Summary
setting forth the standard of review for statutory certiorari review of municipal zoning board decision
Summary of this case from Brown v. City of WilmingtonOpinion
C.A. No. 99A-12-004-WTQ.
Submitted: July 20, 2000.
Decided: August 3, 2000.
Letter Opinion and Order on Petitioner/Appellant's Petition after the Issuance of a Writ of Certiorari — The Decision of the Board is REVERSED
Dear Mr. Hanley, Mr. Hearn and Ms. Cody:
This is the Court's Letter Opinion and Order on Petitioner/Appellant James Hanley's Petition after the issuance of a Writ of Certiorari to review a ruling of the City of Wilmington Zoning Board of Adjustment ("the Board"). For the reasons stated herein, the decision of the Board is REVERSED.
Mr Hanley is a lawyer, employed by the Department of Justice, but is acting in a pro se individual capacity in this case.
FACTS
This appeal stems from the Wilmington Zoning Board of Adjustment's approval of variance to allow alcohol storage in a residential property located at 900 Concord Avenue in Wilmington. The property in question was purchased by the owners of the Kreston Liquor Mart ("Kreston"), located at 904 Concord Avenue. The property appears to have been purchased on September 29, 1998. Prior to its purchase by Kreston, the house was occupied residentially for twenty-two years by Clara Hollins. The property has a residential zoning classification (R-2-A).
The house and the liquor store are on contiguous properties.
Also, prior to purchasing the property, Kreston knew that the house had some environmental problems. Specifically, Kreston knew that there was some asbestos contamination which required removal. EMR Services July 9, 1998 Environmental Proposal, Dkt. No. 8, Ex. G (3).
Four days after Kreston's purchase of the property, Kreston applied to the Delaware Alcohol Beverage Control Commission ("ABC") for permission to use the house for "storage of beverages and records." Kreston Oct. 2, 1998 Letter, Dkt. No. 8, Ex. G (6). That request was subsequently approved by the ABC on October 22, 1998. ABC Oct. 22, 1998 Letter, Dkt. No. 8, Ex. G (7). Thereafter, Kreston applied to the Board for a variance to use the property for alcohol storage.
The first variance hearing before the Board was held on June 23, 1999. At that hearing, several neighbors who live near the property testified in opposition to the variance. One of those neighbors who spoke out against the variance was James Hanley, Esquire. The Board denied Kreston's application to use the house as a storage facility by a vote of 2 to 1. Thereafter, Kreston filed for reargument of the Board decision, claiming that Mr. James Hanley and Board member John Hanley are first cousins. Because of the perceived conflict, the Board granted a second hearing on the Kreston application.
At the second hearing, Kreston presented to the Board several written estimates for the cost of the repair to the house. The estimated cost for repair ranged between twenty and twenty-five thousand dollars. Repair Estimates, Dkt. No. 8, Ex. G (2) (5). An estimate of the rental value of the house reflected that repairs had to be made, the house sits on a major thoroughfare, has limited parking, and has a limited yard. The rental value of the property is estimated to be $500 to $600 per month, instead of a rental value of $725 to $825 per month, which is typical for houses on the street to the rear of the subject property. Daniel Taylor Letter, Dkt. No. 8, Ex. G (4). In addition to this testimony, several residents wrote letters favoring Kreston's proposal, including the Triangle Civic Association. Dkt. No. 8, Ex. F (3).
Residents James Cycyk and James Ambagis wrote letters indicating they did not oppose Kreston's use of the house for liquor storage. John and Denise Nance, Maureen Bowser, and Scott Harding all wrote letters opposing the variance. See Dkt. No. 8, Ex. F.
Following the second hearing, the Board held, by a unanimous vote, that granting the variance requested by Kreston would not substantially impair the general purpose and intent of the zoning code and the proposed use would not adversely effect the character of the neighborhood. Bd. Decision, Dkt. No. 8, Ex. H (1). The Board further held that because the house was in significant need of rehabilitation to meet habitable occupancy standards, and because there was significant public support for the request, the variance should be granted, subject to certain conditions. Id
The Board also opined, erroneously, that the house was the only residential property fronting on Concord Avenue. The City now concedes that there is another house that fronts Concord Avenue.
