IN RE TULIP GARDENS v. ZBA OF HEMPSTEAD

Full title: IN THE MATTER OF THE APPLICATION OF TULIP GARDENS, INC. and HIDIR YILDIZ…

Court: Supreme Court of the State of New York, Nassau County

Date published: Mar 2, 2011

2011 N.Y. Slip Op. 30610 (N.Y. Sup. Ct. 2011)

2011 N.Y. Slip Op. 50398

Opinion

016743/10.

March 2, 2011.

[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] Present: HON. RANDY SUE MARBER, Justice.

Papers Submitted:

Notice of Petition....................................X Affirmation in Opposition.............................X Reply Memorandum of Law...............................X

This Petition, brought pursuant to Article 78 of the CPLR seeking a judgment reversing the determination of The Zoning Board of Appeals of the Incorporated Village of Hempstead ("Zoning Board") dated August 5, 2010, which denied the Petitioner, Tulip Gardens, Inc.'s application for a use variance is determined as provided herein.

Tulip Gardens, Inc., (hereinafter referred to as "Tulip Gardens") of which Petitioner, Hidir Yildiz, is the sole shareholder, acquired the property located at 699 Fulton Avenue in the Incorporated Village of Hempstead, (hereinafter referred to as "Village"), which consists of a gas and automobile service station, in April 2008. Shortly thereafter, Tulip Gardens sought permission to convert the three service bays to a convenience store. The Village denied that application on January 21, 2009 on the grounds that the use requested is not permitted in the BG zone under the Village Zoning Code. Only gas stations and accessory minor servicing of motor vehicles is permitted in that zone. See Hempstead Village Code §§ 139-6, 139-113.

Tulip Gardens sought a variance from the Zoning Board. At the hearing, Tulip Gardens established that there are six gasoline service stations within the BG zone that have accessory convenience stores. One was formerly directly across the street from the Petitioners' gas station and more of them are within the Village and along Hempstead Turnpike. Tulip Gardens also noted that a convenience store would not pose the same environmental concerns as a service station. And, it alleged financial hardship. More specifically, it maintained that the service bays could not be rented and were not generating any profit, but a convenience store would. Many area residents spoke in opposition to Tulip Gardens' application, opining, inter alia, that a convenience store would result in increased traffic and attract vagrants and undesirables.

Following the hearing, by decision dated August 6, 2009, applying the criteria set forth at Village Law § 7-712 (b) (3), the Zoning Board denied the variance application. The Zoning Board concluded that "the quality of life in the area would be negatively impacted quite severely because of the added traffic and vehicles in the area going in and out of the premises [and that] [t]he existence of a convenience store would also increase foot traffic of undesirables congregating in the area after hours." It further noted that there are a significant number of convenience stores in the area which would compete with the Petitioners' store. It also noted that the Petitioners should have known that a variance would be required when it bought the property and that the Petitioners would not suffer a hardship if the variance was not granted because the automobile service station would be a good business. It opined that if granted, the variance would not add value to the community.

Tulip Gardens brought an Article 78 proceeding challenging that determination and by order dated December 22, 2009, (Diamond, J.) this court remanded the matter to the respondent Zoning Board for a determination pursuant to Village Law § 7-712-b (2) (c) as to whether the Petitioner, Tulip Gardens was entitled to a use variance.

On remand, Tulip Gardens modified its application to seek a use variance for only one bay as a convenience store. It also agreed that no beer or alcoholic beverages would be sold there and that the hours of operation would be limited from 6:00 a.m. to 10:00 p.m. Furthermore, at the hearing, it offered to eliminate the curb cut on Surrey Lane, leaving access to and from its property only via Fulton Avenue. By decision dated August 5, 2010, the Zoning Board denied Tulip Gardens' application for a use variance. This proceeding ensued.

