Reagan National Advertising v City of Austin, 2020 U.S. App. LEXIS 27276 (5th Cir. Aug. 25, 2020)

This interesting case is yet another development arising out of the Supreme Court decision in Reed v Town of Gilbert, 576 US 155 (2015). Two companies, both Reagan and Lamar Sign, sued the city when applications submitted to digitize off-premise signs were denied. Plaintiffs argued that the Sign Code distinction between on-premise and off-premise signs was a violation of the First Amendment. The lower court found in favor of the city, but the Fifth Circuit reversed, concluding that the distinction was content based, subject to strict scrutiny, and that there was no compelling governmental interest sufficient to justify the regulation.

The city Sign Code provided for the continuation of nonconforming off-premise signs but sign owners were not permitted to “change the method or technology used to convey a message” on an off-premise non-conforming sign. At the same time, the Sign Code permitted on-premise signs to be “electronically controlled changeable copy signs.” As a result, on-premise nondigital signs can be digitized, but off-premise nondigital signs cannot be. The stated purpose of the Sign Code was to protect the aesthetic value of the city and to protect public safety.

The trial court denied plaintiff’s request for declaratory judgment, concluded that the Sign Code was content neutral and satisfied intermediate scrutiny.

The first interesting aspect of this case has to do with the city’s argument that the case was moot because the city adopted new sign provisions after the lawsuit was filed. Plaintiffs argued that they filed their applications prior to the amendments and that under Texas state law, their applications for permits must be reviewed based on the regulations in effect at the time their applications were filed. See for example, Texas Local Government Code Annotated §245002 (a) (1). See also Reagan National Advertising of Austin v City of Cedar Park, 387 F Supp 3d 703, 706 n. 3 (WD Texas 2019) (“Texas law requires the permit applications be evaluated under the law as it existed at the time they were submitted, rather than under the new, revised sign code.”). The Fifth Circuit agreed with the plaintiffs.

Notice the distinction here between Texas and Tennessee law. It appears that under Tennessee law, although it’s not entirely clear, that there is no protection based simply on the application to the city for a permit; rather, the Tennessee Vested Property Rights Act, Tenn. Code Ann. § 13-4-310, only protects from and after the time that a development plan has been approved (not applied for) or that a building permit has been issued. So if the regulations change during the pendency of an application, theoretically the applicant must comply with the new regulations under Tennessee law.

The next issue before the court was whether the Sign Code was content-based or content neutral. Naturally, if the regulations are content neutral, then the intermediate level of scrutiny applicable to commercial speech would apply; otherwise, strict scrutiny would apply to any content-based regulation.

The court first discussed the Supreme Court decision in Reed and noted that while the Reed decision did not purport to be creating new law, the federal courts have generally recognized that Reed announced a "sea change" in the traditional test for content neutrality. The court cited a number of other circuit opinions, including the Sixth Circuit: Wagoner v City of Garfield Heights, 675 F Appx 599 (6th Cir. 2017), and perhaps more interestingly, Thomas v. Bright, 937 F.3d 721, 737 (6th Cir. 2019), cert. denied, 2020 U.S. LEXIS 3558, 2020 WL 3865256 (July 9, 2020) which held that Tennessee's Billboard Regulation and Control Act of 1972, Tenn. Code Ann. §§ 54-21-101, et seq., "is not narrowly tailored to further a compelling interest and thus is an unconstitutional restriction on non-commercial speech." As many of you are aware, this decision and frankly the lower court decision which preceded it, seemed startling. Concluding that the entire regulatory scheme for controlling outdoor advertising signs was unconstitutional seemed, at least at the time, something of a stretch.

The court concluded that the Supreme Court decision in Reed meant that if a law is content based on its face, then it is subject to strict scrutiny regardless of the government’s content-neutral justification. See Reed, 576 US at 165. One difficulty with this approach is that Justice Alito in Reed concurred and specifically noted that regulations distinguishing between on-premise and off-premise signs should not be considered content-based. The Fifth Circuit, looking to the Sixth Circuit, observed that a restriction distinguishing between on-and off-premise signs could be content-neutral. A regulation that defines off-premise as any sign within 500 feet of a building is content-neutral. But if the off premise/on-premise distinction hinges on the content of the message, it is not a content-neutral restriction.

