More on Subdivisions: Hudson v Metro Planning Commission, 2020 WL 7255807 (Tenn. App. 2020)

Hudson is another important case in the area of subdivisions, although it may leave more questions than it answers. The basic question presented to the court was whether the planning commission could deny a subdivision application because it was not consistent with the “harmonious development” of the municipality? Tenn. Code. Ann. § 13-4-303(a).

The subdivision was for a development of 193 single-family homes on 65 acres of land in Davidson County. The Planning Commission rather reluctantly granted approval in the face of significant public opposition, but only after encouragement both from the staff and from the municipal attorney based on compliance with all of the applicable Subdivision Regulations. The trial court found this encouragement to be inappropriate and reversed, essentially concluding that “harmonious development” allowed the Planning Commission to make decisions beyond the scope of the technical requirements of the Subdivision Regulations. On appeal, the Court of Appeals upheld the trial court, but reversed on the “harmonious development” argument, concluding that the plain language of the statute wasn’t consistent with the trial court’s holding. The statute, by the way, authorizes adoption of subdivision regulations which “may provide the harmonious development of the municipality and its environs…” Thus, whatever the subdivision regulations provide is assumed to promote the harmonious development of the municipality. The Planning Commission has no authority to go beyond the requirements of those Subdivision Regulations. The subdivision regulations themselves are a significantly important part of the process of obtaining subdivision approval.

So far so good. Most land use planning lawyers felt that that was the appropriate interpretation of the statute. The court however went on, noting that the Metro Subdivision Regulations required compliance with the “adopted General Plan, including its constituent elements, and the Major Street Plan.” It concluded that:

the Planning Commission had the authority to determine whether the concept plan complied with the "adopted General Plan." Thus, the planning staff's description of the role of policy in the subdivision approval process was incomplete and led the commission members to discount potentially legitimate objections.

Frankly, most land use lawyers in Tennessee have always assumed that the General or Comprehensive Plan did have some role to play in subdivision consideration. This is true even though Tennessee is not a “plan as law” state, that is, in most of our jurisdictions, the plan is only advisory and basically has no legal significance. See for example Family Golf v Metro Nashville, 964 S.W. 2d 254 (Tenn. App. 1997) (permission to appeal denied April 6, 1998) (Planning Commission recommendation against a zoning change based on the General Plan is overridden by two thirds majority of Metro Council).

But the question is what role does the plan actually play in the context of subdivision consideration? First, most plans are pretty ambiguous, reflecting the inability to see very far into the future. As a result, mandatory provisions in planning documents are less frequent than found within zoning regulations or subdivision regulations. This immediately causes a problem, because with regard to small details which might be ambiguous Tennessee law has always been that ambiguity is construed in favor of the property owner. Edwards v Allen, 216 S.W. 3d 278 (Tenn. 2007). Thus, if the General Plan is ambiguous, the Planning Commission must interpreted favorably to the property owner and that would likely mean approval of the subdivision application.

Second, and perhaps much more significantly, suppose the plan directly conflicts with adopted law in the community. So for example, suppose the General Plan in one part of a local municipality envisions the property as single-family residential but the local legislative body passes a zoning regulation which permits multifamily residential uses in that same area. Recall of course that the General Plan is not law, is not passed by any legislative body (only by the Planning Commission which is not elected), and is a vision for future development not some type of binding regulation.

Back to my hypothetical: if my client applies to the Planning Commission for approval of a site plan for a multifamily residential development, can the Planning Commission deny the application based on the General Plan? Many states these days have enacted statutory provisions which make the General Plan binding, usually because it gets adopted by the local legislative body. In most jurisdictions here in Tennessee, that does not happen (there is authority for it in the planning enabling statutes, but it has not been used frequently). The planning commission adopts the General Plan and it certifies the plan to the local legislative body but that body does not in turn adopt it as law. If the Planning Commission can deny approval of a development plan based on the General Plan contrary to the zoning regulations adopted by the local legislative body, then it would seem that the ultimate authority is now in the hands of the Planning Commission. Surely this cannot be correct.