Mr. Hanley has filed a Petition following the grant of a Writ of Certiorari, claiming that the Board's decision was not supported by substantial evidence because there was unsworn testimony given by Kreston representatives relied upon when the Board made its decision. Therefore, Hanley claims the record is not sufficient for the grant of the variance. Mr. Hanley also claims that there is a lack of substantial evidence to find an unnecessary hardship for a use variance because Kreston did not show that the use of the house as a residence is economically unfeasible and because there is no need for the variance due to the unique circumstances of the neighborhood. Hanley further argues that the Board decision is legally deficient because economic hardship alone is not a sufficient ground to grant a variance, and that the hardship suffered by Kreston was self-imposed because the property was zoned residential when it was purchased.
STANDARD OF REVIEW
The Supreme Court and this Court have repeatedly emphasized the limited appellate review of the factual findings of an administrative agency. The function of the reviewing Court is to determine whether the agency's decision is supported by substantial evidence and free from legal error. General Motors Corp. v. Freeman, Del. Supr., 3 Storey 74, 164 A.2d 686, 688 (1960); Johnson v. Chrysler Corp., Del. Supr., 9 Storey 48, 213 A.2d 64, 66-67 (1965); Stoltz Management Co. v. Consumer Affairs Bd., Del. Supr., 616 A.2d 1205, 1208 (1992). Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Oceanport Ind, Inc., v. Wilmington Stevedores, Inc., Del. Supr., 636 A.2d 892, 899 (1994); Battista v. Chrysler Corp., Del. Super., 517 A.2d 295, 297 (1986), app. dism., Del. Supr., 515 A.2d 397 (1986).
Certiorari to the Superior Court is, in effect, an appeal, differing only by being confined to the record and requiring a mere ministerial act on the part of the Judge in ordenng issuance of the writ. Chadwick v. Janaman, Del. Supr., 349 A.2d 742, 743 (1975). 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 findings and conclusions. Johnson, 213 A.2d at 66. It merely determines if the evidence is legally adequate to support the agency's factual findings. 29 Del. C. § 10142(d). These standards are generally applicable to review of Board of Adjustment proceedings. See Cooch's Bridge Civic Ass'n v. Pencader Corp., Del. Supr., 254 A.2d 608 (1969); Janaman v. New Castle County Bd. of Adjustment, Del. Super., 364 A.2d 1241 (1976), aff'd, Del. Supr., 379 A.2d 1118 (1977). And, the burden of persuasion is on the party who is seeking to overturn the Board's decision to show the decision was arbitrary and unreasonable. McQuail v. Shell Oil Co., Del. Supr., 183 A.2d 572, 578 (1962); Mobil Oil Corp. v. Bd of Adjustment, Del. Super., 283 A.2d 837, 839 (1971).
This Court and the Delaware Supreme Court have determined that cases cannot be remanded by the Superior Court to the Board of Adjustment. See Hellings v. City of Lewes Bd. of Adjustment, Del. Supr., 734 A.2d 641, No. 35, 1999 (July, 19, 1999) (ORDER) (interpreting the language in 22 Del. C. § 328 (c) as not permitting remand); Fantasia Restaurant Lounge, Inc. v. New Castle County Bd. of Adjustment, Del. Super., 735 A.2d 424 (1998), aff'd, Del. Supr., 734 A.2d 641 (1999). The Board of Adjustment cases are complicated somewhat due to the inability of this Court to remand cases on appeal; this expanded review unfortunately sometimes burdens this Court by having review capacity concurrently with trial-like functions.