Thus, the Austin Sign Code must be evaluated under the clear rules set forth by the Reed majority. That makes the rest of the case fairly simple. The Sign Code determines on- versus off-premise by reading the sign and asking if it advertises a business, activity, product, or service not located on the site where the sign is installed. If the product or service is located on the same site than the sign is on-premise; otherwise it is off-premise.

In the Thomas v Bright case, the Sixth Circuit considered an almost identical question. Of course, the Sixth Circuit concluded that state officials were making content-based decisions in order to determine whether the outdoor advertising sign was on-premise or off-premise and invalidated the Tennessee Billboard Regulation and Control Act of 1972. A fairly monumental conclusion.

The Fifth Circuit mentioned that other circuits have reached different conclusions including the DC Circuit in Act Now to Stop War v District of Columbia, 846 F. 3d 391, 404 (DC Circuit 2017). In that case, the DC court reasoned that making a “cursory examination” of sign to determine whether it’s on- or off-premise did not render the statute or regulation content-based.

The Fifth Circuit disagreed. First, the court maintained that there are many cursory examinations which would simply fail. For example, suppose the regulation prevented a political sign for Candidate A, but permitted signs for Candidate B. Surely that would only take a cursory examination but also most assuredly, it would be facially unconstitutional. The court went on to examine this concept a little further, selecting several hypotheticals:

● Digital sign in front yard that says: “Sally makes quilts here and sells them at 3200 Main Street”

● Digital sign in the front yard that says “we love hamburgers” and contains the logo and address to a Whataburger location 2 miles away

● How can one determine whether a digital billboard that says “God loves you” is on- or off- premise?

You get the general idea. The court next considered whether the commercial speech exception applied under the circumstances of this case and concluded that it did not. The court essentially held just because most billboards display commercial messages does not mean that the sign regulation does not apply with equal force to both commercial and noncommercial messages. For example, recall that the Sixth Circuit decision involved billboards which were for the most part displaying noncommercial messages.

Finally, the purported justifications for the Sign Code provisions, protecting the aesthetic values and public safety, simply don’t hold up under the strict scrutiny test. There is no proof or argument that one type of sign was a greater eyesore than the other; furthermore, there was no proof that an off-premise digital sign posed a greater risk to public safety than in on-premise digital sign. As a result the relevant provisions of the Sign Code were declared unconstitutional as violative of the First Amendment.

I’d encourage you to read especially the Sixth Circuit decision in Thomas as well as this Fifth Circuit decision. They are quite interesting. Even more important is attempting to determine what impact this has on local land use planning regulations. Most zoning sign regulations have some dependence on the on- versus off-site distinction. In light of these cases, are those sign regulations still valid?

My thanks to my old friend, Sam Edwards, who told me about this very interesting case. 

 

Business licenses and non-conforming uses

In order to establish a non-conforming use, must the property owner demonstrate compliance with the business licensing laws? In Oregon, the answer is evidently no. In Morgan v Jackson County, 290 OR App. 111 (February 7, 2018) the court reversed a zoning board decision finding that an “auto yard business” located in a zoning district for agricultural use was not legally non-conforming because it did not comply with the dealer-licensing statutes of Oregon.

The court, relying on statutory authority, construed the statute and its use of the phrase “lawful use” to include only land use laws. Therefore, the fact that the owner of the property did not have a business license to engage in the operation of the business at the time that the operation began was not relevant to the land use issue. As a result, the zoning board decision finding no non-conforming use was reversed.

The Tennessee statute, Tenn. Code Ann. §13-7-208, augurs in precisely the opposite direction. For example, §208 (b), (c) & (d) allow “industrial, commercial, or other business establishments in operation and permitted to operate under zoning regulations or exceptions thereto immediately preceding a change in zoning…” to continue and expand. §208(d)(1). In Toles v City of Dyersburg, 39 S.W. 3d 138 (Tenn. App. 2000) the court concluded that because a tavern operator had lost his beer license immediately before the change in zoning took place and therefore could not legally be “in operation” that the property was no longer legally non-conforming. The court found nothing involuntary about the cessation of operations of the tavern and found the property was not legally non-conforming as a result.

I suspect that we will see other cases arguing this point here in Tennessee. However, the “in operation” provision of our statute, as applies to commercial and industrial uses, makes the argument much more difficult than in other states, such as for example Oregon.

Short-term rentals in Metro Nashville

As you are likely aware, Metro Council finally passed the amendments to its Short Term Rental Properties provisions, by way of Ordinance 2017-608. It’s a complicated bill, and I won’t try to cover all the ins and outs, but the most important change is that short-term rental properties which are not owner-occupied are not permitted in most residential areas. Compare §3 with §4 of the ordinance.