On remand, after additional hearings, the Zoning Board found that Tulip Gardens failed to establish that it could not realize a substantial reasonable return on its investment absent the use variance. It rejected Tulip Gardens' accountant, Glenn Ross, CPA's conclusions as "incomplete and skewed." It noted that in assessing the profitability of the property, Ross failed to personally audit Tulip Gardens' records and instead blindly relied on information provided him by Tulip Gardens; failed to include the bay rentals of $3,500 per month which were to be reduced to $2,500 per month; and, improperly took deductions for land depreciation. The Zoning Board also found that the character of the neighborhood would be negatively affected in light of nearby residents' complaints of hampered ingress and egress between Surrey Lane to Fulton Avenue because of the automotive stations' customers, which, they maintained also increased the number of traffic accidents. The Zoning Board also found that the alleged hardship and need for the use variance was clearly self-created because a valid pre-purchase financial analysis was not done and Mr. Yildiz simply and improperly proceeded with the purchase with the expectation that a use variance would be granted since numerous gas stations with convenience stores already existed. The Zoning Board rejected the testimony of Ken Byer, President of the Long Island Gas Retailers Association, that when purchasing a gas station, he simply drove by it to check it out and did not document the financial cost analysis. The Zoning Board rejected that as an acceptable means of purchasing a gas station or any other similar type of business. It concluded that the Petitioner's "failure to do a pre-purchase analysis is a strong indication that the hardship imposed upon [it] is of [its] own doing."

"Generally, a court may set aside a local zoning board's determination considering a variance application only if the zoning board acted illegally, arbitrarily, abused its discretion, or succumbed to generalized community opposition, and must sustain the determination if it has a rational basis in the record." Ramundo v. Pleasant Valley Zoning Bd. of Appeals, 41 A.D.3d 855, 858 (2^nd Dept. 2007), citing Pecoraro v. Board of Appeals of Town of Hempstead, 2 N.Y.3d 608, 613 (2004); Ifrah v. Utschig, 98 N.Y.2d 304, 308 (2002); Mattiaccio v. Zoning Bd. of Appeals of Village of Pleasantville, 22 A.D.3d 758, 758-759 (2^nd Dept. 2005); see also, Westbury Laundromat, Inc. v. Mammina, 62 A.D.3d 888 (2^nd Dept. 2009); Matter of Jul-Bet Enterprises, LLC v. Town Bd. of Town of Riverhead, 48 A.D.3d 567 (2^nd Dept. 2008).

"To qualify for a use variance premised upon unnecessary hardship there must be a showing that (1) the property cannot yield a reasonable return if used only for permitted purposes as currently zoned, (2) the hardship resulted from unique characteristics of the property, (3) the proposed use would not alter the character of the neighborhood, and (4) the alleged hardship was not self-created." Miller Family Ltd. Partnership v. Trotta, 23 A.D.3d 389, 389, 390 (2^nd Dept. 2005), citing Town Law § 267-b [b]; Village Bd. of Village of Fayetteville v. Jarrold, 53 N.Y.2d 254, 257 (1981); Matter of Otto v. Steinhilber, 282 N.Y. 1, 76 (1939), rearg den., 282 N.Y. 681 (1940); Elwood Properties, Inc. v. Bohrer, 216 A.D.2d 562, 563 (2^nd Dept. 1995); see also Westbury Laundromat, Inc. v. Mammina, supra at p. 1029; 194 Main, Inc. v. Board of Zoning Appeals for Town of North Hempstead, 71 A.D.3d 1028 (2^nd Dept. 2010).

