Opinion
C.A. No. 01A-07-007 WCC
Submitted: February 6, 2002
Decided: June 27, 2002
Upon Plaintiff's Appeal from the City of Wilmington Zoning Board of Adjustment. Denied.
James J. Hanley, Esquire, Wilmington, Delaware.
Amy E. Evans, Esquire, Assistant City Solicitor, Wilmington, DE, Attorney for City of Wilmington Zoning Board of Adjustment.
Clifford B. Hearn, Jr., Esquire, Wilmington, DE. Attorney for Donald Kreston.
ORDER
1. On this 27th day of June, 2002, upon consideration of James J. Hanley's ("Hanley") appeal from the City of Wilmington Zoning Board of Adjustment's ("Board") decision to grant a use variance for a commercial entity in a residential area, the City's Response, and Donald Kreston's Response, the following facts are established and legal conclusions are rendered.
2. On September 28, 1998, Donald Kreston ("Kreston"), the owner of Kreston Liquor Mart, purchased residentially zoned property at 900 Concord Avenue ("the property") from Clara Hollis, who occupied the house for twenty-two years. The property is a five-bedroom house, with one bathroom that faces Concord Avenue, a four-lane highway. The property has very little "yard space" if any, and no off street parking. The space that surrounds the property, which could be considered its "yard," is equivalent to two parking spaces. Kreston Liquor Mart, a retail liquor store that has been in business since 1933, sits adjacent to the property. The property presently maintains a residential zoning classification, R-2-A. Kreston is currently using the property's basement for liquor and beverage storage. Truck deliveries, exterior lights, and exterior signs are not permitted so as to eliminate any indication of commercial use.
Kreston filed an application to the Delaware Alcohol Beverage Control Commission ("ABCC") for permission to use the property to store beverages and records, four days after he purchased the property for $115,000. ABCC approved that request on October 22, 1998.
3. After he acquired permission from ABCC, Kreston applied to the Board for a `use' variance to utilize the property for alcohol storage. Before Kreston's hearing, he and the Triangle Neighborhood Association met to discuss concerns about Kreston's plans for the property. Initially, the association was not in favor of Kreston's plan to level the house and use the land for additional parking for his retail liquor store. After meetings and detailed discussions, Kreston agreed not to level the house for parking; he agreed to use the house for storage of alcohol, beverages, displays for the store and other business documents. In addition, the neighborhood association was willing to allow Kreston to use the minimal "yard" space for two additional parking spaces for his staff. Content with these compromises, the neighborhood association supported Kreston's first application for a variance. On June 23, 1999, the Board held a hearing, at which the adjacent neighbor, Hanley, opposed the variance and Kreston's intent on using it as a storage facility. The Board denied Kreston's application, which was immediately followed by a motion for reargument. After unanimously granting Kreston's application for a rehearing, the Board unanimously approved Kreston's request for a `use' variance. Hanley appealed the November 11, 1999 decision to the Superior Court and in a decision rendered by Judge Quillen, the Court reversed the Board's decision. In its August 3, 2000 Opinion letter, the Court concluded that the most significant question was whether Kreston had met both prongs of the `unnecessary hardship' test, which is required for a use variance. The Court held that the Board's decision was not supported by "substantial evidence" as it (1) did not discuss the economic consequences of restoring the house to a residential use; and (2) it had stated in a conclusory manner that Kreston met the first prong of the test, but did not make particularized findings of fact on whether the variance was appropriate, and (3) did not examine why the property could not yield a reasonable rate of return under the current zoning code. Because the Court could not remand the appeal for the Board to clarify or make further findings of fact, the Court reversed the Board's decision but did so without prejudice to allow Kreston to apply again for a variance.
"[A] use variance changes the character of the zoned district by permitting an otherwise proscribed use, whereas an area variance concerns only the practical difficulty in using the particular property for a permitted use." Kwik-Check Realty, Inc. v. Thompson, 389 A.2d 1289, 1291 (Del. 1978).
Kreston asserted in his motion that Hanley, the objector, was first cousins with one of the Board members, who biased the Board's decision to deny Kreston's request.
The Board granted the motion on August 25, 1999.
The second hearing occurred on October 13, 1999, after which the Board issued its written decision on November 11, 1999.
