Second Department Finds Development Rights Constitute Real Property Under RPAPL § 1602

Plaintiffs Thomas G. Hahn, Jr., Jeanne Halstead, and Barbara Butts (collectively “Plaintiffs”), and defendant Johanne Hagar, were siblings who owned a 101–acre farm (“Hahn Farm”) in the Town of Pleasant Valley, which had been in the parties’ family for over 240 years.  The property was owned jointly by the parties’ parents until their father’s death in 1995, and then solely by their mother until her death. The mother’s will left a qualified life estate in the property to Thomas G. Hahn, Jr., and the remainder interest to her four children in equal shares.  Plaintiffs sought authorization pursuant to RPAPL § 1602, which allows the owner of a possessory interest in real property to apply to a court for an order directing that the “real property, or a part thereof, be mortgaged, leased or sold,” to sell the development rights to the property in order to preserve its future use as a farm.  However, the Court found that development rights do not constitute real property, or a part thereof, for purposes of RPAPL § 1602. Accordingly, the court dismissed the proceeding, and Plaintiffs appealed.

The Second Department found that while the parties stipulated to a definition of “development rights,” the specific rights or burdens broadly referred to by this term could vary according to contractual terms or applicable governing statutes.  Here, the court held that development rights, as defined by the parties, constituted “real property, or a part thereof,” for purposes of RPAPL 1602.

Even so, the Court affirmed the lower court’s dismissal because Plaintiffs failed to establish that the proposed sale of development rights would be expedient.  Specifically, the plaintiffs failed to present any evidence of a proposed buyer for the development rights or the value of the underlying property both with and without the development rights. In addition, Plaintiffs failed to present evidence of any other tangible or intangible benefit that could be achieved by a sale of the development rights, or that the sale was necessary to preserve the property as an asset. Accordingly, the Court held that the Supreme Court properly directed the dismissal of the cause of action pursuant to RPAPL § 1602.

The case was Hahn v Hager, 153 A.D.3d 105 (2d Dep’t 2017).


Second Circuit Court Affirms Denial Of Equal Protection Claim Regarding Off-Street Parking Variance

Almost two years after Plaintiff 26 Seminary LLC purchased the property at issue, the Binghamton City Council adopted Ordinance 009-009, amending Chapter 410 of the Zoning Ordinance of the City of Binghamton to require increased off-street parking, including in residential areas of the city, when a building owner sought to modify the use of an existing structure on the property.  Shortly after the new ordinance was adopted, 26 Seminary LLC sought to renovate and modify the use of parts of the structure on its property. The City of Binghamton's Planning Commission and Zoning Board of Appeals (“ZBA”) denied 26 Seminary LLC's application for a variance from the new off-street parking requirement.  Based upon this denial and other events and interactions with the City that occurred during the application process, 26 Seminary LLC brought a non-class-based equal protection claim. The United States District Court for the Northern District of New York granted summary judgment to Defendants, and the Plaintiffs now appeal.

On appeal, the Second Circuit found that 26 Seminary LLC failed to point to any comparable property as a basis for its equal protection claim. In fact, the Court found that the two properties cited as comparators, 63 Front Street and 46 Seminary Avenue, differed significantly from 26 Seminary Avenue. 46 Seminary Avenue involved conversion from one commercial use to another, and 63 Front Street site had an entirely different classification for zoning purposes than the 26 Seminary LLC’s property. In addition, both sites included some off-street parking accommodation as a component of their proposed site plans, while the site plan for the subject property did not. As 26 Seminary LLC failed to point to any substantially comparable example of the City of Binghamton's applying its zoning law regarding the off-street parking requirement, the issue at the heart of Plaintiff’s equal protection claim, the Court held that summary judgment in favor of the City was appropriate and affirmed the District Court’s decision.

The case was 33 Seminary LLC v. The City of Binghamton, 670 Fed.Appx. 727 (2nd Cir. 2016).


Court Rejects Variance Claim for Billboard As Self-Created Harm

Petitioner Canandaigua National Bank, trustee of the Max M. Farash Declaration of Trust, owned real property in the Town of Gates (“Town”) adjacent to Interstate 390.  Farash had purchased the parcels in 1986, but never developed them. The Trust tried to sell the property in 2009 but the sole offer, from petitioner Expressview Development, Inc., was contingent upon receiving variances from the Town.  Specifically, Expressview wanted to construct billboards visible from the highway, requiring a variance of Gates Code § 190–22(E), which prohibited commercial signs not located on the site of the business for which they advertise.  Expressview sought use and area variances allowing installation of the billboards, but the Town’s Zoning Board of Appeals (“ZBA”) denied the application. Petitioners sought to annul the ZBA determination, arguing the § 190–22(E) was unconstitutional. The lower court dismissed the amended petition-complaint, and petitioners appealed.

