Friday, October 21, 2016

Metro Short Term Rental Property Ordinance Unconstitutional

Earlier today, Judge Kevin Jones of the Davidson County Circuit Court ruled in favor of the plaintiffs in a challenge to Metro's Short Term Rental Property Ordinance, finding it unconstitutionally vague. The court ruled on a Motion for Summary Judgment, my guess is orally from the bench, and so an order will be entered sometime in the next week or two. At this present time, I am assuming that no written version of the court's ruling is available. I did check with the Davidson County Circuit Court Clerk's office, and there is no order as of yet (which would be expected if the ruling was from the bench on the motion).

In essence, the plaintiffs argued that the definition of short-term rental properties was unconstitutionally vague and overlapped with a number of other land-use definitions contained in the Metro Zoning Ordinance, including hotels, boardinghouse, and bed-and-breakfasts. From some of the published reports, it appears that the court did not hold the 3% rule unconstitutional, but since the definitions are unconstitutionally vague, the 3% cap was invalidated as well.

It is certainly an interesting decision, and it will be more interesting to read the order. Finally, whether Metro will appeal is another interesting question. It may be simpler to simply pass another ordinance. The difficulty from the standpoint of property owners is that with the increased concern which is developed over the last few years since the adoption of the ordinance, there may be rather draconian solutions, including simply restricting short-term rentals to commercial areas of the city.

Wednesday, October 19, 2016

Short-term rentals upheld in Pennsylvania

In another interesting short-term rental case, the Pennsylvania Commonwealth Court [a kind of land-use Court of Appeals], concluded that a short term rental was consistent with residential single-family zoning. Marchenko v Zoning Board of Pocono Township, 2016 WL 4978459 (Pa. Commw. September 19, 2016). The local zoning official issued a notice of violation which was appealed to the zoning board. The property owner used the property as a primary residence for her purposes, and resided there the majority of the time, but leased out the property on a short-term basis to others. The zoning board ruled against the property owner but on appeal, the Pennsylvania court concluded that since the definition of single-family did not prohibit rental activity, that the accessory rental use was permitted.

Cases like this are appearing across the country, some permitting the short-term rental use, and some finding it inappropriate. Given the controversy here in middle Tennessee over the last year or two concerning short-term rentals, I’m sure we will see some more cases from the Tennessee appellate courts in the not-too-distant future.

Tuesday, October 4, 2016

Accessory Structure for Medical Care

During a seminar a couple of weeks ago sponsored by the Tennessee Principal League, Sam Edwards happened to mention the recent amendment of the zoning enabling statutes allowing accessory residential structures in cases of medical need. I had heard of the bill while it was pending before the General Assembly, but had not really looked at the statute after passage. It is certainly interesting. Furthermore, there is an interesting article in this month's Tennessee Bar Journal; you can take a look at it here.

Tenn. Code Ann. §13-7-501, et seq., authorizes the placement of a separate accessory residential structures in single-family residential districts if for the purpose of medical care as defined by the statute. Only one person can live in the accessory structure, it can be no greater than 500 square feet, and it appears that it must comply with local zoning and building code regulations, except that no permanent foundation is permitted or required.

It's unclear what this statutory provision actually accomplishes. Many local zoning regulations do not permit separate accessory residential structures of any size. There is also the possibility that the structures might not comply with the applicable building code. Tenn. Code Ann. §13-7-503 provides:
Any temporary family healthcare structure installed pursuant to this part shall comply with any local codes and ordinances to connect to any water, sewer, and electric utilities that are serving the primary residence on the property and shall comply with all applicable requirements of the department of health.
This seems a little ambiguous. Doesn't mean that the accessory structure must comply with all local codes, or only those related to the connection of water, sewer, and electrical utilities? Tenn. Code Ann. §13-7-502(c) seems to clarify:
Temporary family healthcare structures shall comply with any local requirements for accessory dwelling structures of this type. 
The Tennessee statute appears to be based upon statutes adopted by North Carolina and Virginia over the last several years. However, in the cases of those two other states, the state legislation appears to expressly permit the accessory structure regardless of any contrary local land use regulations. For example, the North Carolina statute provides in relevant part:
A city shall consider a temporary family health care structure used by a caregiver in providing care for a mentally or physically impaired person on property owned or occupied by the caregiver as the caregiver's residence as a permitted accessory use in any single-family residential zoning district on lots zoned for single-family detached dwellings.
North Carolina SL 2014-94.

The Tennessee version does not mandate such an exemption but only provides that the local government "may" consider it in a single-family residential district.Tenn. Code Ann. §13-7-502(a)(1). That's a very significant distinction and would seemingly limit the applicability of this section only to those areas where the local government would permit such accessory uses.

Ultimately, this is an area, as in so many others, where the local government should have the ability to make the decisions concerning the ultimate land uses in various areas of the city or town. It may be that the sponsors of the legislation here in Tennessee wanted to make clear that it would be appropriate to restrict such accessory uses to lots where the caregiver lives in the principal residence. At least one case has held to the contrary (in Virginia) and perhaps the General Assembly wanted to avoid that result.

This is an interesting piece of legislation; however, as I mentioned, it is a little unclear as to exactly what it does accomplish. My general sense is that most zoning ordinances would prohibit this type of accessory structure in single-family residential districts; since this legislation does not appear to require local zoning authorities to allow the use, the enforcement of local regulations would in many cases appear to entirely prohibit the construction of such an accessory structure.

For some further discussion about the North Carolina provision, take a look at this website.

Friday, August 12, 2016

Vested Rights: Neighbors of Old Hickory v Ind Land Develoers

As I have mentioned previously on this blog, the Tennessee Vested Rights Act became effective on January 1, 2015. So far as I know there have not been any appellate court decisions and I am unaware of any trial court decisions except for a case recently decided by the Davidson County Chancery Court, Neighbors of Hickory v Industrial Land Developers, a case which involved an application for permits to operate a rock quarry on Burnett Road in Davidson County. I should mention that I was involved in this case.

I won't go through all the facts, but suffice it to say the property owner made early contact with representatives of the Metro Codes Administration, to make sure that the zoning was appropriate for the rock quarry, and then in the early part of 2015, submitted an application for a building permit for certain accessory structures related to the operation of the quarry. In connection with that application, a development plan was submitted showing the phases of the development, access points, surrounding land uses and the proposed construction.One of the arguments of the neighbors was that the building permit application did not list the quarry as a land use, but this argument was certainly much less significant given the fact that there was correspondence between the owner and Codes detailing exactly what the owner planned to do and making sure that the zoning was appropriate.

Further, after obtaining the building permit, but before the buildings were completed, the property owner also submitted an application for a use and occupancy permit which was issued, specifically for the quarry. Temporary occupancy permits for the buildings were issued another month later, and about six months after the original applications were made, the Metro Council changed the zoning in an effort to prevent the quarry from opening.

The trial court concluded that the owners had used a "belt and suspenders" approach to vesting their rights: both the building permit and the development plan were sufficient, standing alone, to vest the rights from the perspective of the Judge.

The plaintiffs had argued that the failure of the building permit to reference the land use activity (rock quarry) prevented the application of the Vested Rights Act. Although the court did not address this in particular, it certainly found that both the building permit and the development plan were sufficient standing alone and thus impliedly rejected that argument.

There was a secondary argument concerning who had the burden of proof. The plaintiffs, adopting the standard from non-conforming use case law, suggested that the party asserting vested rights had the burden of proof. The court, in what I think is a very appropriate methodology, concluded that while the initial burden might be on the party asserting vested rights to prove that either a building permit or a development plan was approved, that the burden would then shift to the challengers to demonstrate some reason why the permits or plans were not appropriate in order to defeat the application of the statute.

Finally, running through parts of the plaintiff's argument was that for certain kinds of out-of-doors activities, rock quarries, landfills, agricultural uses, the Vested Rights Act did not apply because there is really no way to obtain a building permit for one of those types of uses. Further, the plaintiff suggested that even though accessory construction might be necessary, that the relatively small size of the accessory construction vis-à-vis the size of the principal use made it inappropriate to apply the act under such circumstances. Again, the court did not directly rule on this argument. However, there's no authority within the statute to conclude that any type of a building permit would not vest the rights to proceed, and if the rights could not vest on those types of uses, rock quarries, landfills, and others, the Vested Rights Act might be of little use. It is those very controversial types of land uses which require protection of this kind.