DECISION
The Board was asked to grant a use variance for the house located at 900 Concord Avenue. A use variance changes the character of the zoned district by permitting an otherwise proscribed use. Jenney v. Durham, Del. Super., 707 A.2d 752, 756 (1997), aff'd, Del. Supr., 696 A.2d 396 (1997); Bd. of Adjustment of New Castle County v. Kwik-Check Realty, Inc., Del. Supr., 389 A.2d 1289, 1291 (1978). Certainly changing a use from residential to commercial is a classic illustration of a use variance. Kostyshyn v. City of Wilmington Zoning Bd of Adjustment, Del. Super., 89A-DE-1-1-AP, Del Pesco, J. (Apr. 12, 1990). A use variance may be granted by the Board of Adjustment where it is in the public interest to do so and the variance is needed to avoid unnecessary hardship and injustice. Johnson v. McWilliams, Del. Super., C.A. No. 96A-11-014, Silverman, J. (Nov. 19, 1997); Jenney, 707 A.2d at 757 (illustrating that the proper standard to be used in assessing a use variance is the unnecessary hardship test). In order to establish entitlement to a use variance, the appellant must establish that: 1) the property cannot yield a reasonable return when used for a permitted purpose, 2) the plight of the owner is due to unique circumstances, and 3) the use authorized will not alter the essential character of the locality. Hockessin Gulf Inc. v. Bd of Adjustment of New Castle County, Del. Supr., 577 A.2d 753, No. 124, 1990 (June 25, 1990) (ORDER); Homan v. Lynch, Del Supr., 1 Storey 433, 147 A.2d 650, 654 (1959); see also, Baker v. Connell, Del. Supr., 488 A.2d 1303, 1307 (1985).
Generally, the applicant bears a heavy burden of showing unnecessary hardship because the prohibited use, if permitted, would result in a use of the land in a manner inconsistent with the basic character of the zone. Id. (citing 8 McQuillin, Municipal Corporations § 25.160 (3d ed. 1983)). Variances are not justified simply because an applicant would be better off with a variance than without one. Mavrantonis v. Bd. of Adjustment of the City of Wilmington, Del. Super., 258 A.2d 908, 911 (1969). Economic advantage, or conversely, economic hardship alone does not justify a variance. Baker, 488 A.2d at 1306; Homan, 147 A.2d at 654; In Re Emmett S. Hickman Co., Del. Supr., 108 A.2d 667, 674 (1954); Searles v. Darling, Del. Supr., 83 A.2d 96, 100 (1951); Mavrantonis v. Board of Adjustment, Del. Super., 258 A.2d 908, 911 (1969); Reagan v. Heintz, Del. Super., 246 A.2d 710, 712 (1968). And, while a self-imposed hardship normally defeats a right to a variance ( Vassallo v. Penn Rose Civic Ass'n, Del. Supr., 429 A.2d 168, 172 (1981)), 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. Baker, 488 A.2d at 1308; see also 3 Rarhkopf's Zoning and Planning § 38.06 ("It should not be within the discretion of a board of appeals to deny a variance solely because a purchaser bought with knowledge of the zoning restrictions").
Hanley first asserts that it was improper for the Board to rely on Mr. Hearn's statements, as the attorney for Kreston at the hearing, in formulating its decision. This point has some merit. Parts of the tape which recorded the Board of Adjustment hearings were inaudible and could not be transcribed. In assessing the transcript as it exists, the bulk of the commentary is given by Mr. Hearn, as the attorney for Kreston. Mr. Kreston's testimony is minimal, and he appears only to answer questions posed to him by the Board. Beyond that testimony, the only other evidence submitted to support the application was five photographs of the house depicting where the deliveries of alcoholic beverages would be made, three proposals detailing what it would cost to make the improvements on the property, a realtor's letter detailing the current rental value of the property, a survey of the property, and some letters and testimony of residents in support of the project.
The Court does not believe there is any legal requirement for witnesses to be subject to cross-examination by those who object to an administrative application. In a notorious case, such a procedure would invite chaos. Mr. Hanley relies on language from Rollins Broadcasting of Del., Inc. v. Hollingsworth, Del. Supr, 248 A.2d 143, 145 (1968) where the Court spoke of the applicant's duty to meet his burden "by substantial evidence, verbal or documentary, susceptible to cross-examination and rebuttal by opponents and of appellate review by the courts." Suffice it to say that this Court would limit "by opponents" to "rebuttal" and not generally extend it to "cross-examination."
