Deceitful Conduct May be a Basis for Denial of an Area Variance

The Appellate Division held that under certain circumstances a zoning board may consider deceitful conduct by an applicant in reaching a determination to deny an area variance. In Matter of Caspian Realty, Inc. v Zoning Board of Appeals of the Town of Greenburgh, the court reiterated that a zoning board of appeals may only apply the five criteria set forth in Town Law section 267-b (3) for granting or denying an area variance but “an applicant's deceitful conduct may form the basis for the denial of requested variances, but only if that conduct and other balanced considerations fit within the factors enumerated by Town Law § 267-b(3).”

The Petitioner had originally applied to the Town for site plan approval for a retail furniture store. The plans submitted designated a cellar area as storage. This was significant as otherwise the proposed structure would have exceeded the permitted floor area ratio (FAR) by almost 100% and would have had significantly less parking than would be required if the cellar was not used for storage. During construction the building inspector questioned the location of partitions, molding and carpeting in the cellar and he was again assured it would only be used for storage. To that point “Caspian provided, further revised plans dated September 25, 2003, that expressly designated the cellar for "storage."

Thereafter, Caspian operated its business using the cellar for retail and an offsite location for storage. Caspian was issued a violation and appealed to the Town Zoning Board of Appeals for area variances. During the hearings Caspian produced reports stating that the variances would not impact the neighborhood. Neighbors testified about noise, overnight parking and trucks backing into the property causing a problem on a busy road. The Zoning Board denied the variances finding inter alia:

“Caspian had continuously deceived the Town as to the intended use of the cellar, such that the benefit of granting the variances was outweighed by the detriment that would be caused to the Town by allowing a diminution of respect for its planning, building, and tax laws. The ZBA found that the retail use of the cellar burdened neighboring property owners in terms of noise, truck movement, and traffic tie-ups; that the variance requests were substantial, as they represented a 100% increase in permissible FAR and a 50% decrease in permissible parking; and that Caspian's need for the variances was self-created by its deceptive conduct.”

The lower court reversed finding that, while it agreed that Petitioner had been deceitful, the Petitioner’s deceit was not one of the criteria to be considered by a zoning board under Town Law section 267-b (3). The Appellate Division reversed the lower court.

The court’s findings set forth in detail the evidence in the record of the deceitful conduct of Caspian including: “after the store opened to the public, evidence of continuing deception exists from Caspian's submission on August 8, 2006, of a floor plan on which a revision changing the cellar's use to "retail" has apparently been back-dated to "4/7/03." As explained by the Town's Building Inspector, the floor plan submitted on August 8, 2006, does not bear his approval stamp, as do earlier uncontested plans submitted by Caspian. The alleged 4/7/03 revision is listed out of chronological order in the lower left-hand corner of the document after a revision containing the notation "9/25/03," an indication that the purported 4/7/03 revision was actually added sometime after September 25, 2003. Also, we note that the revised floor plans dated September 25, 2003, submitted to the Town by Caspian, do not show the "4/7/03" revision, and clearly delineate the cellar as merely "storage."

The court acknowledged that with respect the argument by Caspian that a zoning board cannot add criteria to the criteria established for area variances in Town Law “Caspian correctly argues that the standards set forth in Town Law § 267-b(3) are exclusive, thereby precluding zoning boards of appeal from considering any factors not recited in the statute… Pursuant to Town Law § 267-b(3), when making determinations on applications for area variances, zoning boards of appeals "must weigh the benefit of the grant to the applicant against the detriment to the health, safety and welfare of the neighborhood or community if the variance is granted"

While lengthy, due to the unique nature of this case, the court’s findings are worth quoting extensively, as the court went through each of the criteria to be considered and how each relates to the facts of this case and the issue of the Petitioner’s deceitful conduct:

“We find that the ZBA considered and balanced the factors of Town Law § 267-b in denying Caspian's application for an area variance.

As to the primary consideration of the statute, regarding the benefit of the applicant weighed against any adverse impact upon the community, the ZBA noted that site plan approval was received from the Planning Board, permits were issued by the Building Department, and tax assessments were levied by the Tax Assessor, all based upon plans showing Caspian's cellar to be used for storage only. The ZBA concluded, in its written Certification of Decision, that Caspian "never intended use [of] the basement for storage," and that Caspian "concealed from the Town the actual intended use of the basement of this property from the very first day of operation." The ZBA concluded, in broad fashion, that any benefit to Caspian in permitting it to use the cellar as a retail showroom was outweighed by the detriment to the Town, its citizens, and its commercial operations, that would result from permitting Caspian to successfully mislead planning, building, and tax authorities. We take no issue with the ZBA on this point.