This may generate some questions about the potential non-conforming use of some of the existing non-owner occupied short-term rental properties. There are a number of issues involved in answering those questions, including whether the amendatory ordinance is a zoning ordinance subject to the Tennessee Non-Conforming Property Act ( Tenn. Code Ann. §13-7-208), whether the short-term rental properties would be classified as residential or business use for purposes of the act (if the use of the land is deemed residential, then the act does not apply), and whether the fact that the licenses were issued for only one year at a time would preclude any kind of non-conforming rights.

I’m sure that the will be some litigation about this over the next several years. It may take a while since the act expressly allows for the renewal of permits properly issued and maintained until June 28, 2020. I might add that usually those kinds of amortization provisions within zoning regulations are invalid to the extent that the Tennessee Non-Conforming Property Act is applicable, but in view of the questions about its applicability to these types of uses, that’s another question the court would have to decide.

CBS Outdoor

The recent decision by the Tennessee Court of Appeals in Metro Nashville v Metro Board of Zoning Appeals & CBS Outdoor, 2014 WL 4364852 (Tenn App Sept 3, 2014), presents a considerable difficulty for almost every party who appears before any board of zoning appeals in the state of Tennessee. The holding of the Court of Appeals is that the local government may, presumably without notice in any manner whatsoever to the applicant, appeal any decision of its Board of Zoning Appeals and challenge whether that decision was appropriate. This means that even though there may not be any opposition whatsoever appearing before the Board of Zoning Appeals, the applicant needs to ensure that there is a sufficient evidentiary basis for any decision of the Board which grants the relief sought. Just because no one appears in opposition does not mean that at some point a lawsuit won’t be filed by the local government itself challenging the decision of its own zoning board.

The decision in CBS Outdoor leaves a number of questions unanswered. Does the local government need to present some proof to the trial court concerning standing? Should the local government appear before the zoning board? Who makes the appearance? Assuming that the local government did not make an appearance before the zoning board, there would be no evidence of standing in the record, and assuming that the respondent denied the standing allegations in the petition for writ of certiorari, there would be no clear evidence of any harm to the local government without such proof. On the other hand, perhaps the Court of Appeals is signaling that the local government need not make any other showing than perhaps a reference to a local ordinance which it contends was not followed. Surely the ordinance itself would have to be introduced however before the trial court, and in the absence of a stipulation from respondent’s counsel, it’s not entirely clear how that takes place either. The trial court can take judicial notice of local zoning regulations upon notice (Rule 202 (b) of the Tennessee Rules of Evidence) but in a  certiorari proceeding  all the evidence should have been presented to the zoning board; allowing additional evidence, even the zoning regulations, arguably allows the court to consider factors which were not considered by the zoning board.

On the other hand, it has always seemed to me that local governments should have the ability to appeal under certain circumstances. The most obvious is where the local government owns a parcel property in the immediate vicinity of the proposal. In such a case, the local government is just like any other neighbor, and can appear before the zoning board opposing the application and appeal the decision on to a reviewing court. In a sense, the well-known City of Brentwood v Metro Board of Zoning Appeals, 149 S.W. 3d 49 (Tenn. App. 2004) represents this idea. Although Brentwood itself did not own property in the immediate vicinity, it was in that case an immediately adjacent neighbor, concerned about the construction of the sign which was at issue in that case.

Secondly, there are certainly times when local zoning boards make decisions which are so far beyond their ordinary activities that the decisions may need to be called into question. Two quick examples: first, where the zoning board grants a variance in the building code provisions. The zoning board has no authority over the building code, and should not be considering building code issues in its hearings. Secondly, if the zoning board violates some federally protected right or activity, litigation to protect those citizens whose rights are in issue may be necessary. For example, religious discrimination might be a basis for such an appeal.

But where the zoning board is exercising powers which are normally within its jurisdictional ken, such as considering variances, conditional use permits (special exceptions), or making determinations concerning non-conforming properties, it would seem unnecessary for the local government to have the right to sue its own zoning board and challenge its decision in a trial court. In fact, one wonders why we bother with zoning boards at all if the local government is free to appeal any decision they issue.  In the CBS Outdoor case, there are no special issues. Metro contends that the zoning board decided a non-conforming property case erroneously. The Metro board of zoning appeals probably hears something in the vicinity of 50 to 75 such cases each year. This kind of case is certainly not anything unusual. It does not seem therefore to afford a basis for an appeal by the local government of its own zoning board’s decision.