There is no question in this case that the evidence could have and should have been presented in a more formal manner. But the issues were not complex and everyone understood precisely what Mr. Kreston wanted to do. Mr. Kreston was on the witness stand and subject to cross-examination by the members of the Board. The Court finds no error as a matter of law due to the presentation of counsel.
If one goes directly to the statute, 22 Del. C. § 327, one can isolate the issue on appeal. Clearly the Board, on the mixed evidence, could conclude the variance "will not be contrary to public interest." Equally clear, the Board was free to conclude that the variance could be granted with the "spirit of the ordinance, code or regulation . . . observed and substantial justice done" and "without substantial detriment to the public good and without impairing the intent and purpose of any zoning ordinance, code, regulation or map." Indeed, the conditions imposed were designed to improve the "public good" of the residents of the neighborhood and they were reasonably designed for that purpose.
The only significant question is whether "owing to special conditions or exceptional situations, a literal interpretation of any zoning ordinances, code or regulation will result in unnecessary hardship or exceptional practical difficulties to the owner of the property." Mr. Hanley argued vigorously at the Board hearing that the "unnecessary hardship" test had not been met (Tr. at 36) and the Court holds that the Board did not adequately address whether the prongs of the unnecessary hardship test were met in issuing its decision.
On the crucial issue, the evidence is certainly less than overwhelming. And, the evidence is not enhanced qualitatively by its purely hearsay character. It is one thing to say that the rules of evidence are not strictly applicable to administrative hearings, but it is another to say the applicant for an "unnecessary hardship" use variance can establish the economic factor through a letter from a realtor not tested by any examination whatsoever. The key factors in this case appear as follows:
"No one factor determines the question of what is a practical difficulty or unnecessary hardship, but all relevant factors, when taken together, must indicate that the plight of the premises in question is unique in that they cannot be put reasonably to a conforming use because of the limitation imposed upon them by reason of their classification in a specified zone." Homan, 147 A.2d at 654 (citing an early edition of McQuillin, Municipal Corporations).
1. The property was designed for use as a residence.
2. The house was used as a residence up until the purchase by Kreston in September 1998.
3. While the house is in need of some repair, presumably the condition of the house is a factor that could have been considered in the Kreston purchase price.
4. The land for a long time prior to the Kreston purchase was zoned residential, and it still is.
5. Kreston purchased the property with actual knowledge of the zoning.
6. While the house would not bring a residential rental comparable to some houses in the area, it does have a rental value as a residence.
7. Kreston bought the property with the intent to convert the house to a commercial use and, almost immediately, in early October 1998, applied to the Alcoholic Beverage Control commission for permission to use the house for storage.
The situation here is aggravated by the fact that the hardship is self-created. Simply because a hardship is self-created does not legally preclude the grant of a variance. As stated in earlier Delaware cases, purchasing the property with knowledge of the zoning restrictions is one factor to be considered in determining the hardship. Baker, 488 A.2d at 1308; 7 Patrick J. Rohan, Zoning and Land Use Controls, § 43-79, compare 8 Eugene McQuillin, Municipal Corporations, (3d ed.) § 25.166. But it must be considered by the Board. Here, the record is clear that Kreston purchased the property knowing of the residential zoning restrictions and then immediately applied to the ABC for approval to store liquor. Kreston had no intention of attempting to use the house as a residential property; rather, it was purchased to expand the permitted use by providing storage for the store. There would appear to be a certain arrogance involved here. Surely, the Board should have considered the fact that Kreston's hardship was self-created in its decision to grant the variance and at least addressed the issue in the October 13, 1999 decision.