"With regard to the first element, the applicant must establish that `no permissible use will yield a reasonable return' by means of `proof, in dollars and cents from, of all matters bearing upon the return available under existing zoning.'" Westbury Laundromat, Inc. v. Mammina, supra, at p. 891, quoting Matter of Village Bd. of Village of Fayetteville v. Jarrold, supra, citing Young Women's Hebrew Ass'n v. Board of Standards and Appeals of City of New York, 266 N.Y. 270, 275 (1935), rearg den., 266 N.Y. 672 (1985), app dism. sub nom. Gelkom Realty Corporation v Young Women's Hebrew Ass'n, 296 U.S. 537 (1935); 2 Anderson, New York Zoning Law and Practice, § 18:12; Rathkopf, Zoning and Planning, § 38.03; Forest v. Evershed, 7 N.Y.2d 256, 263 (1959); and citing Ferruggia v. Zoning Bd. of Appeals of Town of Warwick, 233 A.D.2d 505 (2^nd Dept. 1996. "[A] `use variance may not be granted merely because the zoning ordinance proscribes the `highest and best' use of the land, or because the variant use will yield a higher return than those permitted by the zoning regulations.'" Westbury Laundromat, Inc. v. Mammina, supra, at p. 891, quoting Matter of Governale v. Board of Appeals of Town of Brookhaven, 121 A.D.2d 539, 540 (2^nd Dept. 1986), citing Croissant v. Zoning Bd. of Appeals of Town of Woodstock, Ulster County, 83 A.D.2d 673 (3^rd Dept. 1081), app dism., 55 N.Y.2d 826 (1981); Congregation Beth El of Rochester v. Crowley, 30 Misc.2d 90 (Supreme Court Monroe County 1961), citing Matter of Elwood Properties v. Bohrer, supra. One who purchases property with knowledge that it is not zoned for the desired use creates their own hardship. 194 Main, Inc. v. Board of Zoning Appeals for Town of North Hempstead, supra, at p. 1029, citing Matter of Clark v. Board of Zoning Appeals of Hempstead, 301 N.Y. 86, 89 (1950), cert den., 340 U.S. 933 (1951); Miller Family Ltd. Partnership v. Trotta, supra, at p. 390; Friends of Lake Mahopac v. Zoning Bd. of Appeals of Town of Carmel, 15 A.D.3d 401, 402-403 (2^nd Dept. 2005).

"[A] [determination] of an administrative agency which neither adheres to its . . . prior precedent nor [sets forth] its reasons for reaching a different result on essentially the same facts is arbitrary and capricious." London v. Zoning Bd. of Appeals of Town of Huntington, 49 A.D.3d 739,740 (2^nd Dept. 2008), lv den., 10 N.Y.3d 713 (2008), citing Tall Trees Const. Corp. v. Zoning Bd. of Appeals of Town of Huntington, 97 N.Y.2d 86, 93 (2001); see also, Knight v. Amelkin, 68 N.Y.2d 975, 977 (1986). Thus, "where . . . a zoning board is faced with an application that is substantially similar to a prior application that had been previously determined, the zoning board is required to provide a rational explanation for reaching a different result." Lucas v. Board of Appeals of Village of Mamaroneck, 57 A.D.3d 784, 785-786 (2^nd Dept. 2008), citing Campo Granchildren Trust v. Colson, 39 AD3d 746, 747 (2^nd Dept. 2007); Matter of Mobil Oil Corp. v. Village of Mamaroneck Bd. of Appeals, 292 A.D.2d 679, 681 (2^nd Dept. 2002). Reversal is mandated "even if there may otherwise be evidence in the record sufficient to support the determination." Lucas v. Board of Appeals of Village of Mamaroneck, supra, at p. 785, citing Campo Grandchildren Trust v. Colson, supra, at p. 747; Corona Realty Holdings, LLC v. Town of North Hempstead, 32 A.D.3d 393, 395 (2^nd Dept. 2006).

At the hearing, the Petitioners noted that of the 13 BG zoned properties in the Village, 11 of them are either gas stations with convenience stores or convenience stores. The Petitioners noted that there were four BG zoned gas stations in the Village which have been granted use variances for convenience stores, as well as a former one directly across the street from its location. No mention of these comparative properties was made by the Zoning Board in its decision even though the Mobil station directly across the street in particular is of noted similarity to the Petitioners' proposed use. The Zoning Board's failure to differentiate, distinguish or explain their divergent determinations alone requires annulment of its decision. See, Lucas v. Board of Appeals of Village of Mamaroneck, supra; see also, Matter of Charles A. Field Delivery Service, Inc, 66 N.Y.2d 516, 517 (1985); Lyublinskiy v. Srinivasan, 65 A.D.3d 1237 (2^nd Dept. 2009); Menachem Realty Inc. v. Srinivasan, 60 A.D.3d 854 (2^nd Dept. 2009); Bassano v. Town of Carmel Zoning Bd. of Appeals, 56 A.D.3d 665 (2^nd Dept. 2008); Civic Ass'n of Setaukets v. Trotta, 8 A.D.3d 482 (2^nd Dept. 2004).

