Zoning Concerns from Listing Your Property on Airbnb

One of the topics generating a great deal of attention in zoning relates to people leasing their residential homes via Airbnb.

This issue came up in Reihner v. City of Scranton Zoning Hearing Board No. 256 C.D. 2017 (PA Commw. Ct. Dec. 8, 2017). The owners of a single family residential dwelling rented the three bedrooms on the second floor of their house via the Airbnb website.

The City filed a notice of violation alleging that the use was a “Bed and Breakfast” which was not allowed in the property’s zoning district.

Scranton’s ordinance defined a “Bed and Breakfast use” as follows:

“The use of a single family residential dwelling and/or accessory structure which includes the rental of overnight sleeping accommodations and bathroom access…and which does not provide any cooking facilities or provision of meals for guests other than breakfast…”

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Who Can Be a Redeveloper of Property in New Jersey?

One of the questions that I am frequently asked is, “Who can develop property in a redevelopment area?”

As discussed below, redevelopment can be done by anyone, subject to restrictions discussed below, and is not necessarily restricted to just large scale developers.

A redeveloper is defined by New Jersey’s Local Housing and Redevelopment Law (the “LHRL”) as “… any person, firm, corporation, or public body that shall enter into or propose to enter into a contract with a municipality or other redevelopment entity for the redevelopment or rehabilitation of an area in need of redevelopment…”.

Thus, for a redeveloper to make use of the LHRL, a municipality must have first declared a property or properties as an area in need of redevelopment.

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Commonwealth Court Upholds Philadelphia’s Definition of a Family for Zoning Purposes

A recent Commonwealth Court case involving a pair of residential properties has aptly demonstrated that not every residential property in Philadelphia can be automatically utilized for student housing. This case in question is Schwartz v. Philadelphia Zoning Board of Adjustment, 2015 Pa Commw. Lexis 413 (2015).

In Schwartz, two properties were zoned for single family and two family residential use, and located near Drexel University’s campus in Powelton Village. The properties were unequivocally zoned and used for residential purposes, and they were currently being leased to Drexel students, with each property rooming at least 4 students. For the record, the Philadelphia Zoning Code defines a family as “a person living independently or group of persons living as a single household unit using housekeeping facilities in common, but not to include more than three persons unrelated by blood, marriage or adoption.”

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Land Use – Transportation Impact Fees

Metro Bank v. Board of Commissioners of Manheim Township (Pa. Commonwealth Court 2015) dealt with the appropriate calculation for a transportation impact fee. Metro Bank was approved to build a bank in Manheim Township, and was required to pay an estimated transportation impact fee prior to the start of construction. This dispute is due to the amount of the transportation impact fee to be paid.

Metro Bank’s consultant determined that the new bank’s location would generate 110 peak hour trips with a pass-by rate of 57%. Thus, it was expected that 63 of the 110 peak hour trips would be generated from vehicles that were already driving and passing by the new development. A transportation impact fee is intended to offset the strain on a municipality’s roads when the development is installed in an area.

Manheim Township disagreed with Metro Bank’s estimation, and determined that the impact fee should be based on all of the 110 peak hour trips. The bank countered that the impact fee should only be based on the 47 additional trips into the development not resulting from vehicles that were already on the road.

The Court looked at the Administration of Impact Fee provision contained in Section 505-A of the Municipalities Planning Code and determined that nothing in that section required the municipality to exclude pass-by trips. Moreover, the Court determined that Metro Bank’s interpretation would lead to an inappropriate result because, by excluding pass-by traffic, the revenues generated by the impact fee would fall significantly short of the Township’s total costs.

Additionally, under Metro Bank’s calculation, the initial developer would pay for an unfairly high percentage of the increase in vehicular traffic to an area. Thus, the Court held that the impact fee should be determined by multiplying the per-cost trip multiplier by peak hour trips attributed to the new development, with no exclusion for pass-by traffic.

Land Use: What Evidence is Required for a Use Variance?

The unreported case of Jenkins v. City of Philadelphia (1470 C.D 2014) should serve as a reminder to all land use attorneys that they must always adequately satisfy all of the applicable proofs when presenting a zoning case. In this instance, the Applicant needed use and dimensional variances in order to utilize a building for commercial and residential purposes. In this instance, the property only permitted industrial uses.

The Philadelphia Zoning Board of Adjustment granted the requested variances. However, after this request a neighbor filed an appeal. The Philadelphia Court of Common Pleas affirmed the approval, at which time the neighbor appealed to the Commonwealth Court.

After reviewing the case, the Commonwealth Court reversed the trial court and observed that the Applicant failed to satisfy its burdens. The Court also noted that the Applicant presented extremely limited testimony to the Zoning Board. Initially, there was no evidence that the property was incapable of being used for any permitted purpose, and the Applicant testified that the property had been vacant for a decade.

