Legal Intelligencer
(By Robert Max Junker)
There is one in every town. The abandoned lot, corner or block. Maybe it once housed a building that was torn down long ago. Perhaps it served as the neighborhood sandlot for pick-up baseball games in the summer before the new all-season turf field was installed in the athletic complex. Might be one owner or several parcels with various owners. Likely it has delinquent taxes piling up. Possibly there was an approval in the past with much fanfare, but then the market collapsed, the groundbreaking was canceled and permits expired. People drive past all the time and wonder, “What are they ever going to build there?”
Although land is valuable because they are not making any more of it, a variety of factors can prevent otherwise viable property from being developed. In situations where there are local government hurdles to development, a would-be developer can have several options. A rezoning to change the zoning map and the type of permitted uses on the property is one option. But rezoning comes with risks both to the developer including a spot zoning challenge by neighbors and to the local government due to the possibility that the developer does a project that is now permitted in the new zoning district even though it was not what was proposed during the legislative rezoning process.
Another option for a more targeted development where the local government will have assurances that it will get what was promised is a use variance. Although not as common as the ubiquitous dimensional variance that seek to alter building setbacks or heights beyond what is allowed in the zoning ordinance, a use variance in the right circumstances can be a viable path for both the local government and the developer. Far too often a developer might be scared away from this option due to the heavy burden of establishing that the property is constrained by an unnecessary hardship to warrant the relief of a use variance.
In the Pennsylvania Commonwealth Court’s reported opinion, In re Appeal of Frank Garcia, No. 134 C.D. 2020 (May 10, 2022), the much-maligned use variance concept received a bit of a revival. This city of Philadelphia case involved a rectangular lot over 45,000 square feet in size that had been abandoned and vacant for decades as the Olde Richmond neighborhood around it grew and changed. The property is located at 2600-40 Hagert Street and is bounded by three public streets. Zoning only permitted attached and semi-detached single-family residences on the property.
The developer initially devised a plan to divide the property into three parcels for a multi-family apartment building and eleven single-family dwellings. This plan was not well received by the neighbors and the community association. After meeting with community members, the developer revised its plan to reduce the building size and number of units, create a pedestrian walkway, increase the open areas, and increase the landscaping and preservation of several existing trees. Essentially, the apartment building was turned into a smaller number of duplexes and the eleven single-family dwellings remained. In addition, the developer agreed to provide off-street parking for use by the community and to create a pocket park and community garden for the neighborhood.
The duplexes required a use variance from the Zoning Board of Adjustment. The developer addressed the neighbors’ concerns with traffic and parking problems by comparing its proposal to what could be constructed without the variance. Using the entire property for single-family residences would add to the parking and traffic concerns, and there would be no requirement for the developer to provide for the additional off-street parking spaces and other design features that were offered in the revised plan. In addition, the objecting neighbors claimed that the developer failed to establish an unnecessary hardship or that the requested variance represented the minimum variance that would allow the property to be developed. In response, the developer established that it was not economically viable to do an exclusively single-family development and the surrounding commercial and industrial would impact the ability to market single-family residences to potential buyers.
The Zoning Board of Adjustment granted the use variance for the duplexes over the neighbors’ objections, and the Common Pleas Court affirmed. Judge Patricia McCullough, writing for the unanimous Commonwealth Court, used the opportunity presented by this case to review the standards for a use variance, but more importantly, to explain the common errors that arise when a use variance is viewed in terms of extremes rather than the nuance the law requires. McCullough began by addressing the need to find an “unnecessary hardship” peculiar to the property that is the first step in a use variance case. Based on Supreme Court decisions, the three ways an applicant for a use variance can establish an unnecessary hardship are by establishing either that: the property cannot be used for a permitted purpose due to the physical features of the property, or a permitted use can only be developed at a prohibitive expense or the property is valueless for any use permitted by the zoning ordinance. This is a disjunctive test that has multiple factors, and yet there has been a trend of decisions that only focus on one of these three criteria and ignores other factors. The belief that a use variance was only appropriate for a valueless property or in situations where it was impossible to comply with the zoning ordinance played a large role developers’ fear for seeking one and zoning hearing boards’ reluctance to grant one.
This extreme position is an error. A developer does not need to have a completely valueless property before an unnecessary hardship will be established. McCullough explained the variety of factors that must be considered by a zoning hearing board conclude whether an unnecessary hardship exists. In this case, the developer detailed for the Zoning Board of Adjustment what a single-family development permitted by right would look like. It would be 16 lots in two rows of eight houses back-to-back with front yards that were 20 feet wide and side yards that were 70 feet long. This would look like a suburban subdivision and not like anything in the immediate area. This, coupled with the large size of the lot, the fact that it was bounded by three public streets, and that the surrounding land was not in keeping with a single-family development was sufficient for the Zoning Board of Adjustment to conclude that there was an unnecessary hardship that warranted variance relief.
McCullough next analyzed the objectors’ argument that the developer failed to establish that a use variance for duplexes was the minimum necessary variance. The court noted that this criterion is decidedly more difficult to assess in a use variance than in a dimensional variance case where an applicant can clearly quantify the restriction and show how the building will work if the restriction is changed. However, this difficulty in a use variance case can be overcome by considering the economics of the proposed variance. Too often, developers are not willing to discuss their profit margins or how changes will impact the bottom line. Here, the developer was able to bring forward facts that supported its reasonable profit expectations and how that interacted with the minimum number of dwelling units that would be necessary for the plan to be economically viable. By doing so, the developer gave the Zoning Board of Adjustment substantial evidence to support the determination that the number of duplexes requested in the variance was the minimum variance to make the project economically feasible and justified relief from the hardships posed by the property, the surrounding area, and the zoning ordinance.
The developer in this case was well served to meet with the community and make a revision to the plan to address concerns. The court mentioned these revisions throughout the opinion and a willingness to work with the community played a key role in establishing the economics that led to a decision that the duplexes were the minimum necessary variance. There was a final issue relating to a unique provision in the Philadelphia zoning code that bars a variance if there are delinquent property taxes unless the Zoning Board of Adjustment included a condition that the taxes be satisfied, which was not addressed by the lower court and the Commonwealth Court remanded the case for resolution of that issue.
The city of Philadelphia is not subject to the Pennsylvania Municipalities Planning Code like other municipalities, but Pennsylvania courts recognize the universal considerations that go into any variance application before a local zoning hearing board. Practitioners facing a use variance as either counsel for a developer, attorney for the objectors, or solicitor for the zoning hearing board will all be well served to review In re Appeal of Frank Garcia as they prepare for a public hearing. A use variance is not necessarily something to be feared and it can be an effective solution to put that vacant lot present in every town to productive use.
Robert Max Junker is a shareholder in the public sector, energy and natural resources and employment and labor groups of Babst, Calland, Clements & Zomnir. Conctact him at rjunker@babstcalland.com.
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Reprinted with permission from the June 23, 2022 edition of The Legal Intelligencer© 2022 ALM Media Properties, LLC. All rights reserved.