This case is a great example of the problems that property owners frequently encounter. As soon as it became known that a quarry was being proposed for this property, activity began to change the zoning on the property to prohibit that use. From my perspective, dealing with my clients, usually, we are glad to meet whatever requirements have been set up by the local government. What makes things difficult is a change in the rules once the application has been submitted. And that very often is exactly what happens. As soon as it became known that the rock quarry was being proposed, immediate action was taken to change the zoning. While this is perhaps understandable, it makes it very difficult and risky to engage in land development under such circumstances.

There's no word on appeal at this time.

The trial court opinion may be found here.

Tuesday, August 2, 2016

Speedy Cash: Vested Rights, Estoppel and Standing

In a decision filed on April 22, 2016, Chancellor Ellen Hobbs Lyle ruled that a cash advance financial institution had established an equitable estoppel which prevented Metro Nashville from revoking a permit which had erroneously been issued. The case, Concord Finance, Inc., d/b/a Speedy Cash v Metro Board of Zoning Appeals and Tennessee Quick Cash, Inc., Docket #15-1362-III, is extremely interesting inasmuch as its result is very unusual.

I will summarize the facts quickly although the opinion is quite lengthy and in these vested rights/estoppel cases, the factual setting is always the most important. Having said that, the essential  facts are that Speedy Cash applied for a building permit in September 2014 to renovate and remodel an existing convenience market on Dickerson Pike. While the application for the building permit was pending, the Metro Council amended the zoning ordinance in a way which would prohibit the location of a cash advance retail store at that location. Ultimately Metro Codes decided to go ahead and issue the permit notwithstanding the passage of the new zoning regulation. The construction was virtually completed when on April 21, 2015, the Metro Zoning Administrator issued a stop work order and revoked the building permit. The stop work order noted that the permit had been issued in error. Speedy Cash had spent approximately $600,000 in the construction effort.

Speedy Cash appealed the decision to the Metro Board of Zoning Appeals, but the administrative body upheld the decision of the Metro Zoning Administrator. From there, an appeal was taken pursuant to the common law writ of certiorari.

The court looked at three different issues: vested rights and the pending ordinance doctrine, equitable estoppel, and standing. It is worthwhile to read the entire opinion, but again, I will very briefly summarize the decision of the court.

The court found against Speedy Cash with regard to the vested rights doctrine. The court found that the undisputed facts indicated that the new zoning ordinance became effective on November 19, 2014. The building permit was not issued until December 2, 2014. "Issuance of a permit for a building that does not comply with the law renders the permit illegal and, therefore, invalid and of no effect as of the date of its issuance…" Slip Opinion at 12.

The court engaged in some additional analysis based on the pending legislation doctrine, but frankly, I think the summary above encapsulates the significant holding. Ultimately, if a building permit is issued in violation of the existing law at the time of issuance, it is simply void and of no effect. It doesn't make any difference how much construction was completed or how much it cost.

The court then turned to the equitable estoppel argument. Once again, the law is not favorable for Speedy Cash. The equitable estoppel doctrine applies only very rarely to governmental entities. The court cited Sexton v Sevier County, 948 S.W. 2d 747, 751 (Tenn. App. 1997) as an example. There are many others.

However in this case, the court concluded that Metro's conduct clearly induced and caused detrimental reliance by Speedy Cash and given the fact that the building was completely constructed and its design customized for use as a cash advance retail outlet, the doctrine should apply. The important facts related to the original hesitation by Metro Codes to issue the permit, a review by Metro Codes, and a final decision indicating that the permit would be issued and in fact was issued, because it was "grandfathered" in. Most likely, that determination was incorrect; but its effect was to induce the applicant to move forward with the construction effort and spend a very significant amount of money.

Accordingly, the court found in favor of the applicant (Speedy Cash) and reversed the decision of the Metropolitan Board of Zoning Appeals.

Finally, one remaining issue was determined by the court. A competitor, Tennessee Quick Cash appeared before the Board of Zoning Appeals and also participated in the arguments before the Chancery Court. Tennessee Quick Cash admitted that it did not have a store within a quarter mile of the Speedy Cash location. The court noted that in order to have standing, Tennessee Quick Cash must show a direct and palpable injury, a special injury not common to the public generally. City of Brentwood v Metro Board of Zoning Appeals 149 S.W. 3d 49, 58 (Tenn. App. 2004). Tennessee Quick Cash argued that its status as a business subject to the same regulatory structure as the petitioner gave it standing. The court concluded however that the threatened injury necessary to confer standing in a zoning case must be related to the use of the property – dust, noise, traffic, or something similar. Nothing like that appeared in the record with regard to Tennessee Quick Cash, and it certainly didn't flow simply from being a business competitor. Therefore, the court concluded that Tennessee Quick Cash had no standing to speak before the Board of Zoning Appeals and had no standing before the Chancery Court.

This final holding is somewhat unusual, but certainly understandable. It reinforces the concern that any land use attorney has when representing a business competitor who is not located within a short distance from the project itself. In this case, the court used a quarter of a mile, and as it happens, that is my usual rule of thumb: I always look to see if my client (or conversely, an opponent to my client's project) is located within a quarter of a mile of the proposed project. There are some Tennessee cases which suggest 2000 feet, and certainly if your opponent is located that far away that's even better, but a quarter of a mile has always seemed to me to be a reasonable distance. If the objecting party is located more than a quarter of a mile away from the project, there's a pretty strong likelihood that there is no standing.

Anyway, this case gives us three valuable lessons on zoning law. First, vested rights are hard to establish under the Tennessee common law, where you need both a building permit and substantial construction. But more than that under the circumstances of this case, even if you obtain a building permit and even if you engage in substantial construction, if the building permit itself did not comply with the existing law at the time of the issuance of the permit, the permit is most likely void and there are no rights to vest.

Remember also, that the Tennessee Vested Rights Act became effective after the events in this case, on January 1, 2015, but it probably would not have made any difference. The Tennessee Vested Rights Act,  Tenn. Code Ann. §  13-4-310 (b)-(k), requires only the issuance of a building permit, and unlike the common law, it does not require any construction in order to vest. But, once again, if the building permit was void at the time of issuance by virtue of the fact that it did not comply with the zoning or other land development regulations in effect at the time of its issuance, then there are probably no rights which have vested even pursuant to the terms of the statute. The building permit must comply with the local regulations, and if not, it is not very helpful in future litigation.

The second lesson is that even though it is extremely unusual, every once in a while, given unusual facts, an equitable estoppel can be made out against a local government. It doesn't happen often, but from time to time it can be very effective.

Finally, and perhaps a more frequent issue which can come up in virtually any zoning board hearing, the standing of a business competitor is certainly undercut by the Chancellor's decision. The business competitor needs to demonstrate that it is within a short distance from the project, like anyone else, or have some other overwhelming reason that it should have the right to contest the project. Otherwise it simply lacks standing to participate.

Monday, August 1, 2016

Hindu Temple and the Tenn RFRA

The Tennessean reported last Thursday that the Metro Board of Zoning Appeals will hear an application for a special exception for a Hindu temple, of approximately 500 seats in size, on 5.8 acres to be located at 355 Haywood Lane here in Nashville. It will be interesting to see how this process works out; the zoning board certainly hears a good many cases involving religious uses but a Hindu temple is certainly a little unusual for Nashville.

In addition, there is the potential application of the Tennessee Religious Freedom Restoration Act, Tenn. Code Ann. § 4-1-407, which places the burden of proof on the local government when dealing with a religious institution, and requires that there be some “compelling governmental interest” in order to deny an application.

Although I hardly have a list of religious institutions which have been approved by the board over the past five or 10 years, I don’t recall too many being turned down. Possibly because of the impact of the Religious Freedom Restoration Act.

The board will hear the case on August 4, 2016 at 1 PM. It may be interesting to watch if you have time; the proceedings before the board are broadcast on Metro Channel 3.

Friday, July 29, 2016

Happy Birthday, Zoning!

I just saw this article on Bloomberg – interesting reading!

The book, Zoning Rules! by William Fischel is well-known and certainly very interesting. However, even if you assume that his thesis is correct, and that zoning is essentially a protectionist residential regulatory scheme, the argument that zoning should be essentially changed is almost self-defeating. It is certainly a political process, and although many of us have aspects of it that we'd like to change, removing it entirely is certainly not an outcome many people want no matter what impact it has on economic realities.

Thursday, July 28, 2016

Vested Rights Act of 2014: Some questions

Over the last couple of months, I’ve been involved in some litigation involving the Vested Rights Act of 2014. One of the interesting sidelights of the case has to do with development plans. The statute, as you may recall from an earlier post, establishes a vested right to use a parcel of property in accord with an approved development plan or building permit. Tenn. Code Ann. § 13-4-310 (b).