That being said, the Applicant never tried to explain why the property was vacant or what marketing efforts were employed to sell/lease the property or use it for any permitted purpose. There was also no presented evidence that showed it was cost prohibitive to utilize the property for any permitted use. Instead, there was simply a statement that the property had been vacant and the permitted uses were not viable, without any adequate data or supporting information.

For this reason, land use cases should always present the requisite proofs in a zoning case, even if it appears that the board is inclined to grant a zoning application. A zoning board’s decision is entitled to great weight, but testimony is still required to support a board’s approval. This is particularly true for a use variance.

Good News for Developers: New Jersey Permit Extension Act Extended

Just before the end of 2014, Governor Christie signed legislation that extended the time periods contained in the New Jersey Permit Extension Act. The Permit Extension Act deals with various land use approvals and permits that were either approved and/or set to expire after January 1, 2007.

The purpose of the Permit Extension Act was to acknowledge the difficult economic climate and to toll the expiration dates for the covered permits and/or approvals. Without the Permit Extension Act, many developers who were unable to move forward with their projects, were conceivably going to have their approvals/permits lapse. This would force developers to through the costly and time consuming process of reapplying and obtaining various permits and approvals under the current statutory regulations, or perhaps simply not be able to re-obtain the lapsed approvals.

Previously the Permit Extension Act ensured that the covered approvals/permits would not lapse prior to December 31, 2014. Pursuant to the recent legislation, that date has now been extended through at least December 31, 2015

However, it is important to note that not every permit or approval obtained or set to expire after January 1, 2007 is covered by the Permit Extension Act. The approvals may extend up to an additional six months for any unexpired term of the approval or permit, thus not later than June 30, 2016, Moreover, further extensions as permitted by law are not precluded when the tolling period expires.

To ensure your project’s success and that all land use issues are dealt with effectively and efficiently, contact Stark & Stark’s Commercial, Retail and Industrial Real Estate Group. Attorneys are active members of the International Council of Shopping Centers (ICSC).

Is the Owner of Subsurface Rights an Owner for Purposes of a Mechanic’s Lien Claim?

The case of Linde Corporation v. Black Bear Property L.P. et al was decided by the Court of Common Pleas of Lycoming County and dealt with the issue of who is an owner for purposes of a mechanic’s lien claim. Specifically, is the owner of subsurface rights an owner under the Mechanic’s Lien Law? As noted by the Court, the owner of only subsurface rights can be an owner, but was not one in this instance.

The Plaintiff, Linde Corporation (“Linde”), filed a mechanic’s lien for labor and materials used to provide work on the subject property. Linde had entered into a contract with the owner of the property, Black Bear, LLC for the work to the surface of the property. Due to non-payment, Linde filed a Mechanic’s Lien Claim and a Complaint to Obtain Judgment and Enforce Mechanic’s Lien Claim. One of the other Defendants named in the Complaint was Penn Central Corporation, the owner of the subsurface rights in the subject property.

Linde argued that because it installed underground pipes, it had provided a benefit to Penn Central. Initially, the Court held that someone merely holding subsurface rights in a property can be an owner. However, in this instance, Linde did not enter into a contract with Penn Central. Because there is neither an actual nor an implied contract, the Court held that Penn Central is entitled to have the lien stricken against Penn Central. The Court held that in this instance, the Mechanic’s Lien Law should be construed to mean that only the property owner who actually contracts with the contractor can be subject to a mechanic’s lien.

Does Affordable Housing Transform a Project into an Inherently Beneficial Use?

The case of Advance at Branchburg II, LLC V. Township of Branchburg Board of Adjustment, (N.J. Super. Ct. App. Div. 2013) dealt with the issue of whether a residential development could be treated as an inherently beneficial use when only approximately 20% of the development was utilized for affordable housing. The developer was seeking a d (1) use variance for a multi- family residential development consisting of 292 units, of which 59 would be affordable housing units. The developer argued that the inclusion of the affordable housing component rendered the entire development an inherently beneficial use.

A Mechanics Lien Can Potentially Be Filed Without an Erected Structure

In the case of B.N. Excavating v. PBC Hollow-A, the Pennsylvania Superior Court held that it is not always necessary to show that a structure has been erected in order for a mechanics lien to be filed in Pennsylvania. Rather, the majority of the Court ruled that where land excavation is an integral part of the overall construction plan for a building, a mechanics lien could possibly be filed for that work, even where no structure has been built. The en banc panel noted that the seminal case of Sampson-Miller Associated Companies v. Landmark Realty Co. does not stand for the proposition that a mechanics lien can never be filed if a structure has not been erected.

Zoning – Site Specific Relief and Standing

In the case of In Re Appeal of Chester County Outdoor, LLC, the applicant, Chester County Outdoor LLC (“CCO”), desired to erect a billboard on certain property in Penn Township. CCO filed a challenge to the validity of Penn Township’s Zoning Ordinance pursuant to Section 916.1 of the Municipalities Planning Code, alleging that that Section 1800G of the Ordinance excluded billboards. Section 1800G stated that no sign could be erected in the Township except one for a business or merchandise for sale on the same premises as the billboard.

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