MEMORANDUM OF LAW IN OPPOSITION TO THE VERIFIED PETITION

Transcription

1 STATE OF NEW YORK SUPREME COURT : COUNTY OF ERIE ROBERT FAHNING and ANNE FAHNING, Petitioners, vs. Index No.: /2017 Hon. John F. O Donnell, J.S.C. THE ZONING BOARD OF APPEALS OF THE TOWN OF GRAND ISLAND, NEW YORK and THE TOWN OF GRAND ISLAND, NEW YORK, Respondents. MEMORANDUM OF LAW IN OPPOSITION TO THE VERIFIED PETITION HODGSON RUSS LLP Attorneys for Respondents Daniel A. Spitzer, Esq. Charles W. Malcomb, Esq. The Guaranty Building 140 Pearl Street, Suite 100 Buffalo, New York (716) of 35

2 TABLE OF CONTENTS PRELIMINARY STATEMENT...1 STATEMENT OF FACTS...2 Page A. Petitioners Begin Operating A Short-Term Rental Facility....2 B. Petitioners Commence Litigation Against The Town....3 C. The Town Adopts Local Law No. 9 To Clarify That Short-Term Rental Facilities Are Prohibited....4 D. Petitioners Submit A Deficient Application For An Extension Of The Amortization Period And The ZBA Affords Them Another Opportunity To Provide The Required Information....6 E. Despite The Additional Opportunity To Provide Information To The ZBA, Petitioners Failed To Provide Dollars-And-Cents Proof Demonstrating They Qualify For An Extension....7 F. The ZBA Issues Its Decision Denying Petitioners Application....8 ARGUMENT...9 POINT I. THE ZBA S DETERMINATION SHOULD BE UPHELD BECAUSE PETITIONERS FAILED TO PROVIDE THE ZBA WITH THE DOLLARS-AND-CENTS PROOF REQUIRED TO GRANT AN EXTENSION....9 A. Despite Ample Opportunity To Do So, And Clear Warnings As To The Type Of Information That Would Not Suffice, Petitioners Failed To Provide The Information To The ZBA That Would Justify An Extension The Required Financial Information Follows The Court of Appeals Requirements For Support Of Use Variances B. Petitioners Effort To Include Material Dehors The Record Should Be Rejected...14 i 2 of 35

3 TABLE OF CONTENTS - cont d Page POINT II. AS PETITIONERS HAVE ADMITTED IN PRIOR LITIGATION, LOCAL LAW NO. 9 IS A VALID EXERCISE OF THE TOWN S AUTHORITY AND SHOULD BE UPHELD. THEREFORE, PETITIONERS DUE PROCESS CLAIMS SHOULD BE DISMISSED A. As A Legislative Enactment, Local Law No. 9 Is Presumed Valid; Petitioners Have Failed To Bear Their Heavy Burden To Demonstrate Otherwise B. Nonconforming Uses Are Disfavored And Overriding Public Policy Supports Their Restriction And Eventual Elimination. New York Courts Have Consistently Approved Of Local Laws Terminating Nonconforming Uses After Amortization POINT III. PETITIONERS EQUAL PROTECTION CLAIM IS FRIVOLOUS AND SHOULD BE DISMISSED CONCLUSION...28 ii 3 of 35

4 TABLE OF AUTHORITIES Federal Cases Page(s) Wigginess, Inc. v. Fruchtman, 482 F. Supp. 681 (S.D.N.Y. 1979) aff d 628 F.2d 1346 (2d Cir. 1980) cert denied 449 U.S. 842 (1980)...23 State Cases Acquest Wehrle, LLC v. Town of Amherst, 129 A.D.3d 1644 (4th Dep t 2015)...25, 26 Armdar Realty Co. v. Building Inspector of Village of Tuckahoe, 5 A.D.3d 517 (2d Dep t 2004) lv. denied, 3 N.Y.3d 601 (2004)...25 Asian Americans for Equality v. Koch, 72 N.Y.2d 121 (1988)...16, 18, 21 Bower Assocs. v. Town of Pleasant Valley, 2 N.Y.3d 617 (2004)...26 Bowers Assocs. v. Town of Pleasant Valley, 304 A.D.2d 259 (2d Dep t 2003) aff d 2 N.Y.3d 617 (2004)...25 Brown v. Bd. of Educ. Of Mahopac Cent. School Dist., 129 A.D.3d 1067 (2d Dep t 2015)...15 Cavaglia v. Town of Islip, 73 N.Y.2d 544 (1989)...20, 27 Cerame Irrevocable Family Trust v. Town of Perinton Zoning Bd. of Appeals, 6 A.D.3d 1091 (4th Dep t 2004)...9 Congregation Beth El of Rochester v. Crowley, 30 Misc.2d 90 (Sup. Ct. 1961)...11 Crossroads Recreation, Inc. v. Broz, 4 N.Y.2d 39 (1958)...11 Dur-Bar Realty Co. v. City of Utica, 57 A.D.2d (4th Dep t 1977)...15 Featherstone v. Franco, 95 N.Y.2d 550 (2000)...15 iii 4 of 35