The act defines the term “final development plan” to mean “a plan which has been submitted by an applicant and approved by a local government describing with reasonable certainty the type and intensity of use for a specific parcel or parcels of property.” The statute gives several examples such as a subdivision plat, a master planned unit development plan, site plan or “any other land use approval designation as may be utilized by local government.” Tenn. Code Ann. § 13-4-310(k)(5)(a). Furthermore, the statute gives a fairly precise definition of what needs to be included in order to be protected. Tenn. Code Ann. § 13-4-310(k)(5)(b).

Interestingly, §310 (e) allows the local government to specifically identify the types of development plans which will trigger the protection of the statute. However, there’s a big caveat: “provided, that regardless of the nomenclature used in the ordinance or resolution to describe a development plan, a plan which contains any of the information described in subdivision (k)(5) or (k)(6) shall be considered a development plan that will cause property rights to vest according to this section.”
 Tenn. Code Ann. § 13-4-310 (e).

What happens if the local government defines those develop plans, but leaves one out? For example, Metro Nashville has enacted such an ordinance, but the ordinance leaves out a final site plan approval by the zoning administrator pursuant to MetZo §17.40.170. Since that section very specifically requires that the plan “specifically describe the nature and scope of the development serve as the basis for the issuance of permits” it would seem to clearly fall within the protection of the statute.

Another thing which is significant here: the definition of a development plan within the Vested Rights Act does not require that the local approval be with a public hearing before an administrative body of any type. Certainly, those kinds of approvals would qualify, but in the Metro ordinance, if it is not a plan which must go before the planning commission, it must nevertheless be specifically approved by the zoning administrator prior to the issuance of the permits. Isn’t this enough to protect the property owner?

Another interesting issue which came up in this piece of litigation involves the definition of the term “building permit.” Although quite rare, there may be some types of land uses which do not require a building permit whatsoever. Certainly agricultural uses (although accessory buildings such as banes, housing for agricultural workers, and so forth may be needed) in many contexts do not need a building permit. Does that mean that agricultural application which does not include any construction may be lost if the local legislative body changes the zoning before farm work actually begins? Suppose the agricultural use obtained a certificate of occupancy – is the CO sufficient to vest rights under the VRA?

Finally, suppose the farm did apply for and obtain a building permit for housing for workers in a municipality (so that the well-known County agricultural exemption is inapplicable; Tenn. Code Ann. § 13-7-114) but this cause the local legislative body to change the zoning before construction could begin on the housing. Is there an argument that since the farm is over hundred acres in size, and the accessory housing is less than 1% of that, that the building permit does not somehow best the right to use the property as agricultural?

These are all interesting questions. Personally, it would seem to me that a development plan approved by the local zoning administrator would best rights pursuant to the terms of the plan even if the local government had not specifically named that type of a development plan as a document which could vest rights. It also seems to me that if an agricultural use obtained a building permit, or for that matter, a certificate of occupancy, relating to any portion of the property, that its rights are to vest based on the issuance of either the building permit or certificate of occupancy.

I’m sure we will learn more about this over time. In this case, much as in the Tennessee Religious Freedom Restoration Act, we have little case law on which to base our conclusions, and as a result it is quite difficult to anticipate how the courts will actually apply the statute. However, I would think over the next few years, we will certainly get some resolution of these issues.

Saturday, July 23, 2016

The 1922 Memphis Zoning Code

I have been getting ready for a seminar which I am helping to present on August 1 here in Nashville, and while perusing some interesting zoning and land use topics on the Internet, I happened to bump across this interesting website which has a copy of the original 1922 Memphis Zoning Ordinance. Since Josh Whitehead, the Planning Director for the Office of Planning and Development in Memphis and Shelby County is interested in these historic documents, I'm sure he was involved in posting the copy of the ordinance.

The 1922 ordinance was the first one in the state of Tennessee. In addition, Memphis and Shelby County also had the first set of enabling statutes passed by the Tennessee General Assembly (Chapter 165 of the Tennessee Private Acts of 1921), well before the adoption of the public enabling legislation for zoning, which was adopted in 1935.  Tenn. Code Ann. § 13-7-101 et seq. It’s worth the trip over to take a look, as well as the other previously adopted versions of the zoning ordinances, including the 1955 Zoning Code and the 1981 version as well. In addition to the text, copies of the zoning maps are also available for review on the website.

While I'm at it, I should mention that Josh has a personal website which focuses on a number of different aspects of life in Memphis, but in particular often reviews properties which have an interesting zoning history. Just as an example, one of the earliest decisions involving variances in Tennessee, Reddoch v Smith, 214 Tenn. 213, 379 S.W. 2d 641 (1964) was an appeal from a decision of the Shelby County Board of Adjustment. Josh has a set of photos, not only of the property as it currently exists, but copies of the application to the zoning board, the staff recommendation, the minutes of the board granting the application, and the trial court opinion. If you have a minute, it's definitely worth a look. The web page is here.

I have to admit that Josh and I may be the only folks in Tennessee who actually have an interest in these bits of zoning memorabilia, but as Josh makes clear on his website, these early decisions often have a lasting impact on the future development of the property.

Friday, April 8, 2016

Central Radio v Norfolk: More on Signs

After completing the entry yesterday, I noticed that the 4th Circuit Court of Appeals had addressed a noncommercial sign in the context of Reed v Town of Gilbert. In this case, a media company whose property was the subject of condemnation actions placed a 375 square feet sign on a 6 lane major highway, painted or attached to a building it owned. The sign protested the use of eminent domain procedures.

The city cited the company for an illegal sign. The company sued based on the holding in Reed v Town of Gilbert. The Norfolk sign ordinance excepted government and religious flags and banners but regulated flags or banners which referenced products or services. The court quickly concluded that this was content regulation forbidden by Reed, leaving only the question as to whether there was a compelling governmental interest. The court thought not, but was even clearer that the method chosen was not the least restrictive means:
With respect to the City's stated interest in preserving aesthetic appeal, for example, the flag of a private or secular organization was no greater an eyesore than the flag of a government or religion, and works of art that referenced a product or service did not necessarily detract from the City's physical appearance any more than other works of art. Yet, the sign code allowed the unlimited proliferation of governmental and religious flags, as well as works of art that met the City's dubious criterion, while sharply restricting the number and size of flags and art bearing other messages.
The court found in favor of Central Radio.

Central Radio Co. Inc. v City of Norfolk, 2016 WL 360775 (4th Cir. January 19, 2016)

Thursday, April 7, 2016

Reed v Town of Gilbert: Suggestions

As you can tell from the several previous blog posts, Reed v Town of Gilbert seems to leave a lot of open questions in its wake. So what are the best ways to protect the city against potential legal liability given the uncertainty in this area?

First, it is very important to have a severability clause not only in the zoning ordinance itself, but it is also probably worthwhile to include a clause in the section of your zoning ordinance which regulates signs. Just in case one section of the sign provisions is unlawful for some reason, doesn't mean that it should take down the entire system of sign regulation within the local government.

Second, and also a significant suggestion which has been around for many years, add a substitution clause to your sign regulations which would have the effect of allowing the substitution of a noncommercial message to replace commercial text on any sign. The basic idea is to allow the substitution of a noncommercial message in a situation where the sign regulations inadvertently allow a commercial sign to be larger, more numerous, or in some other way advantageous than the noncommercial. The substitution clause would allow a noncommercial message to be substituted on those signs and avoid giving a priority to commercial messages, which is clearly unconstitutional.

Third, careful review of exceptions to the sign regulations is of increased importance after Reed. To the extent that exceptions can be substantially reduced, that will also have the effect of substantially reducing litigation risk. In addition, defining numerous categories of signs, such as political signs, religious signs, real estate signs and so forth also increases risk; to the extent that those categories can be removed or at least reduced, particularly in light of the decision in Reed, the sign regulations will be less susceptible of attack.

Fourth, on the other hand, certain exceptions may be helpful. In the area of noncommercial speech, if the local government wishes sign applicants to obtain permits, the First Amendment requires adequate procedural safeguards including clear criteria to determine whether to issue the permit, and quick availability of review. An exception to the permitting process for noncommercial messages might be less prone to litigation.

Remember, that there are many valid ways to regulate signs without consideration of the message at all. Those clearly include:

  • Size
  • location
  • lighted versus unlighted
  • Static display versus electronic
  • public versus private property
  • commercial versus residential

I'm sure that a large number of local governments are hard at work rewriting sign regulations right now. If you work for a local government which has not yet begun this type of review, it is certainly worthwhile to examine your sign regulations, discuss them with legal counsel, and try to avoid First Amendment difficulties before they arise.