Clearly in such instances, the Planning Commission's authority to deny a development cannot be based on the general plan. The local zoning regulations take precedence and if there’s a conflict between those regulations and the General Plan, the General Plan must give way.

Unfortunately, there is no case law in Tennessee discussing this issue whatsoever and with the recent decision in the Hudson case, it will surely be coming up more and more often. 

Hearings on subdivision applications?

 Just a quick entry today based on a Planning Commission meeting I was at earlier this week. After the staff presented my client's application for subdivision approval, including their comments and recommendations, the chair indicated that this was not a “public hearing” and that it would take a vote to waive the rules in order to allow public comment. I’m hoping that the chair misspoke but just in case there’s some misunderstanding, let me emphasize that while it may be that the hearing is not open to the public (don't misunderstand, the meeting is certainly open to the public but it may be that the statute does not require that the public be involved in the actual hearing; that is, members of the public may only be able to sit and watch although that certainly makes little sense), there certainly is a required hearing. And the basic definition of a hearing is that the applicant gets to make a presentation. The use of the word hearing in the statute also suggests that any people in support or opposition would also get to make comments about the appropriateness of the subdivision. In due course, the Planning Commission adopted a resolution waiving its rules and allowing the hearing, but let me emphasize:       a hearing is required by statute in Tennessee.

In the case of a regional planning commission, Tenn. Code. Ann. § 13-3-404(a) provides that:

Any plat submitted to the commission shall contain the name and address of a person to whom notice of hearing may be sent; and no plat shall be acted upon by the commission without affording a hearing thereon, notice of the time and place of which shall be sent by mail to the address not less than five days before the date fixed for such hearing.

In the case of a municipal planning commission, Tenn. Code. Ann. § 13-4-304(c) provides that:

Any plat submitted to the commission shall contain the name and address of a person to whom notice of hearing shall be sent; and no plat shall be acted upon by the commission without affording a hearing thereon, notice of the time and place of which shall be sent by mail to such address not less than five days before the date fixed for such hearing.

As you can quite easily see, both statutory provisions require a hearing, although perhaps you might not call it a public hearing. It may be that when this legislation was passed, back in 1935, it was only anticipated that the applicant would be present to discuss the application with the members of the Planning Commission. However, since all Tennessee meeting such as this are open to the public, perhaps that distinction is not that meaningful at present.

The appellate courts have also noted this mandatory requirement. In a landmark decision issued just a few years ago, the Court of Appeals reviewed the subdivision process and remarked that a plat may not "be acted upon by the commission without affording a hearing thereon." Save Rural Franklin v Williamson County, 2016 Tenn. App. Lexis 633,*11-12, 2016 WL 4523418 (Tenn. App. 2016).

A further authority on this, although why anyone would need more I don’t know, is the Tennessee Planning Commissioner Handbook, published by the Tennessee Department of Economic & Community Development, Local Assistance Office, and primarily authored by my good friend and very capable planner, Bill Terry. The second edition is dated 2002. At page 34, we find the following:

Another due process requirement applying to both regional and municipal planning commissions is the need to notify the applicant that a public hearing is to be held on the plat.

Given the statutory directive, the remark by the Court of Appeals and the practical experience of a highly respected planner, I hope that there are not too many commissions which believe that a hearing on a subdivision plat is some type of privilege only permitted by special dispensation. A hearing on the plat is mandated by state law and the failure to give a hearing on the application for plat approval will certainly lead to quick reversal in any appeal.

Variances in Iowa: Observations Applicable to Tennessee

 Earley v Board of Adjustment Cerro Gordo County, 2021 WL 744513 (Iowa February 26, 2021)

This very interesting case from the Iowa Supreme Court discusses the standards for area variances, and whether those are different from other types of variance requests. The court concludes that the same restrictive standards would apply and, from my perspective, this is ultimately the correct answer here in Tennessee as well.

This is a fairly typical variance request case. The property owners, Gregory and Lea Ann Saul, hired a contractor to build a pergola on the side of their home, covering a patio. The property is located in a single-family residential district, with a required 6 foot side yard setback. The pergola and patio are only 21 inches from the property line.

