by Rachel Greifenkamp and Gary Taylor
(Nebraska Supreme Court, March 28, 2014)
The City of Norfolk, Nebraska zoning code includes the following provision with regard to nonconforming uses:
In the event that a nonconforming use is discontinued, or its normal operation stopped, for a period of one year, the use of the same shall thereafter conform to the uses permitted in the district in which it is located.
The Rodehorst Brothers partnerships owns a fourplex in Norfolk an area zoned R-2 for one and two family use. The fourplex is a legal, nonconforming use. In 2010 and 2011 Rodehorst applied for building permits to replace a roof, fix some electrical issues, and remodel the apartments in the building. The first two were granted by the building inspector but the third (apartment remodels) was denied because the inspector concluded that Rodehorst had forfeited its right to continue its nonconforming use of a fourplex because several of the apartments in the building had been unoccupied for more than one year.
Rodehorst appealed the denial of the permit to the City of Norfolk Board of Adjustment (Board), and also requested that they grant a use variance to allow the building to continue operating as a fourplex. Rodehorst argued that simply failing to rent out the apartments did not cause a forfeiture of the right to operate as a fourplex, and that it had been trying to “fix up” the building for years. Rodehorst also argued that it would suffer an undue hardship without the use variance. The City argued that the right to operate the building as a fourplex was forfeited because the apartments were unoccupied for more than one year. The City further argued that the Board did not have authority to grant a use variance because the zoning code defines “variance” as “relief from or variation of the provisions of [the zoning code], other than use regulations, as applied to a specific piece of property, as distinct from rezoning.” The Board agreed with the City on both arguments, and Rodehorst appealed the decision to the district court.
At the district court Rodehorst employed the same arguments but went on to say that the Board’s ruling was an unconstitutional taking. The district court, however, affirmed the Board’s ruling in all respects.
Rodehorst appealed the decision of the District Court to the Nebraska State Supreme Court using the same three arguments as when it appealed to the District Court.
Right to continue nonconforming use. Nebraska Revised Statutes provides that, with regard to nonconforming uses for cities of the first class, “if a nonconforming use is in fact discontinued for a period of twelve months, such right to the nonconforming use shall be forfeited and any future use of the building and premises shall conform to the regulation.” The Supreme Court first noted that the choice of the word “discontinued,” as opposed to “abandoned,” is important. Abandonment requires not only a cessation of the nonconforming use, but also an intent by the user to abandon the nonconforming use. Where a legislature or other zoning authority has used the word “discontinued”…instead of “abandoned” their purpose is ‘to do away with the need to proved intent to abandon.'” This squares with the plain, ordinary meaning of the term “discontinue,” and is consistent with the notion that nonconforming uses are disfavored because they reduce the effectiveness of the zoning ordinance, depress property values, and contribute to the growth of urban blight.
Rodehorst argued that the nature and characteristics of the building control; in other words, that the building is and always was divided into four separate living units. The Court disagreed. After reviewing cases from several other jurisdictions, the Court concluded that
The degree of occupancy is the critical factor in determining whether a multifamily dwelling nonconforming use remains in effect, while the existing characteristics of the building (such as separate units and features) generally go to whether the user intended to abandon the nonconforming use. As noted earlier, intent to abandon is not relevant because [Nebraska] zoning laws speak in terms of discontinuance….Thus, the degree of occupancy of the building is the central inquiry.
Noting that “this is not a situation where the discontinuance was involuntary” but rather that no effort had been made to rent the apartments for a number of years, the Court ruled that “a discontinuance period will run where the landlord did not really try to rent the premises.” Thus, the Court affirmed the district court on this argument.
Authority to grant use variance. Citing the relevant provision of Nebraska Revised Statutes, which allows for the grant of a variance “when by reason of exceptional narrowness, shallowness, or shape of a specific piece of property…or exceptional topographic conditions” the Court denied Rodehorst’s argument for a use variance because the request was based on its desire to continue using its building as a fourplex, not because of any physical characteristic of its property.
Taking. While acknowledging that discontinuance provisions may work a taking in some cases, the Court denied that such a claim could be sustained in this case. Using the three-factor test from Penn Central, the Court concluded that (1) even assuming a 50 percent diminution of value, that level of loss generally does not equate to a regulatory taking; (2) Rodehorst bought the property when it was already a nonconforming use, and thus his reasonable investment-backed expectations should have been that he could continue it as a fourplex only so long as its use as such was not discontinued for a period of one year; and (3) the character of the governmental action – to gradually eliminate nonconforming uses over time – is a recognized good.