On appeal, the Appellate Division, Fourth Department found Petitioners’ main contention, that the ZBA failed to adhere to its precedent, was without merit as petitioners failed to show earlier determinations that were based on essentially the same facts. The Court also found that settlement of a federal lawsuit in 1999 by the Town that permitted installation of certain billboards along the highway by two outdoor advertisers was not a ZBA determination under its administrative variance process.  As such, it was not a ZBA precedent from which departure must be justified.

In addition, the record showed that Farash knew or should have known the extent of the limitations on the property at the time of his purchase, as Farash purchased the property after the approval of the industrial park plan, the adoption of applicable zoning restrictions, and the construction of the highway adjacent to the property. Accordingly, there was substantial evidence to support the ZBA determination that Petitioners hardship was self-created.

Finally, the Court rejected Petitioners’ contention that § 190–22(E) was an unconstitutional restraint on free speech. Using the intermediate scrutiny test for restrictions on commercial speech set forth in Central Hudson Gas & Elec. Corp. v Public Serv. Commn. of N.Y., 447 U.S. 557, 561–566 (1980), the Court found the regulation did not impermissible distinguish between on-site and offsite commercial signs.  Accordingly, the Court modified the order to reinstate the declaratory judgment cause of action and declare the provision constitutional, and affirmed the decision as modified.  

The case was Expressview Development Inc. v. Town of Gates Zoning Bd. Of Appeals, 2017 WL 460597 (4th Dep’t February 3, 2017).


Mark Cuthbertson Published In New York Law Journal

Following the success of his October 18, 2017 presentation to the Suffolk County Village Officials Association, entitled "Homestay Companies: A Guide To Short-Term Rental Regulations," Mark Cuthbertson prepared a journal article detailing the essential elements his presentation.  This article was published in the October 23, 2017 edition of the New York Law Journal.

A reprint of the published article can be downloaded here.


Second Circuit Finds Developer’s Takings Claim Was Ripe Notwisthanding Pending Subdivision Application

In March of 2000, Plaintiff applied to the Planning Board for subdivision approval to develop a nearly 400-acre parcel he buying. The project would include 385 housing units and “an equestrian facility, baseball field, tennis courts, clubhouse, on-site restaurant and a golf course that wove through the property.” In October 2003, the Planning Board “deemed complete” Plaintiff’s Draft Environmental Impact Statement (“DEIS”). However, in 2003 the Town Board approved amended zoning regulations. Plaintiff was assured by the Town Planner that he could meet the new requirements with only “a modest amount of additional work” and would soon receive preliminary approval. Plaintiff revised his plan, but the Town again amended its zoning regulations. Eleven months later, Town amended its zoning law for a third time without informing Plaintiff in advance. Plaintiff revised his application again, and in February 2006, the Town again changed its zoning law without warning.  Plaintiff submitted yet another plan in March 2007, and the Town changed its zoning for the fifth time, again without notice. Plaintiff then filed suit in federal court. The District Court held Plaintiff had failed to show that seeking a final decision from the Town would be futile, and Plaintiff appealed.

On appeal, Plaintiff conceded that the Town has not reached an official final decision, but argued that he did not need to meet this requirement of the ripeness doctrine because of the futility exception. The Court reasoned that requiring Plaintiff to persist with this protracted application process to meet the final decision requirement would implicate concerns about disjointed, repetitive, and unfair procedures.  Accordingly, the Court ruled Plaintiff’s claim was ripe for review.

With respect to the takings claim, the Court weighed the three Penn Central factors for whether the interference rose to the level of a taking: (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action. On the first prong, the Court held the Town had effectively prevented Plaintiff from making any economic use of his property. The second was similarly satisfied, as when Plaintiff bought the property, it was already zoned for residential use, and his expectation was that he would begin recouping that investment after a reasonable period to get the Town's approval for some form of development. On the final prong, the Court found the Town's alleged conduct was unfair, unreasonable, and in bad faith. Thus, the court held that Plaintiff stated a non-categorical takings claim and remanded it to be heard on the merits in District Court.

The case was Sherman v Town of Chester, 752 F.3d 554 (2nd Cir. 2014).