5 TABLE OF AUTHORITIES - cont d Page(s) Ferruggia v. Zoning Bd. of Appeals of Town of Warwick, 233 A.D.2d 505 (2d Dep t 1996)...12 First National Bank of Glens Falls v. Sheehan, 30 A.D.2d 912 (3d Dep t 1968)...9 Fred F. French Investing Co., Inc. v. City of New York, 39 N.Y.2d 587 (1976)...18, 27 Fusco v. Town of Oyster Bay, 23 Misc.2d 72 (Sup. Ct. 1960)...11 Gernatt Asphalt Prods, v. Town of Sardinia, 87 N.Y.2d 668 (1996)...21 Harbison v. City of Buffalo, 4 N.Y.2d 553 (1958)...21, 23 Huntington Yacht Club v. Inc. Village of Huntington Bay, 1 A.D.3d 480 (2d Dep t 2003)...25 Ifrah v. Utschig, 98 N.Y.2d 304 (2002)...9 Kahn v. Planning Bd. of City of Buffalo, 60 A.D.3d 1451 (4th Dep t 2009)...14 Kaufman v. Incorporated Vil. Of Kings Point, 52 A.D.3d 604 (2d Dep t 2008)...14 Kaufmann s Carousel v. City of Syracuse Indus. Dev. Agency, 301 A.D.2d 292 (4th Dep t 2002)...15 Kelly v. Safir, 96 N.Y.2d 32 (2002)...15 Khanuja v. Denison, 203 A.D.2d 679 (3d Dep t 1994)...12 McMinn v Town of Oyster Bay, 66 N.Y.2d 544 (2015)...19, 20, 27 Mt. Lyell Enterprises, Inc. v. DeRooy, 159 A.D.2d 1015 (4th Dep t 1990)...9 iv 5 of 35

6 TABLE OF AUTHORITIES - cont d Page(s) Orchard Michael, Inc. v. Falcon, 110 A.D.2d 1048 (4th Dep t 1985), aff d 65 N.Y.2d 1007 (1985)...11 Pecoraro v. Bd. of Appeals of Town of Hempstead, 2 N.Y.3d 608 (2004)...9 Pelham Esplanade, Inc. v. Bd. of Trustees, 77 N.Y.2d 66 (1990)...21 People v. Miller, 304 N.Y. 105 (1952)...22, 23 Salamar Bldrs. Corp. v. Tuttle, 29 N.Y.2d 221 (1971)...19, 27 Soule v. Scalci, 288 A.D.2d Spilka v. Town of Inlet, 8 A.D.3d 812 (3d Dep t 2004)...17 Suffolk Supply, Inc. v. Board of Trustees of Village of Westhampton Beach, 59 A.D.3d 429 (2d Dep t 2009)...23, 24 Tantalo v. Zoning Bd. of Appeals of Town of Seneca Falls, 43 A.D.2d 793 (4th Dep t 1973)...12 Toys R Us v. Silva, 89 N.Y.2d 411 (1996)...21 Village of Fayetteville v. Jarrold, 53 N.Y.2d 254 (1981)...11 Village of Valatie v. Smith, 83 N.Y.2d 396 (1994)...21 Village of Valatie v. Smith, 98 N.Y.2d 396 (1994)...24 Weaver v. Town of Rush, 1 A.D.3d 920 (4th Dep t 2003)...25 Westover Car Rental, LLC v. Niagara Frontier Transp. Auth., 113 A.D.3d 1321 (4th Dep t 2015)...26, 27 v 6 of 35

7 TABLE OF AUTHORITIES - cont d Page(s) Wiggins v. Town of Somers, 4 N.Y.2d 215 (1958)...16, 21 State Statutes N.Y. TOWN LAW 136(10)...16, 21 N.Y. TOWN LAW 267-b...6 Other Authorities SALKIN, NEW YORK ZONING LAW & PRACTICE 29: vi 7 of 35

8 PRELIMINARY STATEMENT Petitioners applied to the Town of Grand Island Zoning Board of Appeals ( ZBA ) for an extension of time to continue operating a short-term rental property, pursuant to Local Law No. 9 of Provided all of the criteria are met, Local Law No. 9 allows for an extension of up to three years. But when Petitioners submitted their application, they failed to provide any evidence that would allow the ZBA to grant an extension. Despite this, the ZBA held the public hearing on Petitioners application open and provided written guidance on the type of proof required for the ZBA to conduct its analysis and make its decision. After having had every opportunity to do so, Petitioners still failed to provide the proof required, resulting in a denial of their application. The ZBA s decision was rational and was supported by the record; its reasoned decision is entitled to deference and should be upheld. Failing to meet the requirements of Local Law No. 9 for an extension, Petitioners turned their attention to attacking the validity of the law itself. But they themselves admitted, in prior litigation, that restriction of short-term rentals is a valid exercise of the zoning power and that the Town Board had the authority to do so. This has been affirmed by New York courts repeatedly. The Town Board had a legitimate basis to prohibit short-term, non-owner occupied rentals in residential zoning districts and, as the Court of Appeals has held, local zoning ordinances are presumed valid and challengers bear a heavy burden to demonstrate a zoning ordinance s unconstitutionality. With respect to non-conforming short-term rentals, the Town Board provided a reasonable termination period of one-year, and allowed for an extension provided certain criteria were met demonstrating the need for a longer amortization period. This approach has been upheld by New York courts for decades. As a last ditch effort, Petitioners 8 of 35

9 throw in an equal protection claim, but they themselves admit in the Verified Petition that they have been treated the same as other similarly situated property owners. For the reasons set forth below, the Verified Petition should be dismissed in its entirety. STATEMENT OF FACTS A. Petitioners Begin Operating A Short-Term Rental Facility. Petitioners are owners of property located at 2012 East River Road, Grand Island, New York (the Property ). 1 The Property is not Petitioners residence. At some point, in 2013, Petitioners began offering the Property for rent for periods of less than 30 contiguous days (short-term rental), 2 essentially operating the Property as a hotel. 3 The Town Code Enforcement Officer determined that use of the Property for short-term rentals violated the Town of Grand Island Code (the Town Code ) and he began the preliminary steps of administrative enforcement by sending Petitioners a notice of violation on November 4, The Code Enforcement Officer determined that use of the Property for short-term rentals violated the Town Code because: (1) the zoning district in which the Property is located permits residential uses and short-term rental is not a residential use because the guests do not reside at the Property; (2) offering the Property for overnight accommodations required a license under Chapter 351 of the 1 Petitioners Verified Petition, verified on February 1, 2017 (the Petition ), 2. 2 As used herein, and in Local Law No. 9 of 2015, the term short-term rental means rental for a period of less than 30 contiguous days. 3 Petition, 8, Affirmation of Charles W. Malcomb, Esq., dated March 31, 2017 ( Malcomb Aff. ), Ex. A. 2 9 of 35

