Criteria for an Application for a Use Variance Explained—Not Met Here

The Third Department reversed Supreme Court’s dismissal of a petition to annul the zoning board of appeals’ grant of a use variance to the respondent.  Respondent operates a manufacturing facility in a residential zone.  The facility pre-dated the ordinance making the zone exclusively residential.  The Third Department, in a previous appeal, determined that an addition to the manufacturing facility constituted an unlawful expansion of a nonconforming use.  Thereafter the respondent procured a use variance from the zoning board of appeals.  In concluding the use variance must be annulled, the Third Department explained that the applicant for a use variance must demonstrate the property cannot “yield a reasonable return if used for any of the purposes permitted as it is currently zoned…”.  In this case, the respondent was required to show that using the property for manufacturing without using the disputed addition would not yield a reasonable return. And the respondent was required to demonstrate that converting the entire property, not just the disputed addition, to residential use would not yield a reasonable return.  The respondent indicated only that the addition would be used to store old equipment and only attempted to demonstrate that conversion of the disputed addition (not the entire property) to residential use would not yield a reasonable return. Neither showing was sufficient:

An applicant for a use variance bears the burden of demonstrating, among other things, that the property cannot yield a reasonable return if used for any of the purposes permitted as it is currently zoned (see Town Law § 267-b [2] [b]…). Where, as here, a use variance is sought to expand a nonconforming use, “the applicant must demonstrate that the land cannot yield a reasonable return if used as it then exists or for any other use allowed in the zone” … . Such an inability to yield a reasonable return must be established through the submission of “dollars and cents” proof with respect to each permitted use (… .

Since the operation of the industrial manufacturing facility, as it existed at the time the prohibitory zoning ordinance was enacted in 1983, was a nonconforming use that was permitted to continue because the property was devoted to such a use before the ordinance took effect, it was a use that was permitted in that zone. Further, the property is located in an R1 residential district and, thus, residential uses were also permitted in that zone. Therefore, respondents had the burden of proving that their property could not yield a reasonable return if used as a presently existing nonconforming use — i.e., as a manufacturing facility without use of the addition for manufacturing purposes — or if used for any residential use … . Respondents’ proof was insufficient to meet either of these showings.

With regard to whether the property could yield a reasonable rate of return if continued to be used for manufacturing purposes without utilizing the 800-square-foot addition, the evidence presented at the hearing established that the addition is used to house older equipment that has been replaced by more advanced, efficient equipment. * * *

Even if there were sufficient proof to demonstrate an inability to realize a reasonable return on the property if used as it presently exists for manufacturing purposes, no evidence was presented as to the financial implications of converting the entire property to residential use, [*3]which is a use permitted in that zone. While financial evidence was presented on the cost of converting the addition to a residential use, “[it] is . . . with respect to the whole tract that reasonableness of return is to be measured”… . The fact that respondents’ application for a use variance was limited to the addition is of no moment; the inquiry as to an inability to realize a reasonable return may not be segmented to examine less than all of an owner’s property rights subject to a regulatory regime … . Matter of Nemeth v Village of Hancock Zoning Bd. of Appeals, 2015 NY Slip Op 03008, 3rd Dept 4-9-15