Hanley's first appeal from the Board's November 11, 1999 decision claimed that the Board's decision was not supported by substantial evidence because (1) there was unsworn testimony given by Kreston's representative; (2) Kreston did not show that the use of a house as a residence was economically unfeasible, or that the neighborhood had unique circumstances for a finding of unnecessary hardship; and (3) economic hardship alone is not sufficient to grant a use variance and Kreston's economic hardship was self created. See Hanley v. City of Wilmington Zoning Bd. of Adj., Del. Super. C.A. No. 99A-12-004, Quillen, J. (August 3, 2000) (Letter Op) at 3.
Hanley v. City of Wilmington Zoning Bd. of Adj., at 6.
4. Kreston re-applied for a use variance and the Board held a second hearing on January 24, 2002. After this hearing, the Board found that Kreston had presented expert testimony from realtors supporting the contention that because of the uniqueness of the property and its location, it could not be rented at an adequate price to compensate for the expenses associated with its purchase, renovation and related cost. Thus, he had met the `undue hardship' test required for a use variance. The Board then granted Kreston's variance request and again imposed six mandatory conditions which Kreston had negotiated with the neighbor association.
The Board conditions stated that Kreston (1) must provide an 8 foot fence to screen adjoining the parking lot; (2) that the easement may not be used for deliveries; (3) the easement may not be used during business hours; (4) the two parking spaces could only be used during business hours; (5) Kreston must control any rainwater runoff from the site; and (6) Kreston must remove a blue storage bin from the site. Bd. Dec. at 2.
5. Hanley has again appealed the Board's decision and essentially asserts that the present Board's decision is again not supported by substantial evidence, and that Kreston did not offer evidence showing that the four essential elements of `unnecessary hardship' were established. Kreston and the City of Wilmington assert that the Board's decision was supported by substantial evidence and even if the Board's decision did not articulate in a formal, detailed manner the exact factors it considered and the supporting evidence it attached to those facts, there is ample evidence throughout the record showing the Board's grounds for granting the variance.
6. Upon an appeal from a decision of the Board of Adjustment, the Court must limit its review to correcting errors of law and determining whether substantial evidence supports the Board's findings of fact and conclusions of law. Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Therefore, if the record below contains substantial evidence in support of the Board's findings, the decision will not be disturbed. On appeal from the Board, the Superior Court does not sit as a trier of fact with authority to weigh the evidence, determine questions of credibility, and make its own factual finding and conclusions. The Superior Court must only determine if the evidence is legally adequate to support the agency's factual findings.
See Mellow v. Bd. of Adjustment of New Castle County, Del. Super., 565 A.2d 947, 954 (1988), aff'd 567 A.2d 422 (1989).
See Oceanport Indus. v. Wilmington Stevedores, Inc., Del. Supr., 636 A.2d 892, 899 (1994).
James J. Hanley v. City of Wilmington Zoning Board of Adjustment, C.A. No. 99A-12-004, Quillen, J. (August 3, 2000) (citing Johnson v. Chrysler Corp., 213 A.2d 64, 66-67 (Del. 1965)).
7. 22 Del. C. § 327(a)(3) confers the Board of Adjustment with the authority to issue a zoning variance, which is not contrary to public interest when special conditions or exceptional situations exist and a literal interpretation of the zoning ordinance would result in `unnecessary hardship' or `exceptional practical difficulties' to the property owner. Stated differently, the statute requires a zoning variance applicant to either show exceptional practical difficulty, or unnecessary hardship. Generally, an applicant seeking a use variance bears a heavy burden in showing unnecessary hardship since "a prohibited use, if permitted, would result in a use of the land in a manner inconsistent with the basic character of the zone." "The prerequisite proof of such unnecessary hardship is that: (a) the land cannot yield a reasonable return if used only for the permitted use, (b) the need for the variance is due to unique circumstances and not general conditions in the neighborhood which reflect unreasonableness of the zoning ordinance itself, and (c) the use sought will not alter the essential character of the locality." After noting these three prerequisites in Baker v. Connell, the Court additionally noted the requirement that an applicant show, by monetary proof, that all permitted uses on the land under existing zoning are economically unfeasible, before a variance may be granted.
22 Del. C. § 327(a)(3). The statute also provides that when a variance is permitted, the "spirit of the ordinance" must still be observed, provided the variance can be granted without substantial detriment to the public good and without substantially impairing the intent and purpose of the zoning ordinance.
Baker, 488 A.2d 1303, 1307 (Del. 1985).
Baker, 488 A.2d at 1307 (citing 8 McQuillin, Municipal Corporations § 25.160 (3d ed. 1983)).
Baker, 488 A.2d at 1307.