10 Town Code, which Petitioners did not obtain; and (3) use of the Property for short-term rentals is a violation of the Property s certificate of occupancy. 5 B. Petitioners Commence Litigation Against The Town. Following receipt of the notice of violation, Petitioners commenced an action against the Town in 2014, arguing that the Town Code did not expressly prohibit short-term rentals and that any ambiguity in the Town Code should be construed in Petitioners favor. 6 In their submissions to the Court, Petitioners explicitly acknowledged the Town s authority to prohibit short-term rentals; they merely argued that the Town had not done so. 7 Ultimately, the Court agreed with Petitioners, finding that since the Town Code did not prohibit short-term rentals with explicit language, they are permitted. However, the Court also held, in accordance with Petitioners admission, that the Town may prevent the short-term rental of single-family detached dwellings... easily by specifically defining that use and doing it unambiguously. 8 5 Id. 6 Petitioners prior action against the Town is entitled Fahning et al. v. Town of Grand Island et al.; Erie County Index No.: /2014. See Malcomb Aff., Ex. B, p. 2 (Point I of Petitioners Memorandum of Law in their 2014 action); see also Malcomb Aff., Ex. C, p. 1 (Petitioners Reply Memorandum of Law in their 2014 action states: Nothing in the Grand Island Code prohibits an owner from renting his single-family detached dwelling for short periods of time. ). 7 Id.; see also Malcomb Aff., Ex. C, p. 2 (Petitioners Reply Memorandum of Law in their 2014 action admits: Indeed if the Town wanted to prevent the short term rental of single-family detached dwellings... it could have done so easily and plainly with language such as: Rental of single-family detached dwellings for less than thirty (30) days is prohibited. ). 8 Malcomb Aff., Ex. D, p. 5 (the Court s decision in Petitioners 2014 action) of 35

11 C. The Town Adopts Local Law No. 9 To Clarify That Short-Term Rental Facilities Are Prohibited. Following the Court s decision in Petitioners 2014 action, the Town of Grand Island Town Board (the Town Board ) determined to clarify that, consistent with the Town s comprehensive plan and community goals, non-owner occupied, short-term rentals are prohibited in residential zoning districts. 9 To accomplish this, the Town Board adopted Local Law No. 9 of 2015, following the guidance of the Court to explicitly define non-owner occupied, short-term rentals and to prohibit them unambiguously. In adopting Local Law No. 9, which became effective on October 15, 2015, the Town Board set forth detailed and comprehensive findings on the impacts of non-owner occupied, short-term rentals and the rationale for excluding them from residential zoning districts. 10 For example, the Town Board found: [T]hat its initial scheme [prohibiting short-term rentals], and the intent thereof, remains in the public interest and that non-owner occupied, short-term, transient rentals should not be permitted in residential zoning districts. * * * The Town Board hereby finds that residential zoning districts should be limited, primarily, to residential uses. Property owners utilizing their properties as residences builds a community and reduces certain impacts. The commercial short-term, transient, non-owner occupied rental use brings with it certain impacts that are best kept away from residential uses. Among these impacts are: noise, damage to property, poor upkeep of structures, large gatherings and/or parties [on weekdays and otherwise], debris, use of property in a manner that is not permitted by applicable law, and late-night activities. The Board has seen evidence of these impacts, especially as of late. This use is not compatible with the Town s comprehensive plan and its residential zoning districts Certified Record of Proceedings, certified by Rhonda Tollner on March 21, 2017 ( Certified Record ), Ex. 1 (Local Law No. 9 of 2015). 10 Id., Local Law No. 9, Section Id of 35

12 The Town Board also noted that there are unique tourist opportunities that the Town s location provides and that the provision of some short-term rentals would be consistent with the comprehensive plan, provided that the impacts were mitigated. 12 Thus, the Town Board determined to continue allowing owner-occupied short-term rentals (e.g., bed-and-breakfasts), which require the property owner to reside in the structure during the guests stay, finding that the presence of the property owner would control many of the impacts of concern. This is a reasonable policy determination by a legislative body and is entitled to deference. For property owners that were operating non-owner occupied, short-term rental facilities at the time of its adoption, Local Law No. 9 provided a one-year amortization period, after which use of the properties for non-owner occupied, short-term rentals automatically terminates. 13 The purpose of the amortization period was to eliminate the[] alleged pre-existing non-conforming uses in a reasonable way and to allow any impacted property owner to recoup some of his/her investment, to the extent any investment is lost as a result of eliminating the use. 14 As discussed more fully below, this approach has been upheld by New York Courts for decades. But the Town Board provided more protection to potentially impacted property 12 Id. 13 Id., Local Law No. 9, Section 5 ( Notwithstanding any other law or provision of the Town of Grand Island Code to the contrary, nonconforming transient rentals or shortterm rentals shall terminate automatically within one (1) year of the effective date of this local law. ). 14 Id., Local Law No. 9, Section of 35

