COURT OF APPEALS DETERMINES THAT TOWN IMPROPERLY EXERCISED ZONING POWERS IN ADOPTING ORDINANCE

Land Use

Recently, the Court of Appeals issued a decision which limits a municipality’s ability to exercise its zoning powers and reinforced the principle that zoning is concerned with the use of land and not the identity of the user.

In 2006, the Town of Hempstead adopted section 302(K) of its Building Zoning Ordinance (“BZO”) to restrict the location of check-cashing establishments to Y Industrial and LM Light Manufacturing Districts in the Town.  Several check-cashing businesses brought an action for declaratory judgment challenging the validity of the provision and also seeking an injunction against enforcement of the section.

In Sunrise Check Cashing and Payroll Services Inc, v.Town of Hempstead, 2013 N.Y. Slip Op. 00949 (February 14, 2013), the Court of Appeals determined that section 302(K) was an invalid exercise of the zoning powers granted to the Town under New York State Town Law §261 and struck the provision.

As noted by the Court, in adopting the Code provision the Town relied on a memorandum supporting the legislation which “was directed at the social evil of check-cashing services, which were thought to exploit the younger and lower income people who are their main customers.”  In the Court’s opinion, this was not a valid basis for the exercise of the Town’s zoning powers because it was “concerned not with the use of the land but the business done by those who occupy it.”

More importantly, the Court rejected the Town’s argument that the ordinance must be upheld based on the principle that deference is generally accorded to legislative enactments.  In the Town’s view “if any valid purpose for the enactment can be imagined, the body enacting it must be deemed to have had that purpose in view.”  On this point, the Town cited to a case where a court noted that check-cashing businesses were the subject of various types of violent crime.  According to the Town, even though this information was not in the record in support of the ordinance, the Town should be deemed to have considered these facts in making it decision.

The Court refused to extend the deference to legislative enactments to situations involving the abuse of zoning powers where the record plainly demonstrated that the municipality had clearly considered factors beyond the legitimate objects of zoning powers.

Nevertheless, it cannot be said that the Court completely closed the door on the Town’s ability to restrict certain uses to particular zones within the Town.  In fact, the Court appears to indicate that if the Town’s justification for the ordinance had been based on a negative secondary effect such as the increased likelihood of violent crime that the ordinance may have withstood judicial scrutiny.

The lesson to be taken from this case is that the power to restrict the location of particular uses is not unfettered and municipalities must be mindful of the objectives of zoning when attempting to do so.

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