Which brings us back to the main issue here: how to best protect against such an appeal. Once more, the best protection is to make sure that the record contains sufficient evidence to justify the decision, and that the order or minute entry of the board reflects findings of fact and conclusions of law which are consistent with the board’s decision. Customarily, I file a fairly lengthy letter with the zoning board approximately one week before the hearing date, detailing why my client complies (or in the case of opposition, why the applicant does not comply) with the requirements for the application. Assuming that the zoning board rules in my favor, I usually request permission to draft the minute entry and/or order of the board which will closely follow my letter. Generally speaking, I have found that it is quite difficult for anyone appealing such decisions to reverse because the combination of the letter (with the evidence), and the order (with findings of fact and conclusions of law) is usually very persuasive to the trial court.

One final note. Given the recent decision by the Tennessee Supreme Court concerning the manner required for trial courts to grant summary judgment pursuant to Rule 56.04 of the Tennessee Rules of Civil Procedure, Smith v UHS of Lakeside, 2014 WL 3429204 (Tenn. S Ct July 15, 2014), it may be advisable to have the zoning board discuss the order or minute entry prior to adoption. I have for a long time suggested that the zoning board should not have to include a detailed motion in order to grant a particular application. Most of the requirements for relief before zoning board are quite detailed – take a look at the variance requirements under Tenn. Code Ann. § 13-7-207 (3) for example (and those are not all of the requirements) – and as a result any motion which attempts to cover each and every requirement is doomed to failure. Most lawyers or trial court could not do it. I know that I could not do it off the top of my head.

However, let me suggest that in the case of a variance, the motion made to grant a variance should include a reference to the exceptional physical feature of the property which the moving member of the board thinks is determinative. The exceptional physical feature of the property is the most important component of a variance, and if the moving member gives the staff or the lawyer representing the applicant that basic piece of information, it would seem to me that most courts would not think it is a logical for the board to allow the staff or the prevailing attorney to draft the order based on that information. Certainly, a good deal of additional information would have to be included, but as I say, the most important part of a variance application is the finding of an exceptional physical feature on the property itself.

In a similar manner, with regard to a conditional use permit (otherwise known as a special exception and many other different names), if the moving member clearly indicated that the use of the property in the manner requested was generally consistent with the other uses in the surrounding vicinity, and that any specific requirements for the conditional use had been complied with, once again, I think most reviewing courts would then allow the staff or the prevailing attorney to fill in the other more minor details of the order or minute entry.

Similarly, on a motion to deny the application, in the case of a variance, the motion might say that there is no exceptional physical feature on the property and/or that there is no hardship suffered by the applicant; and in the case of a conditional use permit, that the use of the property as proposed is not consistent with the other uses in the general vicinity and did not meet all of the requirements. In the case of a denial of a conditional use permit, it would behoove the moving member to specifically identify which of the specific requirements was not complied with. If none of them were complied with then simply say that.

The idea, as you can tell, is to limit the amount of information which must be contained in the motion. The complexity of framing a motion to grant a variance or conditional use permit makes doing that successfully on the spur of the moment almost impossible. Alternatively, if the attorney for the prevailing side so desires, language for suggested motion could be included with the letter justifying the appeal. I have not done this myself in the past, but I have seen it done on several occasions. I would suggest that any such suggested language should be fairly simple and straightforward without the complexity that we lawyers often interject. A sample of such language might be as follows:

I’ll make a motion to approve the variance to permit a reduction in the required sideyard, down to [x number of feet]. In this case, the property is exceptionally narrow when compared to other properties and this causes undue hardship because the applicant can’t use his property in a manner similar to other owners in the same area. This condition was not created by the applicant or others after the adoption of the zoning regulations, the variance won’t cause substantial detriment to the public good and will not substantially impair the intent and purpose of the zone plan and zoning ordinance.

Let me add that I’ve never seen a motion that would be as good as this one. Notice that it is fairly lengthy even though I have kept it as short as I think reasonably possible. It might be advisable to add that the hardship is not solely based on pecuniary considerations and that the size of the variance is no more than necessary to cure the hardship. But unless the members of the zoning board are provided with a sample order such as this for every case, it would be very difficult for the members of the board to remember all of this, especially if the board had a docket of 10 to 20 cases, only some of which are variances.