13 owners, by providing for a hardship extension for up to three (3) years, provided the property owner meets the standard set forth in Section (D) of the Town Code. 15 To be eligible for a hardship extension, Local Law No. 9 requires applicants to meet the following criteria, which track the requirements for the granting of a use variance under Town Law 267-b: (a) The applicant demonstrates, with dollar-and-cents proof, that he/she made, prior to the nonconformity, substantial financial expenditures related to the nonconformity; (b) The applicant has not recovered substantially all of the financial expenditures related to the nonconformity; (c) The applicant will not realize a reasonable rate of return on his/her investment in the property; and (d) The period for which the nonconforming use is permitted to continue is the minimum period sufficient for the applicant to recover a reasonable amount of its financial expenditures incurred related to the nonconformity. 16 Thus, an applicant must submit the required dollars-and-cents proof, demonstrating that each of the above criteria are met, before the ZBA may grant an extension. D. Petitioners Submit A Deficient Application For An Extension Of The Amortization Period And The ZBA Affords Them Another Opportunity To Provide The Required Information. Despite being on notice for more than a year that use of the Property for shortterm rentals must terminate on October 15, 2016, Petitioners waited until the very last minute to submit an application for an extension. 17 Petitioners procrastination was apparent as the 15 Id., Local Law No. 9, Sections 1 and Id., Local Law No. 9, Section 5; Town Code (D)(2)(a)-(d). 17 Certified Record, Ex of 35

14 application materials they submitted provided absolutely no information whatsoever. The sum total of their submission consisted of signed application forms and an attachment reciting the required criteria, with no supporting evidence. 18 Despite the lack of required information, the ZBA, rather than reject their application, opened the public hearing and provided Petitioners and other applicants additional time to supplement their application. 19 In fact, the ZBA provided Petitioners and members of the public with a guidance document explaining exactly the type of information is required. 20 Among other things, the guidance document explained that Petitioners were required to meet all the criteria set forth in Town Code (D)(2), and that dollars-and-cents proof was required. 21 The ZBA specifically instructed Petitioners on the information required to meet their burden and cautioned Petitioners as to what information is not acceptable (e.g., conclusory testimony, lack of analysis, lack of expert testimony on property values or rental revenue). 22 E. Despite The Additional Opportunity To Provide Information To The ZBA, Petitioners Failed To Provide Dollars-And-Cents Proof Demonstrating They Qualify For An Extension. Despite being provided with every opportunity to do so, Petitioners failed to provide the ZBA with the dollars-and-cents proof necessary to grant their application. The additional information Petitioners submitted included the very same conclusory testimony that 18 Certified Record, Exs Certified Record, Ex. 9, ZBA November 3, 2016 meeting minutes. 20 Id. 21 Id. 22 Id of 35

15 the ZBA warned against. 23 For example, and most critically, Petitioners failed to provide dollars-and-cents proof of their investment in the Property and failed to provide expert analysis of the revenue that could have been obtained for long-term rentals (which is permitted as-ofright). As discussed below, these failures, including the failure to submit financial proof mandated by Court of Appeals precedent, were fatal to Petitioners application. F. The ZBA Issues Its Decision Denying Petitioners Application. After holding the public hearings and affording Petitioners every opportunity to provide the required information, the ZBA was left with no choice but to deny Petitioners application. As set forth in its written decision, the ZBA determined that [t]here is no proof of the costs the Applicant has claimed to have incurred, nor is there an appraisal setting forth the value of the Property. There is no information submitted detailing the amount of revenue from short-term rental versus longterm rental. No dollars and cents proof has been provided whatsoever showing that the Applicant cannot realize a reasonable rate of return. Nor is there any documentation showing that a reasonable rate of return cannot be achieved by renting for a period of longer than 30 days. None of the types of evidence listed by the Court of Appeals which evidence was specifically listed on the information given the applicant has been submitted. The Applicant has failed to meet its burden of proof with respect to the statutory criteria for an extension. 24 record and should be upheld. The ZBA s reasoned decision is based on the evidence or lack thereof in the 23 Certified Record, Ex Certified Record, Ex. 16, p of 35

16 ARGUMENT POINT I. THE ZBA S DETERMINATION SHOULD BE UPHELD BECAUSE PETITIONERS FAILED TO PROVIDE THE ZBA WITH THE DOLLARS-AND-CENTS PROOF REQUIRED TO GRANT AN EXTENSION. Local zoning boards have broad discretion and their decisions, following an evaluation of the facts in the record, are entitled to great deference on judicial review. 25 As the Court of Appeals has explained, the judicial function in reviewing [ZBA] decisions is a limited one. 26 Courts are to begin their analysis with the presumption that the decision of the board was correct A ZBA s decision should be upheld unless it is arbitrary and capricious; thus, a challenger bears a heavy burden. 28 The Fourth Department has summarized the standard of review as follows: determinations by ZBAs are entitled to great deference and will be sustained even if the reviewing court might have decided the matter differently. 29 This is especially the case where, as here, the zoning board is required to evaluate the sufficiency of evidence submitted in rendering a determination E.g., Ifrah v. Utschig, 98 N.Y.2d 304, 308 (2002). 26 Pecoraro v. Bd. of Appeals of Town of Hempstead, 2 N.Y.3d 608, 613 (2004). 27 First National Bank of Glens Falls v. Sheehan, 30 A.D.2d 912 (3d Dep t 1968). 28 Ifrah, 98 N.Y. 2d at Cerame Irrevocable Family Trust v. Town of Perinton Zoning Bd. of Appeals, 6 A.D.3d 1091, 1092 (4th Dep t 2004) (citations omitted). 30 See Mt. Lyell Enterprises, Inc. v. DeRooy, 159 A.D.2d 1015, 1016 (4th Dep t 1990) (holding that whether a rate of return is reasonable is within the zoning board s discretion and courts may not substitute their judgment for the judgment of the zoning board) of 35

