBS filed a motion to dismiss raising the same argument, but the local government lacked standing to file suit against its own zoning board. This time, a different Chancellor, Carol McCoy, concluded that the local government could not sue its own board of zoning appeals.

Both cases, as you might suspect, are going up on appeal. There are certainly policy arguments on both sides. The ultimate answer to the question may rest with the Tennessee Supreme Court.

Zoning, Political Signs, and the First Amendment

There was an interesting article in the Tennessean yesterday indicating that a candidate in the upcoming city elections is suing the city based on an ordinance, which evidently allows only a maximum of 1 yard signs per political candidate in an election. The suit argues that this is a violation of the First Amendment to the federal Constitution.

In fact, the United States Supreme Court has already decided a similar case. In City of Ladue v Gilleo, 512 U.S. 43 (1994),  the United States Supreme Court was presented with a yard sign protesting the war in the Gulf which the city indicated was prohibited under the terms of its sign ordinance. After obtaining a temporary injunction in the District Court, Ms. Gilleo put a similar sign in an upstairs window. The city repealed its original sign ordinance, enacted a new one which broadly prohibited all residential signs, except for residential identification signs (no greater than 1 square foot) and signs advertising the property for sale or lease.

The Supreme Court of the United States had little trouble in finding the ordinance totally unconstitutional. The court found that yard signs and window signs were cheap, simple, and efficient forms of communication, historically permitted across the United States, and for which there was no reasonable substitute. The ordinance was struck down as unconstitutional.

Given the result of the Gilleo case, the Spring Hill zoning ordinance may be constitutionally infirm. In this instance, the regulation is directly aimed at political speech, certainly one of the highest forms of free speech. Political campaigns are by their very nature temporary, and placement of the signs on such a temporary basis also augurs against the constitutionality of limitations on such political speech. The Supreme Court decision in Gilleo would certainly appear to favor the challenger here.

Moratoria: Takings or Valid Planning Devices?

The Tennessee Court of Appeals recently ruled in a “takings” or “inverse condemnation” case that a moratorium enacted by a local legislative body for a fairly short period of time (eight months) might under the facts of the case render the city liable for a taking. Durrett Investment Company v City of Clarksville, Tenn. App. February 15, 2013. The trial court had dismissed the case pursuant to a motion to dismiss filed by the city but on appeal, the Court of Appeals reversed. Noting that there is “no bright line rule or formula… for determining when a regulation goes too far such that it is recognized as a taking,” and citing Tahoe-Sierra Preservation Council v Tahoe Regional Planning Agency, 535 US 302 (2002), the court concluded that the balancing test of Penn Central should apply. The factors considered there included:

(1) the economic impact of the regulation,
(2) the degree to which the regulation has interfered with the owner’s reasonable distinct investment-   backed expectations concerning the property, and
(3) the character of the governmental action.

Penn Central v City of New York, 438 US 104 (1978).

There may be other relevant factors to consider as well. That’s probably just as well, because two of the factors enumerated in Penn Central seem to have gone by the boards. For example, the first factor, the economic impact of the regulation, seems to be much less important since the court has held that land use regulations can be a taking only if the landowner is deprived of all or substantially all economically beneficial use of the land. The third factor, the character of the action, originally was thought to distinguish between physical invasions of land and overbroad regulations. However, since the Supreme Court has since ruled that a physical taking is a per se violation, the third factor also seems to be somewhat superfluous.

The complaint alleged that the city knew that the property owner wanted to develop the property, and was in fact in the process of selling the property. The complaint also alleged that the road which was under consideration would not have been constructed for over 10 years. It is also worth noting that the moratorium did not affect all of the property of the plaintiff; only a fairly narrow corridor.

Most of the cases which have considered moratoria such as Tahoe-Sierra hold in favor of the government. In fact, the Supreme Court specifically noted that moratoria were widely used for planning purposes and upheld the 32 month moratorium at issue in that case as reasonable under the circumstances.

The Supreme Court also indicated that a moratorium over one year or more in length might be viewed with special skepticism. Indeed, most cases challenging moratoria with durations of less than one year fail, most likely for the reasons advanced by Tahoe-Sierra.

Although based on the other decisions involving moratoria, the result in this case might be slightly surprising, most likely the Court of Appeals felt that the factual background of the case had not been sufficiently brought into focus for it to make a decision on the ultimate issue of overbroad regulatory takings. A remand to the trial court will give both parties an opportunity to get all the facts before the court so that a fair and final resolution can be achieved.

Sign Ordinance Upheld

A couple of years ago, I posted a comment on an interesting sign case involving a spray-painted message on the front of a home in the town of Cary, North Carolina. You can find that post here.

The town lost in front of the trial court, which concluded that the sign ordinance violated the First Amendment. The town appealed the decision to the Fourth Circuit Court of Appeals, and recently, the Fourth Circuit reversed the trial court, concluding that the sign ordinance was constitutional after all.

The Court of Appeals applied an intermediate level of scrutiny and concluded that the sign ordinance was a reasonable time, place, and manner restriction. Finding that the Town’s stated interests in promoting aesthetics and traffic safety are substantial, and that the Sign Ordinance does not burden substantially more speech than is necessary to further the government’s legitimate interests, the Court concluded that the ordinance passes constitutional muster, as its size, color and positioning restrictions do no more than eliminate the exact source of the evil it sought to remedy.

It is an interesting case, well worth review.

Brown v Town of Cary, 2013 WL 221978 (4th Cir.  Jan 22, 2013)

More on religious uses

An appellate court in New York has reversed a decision of a local zoning board denying a special exception permit for a church on a lot split zoned residential and commercial. In Tabernacle of Victory Pentecostal Church v. Weiss, 2012 WL 6029100, the biggest difficulty was the lack of off-street parking, but the church offered to limit the number of worshipers at sanctuary, and to run buses bringing them to the sanctuary so as to negate the necessity of the parking requirements. At most, the church estimated that during peak hours only 8 to 10 parking spaces would be needed.

The lower court upheld the zoning board decision denying the special exception, finding that the church did not comply with the required off-street parking. On appeal to the Appellate Division, the decision was reversed. The appellate court emphasized that some flexibility should be permitted a religious institution, and some reasonable accommodations attempted. The failure to offer some reasonable accommodation in this matter rendered the denial of the permit inappropriate.

Perhaps this is another way to view the Tennessee Religious Freedom Restoration Act; perhaps offering reasonable accommodations to religious entities who make applications for conditional use permits/special exceptions, would be one way of attempting to convince a Tennessee court that the zoning board had done everything it could do by way of reviewing the application in a flexible and sympathetic manner. This may not be, and probably is not, sufficient under the Tennessee legislation; but it may be the best approach in trying to convince a reviewing court that the zoning board was exercising appropriate judgment and discretion.