After construction, the local zoning officials informed the owners of the violation, a permit was applied for, denied, and a variance requested. Again, in typical fashion, the property owners were unable to demonstrate any unnecessary hardship. While the precise requirements for variance under Iowa law are different from those here in Tennessee, there was no proof of any unique physical feature or any other variance requirement.

Nevertheless, also a tradition in zoning variance cases, the members of the zoning board felt that the pergola “looked nice” and unanimously approved the variance, waving the penalty for building the pergola without a permit.

As you might expect, the neighboring property owner, Ms. Earley, appealed pursuant to a petition for writ of certiorari. The local court upheld the decision of the zoning board, and the Court of Appeals affirmed the District Court. The Iowa Supreme Court granted the application for further review.

First, the Iowa Supreme Court gives a nice summary of rules of thumb for variances. Variances should be granted sparingly and with great caution or in exceptional instances only. The board cannot amend or set aside the zoning ordinance under the guise of a variance. If an applicant does not make the required unnecessary hardship showing, granting a variance is an illegal act by the board.

Second, I’d like to emphasize that the standards for variances in Iowa, at least statutorily, are quite different from those here in Tennessee. The statute at issue in this case, Iowa Code §335.15 (3) provides:

To authorize upon appeal, in specific cases, such variance from the terms of the ordinance as 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.

This language is verbatim the variance provision found in the Standard State Zoning Enabling Act promulgated by a blue ribbon committee working with Herbert Hoover’s Department of Commerce in the middle 20s, almost 100 years ago. As I have written elsewhere, the problem with this language is that it offers no real standards by which to judge whether an application for a variance should be granted or not. A number of courts, including the Iowa Supreme Court, have adopted an approach suggested by the New York Court of Appeals in Otto v Steinhilber, 282 NY 71, 24 NE 2d 851, 853 (1939). The New York Court articulated a three-part test requiring the applicant to show:

(1) the land in question cannot yield a reasonable return if used only for a purpose allowed in that zone;

(2) the plight of the owner is due to unique circumstances and not to the general conditions in the neighborhood; and

(3) the use to be authorized by the variance will not alter the essential character of the locality.

Of course, as you read those requirements, it’s clear that the New York high court was considering a use variance rather than a bulk or area variance, the subject of the Iowa case. Further, while the second and third conditions make reasonable sense and in fact are to a large extent mirrored by the more specific Bettman model variance provision which we have here in Tennessee, the first criterion, asking if a reasonable return is possible, seems to me largely irrelevant. From my perspective, if there is some unusual physical feature of the property which prevents the applicant from utilizing some aspect of his property in a manner similar to what would be permitted on other properties in the same general area, then a variance should be granted, regardless of whether there is a reasonable return. That issue is a continuing debate in Tennessee as in other jurisdictions.

The Iowa Supreme Court made clear that it had adopted the New York standard in Deardorff v Board of Adjustment, 254 Iowa 380, 383-84, 118 N.W. 2d 78, 80 (1962). In that case, a variance which was granted to allow a greater height then permitted under the applicable zoning regulations was overturned by the Iowa Supreme Court, concluding that there was no demonstration of any unique physical feature justifying the relaxation of their zoning regulations in favor of that particular property owner.

In this case, the court observes that the Court of Appeals below concluded that a different standard should apply in the case of an area variance, that is, where some bulk regulation such as a side yard requirement, is the subject of the request. The court first reviewed the distinction between use variances and area variances:

A use variance permits the use of land for purposes other than those prescribed by the zoning ordinance, and is based on the standard of unnecessary hardship.” On the other hand, an area variance does not involve a use prohibited by the ordinance, but concerns a deviation from specific requirements such as height limitations, setback lines, size regulations and the like. 

Relying on a law review article, N. Williams Hines, Difficulties Standard for Area Variances, 102 Iowa Law Review Online 365, 366 (2018), which noted that “notwithstanding the distinctly different purposes served by these two types of zoning variances, two-thirds of US states, including Iowa, apply the same strict requirements for granting them both,” the court found that to be a correct statement of the law.