17 A. Despite Ample Opportunity To Do So, And Clear Warnings As To The Type Of Information That Would Not Suffice, Petitioners Failed To Provide The Information To The ZBA That Would Justify An Extension. As set forth in Town Code (D)(2), Petitioners were required to, among other things, provide dollars-and-cents proof of the financial expenditures they made related to their use of the property for short-term rentals and that they would not realize a reasonable rate of return on their investment in the Property. 31 This could have been demonstrated by providing evidence of expenditures (as opposed to conclusory statements) and by evaluating the rental revenue from short-term rentals versus long-term rentals (which are permitted as-of-right) as against their investment. As the ZBA explained in the guidance document it provided to Petitioners, [w]hile the burden of proof... is not as onerous as proof beyond a reasonable doubt, the quality of proof required is similar. 32 The landowner bears a heavy burden; an applicant must demonstrate the lack of reasonable return by substantial evidence, and the evidence must include dollars and cents proof. 33 Petitioners were required to demonstrate that they would not obtain a reasonable rate of return, not that they could not obtain the highest 31 Petitioners were also required to provide proof that they were operating the Property for short-term rentals (less than 30 contiguous days) at the time Local Law No. 9 was adopted. While Petitioners certainly used the property for short-term rentals in 2014, they needed to prove that they did not abandon the use in favor of long-term rentals, so that they could qualify as a non-conforming use, eligible for an extension. The ZBA guidance material explained that the types of proof that would work include evidence of County bed tax payments, showing the short-term rental use was ongoing at that time. Instead, Petitioners submitted a spreadsheet with purported guests names on it. The ZBA determined that this was not sufficient proof. But, even if it were, Petitioners failed to provide the dollars-and-cents proof required. 32 SALKIN, NEW YORK ZONING LAW & PRACTICE 29: Id.; Certified Record, Ex. 9, Ex. A of 35

18 return; an approval needed to make a venture more profitable and competitive do[es] not sufficiently establish significant economic injury The Required Financial Information Follows The Court of Appeals Requirements For Support Of Use Variances. Obtaining the extended amortization period allowable under Local Law No. 9 requires the same financial proof the Court of Appeals requires in other use variance situations. The Court has provided examples of the type of proof that must be submitted to establish the inability to realize a reasonable return, as well as the type of proof that is not sufficient. For example, such proof would include the purchase price of the property, the property s present value, any investments made in the property, expenses attributable to maintenance, the amount of taxes, the amount of mortgages, income from the property, and other facts relevant to the particular circumstances. 35 Bare conclusory testimony is insufficient as a matter of law. 36 Testimony from a realtor or other witness that is unsubstantiated is also insufficient as dollarsand-cents proof, 37 as is merely providing raw data without the required expert analysis. 38 And expert testimony without documentation and supporting evidence likewise falls short Orchard Michael, Inc. v. Falcon, 110 A.D.2d 1048 (4th Dep t 1985), aff d 65 N.Y.2d 1007 (1985). 35 Crossroads Recreation, Inc. v. Broz, 4 N.Y.2d 39, 44 (1958). 36 Village of Fayetteville v. Jarrold, 53 N.Y.2d 254, 259 (1981) ( [T]this court has consistently rejected as insufficient to justify a grant of a use variance the bare conclusory testimony of witnesses that the property could not yield a reasonable return. ). 37 Village Bd. of See Congregation Beth El of Rochester v. Crowley, 30 Misc.2d 90 (Sup. Ct. 1961) (holding that the simple testimony of a realtor that the land would not attract a developer for the purposes permissive under the zoning was insufficient to prove lack of reasonable return); Fusco v. Town of Oyster Bay, 23 Misc.2d 72 (Sup. Ct. 1960) (holding of 35

19 Despite being told specifically what type of proof was required and being warned against relying on conclusory testimony and unverified materials, Petitioners failed to provide the ZBA with evidence from which the reasonable return on the property could be determined. 40 Turning to their submissions, by letter dated October 25, 2016, Petitioners claimed the Property was worth $325,000, but that number was based on Petitioners own lay opinion and was not supported by any expert analysis like an appraisal or a comparative market analysis. Petitioners also guessed as to the amount of rental revenue they could achieve by renting the Property for 30 days or more, 41 without providing any expert analysis of the rental market. By letter dated November 29, 2016, Petitioners claimed to have expended more than $171,000 on additional investment, but failed to provide any proof of these expenses, claiming that the opinion of a real estate broker that the land will not yield a reasonable return if it is devoted to a conforming use is insufficient as dollars-and-cents proof); Tantalo v. Zoning Bd. of Appeals of Town of Seneca Falls, 43 A.D.2d 793 (4th Dep t 1973) (holding that proof is insufficient where a landowner testifies that his land is unsuitable for farming because an adjacent dump causes flies and odors, and his oral attempts to sell were unsuccessful). 38 Khanuja v. Denison, 203 A.D.2d 679, 680 (3d Dep t 1994) ( Moreover, petitioner s proof consisted of raw data without any analysis.... Thus, we conclude that the ZBA s finding that petitioner did not establish unnecessary hardship is rational and is supported by substantial evidence. ). 39 Ferruggia v. Zoning Bd. of Appeals of Town of Warwick, 233 A.D.2d 505, 507 (2d Dep t 1996) ( [T]he record is devoid of any evidence from which the reasonable return on the property could be determined. While there was some testimony regarding the inability of the owner to sell the property as residential premises, there was no evidence regarding whether other permitted uses within the applicable zoning district would fail to yield a reasonable return. ). 40 Id. 41 Certified Record, Ex. 5 ( As far [sic] a long-term rental, I believe we could not get more than $2,000 per month. ) of 35

20 only that [a]ll amounts can be substantiated. 42 But they never were. The spreadsheets breaking down the claimed additional investment did not match Petitioners claimed total expenses on their tax returns. No effort at explanation or proof was provided. To evaluate whether Petitioners could realize a reasonable rate of return, absent an extension, the ZBA was required to evaluate Petitioners rate of return for short-term rentals versus long-term rentals. If Petitioners could realize a reasonable return by renting the Property for 30 days or more, they would not be entitled to an extension. The first step was for the ZBA to determine the total amount of Petitioners investment. But without the materials proving their expenditures, which Petitioners claimed can be substantiated, the ZBA could not complete this threshold analysis. Moreover, the ZBA also did not have a reliable figure for potential long-term rental revenue for the Property. All Petitioners provided was their guess that it would be approximately $2,000 per month. An expert opinion, either by an appraiser or a realtor, with supporting comparable analysis, was required. Without this critical information, there was insufficient evidence in the record to justify an extension. The ZBA s hands were tied. Petitioners deficient application is perhaps best illustrated by the review of a ZBA decision granting an extension of the amortization period to another applicant. In that case, the applicant provided the ZBA with the material required to evaluate the reasonable rate of return. 43 There, the applicant provided photographic evidence showing the significant repair work that was required on the property and bank statements and receipts proving the repair costs 42 Certified Record, Ex Malcomb Aff., Ex. E of 35