By the way, if you are interested in further reading, a very interesting article by Prof. Alan Weinstein and Brian Connolly is available on the Internet entitled "Sign Regulation after Reed: Suggestions for Coping with Legal Uncertainty." The authors suggest approaching sign regulations as an exercise in risk management: to the extent that the local government is risk averse, less regulation, fewer definitional categories and exceptions should be entertained; if the local government is willing to accept more risk, more aggressive policies can be pursued but with a conscious awareness that this is an evolving area of constitutional law and litigation is indeed expensive.

Tuesday, March 22, 2016

Reed v Town of Gilbert

In our last post, we talked a little bit more about the use of the strict scrutiny test in the Reed v Town of Gilbert decision. Today, let’s talk a little bit about some of the issues which may remain after the Reed decision.

First and foremost, is the issue concerning the continuing validity of the distinction between on premise and off premise regulations. The Reed decision itself only applied to temporary noncommercial signs. It did not discuss the regulation of on-site versus off-site signs. Justice Alito however in his concurring opinion, specifically indicated that that type of regulation was still appropriate. However there is no discussion of why or in what context. And of course, it was only a concurring opinion, not the opinion of the majority (although, spoke for three members of the court, leaving only three in the majority opinion).

The difficulty is the Reed analysis itself: in order to distinguish between an on premise versus an off premise sign, one must read the content of the sign. Does it relate to the goods or services provided on site or not? Thus, given the definition and the mode of analysis in the majority opinion, on-site versus off-site regulation seems to be drawn into question.

On the other hand, most people see this type of regulation as content neutral because it simply regulates where a sign can be located. Certainly, on-site versus off-site regulations have been around for as long as sign regulations have existed. They are part and parcel of every zoning sign ordinance.

It is furthermore important to remember, that the Supreme Court concluded in Metromedia Inc. V San Diego, 453 US 490 (1981), that on-site versus off-site regulations were appropriate in the context of commercial signs. In that case, the Supreme Court recognized that most noncommercial messages have no locational basis; for example, “Stop the Vietnam War!” Is really not an on site or an off-site concept. Therefore, Metromedia provided that commercial signs could not be favored over noncommercial.

It seems to me that most courts will certainly continue treating the on-site versus off-site distinction in the context of commercial signage as a valid locational restriction. However, it is certainly worth pointing out, that a District Court here in Tennessee has already suggested otherwise. Thomas v Schroer, 116 F. Supp. 3d 869 (WD Tenn. 2015). This opinion ordered injunctive relief and the court may ultimately change its mind. But there are at least in some judges who may take a different view of the on-site versus off-site regulation of commercial messages.

Another issue after the Reed decision concerns regulations of signed by classifications. Real estate signs, construction signs, directional signs, grand opening signs, are all basically defined by reference to the content of the signs themselves. There may not be a way around these issues, although several authors have suggested potential workarounds. Perhaps it is simply easier to omit the definitions, and simply regulate based on the number, location, and size of the signs.

Another problem after Reed is the vast array of exemptions in most sign ordinances. Those exemptions are normally based on definitions keyed to the content of the signs. Once again this is prohibited by the Reed decision itself. Even such nondescript and constitutionally insignificant signs as real estate signs and building name signs may run into significant difficulty. Once again, regulation simply by number and square feet, without reference to function or content may be most appropriate.

In the next post we will talk a little bit about some ways in which the local government can protect itself against challenges to the constitutionality of its sign provisions.

Monday, March 21, 2016

Reed v Town of Gilbert

In our last post, we spoke about Reed v Town of Gilbert, 192 L. Ed. 2d 236, 135 S Ct 2218 (2015), generally, making the point that it was an unfortunate case to reach that high level, and secondly that sign regulations based on the content of the sign must always be judged strictly. This “strict scrutiny” is a judicial test which requires that any regulation which restricts freedom of speech demonstrate some compelling governmental interest which justifies the restriction and also requires that the restriction be narrowly tailored so as to avoid overregulation. Today, let's review that test and its implications.

As a practical matter, if the courts apply the “strict scrutiny” constitutional test, the regulation is almost certainly going to be held unconstitutional. Very few regulations can demonstrate the required “compelling governmental interest” and even if that could be shown, those are not usually very well tailored.

It’s hard to blame the city for its manner of regulation: most cities use similar types of categories to regulate signs. And as the city argued before the Supreme Court, and as the lower two courts concluded, the city had no intent to discriminate based on sign content, and in fact, within each category, ideological, political, and directional signs, the city didn’t care what type of politics, ideology, or even was referenced by the sign.

However, from the standpoint of the Supreme Court, the fact that there were distinctions drawn between the types of signs themselves, which had to be based on the content in the signs, meant that the regulation was not content neutral, that distinguished between signs based on content, and such distinctions violated the First Amendment unless there was compelling reason for those distinctions.

It is therefore important for local governments, after the decision in this case, to eliminate or at least reduce the number of different classifications of signs, particularly noncommercial signs. In fact, perhaps local governments are better served by simply restricting the number and size of signs in general based on location without reference to any type of classification. Whether it is a real estate sign, construction sign, a temporary event sign, or political sign, perhaps allowing a number of signs with a certain total amount of square feet is a better solution to the problem.

Think about this from another angle. The court ended its strict scrutiny analysis by assuming that the town had a compelling governmental interest. It did not review that because it was easier to conclude that the regulations were not narrowly tailored: that is by allowing a different timeframe for political, ideological and directional signs, and allowing different square feet for each of those different classifications, is easy to conclude that the regulations are not narrowly drawn. Because if the governmental interest at stake is aesthetics or traffic safety, all three types of signs would have had the same impact and therefore should of been restricted in the same or a closely similar manner. Because they were not, the city failed in the most basic way. I suspect that most local governments across the state of Tennessee also fail in a similar manner.

In the next post, we’ll talk a little bit more about issues which remain to be decided after Reed. For one thing, does this important decision herald a break in constitutional protection for the distinction

Friday, March 18, 2016

Reed v Town of Gilbert

I don’t often discuss sign cases in this blog. The whole area of zoning, land use planning, the First Amendment and signs is quite complicated and I’m never sure that people really want to dig too deeply into it. However, I’ve been asked to do a short seminar on Reed v Town of Gilbert, 192 L. Ed. 2d 236, 135 S Ct 2218 (2015), and perhaps some discussion of this important case is worthwhile.

I’ll probably take a few days to discuss several of the important themes. And like almost all First Amendment sign cases, it is difficult to know for sure where the Supreme Court is headed. So, with that caveat, let’s start with perhaps the first two most important points.

First, and this is possibly easier to see in hindsight then at the time that the actual decisions concerning litigation were made, the circumstances presented here were not ideal from the local government standpoint. There are at least three different types of tests to determine the validity of regulations which might impact First Amendment interests. As Justice Kagan mentioned in her concurring opinion,
The Town of Gilbert’s defense of it sign ordinance – most notably, the law’s distinctions between directional signs and others – does not pass strict scrutiny, or intermediate scrutiny, or even the laugh test.
Given that sentiment, this case ultimately opened the door and allowed an opportunity for the Court to roam around these sign regulations and employ the strictest test in First Amendment jurisprudence. Looking back, it would have been far better if this case had never reached of the US Supreme Court.

Secondly, it is clear, based both on the majority opinion, and on Justice Alito’s concurring opinion, that the majority of the court found that distinctions in the regulations based on noncommercial sign content which might under most circumstances seem innocent, rendered the sign regulations unconstitutional because of the worst conclusion: that the town was regulating based on the content of the signs themselves.

The opinion focuses on three different types of signs, political signs, ideological signs, and temporary directional signs. A political sign, under the towns definitions were temporary signs designed to influence the outcome of the election. Ideological signs were signs which were basically other types of noncommercial signs. And temporary directional signs were intended to direct pedestrians and motorists to some particular event.

The trouble was, that each different sign was allowed for a different time frame as far as its display, and different sizes were permitted depending on the type of sign. Thus, as Justice Thomas pointed out, if John Locke was running for political office, he could post a sign to promote his election, but that sign would be treated differently from a sign expressing one of Locke's principles of democratic government, and would further be different from a sign giving notice of the time and place of a book club which would discuss one of John Locke’s books. The only way to distinguish between the signs was to read the sign and determine its content. As the court pointed out this is the very thing that is prohibited by the First Amendment.