Frankly, my experience is that most trial courts are so overjoyed to see anything remotely resembling an order or minute entry which addresses the specifics of a particular case that it is usually sufficient to persuade the court that the board’s decision, to grant or deny, will be upheld.

TNCPA §208(g):Discontinuation

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

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

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

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

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

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

. . .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

The Tennessee Non-Conforming Property Act

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

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

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

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

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

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

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

Non-Conforming Uses: Digital Display Billboards

Next Monday morning there is scheduled another interesting argument concerning nonconforming uses  before the Davidson County Chancery Court, Part I. In this case, the Metro Board of Zoning Appeals considered and declared that a billboard located adjacent to the Corky’s barbecue near Brentwood was legally nonconforming notwithstanding the fact that it converted from a standard billboard sign to a digital display.

The Tennessee Non-Conforming Property Act, Tenn. Code Ann. § 13-7-208 (c) permits a structure or building to expand as needed for business purposes. This type of expansion, from a standard to a digital display, seems to fit nicely within the code provision.

Metro itself has appealed the decision in the case. One wonders first, how the Metropolitan Government can appeal a decision of its own zoning board, but we have discussed that issue in connection with my case involving the Mooneyhans previously here.

Second though is the substantive issue: Metro contends that the prohibition of digital displays is not a zoning regulation and as a result, the protections of the Tennessee Non-Conforming Property act do not apply. The difficulty with Metro’s argument is that the regulations concerning digital displays on billboards are in the zoning ordinance. It seems to me much harder to argue that it’s not a zoning regulation when the regulation itself is contained in the zoning ordinance.

Metro makes something of a novel argument, relying on cases where regulations which were not contained within the zoning regulation but which function as zoning regulations have been held to be zoning regulations and subject to the protections of the Tennessee Non-Conforming Property Act. One of those, is a case I tried several years ago, Metro v Buchanan, where the Tennessee Court of Appeals construed the Metro Property Maintenance Standards as applied to Mr. Buchanan’s property, as a zoning regulation and since Mr. Buchanan had been utilizing his property for more than 50 years, before the adoption of the Property Maintenance Standards, the Tennessee Non-Conforming Property Act protected against the regulation of his property by those standards.

But it’s one thing to apply that doctrine to non-zoning regulations which appear to work as restrictions on the use of property and appear to be zoning regulations in effect, and another entirely to take a regulation in the zoning ordinance and say that it’s just a general health, public safety and welfare regulation, not a zoning regulation. The argument appears to be that MetZo §17.32.050(h)(2) is not a zoning regulation. But the language of the regulation belies that assertion:

The following signs are expressly prohibited:
LED message boards and digital display signs in the AG, AR2a, R, RS, RM, RM-A, MUN, MUN-A, MUL, MUL-A, MUG, MUG-A, ON, OL, OG, OR20, OR20-A, OR40, OR40-A, CN, CL, SCC and SCN districts, except for time/temperature/date signs.

So, in the zoning districts referenced above, digital display signs are not permitted. But there are several remaining districts which are not covered by the prohibition, including all industrial, and several commercial, and also downtown districts. It is extremely difficult to argue that the above-referenced section of the zoning ordinance is not a zoning regulation since it expressly refers to some of the zoning districts established by the zoning ordinance, but not all of them. This is the epitome of what a zoning regulation is: you’re allowed to do digital displays in some districts and not others. That is exactly what zoning is all about.

As a result, the argument that the Corky’s billboard is not legally nonconforming seems to underestimate the policy and power behind the Tennessee Non-Conforming Property Act, which as I mentioned above, seems to apply directly to this type of case.

This should be an interesting decision. It will be an important decision, because it will have an impact on digital displays all over Davidson County, and perhaps, if the case is appealed, all over the state.

Non-Conforming Uses: Owner's Intent

I have an interesting argument coming up in Davidson County Chancery Court, Part I, this morning. The case, Richland Creek Watershed Alliance v Metro BZA, is an appeal from a decision of the Metro Board of Zoning Appeals, where they agreed that my clients property on Charlotte Avenue was legally nonconforming for a used car lot. The interesting aspect of the case is that it focuses on a provision of the Tennessee Non-Conforming Property Act, Tenn. Code Ann. § §13-7-208, which is rarely mentioned in any of the cases. This particular section, §(g) (4), provides that “the restrictions of this subsection… shall only apply if the property owner intentionally and voluntarily abandons the nonconforming use of the property. In any contested matter on the use of such property, the government has the burden of proving an overt act of abandonment in such matter.”