The court felt that the rule of stare decisis required consistency in application of the standard. This is particularly true because the requirements for obtaining a variance are set by statute. The legislature presumably was aware of the court’s interpretation of the statute, and if the legislature had wanted to change that interpretation, it had only to change the language of the statute. After almost 60 years, no such amendment to the statutory provision had been made.

After clarifying the standards to be applied, the court applied those standards to this case. The application of the standards is largely immaterial to us here in Tennessee. However one interesting aspect, which comes up time and time again, is the fact that the property owners argued that their good faith completion of the illegal pergola was a factor which should augur in favor of allowing the variance to stand. The Supreme Court of Iowa indicated that it had repeatedly rejected these types of equitable considerations as immaterial to the statutory grounds authorizing a variance. The same is, and should be, the rule here in Tennessee.

The court reversed the decision granting the variance. While the standards for variances in Iowa are very different from those here in most jurisdictions in Tennessee, the case is highly instructive. The same kinds of issues arise time and time again before not only the courts in Iowa and Tennessee, but I dare say, across the vast majority states in the country as a whole.

As I finished this entry, I remembered an old case of mine, JD Biggs v Metro Board of Zoning Appeals, decided in the early 80s. In that case, it was a carport which was constructed with a permit, but the permit showed the required 5 foot side yard. As built, the carport was within 2 feet of the property line. The zoning board turned down the application for a variance, the trial court affirmed, and although I no longer have a copy of the case, I believe that the Tennessee Court of Appeals affirmed as well. I will try to upload a copy of the trial court opinion in the near future.

The Agricultural Exemption: Jefferson County v Wilmoth (Tenn. App. 2021)

Jefferson County v Wilmoth Family Properties, Tennessee Court of Appeals, February 1, 2021

One of the most difficult questions arising in Tennessee land use cases is the enforceability of zoning regulations against agricultural activities within county government jurisdiction (the statutory exemptions for the most part do not apply to municipal governments). The Wilmoth case offers some clarification although the waters remain murky.

Let’s start by mentioning the statutory provisions which cause the difficulty in the first place. When the Tennessee Zoning Enabling Statutes were passed in 1935, the County legislation included a very significant agricultural exemption:

This part shall not be construed as authorizing the requirement of building permits nor providing for any regulation of the erection, construction, or reconstruction of any building or other structure on lands now devoted to agricultural uses or which may hereafter be used for agricultural purposes, except on agricultural lands adjacent or in proximity to state federal-aid highways, public airports or public parks; provided, that such building or structure is incidental to the agricultural enterprise. Nor shall this chapter be construed as limiting or affecting in any way or controlling the agricultural uses of land.

Tenn. Code. Ann. § 13-7-114 (a). In addition, years later, the General Assembly added another provision, which only serves to increase the confusion:

Nothing in this part shall be construed as granting counties the power to prohibit or regulate normal agricultural activities.

Tenn. Code. Ann. § 5-1-118(b). It is anybody’s guess why the second provision only relates to “normal agricultural activities” when the first essentially prohibits any control over presumably all “agricultural uses of land.” The distinction between the two statutes is not the subject of our story, but just an interesting sidelight. It should be mentioned here that the original statute was not mentioned in the Wilmoth opinion; presumably the attorneys may not have cited it to the court.

The Tennessee Supreme Court took a look at this area not too long ago in Shore v Maple Lane Farms, 411 S.W. 3d 405 (Tenn. 2013). While I would characterize the opinion as fairly liberal concerning the interpretation of the agricultural exemption, the court drew a line at entertainment activities and decided that such things as concerts and other entertainment simply were not part of agriculture.

Tennessee being the farming state that it is the General Assembly immediately went to work and defined the term agriculture in a way so as to include entertainment activities. Tenn. Code. Ann. § §1-3-105 and 43-1-113. Both of these sections are definitional and include the same language relating to agricultural activities.