To the extent that Town Law § 267-b(3) requires consideration of whether the requested area variance is substantial, the ZBA properly noted that the requested increase in FAR was 100%, and the requested decrease in parking was 50%. These requested variances are substantial and support the denial of the variance application…

Town Law § 267-b(3) also requires consideration of whether the applicant's need for variances is self-created. While the self-imposed nature of a hardship is fatal to a use variance application… the self-imposed nature of a hardship is significant, but not determinative, to an area variance… We agree with the ZBA that under the peculiar circumstances of this matter, Caspian's self-created difficulties represent a particularly compelling statutory factor, given its repeated and documentable misrepresentations to the planning board, building department, tax assessor, and zoning board, both prior to and after the issuance of the Town's site plan approval and certificates of occupancy, as to its true intended use of the cellar….

Town Law § 237-b(3) requires that the variance applicant consider feasible alternatives that might alleviate the need for the variance (see Matter of Chandler Prop. Inc. v Trotta, 9 AD3d at 409; Johnson v Town of Queensbury Zoning Bd. of Appeals, 8 AD3d 741, 743). The benefit of the variance sought by Caspian is a furniture showroom that can compete, in terms of square footage, with those of competitors. The Supreme Court held that the ZBA failed to consider whether the same benefit could be obtained by alternate means. The ZBA did, however, address this factor of Town Law § 267-b(3) to the extent of finding that the cellar could be put to an alternative use, as storage, which is consistent with the plans that were originally approved by the Town.

The ZBA's recognition that the alternative uses of the cellar were limited, essentially, to being a showroom or a storage area, "merely stated the obvious" (Matter of Merlotto v Town of Patterson Zoning Bd. of Appeals, 43 AD3d at 930) as to this factor. Nevertheless, the factor was considered. A showroom use of the cellar cannot be achieved without significant area variances as to FAR and parking, as noted. Moreover, Caspian provided no evidence of the square footage of competitor showrooms or the effect that additional showroom space might have on its profitability….

Not all of the statutory factors favor the denial of Caspian's area variance application. To the extent that Town Law § 267-b(3) requires consideration of whether there would be an undeniable change in the character of the neighborhood or detriment to nearby property created by the granting of an area variance, and whether the proposed variance would adversely affect the physical or environmental conditions of the neighborhood (see e.g. Matter of Matherson v Scheyer, 20 AD3d 425; Matter of Johnson v Town of Queensbury Zoning Bd. of Appeals, 8 AD3d at 743), the ZBA relied upon complaints from neighbors regarding noise and trucks backing into Caspian's parking lot, landscaping, garbage pickups, and the overnight storage of commercial vehicles. However, generalized or unsubstantiated complaints from neighbors, unsupported by empirical or expert evidence, are generally insufficient for a zoning board to base its decision…. In contrast, a zoning board's reliance upon specific, detailed testimony of neighbors based on personal knowledge does not render a variance determination the product of generalized and conclusory community opposition….

Here, based upon complaints from members of the community, the ZBA determined that the particular size and placement of the buildings on the lot required delivery trucks to maneuver into Caspian's parking lot backwards, tying up traffic on Central Avenue, and that this factor was among those that warranted a denial of the requested area variance. The ZBA's determination in this regard is wholly unsupported by the record…

Contrary to the determination of the Supreme Court, we also find that the ZBA adequately distinguished other cases in the Town of Greenburgh where area variances had been granted…
The application to the ZBA raised some statutory factors of Town Law § 267-b(3) that favor the grant of Caspian's requested area variances, and other factors that negatively affect the application. …

In weighing these competing factors, which were each addressed in some form or fashion by the ZBA, we are mindful that our judicial responsibility is to review zoning decisions to assure that the statutory factors have been considered, but not, absent proof of arbitrary or irrational action, to make the decisions for the zoning boards …Local zoning boards have discretion in considering variance applications, particularly given their "familiarity with local conditions necessary to make the often sensitive planning decisions which affect the development of their community" (Cowan v Kern, 41 NY2d at 599).

Under the circumstances of this case, we find that the determination of the ZBA denying Caspian's requested area variances was neither arbitrary or irrational. In doing so, we are guided by two analagous cases from this Court, Matter of Merlotto v Town of Patterson Zoning Bd. of Appeals (43 AD3d 926) and Matter Becvar v Scheyer (250 AD2d 842). Both cases involved homeowners who constructed second stories to their homes in violation of applicable local regulations and without obtaining prior area variances. In both cases, while some factors may have favored the grant of area variances that were later sought, this Court upheld the ZBA's denial of the variances on the grounds that, principally, the applicants' requests were significant and their difficulties self-created.”