The types of distinctions between noncommercial signs at issue in Reed v Town of Gilbert appear in almost all local governmental sign regulations. Local signs are almost always exempted, for at least some time frame around the election; directional signs are almost always controlled in some way; and frequently noncommercial ideological signs are not referenced at all and in some cases are treated less favorably than other types of commercial speech. This of course inverts the importance of the two types of speech: noncommercial, particularly ideological speech should be treated with greater respect then commercial messages.

In any event, it seems to me that the case unfortunately got to this high level, and secondly was not a very apt case for decision.

In the next post, will discuss in greater detail the holding, and what it might portend for the future. Sometime thereafter, it may be worthwhile to consider how local governments can best react to the decision.

Certainly, if you work in or around a local government codes enforcement department or planning department, and your city has not yet reviewed it sign regulations in the context of this important Supreme Court case, you would be well advised to review the local sign regulations and make some decisions about how they should be changed in order to make them consistent (as much as possible) with this case.

Thursday, March 17, 2016

Tennessee Equal Access to Justice Act

Yesterday, I mentioned the proposed bill pending before the Tennessee Gen. Assembly, which would have the effect of allowing a state or local employee to recover his or her attorney’s fees in the event that a lawsuit is brought against the employee unsuccessfully. That’s Senate Bill 2377, House Bill 1679.

I probably should have mentioned the Tennessee Equal Access to Justice Act, Tenn. Code Ann. § 29-37-101 et seq., which allows a small business or neighborhood organization to recover attorneys fees where a State agency or local government has acted arbitrarily and capriciously as determined by a court of law. A small business or a neighborhood organization may recover their attorneys fees and costs associated with suing the state or local government in order to overturn the decision.

In most litigation, demonstrating that the state or local government has acted arbitrarily and/or capriciously, is a very difficult task. However, in land use planning litigation, most of which is filed by means of the common law writ of certiorari, it turns out that demonstrating arbitrary and capricious action is not all that difficult. In fact, in order to prevail on a common law writ of certiorari in the first place, you must demonstrate to the court that the zoning board or the planning commission acted arbitrarily and capriciously. Only then, will the court reversed the decision of the local government.

As a result, in many types of local land-use litigation, if the plaintiff or petitioner is a small business (which includes a partnership or corporation with gross receipts of less than $2 million during the 12 months preceding the lawsuit and which does not employ more than 30 persons on a full-time basis) or a neighborhood or homeowners association, attorneys fees and costs may be recovered if the decision of the zoning board or planning commission is reversed by the court.

The amount of the fees are limited to $10,000, but that limitation applies to each prevailing party and to each stage of the litigation. Therefore, it is possible to recover the attorneys fees associated with the appearance of an attorney before the local zoning board or planning commission, the attorneys fees for the appeal to trial court, and then to the Court of Appeals and then finally to the Tennessee Supreme Court. Theoretically therefore, the attorneys fees in such a case for each entity which prevails could be as much as $40,000. State v Thompson, 197 S.W. 3d 685 (Tenn. 2006).

Although the statute was adopted back in 1984, it is still somewhat little-known, and even less used. If you represent parties in local administrative proceedings, the ability to recover attorneys fees under the appropriate statutory circumstances, can make it much easier for your client. Note however that the statute does not require the court to award fees. The court may make an award but may certainly decline to do so if there are circumstances which would make the award unjust. I certainly have had cases where although the court reversed the decision of the zoning board, it found circumstances were such as to disqualify my client notwithstanding compliance with the statutory prerequisites.

Wednesday, March 16, 2016

Shifting Attorneys Fees in Land Use Litigation

There’s an interesting new bill proposed before the Tennessee Gen. Assembly. Assuming it passes, it will be important from two different perspectives. Senate Bill 2377 and House Bill 1679 would amend the Tennessee Governmental Tort Liability Act, Tenn. Code Ann. § 29-20-101 et seq., by creating a new section which would allow for the recovery of attorneys fees by a governmental employee if the employee wins a lawsuit brought against him or her arising out of his or her official duties.

From one perspective, this may help to fill a void which I have protested against for many years. The Tennessee Governmental Tort Liability Act in many types of cases leaves the employee open to litigation but immunizes completely the local government. This has always seemed inappropriate to me. It leaves the employee uncovered, but protects the local government. It seems to me that it should be precisely the opposite: the employee should be immune, and if there is any liability, it should be against the local government, with a reasonable cap on exposure.

Let me take a quick example. No local government is liable for the issuance, denial, suspension or revocation of or the failure or refusal to issue, deny, suspend or revoke, a permit, license certificate, approval, order or or other similar authorization pursuant to Tenn. Code Ann. § 29-20-205 (3). However, that section only removes liability of the local government; the governmental employee may nevertheless be liable. Fann v City of Fairview, 905 S.W. 2d 167 (Tenn. App. 1994). Subsection (c) of  Tenn. Code Ann. § 29-20-310, says that “no claim may be brought against an employee or judgment entered against an employee for injury proximately caused by an act or omission of the employee within the scope of the employee’s employment for which the governmental entity is immune in any amount in excess of the amounts established for governmental entities…, unless the act or omission was willful, malicious, criminal or performed for personal financial gain…”

So, an employee who issues a building permit or revokes a building permit illegally or wrongfully, may face liability under the TGTLA where the municipal corporation does not. This has always struck me as being unfair and totally inappropriate.

The new legislation would have the effect of making a plaintiff reimburse the employee for all attorneys fees and costs incurred in defending against the claim. This certainly isn’t as good as making the employee totally immune (and having the municipality pay up to a reasonable cap), but perhaps it’s a start.

On the other hand, from the perspective of a plaintiff wanting to sue the government, it of necessity means that plaintiff’s counsel will need to be fairly confident of prevailing before initiating a lawsuit against the employee. This may limit strategic decisions by plaintiff's counsel, and in the context of land use planning law, might foreclose certain kinds of actions which would ordinarily be viewed as appropriate. Many land use planning attorneys do not sue local government employees because we rely to a large extent on working with them in our day-to-day practice. But many other kinds of cases, say in a situation where a religious entity is involved, or where there is some other special circumstance, a lawsuit against both the local government and an employee or group of employees might be seen as advantageous. But if the odds of prevailing are not significant, this proposed bill would certainly undermine any such attempt.

Finally I might add that the new bill seems a little distracted in ways. It purports to amend the Tennessee Governmental Tort Liability Act but that act only pertains to local governmental entities. It certainly appears that this is supposed to apply to employees of the state of Tennessee because it references specifically claims brought before the Tennessee claims commission or board of claims, which, as I understand it, can only be done if it involves state action (not local governmental action). It certainly would be unusual to include a fee shifting statute applicable to all governmental employees, state or local, in a tort liability provision which applies only to local governmental employees. In any event, we will see if it is passed. There was an article in yesterday’s Tennessean which suggested that it is somewhat controversial; it will be interesting to see what happens to it as the legislative session winds up.

Thursday, March 10, 2016

The Vested Rights Act of 2014

Although the Vested Property Rights Act of 2014 has been in effect for well over a year (since January 1, 2015) I don’t think I’ve taken a moment to talk about it. It certainly is a welcome step in the right direction: when I see happen all the time, is an applicant who finds a parcel of property, puts together his development plan, goes to codes and applies for a permit only to have the permit either stalled, or even if it is issued, the law is changed immediately thereafter in order to thwart the proposed development.

I’ve always thought that developers look for properties which they can develop without a hassle from the local government. They find a piece of property, to figure out if it can be used for the purpose they intend, and then they apply for a permit. It’s only after that, that all of a sudden, that particular land use at that particular location is no longer satisfactory. The neighbors or the local government or both rise up in righteous indignation and demand that the law be changed so that that use can no longer be permitted at that location.

That was the state of the law in Tennessee before the adoption of the 2014 VRA. An applicant had to get a building permit plus must have substantial construction underway in order to have any white to continue the work, notwithstanding the fact that when he obtained the building permit, the project was entirely legal. Because of the government, under the old Tennessee law, changes the rules before you reach substantial construction, the new law applies and the building permit catch revoked.

The 2014 VRA changed that. It was adopted as Chapter 686 of the Public Acts of 2014, and is codified in its municipal version at Tenn. Code Ann. § 13-4-310(b) to (k). Found in the first sentence: “a vested property rights shall be established with respect to any property upon the approval… Of a… Development plan or a building permit. During the vesting period… The locally adopted development standards which are in effect on the date of approval… Shall remain the development standards applicable to that property or building…”

Certainly, we will have to wait for some court decisions to understand how this will all fit together. From my perspective there has been a growing acceptance across the nation of statutory provisions such as this, where the applicant who complies with the developmental regulations in effect at the time of approval is permitted to develop pursuant to those regulations even if changes are made thereafter.