In our case, it was clear before the Board of Zoning Appeals that the owner never voluntarily or intentionally abandoned the nonconforming use. Furthermore, there was really no proof of any overt act of abandonment. On the other hand, nonconforming use cases rarely addressed this particular aspect of the statute, and so this case will be unusual in that way. It will be interesting to see what the Chancellor rules, and how she approaches the language of the statute. It seems relatively clear, but certainly reasonable people can differ about interpretations on what seems to be rather straightforward legislative language.

The Diminishing Assets Doctrine

Last week the Tennessee Supreme Court handed down an interesting and important case relating to nonconforming properties here in Tennessee, and reversing a decision of the Tennessee Court of Appeals. The case is Ready Mix v Jefferson County, 2012 WL 3757025, and the issue presented was whether or not the quarry activities were sufficiently established on the property such that a new zoning resolution adopted by the County did not limit the continuation of the quarrying activities. The Court of Appeals had ruled that the quarry owners had failed to exhaust administrative remedies because they proceeded directly to court, rather than to the Board of Zoning Appeals. the Supreme Court found that the quarry owners did not need to appeal to the zoning board, because the real question was a legal one concerning the applicability of the zoning ordinance itself rather than to the discretion of the zoning official who issued a stop work order in this case.

After a discussion of nonconforming properties, and the requirement of "substantial" activity before the adoption of the zoning regulations in order to validate the existence of the nonconforming use, the court turned to an analysis of the diminishing assets doctrine.

The Supreme Court emphasized that whether a particular business is "in operation" depends to some extent upon the nature of the business itself. Since the mining and quarrying industry is comprised of the excavation and sale of the very natural resources that make up the property, those reserves may be considered pre-existing uses themselves in the event of a more restrictive zoning change. Applying the doctrine to the facts in the case, the court concluded that the company had engaged in a variety of activities on the property prior to the adoption of the zoning regulations. The company applied for permits from the state government, analyzed suitability as a quarry site, cleared overgrown brush and vegetation from the pre-existing bits which had been used previously, and moved substantial equipment on the property. In addition, at least two completed blast shots were performed on the property before the adoption of the zoning regulations.

The Supreme Court held that the evidence did not preponderate against the trial court's finding that the activities established a  pre-existing use and qualifed for protection under the Tennessee Non-Conforming Property Act. the court indicated that "substantial steps" in construction may often satisfy the Non-Conforming Property Act, and that a demonstrated "devotion of the property" to particular use can also result in a finding of a non-conforming use protected by the statute.

Over the next week or so, I will come back to discuss both the diminishing assets doctrine, and the failure to exhaust issues presented by this case. in addition, Justice Wade, writing for the Court, briefly discusses the vested rights doctrine which is worth considering as well. We will try to take a look at that also in the next few days.

It is certainly an interesting case, applying the "in operation" language of the Tennessee statute in a flexible way so as to protect the demonstrated assets of this quarrying company.

You have to start somewhere!

I noticed this interesting case from New York several days ago, reported on Patty Salkins' Law of the Land blog. The case involves an argument by a quarry owner that the quarry was legally nonconforming, and as a result it could continue after a change in the zoning regulations. Unfortunately for the quarry owner, the New York Court concluded that the quarrying operation had never begun before the change in the zoning regulations. As a result there is no nonconforming use. Take a look at the case: Cobleskill Stone Products v Town of Skoharie, 2012 WL 1948307 (App. Dept. 2012).

I was involved in a similar case 10 or 15 years ago, Dickson County v Jennette, 2000 WL 1121550 (Tenn.Ct.App. 2000). Even given the statutory protection found here in Tennessee at TCA §13-7-208, the nonconforming use must have begun operations before the change in the zoning regulations. In the Janette case, just as in Cobleskill, quarrying operations had not begun before the change in zoning took place. You just can't have a nonconforming use, unless the use has actually begun operations before the change in the zoning regulations takes place.

A legally existing use of land . . .

Abbington Center v Town of Collierville, Tennessee Court of Appeals, filed on February 13, 2012, is a good example of the requirement that a legally nonconforming use demonstrate that it was established legally before the effective date of the zoning ordinance. For example, if you don’t have the required permits from the city, such as for example, a business license and/or a zoning permit, and possibly others, as well as any state permits that might also be required, the use of the property may not have been legally established, and is therefore not protected by the Tennessee Non-Conforming Property Act, Tenn. Code Ann. § 13-7-208. In this case, the failure to have the municipal permits prevents the application of the protections of the act.