8. After a review of the Board's second hearing, it appears to the Court that the evidence presented and the Board's decision addressed the concerns expressed by Judge Quillen and is supported by substantial evidence. The first issue presented by Judge Quillen's decision indicated that the "appellant should show in terms of monetary proof that uses permitted on the land under existing zoning are economically unfeasible before a variance may be granted." The Board heard evidence that Kreston's cumulative mortgage payments based upon a typical thirty year mortgage, coupled with insurance and property taxes, would total approximately $1,100 per month. Thus, if the property was utilized as a rental property, an allowed use under the present zoning structure, Kreston would need to net that amount to be financially even. Bert Green, an officer and prior president of the New Castle County Board of Realtors and a current realtor, testified that a reasonable and realistic rent for the property would be approximately $600 a month. Testifying about the feasibility of renting the property, Mr. Green testified:
James J. Hanley v. City of Wilmington Zoning Board of Adjustment, C.A. No. 99A-12-004, Quillen, J. (August 3, 2000) (citing Johnson v. Chrysler Corp., 213 A.2d 64, 66-67 (Del. 1965)).
"It would be very difficult to rent this property. It's a five-bedroom home with one bath. What we call that, in the real estate business, is functional obsolescence. A five-bedroom house is generally suited to a family; not many families would be keen on that location. The location is extremely unique, in that, it's like an island. It's on Concord Avenue. It's backed to a commercial property. It has no off-street parking. Now, there's the two spots you were talking about. But, it really is difficult for somebody to drop off their groceries, to let kids play. I mean it's not very conducive to a family. So, therefore, the rental is very difficult on that. The rental market, which I've done a lot of business in that area, is a very strong excellent area, but that location . . . I would have to concur with the previous letter, saying that six hundred dollars is probably the maximum rental you could get. Because of the uniqueness of the situation, both in terms of the condition of the house but mainly because of the way it's . . . it's like an island, really."
Zoning Board of Adjustment transcript pg. 7.
Mr. Green further indicated:
"Anyone looking to buy a home or rent a home, it's like the least desirable kind of site, that you could ever ask for. It just doesn't offer the kind of amenity that most people would look for in renting a property as a family. If you had young kids you wouldn't want them basically a couple of feet from a busy highway. It's unique in terms of the fact that if you walk around the property you can see it's totally different than the whole community."
"I think that no matter what you do to improve the site, you still have the streets, the lack of any yard space, the lack of, really, any privacy at all. You can't change that. No matter what you do."
Zoning Board of Adjustment transcript pg. 8.
Zoning Board of Adjustment transcript pg. 10.
Based upon this evidence, the Board was free to find that the property could not yield a reasonable return if used only for the permitted use — that is a residence. The Court should also note that it is not impressed by the argument that simply because the property was used as a residence for 22 years by Mrs. Hollis prior to Mr. Kreston purchasing it, that it should remain so. The market and community has changed in 22 years, and the uniqueness of this property is best summed up by Mr. Green when asked how he could make this a viable rental property he responded by answering "you should move the house."
9. The next area of concern expressed by Judge Quillen is the failure of the Board to discuss clearly the economic consequences of restoring the house to residential use. At the hearing, Kreston supplied evidence confirming that the necessary improvements and renovations would cost over $50,000. Kreston received bids from Bellevue Construction Company, and Reybold Construction, two different construction companies, which detailed the kind of improvements that were necessary to renovate the property to bring it up to Code and the expense of those improvements. It was stated at the hearing that Kreston would either have to create two, one bed-room apartments, which would require constructing another kitchen and placing more bathrooms in the house, or he could keep the property as a single family home, but would still have to put in an additional bathroom, as the house currently only has one in relation to its five bedrooms. Regardless of which path Kreston took, he would be forced to expend approximately $50,000 for the repairs and renovations. The asbestos removal alone would cost $2,000, and the lead paint removal would cost approximately $8,000.
The Board also noted it was particularly persuaded by the fact Kreston presented not one, but two different, very qualified realtors, who had the opinion that even with expansive and expensive improvements using the property for residential use would be difficult. In Mr. Taylor's letter of September 3, 1999, he stated:
"there are a number of problems associated with any rental scenario, particularly for the most likely tenants, i.e. a larger family: Concord Avenue is a major thorofare with heavy traffic including large truck traffic; curbside parking is not allowed at that point and there is limited parking in the surrounding neighborhood which is used by those residents; there is virtually no front yard and very little rear yard; and is the only house in the 900 block located adjacent to a parking lot and liquor store.