Notice however, that the protection only exists from and after the time of approval. If the applicant applies for a building permit, but does not get the permit approved, and there is a change in the zoning regulations which would preclude the development, there is no protection pursuant to the act. Protection starts on the day of approval; not on the day of the application.

I’m sure that there will be many interesting questions which arise as a result of the application of the Vested Rights Act, but as of now, I don’t know of any particular litigation involving the statutory provisions. I’m sure that it won’t take long for lawsuits regarding the application of the act to offer some additional guidance.

Monday, February 29, 2016

The Embers

The recent controversy involving the Embers building near the corner of Fourth and Church in downtown Nashville, should be interesting to follow. The property owner believes that the structure has suffered so much damage that it is no longer economically feasible to renovate. The Mayor is displeased inasmuch as public funds in the amount of $6.5 million have been pledged with the idea that the building would be saved for historic reasons. Obviously, from an engineering standpoint, almost anything can be renovated; the issue is whether the money spent on renovation is worth the ultimate result. Politics being what it is, usually the local governmental officials prevail under these kinds of circumstances. We will check back in on this controversy as it develops.

Saturday, February 27, 2016

Short Term Residential Rentals

One of the things that is sometimes forgotten about short-term residential rentals is that not only must you comply with the local zoning provisions, but you must also be sure to comply with the applicable building code regulations. Most people fail to distinguish between building regulations and zoning regulations, but they are distinctly different. One shorthand way of looking at it is that zoning regulations are designed to minimize the adverse impacts on surrounding properties, whereas the building code is designed to protect people who occupied the structure.

In zoning terms, short-term residential rentals may run afoul of a local zoning requirement which may define permanent residential use as being greater then some arbitrary time. Such as more than 30 days, more than six months, or more than a year. If the use of the property does not comply with the local zoning regulations, then the use may be enjoined, that is, prohibited altogether.

In the case of the building code, short-term residential rentals may increase the types of safety precautions which are necessary. Here in Tennessee, single-family residential occupancy does not typically require automatic fire sprinklers. Tenn. Code Ann. § 68-120-101(a)(8)(A).

The question here is whether such short term residential rentals, let’s say, less than 30 days in duration, require automatic fire sprinklers despite the limits imposed by the statute referenced above. As it turns out, the State Fire Marshal’s Office has provided some answers to these questions.

First, SFMO defines what I have called short-term residential rentals as follows:
A transient rental home (“TRH”) is a building that is a single dwelling unit providing complete independent living facilities including, but not limited to, permanent provisions for living, sleeping, eating, cooking and sanitation occupied for thirty (30) days or less. These include rental cabins, buildings offered for rent on Airbnb and similar services, yurts and similar structures.
If the TRH is three stories or less in height, 5000 or fewer square feet in size, with 12 or less occupants, automatic fire sprinklers are not required. If these requirements are not met, the transient rental home must be sprinklered.
TRHs with three (3) or less stories, less than five-thousand (5,000) gross square feet, and twelve (12) or fewer occupants shall be classified as one- and two- family dwellings subject to Tenn. Comp. R. & Regs. 0780-02-23 (One and Two Family Dwellings and Townhouses). These buildings may be regulated by cities and counties that have received an exemption to enforce codes for one- and two-family dwellings and townhouses from the SFMO. These buildings are subject to the fire sprinkler exemptions of Tenn. Code Ann § 68-120-101(a)(8)(A).
TRHs with thirteen (13) or more occupants, four (4) or more stories, or five thousand (5,000) gross square feet or more are to be classified as R-3 and subject  to the IBC and Tenn. Comp. R. & Regs. 0780-02-03 (Review of Construction Plans and Specifications). These buildings may be regulated by cities and counties that have received an exemption to enforce codes for commercial buildings from the SFMO. These buildings are not subject to the fire sprinkler regulations of Tenn. Code Ann § 68-120-101(a)(8)(A).
These new regulations took effect on February 1, 2016.

Essentially, if you are hosting short-term rental activities, you should check to see that you comply not only with the local zoning regulations, but also with the local and state building codes. If your building is more than three stories in height, greater than 5000 square feet in size, or houses more than 13 occupants at a time, the building code regulations here in Tennessee fall under the more strictly scrutinized R-3 residential occupancy of the International Building Code, rather than the less strict International Residential Code.

Source: Memo from SFM0 dated January 29, 2016 re: Transient Rental Homes

Thursday, February 25, 2016

Tennessee Vested Rights Act of 2014

By now, just about anybody who works in this area of law, is aware of the Tennessee Vested Rights Act and the highly desirable changes it has wrought in the applicability of new land use standards as applied to permitted developments. Two of the principal attorneys involved in working the bill through the Gen. Assembly wrote an article a year or so ago. It is now online and is certainly worth reading. You can find a copy here.

Wednesday, February 24, 2016

More on Variances

A couple of days ago I mentioned a new book, Zoning Rules! The Economics of Land Use Regulation, by William Fischel, which I have been reading over the last week or so. It is quite an interesting book and comes at land use planning regulations from the perspective of economic utility rather than a technical legal perspective as to whether the regulations are administered and enforced an appropriate manner.

One of the areas that I’ve always been interested in has to do with zoning variances. The original Standard State Zoning Enabling Act had a fairly loosey-goosey variance provision, which allowed the zoning board to grant variances for almost any reason. When the public zoning enabling statutes were adopted here in Tennessee in 1935, Alfred Bettman, the author of those statutory provisions, inserted a much stricter requirement in order to successfully apply for a variance. As he said in 1935,
The test adopted to govern [zoning board] discretion was rather vague, elusive, and elastic clause known as the practical difficulty and unnecessary hardship clause, which provides, in a most generous way, that the board may vary the requirements of the zoning regulations where strict application would produce practical difficulty or unnecessary hardship.
Model Planning Laws, Bassett, Williams, Bettman & Whitten, Harvard Univ Press (1935) at 64. As an example, here's the text of the Wisconsin County provision as of 2005:
To authorize upon appeal in specific cases variances from the terms of the ordinance that will not be contrary to the public interest, where, owing to special conditions, a literal enforcement of the provisions of the ordinance will result in unnecessary hardship, and so that the spirit of the ordinance shall be observed and substantial justice done.
WIS. STAT. § 59.694(7)(c) (2005-2006). This is drawn straight from the Standard State Zoning Enabling Act. See Alan Madry, "Judging Ziervogel: The Twisted Path of Recent Zoning Variance Decisions in Wisconsin," Marquette Law Review 91:485-534 (2007). As the Madry article and many others have pointed out, this formulation of the test can be fairly elusive in actual application.

Bettman criticizes the “elastic clause” and points out that a
Serious consequence of the indefiniteness of the hardship clause is the advantage taken of it by many boards of appeals, so that, in practice in many places, the cumulative effect of the allowances of variances and exceptions represents a more serious impairment of the integrity of the zone plan than results from court decisions or councilmanic spot zoning.
It should also be pointed out, that the very same elasticity had allowed for the buying and selling of variances in New York City at about the same time in the 20th century. S I. Toll: Zoned American (1969) at 208-210.

Fischel, in Zoning Rules!, is critical of legal conclusions that variances are granted in situations where they are inappropriate. Citing a number of law review articles reach the same conclusion Fischel argures that frequently in person review by members of the zoning board and neighborhood considerations, including lack of opposition by adjacent neighbors, influence the board to grant appropriate relief. Fischel was a member of the Hanover, New Hampshire zoning board, and certainly his practical experience is worthy of note.

However, perhaps the situation is more complicated. Although the straitjacket zoning variance provisions which exist here in Tennessee may go too far, extremely lax zoning provisions may encourage zoning boards not only to grant too many variances but in fact grant variances as though dispensing candy, even going so far as to base those decisions on factors unrelated to board hearings. I’m talking about mayoral and councilmanic influences and money getting paid under the table in the form of bribes. Trying to balance those two competing considerations is the goal: to prevent zoning boards from reacting to external influences, which I believe happens with a great degree of frequency, and at the same time allowing the developer some flexibility where warranted.

Furthermore, using neighborhood opposition as a gauge as to whether or not a variance is appropriate is certainly and totally invalid. Some neighborhoods are just more active; some neighbors are just less neighborly. So if you live in one neighborhood with a more activist homeowners Association, you might get no relief where another property owner with the same issues, might get approved. From the standpoint of a land use lawyer, this certainly sounds like an arbitrary process.