The question in Wilmoth was whether this farm of approximately 30 acres in size where cattle has been sold for profit but at the time of the case, only nine cows and a bull or on the farm; farm also had 18 to 22 chickens which produced 400 to 600 eggs per month. But the main income producing aspect was an event venue, where various types of parties and wedding receptions were held. As you might guess, income from the farm related to what might be referred to as normal agricultural activities was only $6250 in 2019 whereas rental income for the venue events was approximate $40,000 more. Mr. Wilmoth, the farmer, testified in-depth concerning his time operating a farm and he indicated that he spent minimal time facilitating the event venue business; that most of his time was related to working on the farm. The County of course argued that Wilmoth was attempting to circumvent the zoning regulations by maintaining a token amount of agricultural activities which had no connection to the much more lucrative commercial event venue use. The County argued that the current use the property was not agricultural and thus it was not protected by either statutory provision.

The broadened statutory definition of agriculture passed by the General Assembly after the Supreme Court decision in Shore, reads as follows:

“Agriculture” means:

(i) The land, buildings and machinery used in the commercial production of farm products and nursery stock;

(ii) The activity carried on in connection with the commercial production of farm products and nursery stock;

(iii) Recreational and educational activities on land used for the commercial production of farm products and nursery stock;  and

(iv) Entertainment activities conducted in conjunction with, but secondary to, commercial production of farm products and nursery stock, when such activities occur on land used for the commercial production of farm products and nursery stock;

Tenn. Code. Ann. § 1-3-105.

Neither the trial court nor the Court of Appeals felt that the weddings and other parties held at the event venue could be characterized as recreational or educational; however, to the extent that those activities were entertainment, conducted in conjunction with, but secondary to, the production of farm products, then the event venue would be protected by the agricultural exemptions.

As typically happens in these cases, Mr. Wilmoth, the farmer, testified that the property was offered as an event venue and that it was successful due to the aesthetic appearance of the farm and the farming operation itself, noting that the venue provided multiple photographic opportunities of general farm life.

The Court of Appeals concluded, like the trial court, “that the present use of the property is in keeping with the legislature’s obvious intent to allow the necessary supplementation of forming income with income from related activities as long as such activities are stopped secondary to the commercial production of farm products and nursery stock.” Accordingly, the trial court’s dismissal of the complaint was affirmed.

I’m confident that there will be more cases as time goes along. This certainly can be a difficult area of land use law. Many times the properties contested are fairly small, leading many people more familiar with larger farming operations to doubt the nature of the land use. In addition, as in the Wilmoth case, often, the farmer makes more money from the event venue than from his farming activities. Frankly, this is to be expected. First of all, farming is hard work, and it does not pay particularly well unless you are farming on a very large scale. There is skepticism built into the analysis by local zoning officials.

Second, it’s not terribly clear what the General Assembly intended to protect with the latest definitional changes. It’s also not exceptionally clear how the definitions are to be applied. Wilmoth certainly is a start, but more cases will be needed to fill in the blank spaces.

Before concluding, it is interesting to take a look at the US Census of Agriculture, the latest version of which was published in 2017. There are specific versions for each state as well as the entirety of the country, and a brief look at the Tennessee census is very interesting.

First, over the last 20 years, the number of farms in Tennessee has dropped from approximately 90,000 farms to approximately 70,000 farms. That may give a good indication as to why the Tennessee General Assembly is protective of agricultural activities. Further, the size of the farms is also instructive. In 2017, with approximately 70000 operating farms, almost 6000 of those farms were under 10 acres in size. Almost ½ of all the farms in Tennessee were under 50 acres in size (30,000 farms). Another 25,000 farms were under 180 acres in size. As you can immediately see, many of the farms in our state are not very large.

The next item that jumps out is the fact that almost 31,000 farms in Tennessee make less than $2500 a year. Another 27,000 farms make less than $25,000 a year. So, of the 70,000 farms in Tennessee, approximately 58,000 of them make very little money, and probably not enough to live on. Once again, these numbers may explain quite a bit. If the state of Tennessee wants to keep some semblance of farming alive, special protections for farmers and farming activities seem undoubtedly necessary.