In any event, assuming, arguendo, that reversal was not required on that ground, the Zoning Board's findings lack support in the record.

The court initially notes that contrary to the Petitioners' position, their hardship was for the most part self-created. The property was acquired knowing that a use variance would be required. That the Petitioners saw fit to take a calculated risk that they would procure a use variance in light of how many had been granted does not alter that fact. See Diana v. City of Amsterdam Zoning Bd. of Appeals, 243 A.D.2d 939 (3^rd Dept. 1997).

Nevertheless, the Zoning Board did not maintain that the hardship is not unique and it appears it is.

In addition, the Zoning Board improperly baldly rejected the Petitioners' CPA, Ross' financial data on the grounds that he did not formally audit Tulip Gardens' books but instead relied on information supplied by Mr. Yildiz. Ross testified that "valuation experts in general across the country in every type of report [they] do, . . . do not audit. The information is provided to [them] and [they] accept it at face value that it is correct and accurate." There is no evidence to refute that. Additionally, Ross specifically testified that in evaluating the Petitioners' gasoline profits, he relied on required New York State tax returns setting forth the number of gallons pumped.

Furthermore, the Zoning Board's finding that the Petitioners did not demonstrate that it was unable to realize a reasonable return on the property if not granted a variance is not founded in the record. Glen Ross, CPA, testified on behalf of the Petitioners that gas stations average a profit of $0.13 a gallon, and that $0.04 of that goes toward payroll, $0.04 goes toward credit card fees, and $0.04 goes toward rent. Mr. Ross stated these numbers are published averages. The Petitioners own the subject property so they do not have to pay rent. In lieu of rent, Mr. Ross took into account the depreciation in value of the property and its improvements. Mr. Ross utilized the Petitioners' tax returns which require gas station owners to list the number of gallons bought and sold to determine that based upon the aforementioned $0.13 per gallon profit, the Petitioners earn a little under $6,000 a month. Mr. Ross then took into account the Petitioners' costs, which include (on a monthly basis):

payroll ............................... $9,000.00 electric bills ........................ $1,000.00 insurance ............................. $ 400.00 heat .................................. $ 100.00 telephone ............................. $ 150.00 property and equipment maintenance contract .................. $1,000.00

On top of all those monthly expenses, Mr. Ross noted that the Petitioners also pay approximately $40,000 in property taxes (which prorates to $3,333.33 per month) between property taxes paid to the Village of Hempstead, the County of Nassau, and school taxes. Based upon the profits and expenses, Mr. Ross determined that the Petitioners are losing a little over $9,000 per month. While Mr. Ross did not include the bay rentals, which certainly appears to be unfounded, even including the rental income, whether it be $3,500 per month or $2,500 per month, the Petitioners are still operating at a loss of $5,500 or $6,500 per month. Similarly, even if Mr. Ross should not have taken depreciation into account, a profit was still not being made. While there is no hard and just rule on "reasonable return," as each case turns on its own facts and circumstances ( Soho Alliance v. New York City Bd. of Standards and Appeals, 264 A.D.2d 59, 69 [1^st Dept. 2000], aff'd, 95 N.Y.2d 437), a loss hardly qualifies.

As for the character of the neighborhood, in light of the absence of any evidence that a convenience store would increase traffic, the Zoning Board improperly relied on residents' complaints regarding the current traffic conditions in finding that a use variance would further negatively affect the neighborhood's character. In addition, the Zoning Board completely failed to consider the Petitioners' agreement to eliminate the curb cut on to Surrey Lane and the affect that would have on the traffic complaints.

In view of the foregoing, the Zoning Board's denial of the Petitioners' application for a use variance was arbitrary and capricious. This matter is remanded to the Zoning Board for the granting and issuance of the use variance accompanied by reasonable conditions similar to those already agreed to by the Petitioners.

This constitutes the decision and order of this court.