I certainly believe that the Tennessee version is too strict; but there are also many states where the legislation would seem to be quite lax as in the Wisconsin version above.

Once again, this is quite an interesting book. It is well worth reading if you’re interested in this area, whether from a legal, planning, developmental, or economic perspective. It’s available on Amazon.

Monday, February 22, 2016

Interesting New Book: Zoning Rules! by Fischel

An interesting new zoning book entitled Zoning Rules! The Economics of Land Use Regulation, written by William Fischel, and and published late last year, makes interesting reading to those of us interested in zoning and its impact in the community. Fischel is an economist, but quite knowledgeable about zoning issues, and his book is an interesting story of the impact of local zoning regulations on development, including an overview of the history of zoning as well as how contemporary zoning controls work. One of his interesting historical observations is that the invention of the motorized truck (not the car) made it relatively easy for factories and other possibly inconsistent land uses to move from
downtown railroad stations and docks to areas located further from the center of town. These transplanted uses put new homeowners in the situation where they may have paid a significant sum for the new home but were now faced with the possibility of an inconsistent land use which would drive down the value of the property. In order to control that possibility, zoning “spread like wildfire” across the United States. Fischel at 170-178.

The book has a number of interesting observations along those lines. Another one, which may not be of such general interest to many land use practitioners, but which I was tremendously interested in because of the similarity of New Jersey statutory law with ours here in Tennessee, involves a bit of history from the Garden State. It is well known that New Jersey adopted a state constitutional amendment in 1927 specifically recognizing the validity of zoning and land use planning. The text of the amendment currently reads (it has been changed slightly over the years) as follows:
The Legislature may enact general laws under which municipalities, other than counties, may adopt zoning ordinances limiting and restricting to specified districts and regulating therein, buildings and structures, according to their construction, and the nature and extent of their use, and the nature and extent of the uses of land, and the exercise of such authority shall be deemed to be within the police power of the State. Such laws shall be subject to repeal or alteration by the Legislature.
New Jersey State Constitution, 1947, Article IV, Section VI, ¶ 2.

But what I did not know is that in the years leading up to the constitutional amendment, including 1927 itself, the New Jersey courts emphatically resisted local land use controls, particularly in so far as various land uses were permitted in some areas but not in others. Fischel cites the example of the Oxford Construction Company v City of Orange, 137 A. 545 (NJ 1927) in which the construction company applied for a permit to allow the construction of four 5 story brick apartment houses. The property however was located in a zoning district which was principally for single-family residential use. The lower court case was decided in May 1926, Oxford Construction Company v City of Orange, 4 NJ Misc. 515 (NJL 1926), just before the November 1926 decision of the United States Supreme Court in Euclid v Ambler Realty 272 US 365 (1926). The lower court, citing numerous examples from the Court of Errors and Appeals, concluded that “the attempt to exclude apartment houses from a residential zone is a question which, standing alone, has been met in the various zoning cases and decided adversely to the contention of the [city]. There is no basis for the refusal on this ground of the building …  inspector of Orange to grant a building permit.” Id. at 517.

Once the decision of the US Supreme Court was handed down in Euclid however, one would have felt that on the appeal to the New Jersey Court of Errors and Appeals, that the High Court would soften its stance on the invalidity of such use restrictions. It did not. Instead, the court distinguished Euclid in its May 1927 opinion by pointing out that the US Supreme Court had restricted its opinion such that if
the provisions set forth in the [Euclid] ordinance under review should come to be concretely applied to particular premises, or to particular conditions, or to be considered in connection with specific complaints, some of them, or even many of them, might be found to be clearly arbitrary and unreasonable. Having so stated, then pointed out that the ambler Realty Company did not base its right to the relief prayed for upon the ground of a present infringement upon or denial of a specific right but upon the broad ground that the mere existence and threatened enforcement of the ordinance constitute a present and irreparable injury, and then held that the ordinance, in its general scope and dominant features, was so far as its provisions were involved in the case before the court, was a valid exercise of the police power, and left other provisions to be dealt with as the cases arise directly involving them.
The New Jersey Court was not swayed by the decision in Euclid.

That set the stage for the constitutional amendment in September of that same year. The prevailing powers in the state lost no time in adopting the amendment previously quoted, which in effect overturned the decision of the New Jersey courts in the Oxford Construction Company case. “ ... [M]unicipalities ... may adopt zoning ordinances limiting and restricting to specified districts and regulating therein, buildings and structures, according to their construction, and the nature and extent of their use, and the nature and extent of the uses of land, and the exercise of such authority shall be deemed to be within the police power of the State ...”  There are very few states in the country with a constitutional amendment which specifically provides that zoning and land use regulations are within the police power the state. But given the decisions of the New Jersey courts prior to that time, the constitutional amendment was obviously necessary.

Finally, in October 1927, the court had still not given up. In Robert Realty Co. V City of Orange, 139 A. 54 (NJL 1927), the New Jersey Court of Errors and Appeals yet again reaffirmed its old position:

This appeal brings up for review a judgment of the Supreme Court, directing the issuance of a peremptory writ of mandamus, compelling the granting by the municipal authorities of the city of Orange of a permit to the respondent, Robert Realty Company, authorizing it to erect three apartment houses upon a plot of land owned by it within the municipal limits. The sole ground upon which the appeal is rested is that the zoning ordinance of the city prohibits the erection of apartment houses on the respondent's plot; and that such ordinance is a valid exercise of the police power. The argument in support of the appellants' contention is identical with that which was submitted on their behalf in the case of Oxford Construction Co. v. City of Orange et al., 137 A. 545 (not yet officially reported), wherein the same question was presented. For the reasons stated in the cited case, the judgment under review will be affirmed.

But the court did acknowledge the constitutional amendment:
We deem it proper to point out that the judgment now before us was rendered some nine months prior to the adoption by the people of our state of the amendment to our Constitution, which declares that zoning ordinances similar to that involved in the present case shall hereafter, when legally adopted, be deemed to be within the police power of the state; and that, consequently, its validity is not affected by the subsequent change in our fundamental law.
Robert Realty Co. v. City of Orange, 103 N.J.L. 711, 712, 139 A. 54, 54-55 (1927).

And in something of a humorous postscript to this series of events, the New Jersey Court once again cited the Oxford Construction Company case in a decision in 1929 as follows:

There is nothing in the record to rebut the presumption that the ordinance is a reasonable exercise of the police power. Oxford Construction Co. v. Orange, 103 N. J. Law, 355, 137 A. 545.

Robert L. Evans, Inc. v. Williams, 148 A. 206, 206 (N.J. Sup. Ct. 1929). In the Evans case, the application by the property owner to require the issuance of a building permit for a use which was in violation of the zoning regulations was denied. Finally, based on the constitutional amendment, the New Jersey Court bowed to the constitutional imperative.

In any event, the Fischel book is very interesting and well worth reading. I have not yet finished the entire book, but look forward to continuing my reading.

Here’s a quick timeline of the events in New Jersey:

May 1926   Lower Court Opinion in Oxford Construction Company
                   (can't keep apt out of single-family area)
Nov 1926    US Supreme Court decides Euclid v Ambler Realty
May 1927   Court of Errors and Appeals affirms lower court in Oxford Construction
Sept 1927   NJ Constitutional Amendment relating to zoning and land use planning
Oct   1927   Court of Errors and Appeals decision in Robert Realty Co.
                    (can't keep apt out of single-family area)
Dec 1929    Court of Errors and Appeals decision in Robert Evans, Inc. v. Williams
                    (Separation of land uses is constitutionally valid)

Thursday, February 18, 2016

Can a Planning Commission Recommendation be appealed?

Last fall, Historic Sylvan Park Inc., sued Metro Nashville by way of a common law writ of certiorari, seeking to appeal a decision of the Metro Planning commission recommending against the extension of a historic zoning district in that neighborhood. The residents of Sylvan Park argued that the negative recommendation of the Planning Commission results in a requirement that a two thirds majority of the Metropolitan Council past the proposed zoning change pursuant to §18.02 of the Metropolitan Charter. The residents argued that because there’s no other mechanism by which to appeal the two thirds voting requirement, the Planning Commission decision was a final order subject to appeal by certiorari.