No one disputed that the two billboards at issue were constructed in 1979 before the town of Collierville prohibited additional billboards. The problem was that no one could find the municipal permits demonstrating that they were legal at the time of construction. In 1993, the current owner purchased the billboards and began looking into the question as to whether or not they could be destroyed and then reconstructed under Tenn. Code Ann. § 13-7-208 (d). Originally, the new owner received assurances from the town that the billboards were legally nonconforming. After approval by the design review commission, the signs were destroyed, and construction was begun on two new signs to replace the old ones.

However, the sign owner failed to get a permit and a stop work order was posted. When the owner applied for permits, they were denied, with the town now saying that the signs were not nonconforming under §208. The owner appealed to the board of zoning appeals, which held against the owner, and on appeal to Chancery Court, there was a remand with a second hearing before the board of zoning appeals with the same result.

Once again, the owner went to Chancery Court, and this time the court reversed the decision of the board of zoning appeals. The Tennessee Court of Appeals in this case reverses the decision of the Chancery Court, and reinstates the decision of the Board of Zoning Appeals.

The difficulty in this case for the owner of the billboards is the extremely narrow scope of judicial review under the common law writ of certiorari. Since the court cannot substitute its judgment for that of the zoning board, that means that if the zoning board weighs the evidence in a way that might not seem quite appropriate, the court is nevertheless restrained from reversing as long as there’s some reasonable grounds upon which the decision of the board may be upheld.

In this case, there was almost a total dearth of proof concerning the issuance of any municipal permits for the signs. This is perhaps to be expected, since the signs were constructed originally over 30 years before the decision. The only real evidence of any municipal permit having been issued, was given by the owner/general manager of the sign company who owned the signs at the time of the original construction. He testified that he was aware that municipal permits had been issued. Unfortunately, the difficulty with his testimony was that it was based on a contingency fee arrangement with the current owner of the billboards. The former owner would testify, and if the permits were issued, he would receive $5000 for his testimony. If the permits were not issued, he would receive nothing.

While evidently the current owner of the billboards corrected this and simply paid him the $5000 at a later date, this was not until after he is sworn testimony was taken. Most of the members of the board of zoning appeals found his testimony to be suspect as a result and since his testimony was the only testimony related to the issuance of an actual municipal permit, if his testimony is discarded, there was no basis upon which to conclude that the proper permits had been obtained prior to the original construction of the billboards.

As a result, the board of zoning appeals denied the appeal, and the Tennessee Court of Appeals was in a position where it could not reinstate the testimony of the former owner because that essentially would amount to weighing the evidence.

It may be a better option in these kinds of cases to allow the appeal on a de novo basis before the trial court. In essence, a nonconforming property is something like a species of property right, and it certainly seems as though a court of law should have the last say in those types of cases, unfettered by the restrictions found in the common law writ of certiorari.

Legislation would be necessary to work this kind of a change although there is certainly some common law authority for arguing that the statutory writ of certiorari would apply to these kinds of cases. Judge Ben Cantrell’s landmark law review article in the University of Memphis law review, back in the early 70's established that. But so far as I know, no Tennessee court has actually reviewed the issue as to whether or not a statutory writ of certiorari would apply. Several cases have certainly indicated that the appeal is pursuant to the common law writ of certiorari, but usually without consideration of the statutory writ.

Distinguish these kinds of cases where there is a property right from an application for a variance or even a conditional use permit. When you apply for a variance, you are basically asking for special relief because of some hardship found on the property. When you apply for a conditional use permit, you’re asking for a new use based on your compliance with certain restrictions. Both of those cases certainly get reviewed under the common law writ of certiorari. These types of cases however do not involve pre-existing uses of the property.

On the other hand, a nonconforming property is as I mentioned above, a species of property right. Arguably, the owner has a property right which may be taken away if the local administrative body makes the wrong decision. Under those circumstances, where there is arguably a pre-existing property right, a hearing de novo in court should be permitted/required, where the court makes a final decision about the weight of the evidence.

