This case is another in a series of recent decisions from the New Hampshire Supreme Court concerning unnecessary hardship and the distinction between use and area variances. The applicant owned a 46-acre parcel in a medium density residential zone in which manufactured housing parks were permitted. There were 33 manufactured home sites and 54 campground sites located on 26 acres of the property. The owner wanted to add 26 manufactured home sites on the remaining 20 acres.
Under the zoning ordinance, a minimum of 10 acres was required for manufactured housing parks, and the number of sites was limited to 25. Town officials were uncertain whether the ordinance limited the number of sites to 25 per 10 acres, or 25 regardless of the size of the parcel, as long as the parcel was at least 10 acres. Because the parcel lacked required road frontage, the property owner was unable to subdivide it, which would have given him two additional 10-acre parcels on which he could locate 25 sites each. Therefore, he applied for a variance.
The zoning board of adjustment granted the variance, but limited the number of additional sites to 25, to be developed at no more than five sites per year. The abutters, the Harringtons, appealed to the superior court, which affirmed the ZBA's decision, and then appealed to the Supreme Court, arguing that the applicant failed to show unnecessary hardship; created his own financial hardship because he purchased the property with knowledge of the zoning restrictions; and failed to prove other variance criteria, including that the variance was consistent with the spirit and intent of the zoning ordinance and that granting the variance would do substantial justice.
Distinguishing between a use or area variance isn't always simple, which didn't matter until the Court's decision in Boccia v. City of Portsmouth, 151 N.H. 84 (2004) established separate unnecessary hardship factors to apply to area variances, while limiting the Simplex unnecessary hardship test to use variances.
In this case, the ZBA granted the variance before Boccia was decided and, therefore, the Simplex test applied regardless of whether the applicant sought a use or area variance. However, the case reached the Supreme Court after Boccia . The applicant sought a variance from the 25-site limitation, and the Court began its analysis by first determining whether to apply the Boccia factors or the Simplex test to the unnecessary hardship criterion.
“A use variance allows the landowner to engage in a use of the land that the zoning ordinance prohibits,” the Court wrote, while “[a]n area variance is generally made necessary by the physical characteristics of the lot. In contrast to a use variance, an area variance involves a use permitted by the zoning ordinance but grants the landowner an exception from strict compliance with physical standards such as setbacks, frontage requirements, height limitations and lot size restrictions. As such an area variance does not alter the character of the surrounding area as much as a use not permitted by the zoning ordinance.”
The Court said, “The critical distinction between area and use variances is whether the purpose of the particular zoning restriction is to preserve the character of the surrounding area and is thus a use restriction. If the purpose of the restriction is to place incidental physical limitations on an otherwise permitted use, it is an area restriction. Whether the variance sought is an area or use variance requires a case-by-case determination based upon the language and purpose of the particular zoning restriction at issue.”
The Court compared the manufactured housing park provision to another provision of the ordinance that permitted manufactured housing subdivisions on a minimum 12-acre lot. According to that provision, the maximum number of lots “in any manufactured housing subdivision shall not exceed 25.” The Court emphasized the word “any” in this provision and interpreted it to mean that regardless of the size of a parcel, as long as it was a minimum of 12 acres, it was limited to 25 manufactured housing sites. “Thus, unlike an area restriction, the limitation on the number of manufactured housing sites is not related to the acreage or other physical attributes of the property,” the Court wrote. “Rather, the restriction limits the intensity of the use in order to preserve the character of the area.”
In fact, the Court added, the town's overall zoning scheme, with three residential districts, segregates land by types of uses as well as by intensity of use. For example, two-family dwellings were permitted uses in the village and medium density districts, but permitted only by special exception in the low-density district. “[G]iven the language and purpose of the zoning ordinance,” the Court concluded that “the provision limiting the number of sites to 25 lots is a use restriction.”
The Court then applied the Simplex unnecessary hardship factors: “1) the zoning restriction as applied interferes with the applicant's reasonable use of the property, considering the unique setting of the property in its environment; 2) no fair and substantial relationship exists between the general purposes of the zoning ordinance and the specific restriction on the property; and 3) the variance would not injure the public or private rights of others.”