The Tennessee Court of Appeals did not agree. The court cited back to one of mild cases, Family Golf v Metro Nashville, 964 S.W. 2d 254, 259 (Tenn. App. 1997), which explained:
We view §18.02 as clear confirmation of the important advisory role of the Metropolitan Planning Commission plays in the control of the use of land Nashville. By requiring a super-majority of the Metropolitan Council to override the planning commission’s disapproval of a proposed zoning change, the Charter Commission intended to protect against random or ad hoc zoning and to ensure that the Metropolitan Council takes the carefully crafted general plan seriously.
964 S.W. 2d at 259. The important point here is this: a decision to extend the zoning district is a legislative decision made by the Metropolitan Council, with a recommendation from the Planning Commission. But that does not make the Planning Commission decision an administrative or judicial decision subject to review by the common law writ of certiorari; in fact, a zoning change application such as this can only be challenged by declaratory judgment. Fallin v Knox County, 656 SW 2d 338 (Tenn. 1983). The recommendation by the Planning Commission, both here in Nashville and across the state of Tennessee, is simply a part of the legislative process, not subject to review by means of the common law writ.

The Court of Appeals affirmed the decision of the trial court dismissing the case.

Wednesday, February 17, 2016

Must the county inform a purchaser of the base flood elevation?

In an interesting case involving governmental immunity, Gibbs v Gilleland, (Tenn Apps. 2014), the issue was whether Rutherford County had a duty to inform the purchaser of property which is below the base flood elevation of that fact prior to purchase. The purchasers bought the property, obtained building permits, and started construction. The week after the construction began, the county informed them that the property was below the base flood elevation and that modifications were necessary to comply with the county storm water regulations. The cost of the modifications was alleged to be significant, to the point that construction might be financially prohibitive.

The plaintiffs carefully avoided suing the county based on the issuance of the permits; the Tennessee Governmental Tort Liability Act, Tenn. Code Ann. § 29-20-101 et seq., specifically immunizes local governments for the negligent issuance of building permits, or for that matter any other kind of permit or license. So the plaintiffs alleged that the county had a duty to inform them that the property was below the base flood elevation, and that the county’s failure to so inform them was a breach of that duty for which the county was liable.

The Court of Appeals (as well as the trial judge, who was Senior Judge Ben Cantrell) concluded that there was an immunity because this was a discretionary function, even if the plaintiffs could prove that there was some duty owed. The court noted that the Rutherford County Zoning Regulations did not impose such a duty on the county. Relying on the “planning – operational test” where planning involves consideration regarding a particular policy, and operational decisions implement pre-existing laws and regulations, the Court of Appeals concluded that the county’s decision to refrain from notifying plaintiffs that the property was located in a flood prone area was a discretionary decision entitled to immunity.

Given the breadth of the Tennessee Governmental Tort Liability Act, this result seems eminently reasonable. It is very difficult to sue a local government or indeed an employee of a local government under the terms of the act. The Tennessee General Assembly has concluded that retaining local government immunity is important to the continued vitality of local governments, and the statute is drafted broadly to cover many different kinds of governmental activities and immunize those from potential tort liability.

More on Res Judicata

Yesterday, we briefly discussed the doctrine of res judicata and its application to local government boards of zoning appeals. Finley v Marshall County, decided by the Tennessee Court of Appeals about a year ago, made clear that this doctrine, which precludes appealing the same case several times, does apply in the context of zoning decisions.

I certainly don’t know the answer to this question, but one wonders how the doctrine would apply in the context of special exceptions (otherwise known as conditional use permits amongst other names) which are granted for a specific period of time. Many special exceptions are granted without a specific restriction in terms of how long the operation made last. But more and more these days, a special exception is granted for a specific period of time such as two years, three years, five years, or more.

Suppose a special exception has been granted for a period of five years. By granting the special exception, the board of zoning appeals has indicated that it complies with all of the requirements of the local zoning regulations. It may or may not impose additional conditions on the application. But let’s assume that five years later, the same applicant returns, and that the zoning regulations have not been changed. Finally, also assume that while there is opposition, the opposition is substantially similar to the opposition at the original hearing, and that no appeal was taken from the original hearing.. Is there sufficient evidence before the board of zoning appeals to deny the application? If the board granted the first time, under the same laws and the same facts, to the same applicant, does the doctrine of res judicata require the board to grant the permit upon request for renewal?

Let’s add one further wrinkle to this issue. Suppose there was an interpretation of the zoning regulations at the time of the original approval. Obviously the interpretation by the zoning board was favorable to the applicant or the permit would not of been granted. At the application hearing for renewal, the opponents again bring up the same legal issue concerning the interpretation of the same term in the ordinance. Is the zoning board bound by its previous interpretation? It would seem that unless some court has specifically overruled the board’s interpretation of the zoning regulation, or unless the local legislative body has change the terminology, that the board should continue interpreting the ordinance in the same manner.

I don’t know of any case law on this issue. But certainly it is pretty interesting. I’ve always thought that once a special exception permit has been granted by a zoning board, even if it is for a particular period of time, that upon applying for renewal, the applicant had a special claim to be treated fairly, given the investment in the property and the operation of a business for some period of time. Certainly, if the opponents of the applicant can demonstrate that the business has been running away detrimental to the surrounding properties, the board should pay close attention and make a decision with those contentions in mind. But if the business has been run appropriately, and if the only objections are similar to the ones made at the original hearing, it would seem difficult for the zoning board to deny the renewed application.

Tuesday, February 16, 2016

Res Judicata

Every once in a while, although not very frequently, the doctrines of procedural laws impact litigation a land-use planning issues. In Finley v Marshall County, the petitioner attacked the decision by the Board of Zoning Appeals denying his request that he be recognized as a nonconforming rock quarry. Unfortunately, several years before, the same applicant had requested the same relief from the same as zoning board and of course with the same result. However, since the applicant at that time had not appealed the case by means of the common law writ of certiorari up to the chancery or circuit courts of the county, the Tennessee Court of Appeals determined that the prior case operated as res judicata in the context of the current case. That is, the result in the first case barred further litigation in a new case in an attempt to change the result. As the court said in Finley:

The doctrine of res judicata applies to the determinations of administrative agencies ―acting in a quasi-judicial capacity-- when the following conditions are met: 
(1) the issues decided in adjudicative proceedings are identical; (2) the prior adjudication resulted in a judgment on the merits; (3) the proceedings involve the same parties; and (4) the parties had a full and fair opportunity to litigate the issue in the prior proceeding. 
Wayman v. Transp. Licensing Comm’n of Metro. Gov’t of Nashville & Davidson Cnty., No. M2009-01360-COA-R3-CV, 2010 WL 1293796, at *3 (Tenn. Ct. App. Apr. 5, 2010) (citing Mangrum v. Wal-Mart Stores, Inc., 950 S.W.2d 33, 36 (Tenn. Ct. App. 1997)). 
The general rule concerning the application of the doctrine of res judicata to decisions by administrative boards has been summarized as follows: 
Like a judgment of a court, an administrative adjudication is res judicata or conclusive between the same parties on the same cause of action not only as to all matters litigated, but as to all matters which could have been litigated in the proceeding with respect to such cause. An administrative decision denying or dismissing a party‘s claim on the merits precludes such party from obtaining, in a judicial proceeding not designated for review of the administrative decision, the relief denied by the administrative agency, whether upon the same ground as urged in the administrative proceeding, or upon another ground. An administrative decision granting a party the relief asked for prevents such a party from obtaining additional relief in a judicial proceeding upon the same ground.
Purcell Enters., Inc. v. State, 631 S.W.2d 401, 407 (Tenn. Ct. App. 1981) (quoting 2 AM. JUR. 2D Administrative Law § 502 (1962)).
The Tennessee Court of Appeals went on to apply the four factors and concluded that in this matter, all four factors applied properly. That is, because the issues were fully and fairly litigated in a previous case where the issues were identical, parties were identical and a judgment was reached by the board of zoning appeals, the applicant had no further opportunity to contest the final judgment in the original zoning board matter.

Res judicata does not often apply in the context of administrative proceedings. That is, you don't often see a case where a prior zoning board decision did not get appealed in the first instance and then gets appealed at a later time. I recently had a case myself where I was contacted at a approximately the end of an administrative proceeding, with the idea of filing an appeal. However, I could not make contact with the other attorney who was originally representing the client, and I did not want to interject myself into the case until I had spoken with the original attorney. Because I was never able to get any satisfactory contact with the original attorney, I asked that the client just refile. Unfortunately, this also had the effect of res judicata and ultimately we lost in the Chancery Court on that basis.

Certainly while the doctrine of res judicata does not crop up too often in zoning and land-use planning litigation, when it does, it certainly has the effect of ending the litigation without the ability of the applicant to get to a final decision in that particular instance. On the other hand, certainly the result is fair: the petitioner should have appealed the case in the original instance and sought judicial review and cannot now complain that his failure to do so is unfair.