21 providing the amount of investment. 44 In addition, the applicant provided the Board with information on the amount of long-term rental revenue from a prior arms-length transaction renting the property for longer than 30 days. This information allowed the ZBA to evaluate the reasonable rate of return, comparing short-term rental revenue and long-term rental revenue, and applying it to the applicant s investment. This is the critical information that Petitioners failed to submit, requiring a denial of their application. The ZBA s reasoned determination should be upheld. B. Petitioners Effort To Include Material Dehors The Record Should Be Rejected. After the ZBA denied their application, Petitioners seek to submit new material to the Court, claiming that they are entitled to an extension. 45 Included as attachments to the Petition are guest welcome materials, a sample rental agreement, a list of property amenities, a schedule of rental rates, and house rules. This material however irrelevant to the claims at hand was not submitted to the ZBA. Thus, exhibits A, B, and C to the Petition are dehors the record and should not be considered by the Court. In an Article 78 proceeding reviewing a municipal board s determination, the Court s review is limited to the arguments and record adduced before the agency. 46 As the Court of Appeals explained, for a court to consider evidentiary submissions as to circumstances after the [board] made its determination would violate another fundamental tenant of CPLR 44 Id. 45 Petition, Exs. A, B, C. 46 Kahn v. Planning Bd. of City of Buffalo, 60 A.D.3d 1451, 1452 (4th Dep t 2009) (citing Kaufman v. Incorporated Vil. Of Kings Point, 52 A.D.3d 604, 607 (2d Dep t 2008) of 35

22 article 78 review [that] judicial review of administrative determinations is confined to the facts and record adduced before the agency. 47 Courts have consistently held that it is improper to consider evidence that is dehors, or outside, the record. 48 POINT II. AS PETITIONERS HAVE ADMITTED IN PRIOR LITIGATION, LOCAL LAW NO. 9 IS A VALID EXERCISE OF THE TOWN S AUTHORITY AND SHOULD BE UPHELD. THEREFORE, PETITIONERS DUE PROCESS CLAIMS SHOULD BE DISMISSED. A. As A Legislative Enactment, Local Law No. 9 Is Presumed Valid; Petitioners Have Failed To Bear Their Heavy Burden To Demonstrate Otherwise. It is fundamental that the authority to regulate land use through zoning derives from the police power under the due process clauses of the State and Federal Constitutions, and that restrictions upon the use of land are not unlimited but must bear a substantial relation to the public health, safety, morals, or general welfare. 49 Zoning ordinances like Local Law No. 9 carry a strong presumption of constitutionality. As explained by the Court of Appeals: Because Zoning is a legislative act, zoning ordinances and amendments enjoy a strong presumption of constitutionality and the burden rests on the party attacking them to overcome that presumption beyond a reasonable doubt. [ ] In claims such as this, the analysis follows traditional due process rules: if the zoning ordinance is adopted for a legitimate governmental purpose and there is a reasonable relation between the end sought to be achieved by the regulation and the means 47 Featherstone v. Franco, 95 N.Y.2d 550, (2000) (internal quotations omitted). 48 Kelly v. Safir, 96 N.Y.2d 32, 39 (2002) (holding that the court incorrectly relied on evidence outside the record); Kaufmann s Carousel v. City of Syracuse Indus. Dev. Agency, 301 A.D.2d 292, 305 (4th Dep t 2002) (holding that a newspaper article, not submitted to the agency, is dehors the record and cannot be considered by our Court ); Brown v. Bd. of Educ. Of Mahopac Cent. School Dist., 129 A.D.3d 1067 (2d Dep t 2015) (granting motion to strike portions of brief on the ground that they refer to matters dehors the record). 49 Dur-Bar Realty Co. v. City of Utica, 57 A.D.2d (4th Dep t 1977) of 35

23 used to achieve that end, it will be upheld. [ ] An amendment which has been carefully studied, prepared and considered meets the general requirement for a well-considered plan and satisfies the statutory requirement. [ ] The court will not pass on its wisdom. 50 Indeed, it is only as a last resort that courts strike down legislative enactments on the ground of unconstitutionality. 51 Petitioners have failed to meet their heavy burden of demonstrating that Local Law No. 9 is unconstitutional. As a first matter, it cannot legitimately be asserted that the Town cannot regulate short-term rentals, as the State Legislature has directly authorized such local legislation in Section 136(10) of the New York Town Law. 52 Secondly, Petitioners admitted that the Town Board was well within its authority to prohibit short-term, non-owner occupied rentals. In prior litigation, Petitioners explicitly acknowledged the Town s authority to prohibit short-term rentals; they merely argued that the Town had not done so. 53 Ultimately, the Court agreed with Petitioners in their prior suit, finding that since the Town Code did not prohibit short-term rentals with explicit language, they are permitted. However, the Court also held, in accordance with Petitioners admission, that the Town may prevent the short-term rental of single-family 50 Asian Americans for Equality v. Koch, 72 N.Y.2d 121, (1988) (internal citations omitted). 51 Wiggins v. Town of Somers, 4 N.Y.2d 215, 218 (1958). 52 N.Y. TOWN LAW 136(10) ( The town board may provide by ordinance for the licensing and otherwise regulating of... [t]he running of hotels, inns, boarding houses, rooming houses, lodging houses and associations or clubs furnishing services ordinarily furnished in hotels, inns, boarding houses, rooming houses and lodging houses. ). 53 Id.; see also Malcomb Aff., Ex. C, p. 2 (Petitioners Reply Memorandum of Law in their 2014 action admits: Indeed if the Town wanted to prevent the short term rental of single-family detached dwellings... it could have done so easily and plainly with language such as: Rental of single-family detached dwellings for less than thirty (30) days is prohibited. ) of 35