The Court said a use variance generally “requires a greater showing of hardship than an area variance because of the potential impact on the overall zoning scheme” and said the first prong of the Simplex standard “is the critical inquiry for determining whether unnecessary hardship has been established.” Determining whether the zoning restriction as applied interferes with a landowner's reasonable use of the property, the Court stated, “includes consideration of the landowner's ability to receive a reasonable return on his or her investment.” The Court said a “reasonable return on investment” is not a maximum return, but requires more than a “mere inconvenience.” It “does not require the landowner to show he or she has been deprived of all beneficial use of the land.” In addition, “reasonable return” requires “actual proof, often in the form of dollars and cents evidence,” the Court stated, citing a Missouri case.
Simplex also “requires a determination of whether the hardship is a result of the unique setting of the property,” which, the Court said, “requires that the property be burdened by the zoning restriction in a manner that is distinct from other similarly situated property,” but it “does not require that the property be the only such burdened property. [T]he burden must arise from the property and not from the plight of the individual landowner.”
Consideration of the surrounding environment is also required under the Simplex test. “This includes evaluating whether the landowner's proposed use would alter the essential character of the neighborhood. Indeed, because the fundamental premise of zoning laws is the segregation of land according to uses, the impact on the character of the neighborhood is central to the analysis of a use variance.”
The Court said the evidence was sufficient to establish that the applicant met the Simplex unnecessary hardship standard. The fact that manufactured housing parks were a permitted use in the zoning district was “most significant” in supporting the conclusion that the 25-site limit per parcel interfered with the applicant's reasonable use of the property, according to the Court. Evidence supporting the conclusion that unique conditions of the property created a hardship included the fact that the applicant could not subdivide the parcel because of insufficient road frontage; the current location of the existing mobile homes, campground sites and swamp land made construction of a road with sufficient frontage “almost impossible;” and improvements to the park's private road would not remedy the road frontage problem.
“[T]he ZBA implicitly found that the expansion of the park would not adversely affect the character of the area,” the Court said, noting that the impact on schools, traffic and the availability of affordable housing were considered and that the ZBA limited the expansion to five new sites per year to lessen the impact on schools.
The abutters had also argued that because the zoning regulation was in place before the applicant purchased the property, any hardship experienced was self-created. The Court cited its previous decision in Hill v. Town of Chester, 146 N.H. 291 (2001), which held that “purchase with knowledge” of the zoning restrictions does not preclude the landowner from obtaining a variance, but should be a factor considered under the first prong of the Simplex test. According to the Court, “To counter the fact that the hardship was self-created because the landowner had actual or constructive knowledge of the zoning restrictions, the landowner can introduce evidence of good faith.” Among the ways an applicant can show good faith, the Court said, are: compliance with rules and procedures of the ordinance; use of other alternatives to relieve the hardship before requesting a variance; reliance upon the representations of zoning authorities or builders; no actual or constructive knowledge of the zoning requirement.
In this case, the Court said, the applicant was advised in writing by the selectmen before purchasing the property that the mobile home park could be expanded subject to planning board approval and compliance with the building code. Also, the Court said, the ZBA was uncertain whether the 25-site limitation for mobile home parks applied per 10 acres or was an absolute maximum and, therefore, the applicant acted in good faith in applying for a variance.
The abutters also argued that the applicant did not prove that the variance was consistent with the spirit and intent of the zoning ordinance and would do substantial justice. The Court disagreed, noting that mobile home parks are a permitted use under the ordinance, that a mobile home park already existed and that the property owner could have established a second mobile home park if he had be able to subdivide the property.
Please be advised that the foregoing case summary is based upon a Supreme Court slip opinion. Slip opinions are subject to change following motions for rehearing and/or motions for reconsideration. The Court may also modify the opinion without motion. The final version of the Court’s opinion is that which appears in the New Hampshire Reports.