What Happens to the Holdouts?

Grandfathering versus Amortizing Nonconforming Uses

A car repair shop owner was flush with business because her shop was the only one in the mostly residential neighborhood for over sixty years.   She doesn’t have to worry about competition moving in.  Her shop has been in her family for three generations and was up and running before the zoning laws were enacted that prohibit car repair shops in the area. The surrounding neighbors complain about the noise and odors and that the cars clog the narrow pre-World War II streets.  The shop doesn’t have enough parking spaces because it was built before local ordinances required a minimum number of parking spaces and before the typical American family had two cars.   Times have changed, the zoning has changed, but the repair shop remains the same.

When a property like this car repair shop predates and doesn’t comply with the zoning ordinance, this “holdout” is referred to as a non-conforming use.  The non-conforming use is usually subject to a grandfather clause, which creates an exemption and allows the use to continue subject to some conditions.  Amortization is another viable but controversial method that does not provide for an exemption and requires the non-conforming use to terminate at a specific time.

“Grandfathering” is the more common and familiar mechanism.   Although the car repair shop owner’s right to expand the use is limited, the nonconforming use may continue unless it is abandoned, discontinued for a specified time, or the structure is destroyed. Grandfathering balances the private property rights of landowners against the public need to regulate land use. Property owners can feel comfortable that the rug is not going to be pulled out from beneath them.    They are protected from any financial burden of complying with the new rules.

Grandfathering, however, has not been very effective in achieving one of the objectives of zoning regulations – to ultimately eliminate non-conforming uses that run contrary to the community’s formally expressed goals. Although another shop like this shouldn’t pop up, grandfathering does not provide comfort to surrounding neighbors that the car shop will ever disappear.  Municipal decision-makers may be sympathetic when the nonconforming car repair shop is damaged or destroyed in a fire, and may grant a variance to rebuild the structure and continue the non-conforming use.  Thus, an unintended consequence of “grandfathering” is that the nonconforming use is not eliminated and obtains a monopoly – one that the owner will fight to keep to protect their livelihood.

The less common method is “amortizing” the non-conforming use. Amortizing requires the nonconforming use to terminate and come into compliance within a specified time period, usually enough time for the owner to recoup his investment.  The vast majority of courts will not find that amortizing a land use is a “taking” that requires compensation to the land owner provided that the amortization period is reasonable.   Some local ordinances will specify a fixed amortization period, and if the owner can prove by opening its financial books that he did not recoup its investment, an extension may be authorized.  However, the courts generally do not require that every penny of the investment is recouped before the use may be eliminated.

Early United States Supreme Court cases upheld retroactively enforcing land use ordinances, but local governments rarely took advantage because such measures provocative and they believed that the non-conforming uses would disappear over time.   Even today, we know that grandfathering didn’t effectively eliminate these holdouts, but this political fireball of a technique is sparingly used.  And typically, its use is limited to noxious uses such as junkyards and strip clubs or lower value uses such as signs and dumpsters. Amortization is so controversial because it offends deeply held notions of strong property rights dating back to pre-Revolutionary America.  Americans do not want to be told want they can do with their land.  But these strongly held notions can be shaken when one cannot enjoy their own property because another property has a 60-year-old exemption from the rules.

So what happens to this car repair shop holdout and others like it?  Although the location is currently profitable due to its status as a monopoly, it may not be able to keep up with new trends and technology due to its inability to expand.   At some point in the future, the owner may find that the location is no longer economically advantageous.   In the meantime, however, if the car repair shop is a good neighbor, the neighbors may not object to its expansion or rebuilding and the use will continue.

On the other hand, the outcome may change if the neighbors cannot sit on their porches because of the bad odors and blocked driveways are a regular occurrence.   The owner may create a vocal and organized opposition to continuing the grandfather status.  An angry enough constituency will provide the needed political cover for municipal decision makers to eliminate the use.

This article is for educational purposes, and is not legal advice.

For more information on nonconforming uses, contact Tiffany Peperone Pitre at 504-569-9239 ext. 30 or tiffanypeperone@tmg.consulting.net

Disclaimer
The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

New DBE Regulations Take Effect: Implementation at the Baton Rouge Metropolitan Airport

This year, TMG will coordinate the 6th annual DBE Outreach Event for the Baton Rouge Metropolitan Airport (BRMA). Each year the BRMA and TMG invite contractors, consultants and vendors to attend the DBE workshop to learn about the Airport’s DBE Program and upcoming business opportunities. Airport staff and program managers are available to discuss project details and many small business resources are on hand to promote technical, financial and advisory services. This year there will be a special presentation to discuss the new DBE regulations that took effect in February 2011 including the increased personal net worth cap for DBE certification, increased program oversight, and revised provisions on substitution or removal of DBE firms. The Outreach Event has been greatly effective in past years to expand the quality and quantity of bids received at the Airport and it is also an excellent opportunity for small businesses to meet the big players in the Airport industry and to network for future work.

TMG Consulting is abreast of the revisions made to the Department of Transportation 49 CFR Part 26 regulations. The changes to the regulations dramatically affect current DBE programs by creating increased monitoring efforts, new reporting requirements, and a new race and gender neutral small business program requirement. TMG has researched nation-wide best practices and is prepared to respond to the needs of your agency.

If you have any questions about how the new regulations affect your current program or if your agency needs assistance in updating your DBE program and drafting the newly required Small Business Program (to be implemented by February 2012) please contact Bonnie Garrigan at (504)569-9239 Ex. 29 or bonniegarrigan@tmg-consulting.net.

DBE Outreach a Success at Baton Rouge Airport

In early July, TMG assisted the Baton Rouge Airport (BTR) in producing its annual Disadvantaged Business Enterprise (DBE) Vendor Outreach Conference. This annual event showcases the airport’s DBE program and renews and expands the vendor pool as well as increasing awareness of BTR’s minority inclusion efforts in the community. TMG manages this event every year and works with BTR to maintain and expand their DBE program, establishing participation goals for construction and services contracts, monitoring goal attainment, and preparing regulatory documents and reports.