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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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