Based on the value of the house, plus the needed improvements to prepare it for rental, and the above stated negative it will be very difficult to use as a rental property and more importantly to keep it rented at anywhere near the market price for a private residence located reasonably nearby."
In addition, Mr. Green, when questioned about renting the property if the needed renovations were made, testified:
"I think, the rent is really tied to where the house sits. I really do. I mean, if you spent all that money, you'd still have a terrible, terrible problem renting that property. Of course, it would be easier, but on the other hand, your return on investment would be disastrous if you did that. I mean if I were giving someone advice, don't spend that kind of money because it's still going to be a problem because of where it is."
Based upon this evidence, there was substantial evidence to conclude that even with significant renovations, the economic consequences to use the house for residential purposes would be disastrous and would never yield a reasonable return under its existing zoning.
10. During the first, and again in the second hearing, the Board set specific conditions on Kreston's variance. The conditions were mandatory, agreed to by the community and reflect the Board's determination to ensure this variance did not disturb the current neighborhood and its appearance. Some issue has been made by Hanley that Kreston has failed to comply with all of these conditions. However, a fair reading of the record reflects that any delay in compliance is directly contributable to the actions of Mr. Hanley. Kreston stated that he did not want to expend time and money on implementing these conditions if his variance was not going to be granted. This appears to be a sound business decision and adequately explains why Kreston has not satisfied the conditions at this point in time, as required by the Board. If the variance had not been granted, there would be no requirement for Kreston to make these changes, and waiting until the variance is granted is a reasonable course of conduct.
The Board's decision is also reflective of the community sentiment on this issue. It heard testimony from former and present Triangle Neighborhood Association presidents who testified that they were in favor of Kreston's variance two years ago, when he first applied to the Board, as well as now. The association spoke to Kreston's' relationship with the neighborhood and how concerned Kreston was to ensure their happiness with the measures he took. They spoke about the meeting Kreston had with the association, and the conditions they all agreed upon. As the Court has previously held, "the Board's paramount consideration is the public interest, and by its terms, the statute precludes any action which is contrary to that mandate." It appears from the neighborhood association, that the public is in favor of Kreston's variance.
Baker, 488 A.2d at 1307.
11. In considering the three factors, which must be established for a use variance, and the jurisdictional requirement that the applicant show monetary proof that all uses under existing zoning are economically unfeasible, it appears that there was substantial evidence presented at the Board's second hearing to find a use variance should be granted. Although the Board's final decision may not be as detailed as Hanley would like, the entire record of the Board's hearing, the questions it asked, and its examination of the evidence presented, evidences the grounds for its decision. Pursuant to 22 Del. C. § 331, the Board must "show the grounds of the decision appealed from and shall be verified" but the Board's decision is not required to be as formal and detailed as a Court decision.
12. Finally, it is clear from the second hearing's record that the Board did consider the fact that Kreston bought the property knowing it was residentially zoned. Although a board will generally deny a variance request when the hardship has been self-created, "the fact that an applicant has prior knowledge of the existing zoning regulations applicable to the land does not preclude the right to a variance; it is merely an element to be considered in determining the existence of hardship." "If prior knowledge of the zoning regulations acted as a bar to variance applications, it would be virtually impossible to obtain a variance." The Board considered Kreston's prior knowledge of the zoning, it was commented upon by Board member Mark Pilnick when he stated his decision on the record, and the Court cannot find that the Board's decision that the other factors presented as to the economic hardship associated with this property outweighs Kreston's obvious intent never to comply with the property's present zoning is either illegal, unreasonable or not supported by substantial evidence. As noted previously, if knowledge of a zoning regulation was systematically used to deny variance requests, then variances would be obsolete. To adopt Hanley's logic would effectively eliminate any need for use and area variances.
Mesa Communications Group, LLC v. Kent County Board of Adjustment, Del. Super. 2000 WL 33110109, C.A. No. 00A-03-003 (Oct. 31, 2000) (Mem. Op) at *6.
Mesa, at *6.
Id.
13. Given the facts established by the record of the Board's hearing and the Board's written decision, the Court finds that the Board's decision is supported by substantial evidence, is otherwise free from legal error, and the concerns expressed in Judge Quillen's letter Opinion of August 3, 2000 have been adequately addressed. For those reasons, Hanley's appeal is denied, and the Board's decision is affirmed.
IT IS SO ORDERED.