Daily Development for
Friday, November 6, 1997

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

ZONING AND LAND USE; VARIANCE: Property owner that had obtained zoning variance to permit commercial use (movie theater) on property originally zoned for residential use could not sell air rights to adjacent property owner so that adjacent property owner could construct a larger residential multiple dwelling.

Bella Vista Apartment Company v. Bennett, 655 N.Y.S.2d 742 (Ct. App. 1997).

In this interesting case, landowner A and landowner B owned adjacent properties subject to residential zoning restrictions. Landowner A obtained a zoning variance to construct a movie theater on the property. When landowner B wanted to construct an apartment building on his property, he could not build the building he wanted because the lot fell short of the requisite floor area ratio and bulk zoning specifications. Accordingly, landowner B bought the extra development rights from landowner A in an effort to satisfy the shortfall.

The zoning board of appeals refused to provide a building permit premised on the creative combination. Two lower courts disagreed and ordered the Department of Buildings to issue the permit. New York's highest court reversed on the theory that once the use variance had been granted, the entire property was subject to commercial zoning and "bonus development rights could not be transferred."

Part of the reason for this determination was that a zoning variance is granted for the purpose of realizing a reasonable return under permissible uses and that the inability to achieve a reasonable return is part of the reason a variance is granted. If an owner can then use and sell at a profit extra development rights not consistent with the use variance, it would receive a windfall. Accordingly, the beneficiary of a variance is bound by the explicit terms of the variance and must seek additional authorization from the zoning board before transferring prevariance rights and benefits to adjoining owners, otherwise the premium on top of the variance from sale of development rights contradicts the "no-reasonable return" predicate finding necessary to obtain the use variance in the first instance.

Comment 1: The editor thought that the landowner's scheme was such a nifty idea that he reported the case even though it was a loser at the highest appeals court level in New York. Would the scheme work if it did not involve variance property? One would assume that if a party owned two adjacent lots, it could take advantage of the total space in both lots to satisfy density requirements, assuming that it otherwise met setback and other boundary-specific regulations. Assuming that both properties are zoned residential, and one of them is underdeveloped, would it be possible for the underdeveloped owner to sell air rights (or make some other density right transfer) to the neighbor, so that the neighbor could develop at a higher density? The court's refusal to permit this practice with regard to a varianced property would not apply in the hypothetical situation.

Comment 2: Are there reasons for a variance other than hardship that would belie the court's argument that the varianced landowner is estopped from selling density benefits to his neighbor when he has taken advantage of a hardship exception? DIRTers more conversant with zoning practices may be able to suggest some.

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