The applicant 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. Baker, 488 A.2d at 1307. Even a desired, needed or justified change in the zoning scheme or ordinance is not normally ground for a variance. Id. at 1308. The Board here held that the property could not yield a reasonable rate of return when used for the permitted use. It appears, however, that the Board did not clearly discuss in its decision the economic consequences of restoring the house to a residential use to determine whether the substantial hardship test was met. The Board simply held that the "condition [of the house], necessitating significant rehabilitation to meet habitable occupance standards, warrant nonresidential use of the property." The Board then merely stated in a conclusory manner that Kreston had satisfied the first prong of the unnecessary hardship standard. See Gilman v. Kent County Department of Planning, Del. Super., C.A. No. 99A-05-001, Ridgely, P.J. (Jan. 28, 2000). The Board did not make particularized findings as to focus on the issue of whether the variance was appropriate and did not attempt to show why the property could not yield a reasonable rate of return under the zoning code. See id. It appears that the critical evidence on this point (the realtor's letter assigning a fair rental value to the property) was not at all scrutinized in the decision written by the Board. Furthermore, it is questionable as to whether the Board in its decision sufficiently discussed whether the plight of the owner was due to unique circumstances and not general conditions of the neighborhood. Baker, 488 A.2d at 1307. The rental value of the house might be a natural reflection of a location next to a liquor store at the City end of the Concord Pike, whichever way that may cut.
Even considering the letter in isolation, it does not seem to prove that "all uses permitted on the land under existing zoning are economically unfeasible." Baker, 488 A.2d at 1307.
I confess to being of a mixed mind on this appeal. On the one hand, the Respondent usually gets all the breaks on a "substantial evidence" review. Moreover, in urging the parties herein to settle, I noted that the liquor store may be the most substantial neighbor that is likely to come to the area. I thought the case could be compromised if Kreston went out of its way to make the residential neighborhood a better place to live. In short, it seemed to me there was a possibility of a "win-win" conclusion of this litigation. So, I am impressed with the potential of legitimizing Kreston's use.
I still think the matter would be better resolved by creative compromise. Indeed, the house looks better in recent months.
But there must be some limit on letting people manipulate the system. Zoning exists for a purpose and the substantial evidence here is substantial evidence to probatively support a variance for unnecessary hardship. This Court does not think the evidence in this case rises to that level.
Thus, the question becomes, what to do next? This appears to be a prime case where remand to the Board would be warranted so that both Kreston and those opposing the petition could supplement the record and the Board could make explicit findings to determine if the subject house property met the standards necessary for a use variance. In short, remand to focus on the issue in the case and to produce a good record. But this Court cannot remand a case to the Board of Adjustment. See Hellings v. City of Lewes Board of Adjustment, Del. Supr., 734 A.2d 641, No. 35, 1999 (July, 19, 1999) (ORDER). Other Judges on this Court have simply reversed the decision below and in effect told the applicant to start over. Anthony v. Board of Adjustment of the City of Lewes et. al., Del. Super., C.A. Nos. 97A-09-005, 97A.09-006, Graves J. (May 19, 1998); Fairwinds Shopping Center, Inc. v. Board of Adjustment of New Castle County, Del. Super., C.A. No. 91A-12-5, Cooch, J. (June 4, 1993). It may well be that the house and the neighborhood would be better off if the conditions imposed by the Board are implemented and the house is used for storage rather than for a residence. But, under the facts presented, the Court cannot hold that the Board's decision is supported by substantial evidence. Therefore, it appears that the appropriate thing to do is simply reverse the Board of Adjustment and allow Board to take a fresh look at Kreston's application in a wholly new proceeding, if Kreston chooses to make a new application.
This Judge supports the comments of Judge Graves made in the case of Anthony v. Board of Adjustment of the City of Lewes et. al., Del. Super., C.A. Nos. 97A-09-005, 97A-09-006, Graves J. (May 19, 1998) when he wrote "I have no authority to remand. Perhaps future legislation will permit a remand so that it will not be necessary for an applicant to go back to square one."
For the foregoing reasons, upon the grant of the Writ of Certiorari, the decision of the Wilmington Zoning Board of Adjustment is REVERSED without prejudice for Kreston to renew its application for a use variance before the Board. IT IS SO ORDERED.