Second Circuit Finds Developer’s Takings Claim Was Ripe Despite Pending Subdivision Application

In March of 2000, Plaintiff applied to the Planning Board for subdivision approval to develop a nearly 400-acre parcel he buying. The project would include 385 housing units and “an equestrian facility, baseball field, tennis courts, clubhouse, on-site restaurant and a golf course that wove through the property.” In October 2003, the Planning Board “deemed complete” Plaintiff’s Draft Environmental Impact Statement (“DEIS”). However, in 2003 the Town Board approved amended zoning regulations. Plaintiff was assured by the Town Planner that he could meet the new requirements with only “a modest amount of additional work” and would soon receive preliminary approval. Plaintiff revised his plan, but the Town again amended its zoning regulations. Eleven months later, Town amended its zoning law for a third time without informing Plaintiff in advance. Plaintiff revised his application again, and in February 2006, the Town again changed its zoning law without warning.  Plaintiff submitted yet another plan in March 2007, and the Town changed its zoning for the fifth time, again without notice. Plaintiff then filed suit in federal court. The District Court held Plaintiff had failed to show that seeking a final decision from the Town would be futile, and Plaintiff appealed.

On appeal, Plaintiff conceded that the Town has not reached an official final decision, but argued that he did not need to meet this requirement of the ripeness doctrine because of the futility exception. The Court reasoned that requiring Plaintiff to persist with this protracted application process to meet the final decision requirement would implicate concerns about disjointed, repetitive, and unfair procedures.  Accordingly, the Court ruled Plaintiff’s claim was ripe for review.

With respect to the takings claim, the Court weighed the three Penn Central factors for whether the interference rose to the level of a taking: (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action. On the first prong, the Court held the Town had effectively prevented Plaintiff from making any economic use of his property. The second was similarly satisfied, as when Plaintiff bought the property, it was already zoned for residential use, and his expectation was that he would begin recouping that investment after a reasonable period to get the Town's approval for some form of development. On the final prong, the Court found the Town's alleged conduct was unfair, unreasonable, and in bad faith. Thus, the court held that Plaintiff stated a non-categorical takings claim and remanded it to be heard on the merits in District Court.

The case was Sherman v Town of Chester, 752 F.3d 554 (2d. Cir. 2014).


Appeals Court Affirms Dismissal Of Substantive Due Process Claim Based on Planning Board’s Refusal to Adopt 25-Year-Old SEQRA Review

In 1987, the Town of Union Vale Planning Board issued a negative declaration pursuant to the State Environmental Quality Review Act (SEQRA) regarding a proposal to subdivide a 950-acre parcel of real property owned by plaintiffs/petitioners.  Plaintiffs/petitioners later sought and received approval to subdivide a portion of the property, which was developed.

In 2012, plaintiff/petitioner Dryfoos, to whom a portion of the property had been sold, applied for preliminary plat approval to subdivide the remainder of the parcel using the 1987 negative declaration. The Planning Board found that the 1987 negative declaration was inapplicable and ruled the application was incomplete. Plaintiffs/petitioners commenced this action to recover damages pursuant to 42 USC § 1983, claiming the Planning Board's determination violated their substantive due process rights. The trial court granted the branch of defendant/respondent's motion alleging a violation of constitutional rights pursuant to 42 USC § 1983, and denied plaintiffs/petitioners’ motion for leave to renew their opposition.  Plaintiffs/petitioners appeal.

The Appellate Division, Second Department stated that to establish a violation of substantive due process, plaintiffs must establish “a cognizable or vested property interest, not the mere hope of one.” Here, plaintiffs/petitioners were required to establish a “legitimate claim of entitlement” to have the 1987 negative declaration applied to their present application. As the Planning Board's discretion was not “so narrowly circumscribed” that approving the application of the 1987 negative declaration was “virtually assured,” plaintiffs/petitioners failed to allege a cognizable property interest.

The case was Leonard v Planning Bd. of Town of Union Vale, 136 A.D.3d 873 (2d Dep’t 2016).


Mark Cuthbertson Gives Presentation On Short-Term Rental Regulations to SCVOA

On October 18, 2017, Mark Cuthbertson gave a presentation at the Suffolk County Village Officials Association's annual municipal training event.  Mr. Cuthbertson's presentation, entitled "Homestay Companies: A Guide To Short-Term Rental Regulations," examined different approaches to regulating short-term rentals in light of the unique regulatory challenges posed by companies such as AirBnB. 

A copy of the PowerPoint that accompanied  Mr. Cuthbertson's presentation can be downloaded here.