24 detached dwellings... easily by specifically defining that use and doing it unambiguously. 54 New York case law supports this view that prohibiting short-term rentals is a legitimate exercise of the zoning power. 55 The Town Board determined, consistent with the Town s comprehensive plan, that residential zoning districts should be restricted to residential use. The Town Board set forth its findings in Local Law No. 9 that restricting short-term rentals would address, among other things, noise, damage to property, poor upkeep of structures, large gatherings and/or parties [on weekdays and otherwise], debris, use of property in a manner that is not permitted by applicable law, and late-night activities. 56 Further, the Town Board determined that certain short-term rentals may be permitted, where the owner resides at the premises (bed-and-breakfasts). The 54 Malcomb Aff., Ex. D, p. 5 (the Court s decision in Petitioners 2014 action). 55 See Spilka v. Town of Inlet, 8 A.D.3d 812 (3d Dep t 2004) ( Finally, the amendment [limiting non-owner occupied short-term rentals] is not arbitrary, capricious or illegal. Zoning ordinances are presumed valid and the challenger bears the burden of proving invalidity. The test is whether the ordinance was enacted in furtherance of a legitimate governmental purpose and is reasonably related to the end sought to be achieved. The amendment identified many legitimate governmental purposes for its enactment, including preserving aesthetic integrity in residential neighborhoods, encouraging residential property maintenance, prevention of neighborhood blight, protecting residential property values, permitting efficient use of defendant s dwellings to provide economic support to residents, and enhancing the quality of life in residential neighborhoods. Placing restrictions on absentee landlords is reasonably related to achieving these goals and does not improperly distinguish between homeowners who occupy their premises and those who do not. Thus, defendant was entitled to a declaration that the amendment was valid. ); Soule v. Scalci, 288 A.D.2d 585 ( Petitioner apparently rented units for as short as a week, but there is nothing in the Zoning Ordinance which requires a minimum rental period for a multiple-family dwelling, although such a limitation could have easily been included by the applicable legislative body. (emphasis added). 56 Certified Record, Ex of 35

25 Town Board determined that the presence of the property owner would mitigate the impacts with which it was concerned. These are all legitimate purposes for adopting a zoning ordinance. As noted by the Court of Appeals, courts do not act as superlegislatures sitting in judgment of local legislative bodies, and will not pass on the wisdom of local enactments. 57 The cases cited by Petitioners are inapposite. In Fred F. French Investing Co., Inc. v. City of New York, the Court of Appeals invalidated a zoning amendment not because there was no rational relationship between the act (rezoning of private lands to create a special spark district) and the stated governmental purpose (use of those lands as a public park) in fact, by creating additional parkland the rezoning had exactly the effect the amendment intended. 58 Instead, the amendment was held to exceed the City s police power because it render[ed] the property unsuitable for any reasonable income productive or other private use for which it is adapted and thus destroys its economic value, or all but a bare residue of its value, i.e., because the amendment destroyed the economic value of the property [ ], it thus constituted a deprivation of property without due process of law. 59 By contrast, Petitioners are free to use their property as a single family residence, or rent it out for more than thirty days at a time, or sell it. Local Law No. 9 may have restricted one potential use of the property, but its economic potential was hardly destroyed. Therefore, French is not controlling here. 57 Asian Americans for Equality, 72 N.Y.2d at Fred F. French Investing Co., Inc. v. City of New York, 39 N.Y.2d 587 (1976). 59 Id. at of 35

26 The Salamar Bldrs. Corp. v. Tuttle case actually supports the validity of Local Law No. 9. In that case, the Court of Appeals upheld as constitutional a zoning ordinance that established minimum square footage requirements against a challenge that the enactment exceeded the Town s police power authority. 60 Where the municipality shows that the restriction at issue serves some legitimate public purpose, Salamar held that the property owner, in order to sustain the attack on constitutional grounds, must [ ] establish that the resulting hardship is such as to deprive him of any use of the property to which it is reasonably adapted, or served to destroy the greater part of its value. 61 There, and despite the absence of proof by the town on the issue, because plaintiff [ ] failed to demonstrated that the ordinance was tantamount to a confiscation, the Court of Appeals upheld the ordinance against constitutional challenge. 62 Respondents have demonstrated that, among other things, Local Law No. 9 was enacted to promote the health and safety of its residents, 63 and to preserve the residential character of Town neighborhoods from the harmful effects associated with non-owner occupied, short-term rentals. 64 As noted by the same authority cited by Petitioners, the preservation of the character of single-family neighborhoods is a legitimate governmental objective. 65 Therefore, the validity of Local Law No. 9 should be upheld under Salamar as well. 60 Salamar Bldrs. Corp. v. Tuttle, 29 N.Y.2d 221, 228 (1971) 61 Id. at Id. at Certified Record, Ex. 1 (Local Law findings pertaining to the Building Code). 64 Id. (Local Law findings pertaining to noise, litter, etc.). 65 McMinn v Town of Oyster Bay, 66 N.Y.2d 544, 550 (2015) of 35

