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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

Funeral Homes & Crematoria

New construction of crematoria, either as an accessory to an existing funeral home or freestanding, continues to be controversial. Last month, in Loudon, Tennessee, an application for a special exception for a crematorium was deferred by the local zoning board. Recently, Knoxville adopted tighter restrictions on operation and placement of crematoria. There been several instances of requests in and around Nashville which have raised neighborhood concerns.

Knoxville’s new regulations made most existing crematoria legally non-conforming. It also evidently had the effect of allowing an existing funeral home to add a crematorium.

Certainly, requests for cremation services are on the increase in the funeral industry. Regulations which adequately protect surrounding land uses from adverse impact are obviously worthwhile. However, much of the concern may be attributable more to actual operations rather than external impact. Regulations of the internal operation are best left to the state agencies charged with that responsibility.

Take a look at the recent news article found here.

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.