Appellate Court Holds Town Findings Underlying Zoning Determinations Must Be Based Upon Fully Developed SEQRA Record

In 2003, Plaintiff Troy Sand & Gravel Company, Inc. (“Plaintiff”) applied for a mining permit from the Department of Environmental Conservation (“DEC”) to operate a quarry in the Town of Nassau, Rensselaer County. Plaintiff also applied for a special use permit and site plan approval from defendant Town of Nassau. DEC, as the lead agency for a coordinated review under the State Environmental Quality Review Act (“SEQRA”), issued a positive declaration, and Plaintiff prepared a draft environmental impact statement in 2006. After a public hearing and comments, Plaintiff prepared a final EIS in 2007. Thereafter, DEC issued its SEQRA findings, approved the project, and granted the mining permit.

Following DEC’s approval, the Town filed an action challenging DEC’s findings, and in the subsequent years the parties have litigated at least three related actions that have come before the Appellate Division, Third Department.  The instant case arose when Plaintiff filed a declaratory judgment action seeking a declaration that the Town was from conducting its own review of the environmental impact of the proposed quarry as part of its zoning determination.  The trial court granted a preliminary injunction to that effect, but the Third Department reversed and vacated the injunction on appeal. The Town Board then rescinded its determination that the permit was complete, and Plaintiff commenced a separate Article 78 proceeding to reverse the decision and for a declaratory judgment that the Town was limited to relying on the existing SEQRA record to justify its determination.  As the Supreme Court refused to allow consolidation of the Article 78 and pending appeal, the Third Department addressed the Article 78 in a separate, simultaneously issued decision that refers.

As a preliminary matter, the Court noted that while the Town is bound by DEC's SEQRA findings and may not repeat the SEQRA process, it still retains authority to make an independent review of Plaintiffs' application for a special use permit based on the standards laid out in the applicable zoning regulation. Here, the full SEQRA record, spanning thousands of pages, reflected the hard look taken by DEC at the proposed quarry's environmental impacts, made with the Town's extensive involvement. Allowing the Town to rely on information outside of the SEQRA record would undermine the efficiency and coordination goals of SEQRA. Accordingly, the Court held that the Town must base its determination of the environmental impact for zoning purposes on the record developed as part of the coordinated review conducted pursuant to SEQRA.

The case was Troy Sand & Gravel Co. Inc. v. Town of Nassau, 125 A.D.3d 1170 (3d Dep’t 2015).  The Article 78 was decided in a separate, but related decision, Troy Sand & Gravel Co. Inc. v. Town of Nassau, 125 A.D.3d 1188 (3d Dep’t 2015).


Second Department Upholds Conditions on Parking Variance

Petitioner sought to demolish the structure on its property and construct a 5,400 square-foot restaurant in its place. The Village of Rockville Centre’s (“Village”) Zoning Code required Petitioner to have 54 off-street parking spaces. As the property did not have any off-street parking, Petitioner proposed to merge the subject property with the adjoining lot that it also owned. This would allow Petitioner to utilize an exception to the off-street parking requirement for “interior restaurants that abut municipal parking fields,” as the adjoining property was adjacent to a municipal parking lot. When Petitioner’s restaurant was substantially completed, the Building Department discovered that the proposed merger had never taken place. As such, the Building Department directed Petitioner to apply for a parking variance. Petitioner applied, relying on a license agreement which allowed the petitioner access to the adjoining property’s 40 exclusive parking spaces between 4:00 p.m. and 12:30 a.m. on Monday-Friday. The Village’s Zoning Board of Appeals (Z”BA”) granted the parking variance but imposed the conditions that the restaurant’s operating hours be restricted to the times in the lease agreement, and mandated valet parking. Petitioner commenced a CPLR article 78 proceeding to annul these conditions. The Supreme Court granted Petitioner’s request, and the ZBA appealed.

On appeal, the Second Department found that the ZBA’s conditions were proper because they “related directly to the use of the land and were intended to protect the neighboring commercial properties from the potential adverse effects of the petitioner’s operation, such as the anticipated increase in traffic congestion and parking problems.” The ZBA’s rationale was supported by empirical and testimonial evidence, as Petitioner’s own expert stated that there was a high demand for parking in the area of the subject restaurant. Accordingly, the petition to annul the conditions restricting hours of operation and requiring valet parking was denied.

The case was Bonefish Grill, LLC v Zoning Board of Appeals of the Village of Rockville Centre, 2017 WL 4275872 (2d Dep’t September 27, 2017).



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