Daily Development for Thursday, September 27, 2007
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

ZONING; LICENSES: Restaurants obtaining of an entertainment license does not amount to an amendment of the zoning classification of the property from restaurant to nightclub use.  Such zoning changes are subject to the full set of land use procedures applicable to the municipality, and cannot be short circuited by the permit process. 

Nouhan v. Board of Adjustment of the City of Clifton, 392 N.J. Super. 283, 920 A.2d 700 (App. Div, 2007); April 19, 2007. 

A group of residents sued a zoning board over its interpretation and enforcement of a zoning ordinance and its grant of a special exception to allow a restaurant to operate as a nightclub in the evening.

The restaurant was authorized to operate as a restaurant as under to operate with a parking area that was too small for its capacity.  The permit required that the applicant maintain a license for  additional parking at a neighboring business's property.  Some years after obtaining this permit, the restaurant began operating a discotheque-nightclub at night, after its normal restaurant operating hours.  It purported to be operating under the authority of an entertainment license granted to it by the municipality.  The nightclub business attracted a substantially greater numbers of patrons than the restaurant business drew, and the number of existing parking spaces was inadequate for the nighttime business. 

The neighboring residents perceived this to be a zoning violation and asked a zoning officer to enforce the violation.  The officer refused to do so, having concluded that the nightclub use was consistent with the conditional use permit for a restaurant.  The residents brought suit challenging the agency's affirmation of the restaurant's operation as a nightclub based on its entertainment license. 

The lower court noted that a municipality has the statutory authority to issue entertainment  licenses to restaurants, and that such a license can be read as part of an overall zoning ordinance that allows for restaurant operation.  The court commented, as had the zoning official in testimony that the neighbors fight was with the City over the entertainment license as it was this license, and not the restaurant zoning, that caused their problem. 

On appeal, the Appellate Division held that the nightclub operation was not a restaurant and had not been blessed as a restaurant under the zoning ordinance simply because it had received an entertainment permit.  A municipality may adopt a zoning ordinance regulating land use only after the land use and housing elements of its master plan have been approved by the planning board.  The board has to approve all zoning proposals and notices of amendments to any prior ordinances.  Ordinance interpretation is also the exclusive exercise of land use boards. Thus, the business license process by which the restaurant had obtained an entertainment permit was not part of the land use process and did not amend the zoning classification of the property, or the limits that it imposed. 

 The regulation of land and of businesses, the Court remarked, should be two separate spheres of municipal regulation.  Therefore, the restaurant's discotheque operation was not a permitted use of the restaurant unless it was permitted under the zoning ordinance or by way of a variance.

Here, the municipality's zoning ordinance specifically did not make discotheques a permitted use in every zoning district.  The special exception originally granted to the restaurant was only to authorize expanded seating for the restaurant; it did not authorize a discotheque or related activities for the space.

Comment: This outcome seems so logical that it is difficult to understand why both the zoning officer and the lower court had different views.  Most states, and especially New Jersey, have elaborate land use planning legislation, both state and local, and land use decisions are based upon a multi-layered analysis that is unrelated to whether a business license ought to issue.

It does seem to the editor, however, that a municipality ought not to issue a business license where the intended use is inconsistent with zoning.  But even if that rule were to apply (as it might have here), the full zoning process of the municipality ought not to be estopped by the judgment of the business license issuer, even if the issuer is the mayor and city counsel.

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