Bear in mind, that opening this up to a trial de novo in the court changes the arguments up in the court room itself as well. I’ve been practicing almost 35 years in this area of the law, and I’ve had this argument in the back of my mind for virtually all of those 35 years. But when push comes to shove, and a final decision has to be made about the kinds of allegations to make in an appeal to the court of law, I have always felt better with the common law writ of certiorari in my cases. Obviously, if the owner of the nonconforming property prevails before the board of zoning appeals, it is almost always better to allow the decision pursuant to the common law writ (obviously, if my client won below, he is a respondent and he does not file the petition; he just responds to the neighbor’s petiton). In that way, there is an astoundingly high chance that the trial court will uphold the decision of the board of zoning appeals.

On the other hand, if I have lost before the zoning board, and I think I have an opportunity to win in the trial court, I have been usually involved in cases where I thought that the other side might have a better argument in a trial de novo and that appealing pursuant to the common law writ actually would suit my clients purposes better. Usually there has been some technical legal argument that I could make that I felt would reverse the board and get my client’s position upheld.

By way of an example, within the last two or three years, the Ransom School case was decided. It is not a nonconforming property, but a historic zoning matter. However, under the statutes, the appeal can up under the statutory writ of certiorari, just as I am arguing a nonconforming property case may. Before the appeal was made from the local historic zoning commission, I spoke with Tom White who was handling the case, and the decision was made to appeal under the common law writ of certiorari. Tom ultimately felt that the statutory writ would allow the city to put on more proof and that ultimately the city’s proof might actually be better. So a strategic decision was made to go with the common law writ of certiorari.

My guess is that over the next five years or so, legislation changing this may be passed. But until that time arrives, keeping in mind that the statutory writ of certiorari may be available is certainly a valid idea.

Smith County v Hiwassee Village Mobile Homes

The Tennessee Supreme Court released its opinion in Smith County v Hiwassee Village Mobile Home Park, Tenn S Ct, Jan 22, 2010 today, and it is quite an interesting decision. The Court of Appeals decided this case back in 2008 and concluded that the mobile home park was not a commercial use within the meaning of Tenn. Code Ann. § 13-7-208, and was not therefore legally non-conforming. The Court also concluded that the use of the park had not begun as of the time effective date of the zoning ordinance in Smith County and therefore, it was not entitled to protection under the statute.

The Supreme Court disagreed with the analysis, finding that the mobile home park was indeed commercial, and devotes a good deal of analysis as to why that conclusion is correct. In the end the court concludes however that the trial court was correct in finding that the use was not established before the zoning was enacted and because of that failure, the statutory protection is unavailable.The end result is that the Court of Appeals decision was affirmed.

The Supreme Court first did a little housekeeping. Although it seems too obvious to require a holding, and perhaps for that reason there is a dearth of rulings on this point, the Court made clear that the right to continue the use runs with the land and benefits a subsequent purchaser. "The trial court correctly found that, if the mobile home park were a prior conforming commercial use, the right to continue that use after the effective date of the Private Act would run with the land and benefit Hiwassee LLC as a subsequent owner." Footnote 13. This ruling is a welcome one. Although scarcely anyone would argue to the contrary, it is an important point and a Supreme Court ruling to that effect makes plain what most land use attorneys had always assumed.

The Court also laid to rest another nagging issue. Does the Non-Conforming Property Statute, Tenn. Code Ann. § 13-7-208, apply to both municipalities and to counties, or only to the former? The statute itself is found in the municipal section of the zoning enabling legislation and for that reason some courts held it only applied to cities. In more recent years, the Courts have held that the statutory protection applies to both governmental entities, because the actual language appears to apply to both. However, the Supreme Court had never ruled and the issue remained a littl cloudy.

Justice Clark clarified the state of Tennessee law, holding that the statute applies to both types of local governments, relying principally on the language of the statute. That seems the most appropriate conclusion and this issue now seems resolved fully and finally.

I was somewhat surprised that the Supreme Court reached the conlusion that it did with regard to mobile home parks. It seems more appropriate to look at the end use, and not what the owner of the property considered the use as. Here, the end use is residential. Therefore, the statute would seem inapplicable, as the Court of Appeals had ruled. Justice Clark reviewed the history of mobile homes; "Commentators, and most courts until very recently, have agreed that '[a] mobile home court is a commercial venture.'" Sl Op at 12, citing Young's Anderson's Law of Zoning.

It is true that the parties (including the government) had agreed that the use was commercial. It is hard to understand why the government conceded such a position. In any event, it seems clear that the Court could simply refuse to accept such an agreement. The Court specifically mentions that it expresses no opinion on apartments or duplexes, but surely the Corut would find an apartment house as residential. And if so, why not mobile homes?