27 The McMinn v. Town of Oyster Bay decision does not support the invalidation of Local Law No. 9 either. That case struck down a municipality s definition of family, which attempted to restrict occupancy of single-family housing, because the challenged definition excludes many households who pose no threat to the goal of preserving the character of the traditional single-family neighborhood, and thus failed the rational relationship test. 66 By contrast, Local Law No. 9 was specifically adopted with the goal of preserving the character of single-family residential neighborhoods, and specifically explained how permitting shortterm/transient rentals in these neighborhoods threatened that goal. 67 The Cavaglia v. Town of Islip decision is also inapposite. There, the Court of Appeals upheld a zoning ordinance that placed restrictions on adult uses to limit the harmful secondary effects of those uses against a First Amendment free speech challenge a completely different and more stringent test for constitutionality that is inapplicable here. 68 Lastly, Petitioners attempt to turn the burden of proof on its head, arguing that Respondents should somehow be required to produce scientific studies and/or other empirical data to justify the enactment of Local Law No No community has to justify its use of the police power when the State Legislature has specifically authorized the challenged action, as is 66 Id. at Certified Record, Ex Cavaglia v. Town of Islip, 73 N.Y.2d 544, 559 (1989) (holding that the regulation would be constitutional with respect to First Amendment concerns where it was designed to carry out legitimate and important governmental objectives which incidentally burdens free expression, which may be sustained only if the State action is no broader than needed to achieve its purpose. ). 69 Petitioners Memorandum of Law at p of 35

28 the case here with the power created by Town Law 136(10). Further, it has long been the law in New York that the presumption of constitutionality which attaches to legislative enactments does so precisely because those measures are presumed to be supported by facts known to the Legislature. 70 The Town specifically laid out the findings and reasoning behind its enactment of Local Law No Because Petitioners failed to offer affirmative proof to rebut those findings beyond a reasonable doubt, the Town s enactment of Local Law No. 9 was a valid exercise its police power, and should be upheld. 72 B. Nonconforming Uses Are Disfavored And Overriding Public Policy Supports Their Restriction And Eventual Elimination. New York Courts Have Consistently Approved Of Local Laws Terminating Nonconforming Uses After Amortization. Nonconforming uses, though lawful, are disfavored. 73 In light of problems presented by continuing nonconforming uses, [the Court of Appeals] has characterized the law s allowance of such uses as a grudging tolerance The Court of Appeals has reaffirmed that the overriding public policy of zoning in New York State and elsewhere is aimed at their reasonable restriction and eventual elimination. 75 The Court of Appeals has never held that... [nonconforming uses] may continue virtually in perpetuity. 76 Thus, code provisions providing 70 Wiggins v. Town of Somers, 4 N.Y.2d 215, 218 (1958). 71 Certified Record, Ex. 1 (findings). 72 Asian Americans for Equality, 72 N.Y.2d at Gernatt Asphalt Prods, v. Town of Sardinia, 87 N.Y.2d 668, 676, n.1 (1996). 74 Village of Valatie v. Smith, 83 N.Y.2d 396, 400 (1994) (quoting Pelham Esplanade, Inc. v. Bd. of Trustees, 77 N.Y.2d 66, 71 (1990)). 75 Toys R Us v. Silva, 89 N.Y.2d 411, 417 (1996). 76 Harbison v. City of Buffalo, 4 N.Y.2d 553, 561 (1958) of 35

29 for the reasonable elimination of nonconforming uses are allowed. This is done through an amortization period, where the property owner has a period of time to recoup some of their investment. In People v. Miller, 77 the Court of Appeals upheld a municipal ordinance that completely zoned out a nonconforming use, without providing for an amortization period. There, a property owner raised pigeons as a hobby at his home and the town adopted a law banning the harboring of pigeons. The property owner argued that his pre-existing use of the premises for harboring pigeons rendered the regulation unenforceable against him. 78 The Court noted that the nonconforming use at issue was not of such a character as to protect it from the application of a zoning measure. 79 The key is the degree to which there is a vested right in the use, which is another way of saying that the property interest affected by the particular ordinance is too substantial to justify its deprivation in light of the objectives to be achieved by enforcement of the provision. 80 Thus, the the enforcement of a zoning regulation against a prior nonconforming use will be sustained where the resulting loss to the owner is relatively slight and insubstantial. 81 With respect to prohibiting short-term rentals, the Town Board would have been well within its authority under Court of Appeals precedent to provide no amortization period at all because the properties could still be used for residential purposes and for rentals for 77 People v. Miller, 304 N.Y. 105 (1952). 78 Id. at Id. 80 Id. at Id of 35

30 30 days or more. The resulting loss to the owner under these circumstances is relatively slight and insubstantial. 82 However, the Town Board determined to allow for a one-year amortization period to allow property owners to recover some of their investment in use of the property as a shortterm rental. The Court of Appeals has stated that if the zoning ordinance provides a sufficient period of permitted nonconformity, it may further provide that at the end of such period the use must cease When the termination provisions are reasonable in the light of the nature of the business of the property owner, the improvements erected on the land, the character of the neighborhood, and the detriment caused the property owner, we may not hold them constitutionally invalid. 84 Given the nature of the restriction, and the fact that Petitioners may still use their property for residential purposes, a one-year amortization period is more than appropriate. 85 In Suffolk Asphalt Supply, Inc. v. Board of Trustees of Village of Westhampton Beach, 86 the Second Department reaffirmed this analysis and held that plaintiff failed to show that termination provisions, applicable to a nonconforming asphalt plant, were unreasonable where the provision provided a one-year amortization period, with the opportunity for an 82 Id. 83 Harbison, 4 N.Y.2d at Id. at Wigginess, Inc. v. Fruchtman, 482 F. Supp. 681 (S.D.N.Y. 1979) aff d 628 F.2d 1346 (2d Cir. 1980) cert denied 449 U.S. 842 (1980) (holding that a one year period terminating adult use was not unreasonable since prohibition of that use did not deprive plaintiff all reasonable uses of their property). 86 Suffolk Supply, Inc. v. Board of Trustees of Village of Westhampton Beach, 59 A.D.3d 429 (2d Dep t 2009) of 35