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.

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).

Otherwise:

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

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.

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.

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)

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.

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.

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.