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Effect of Private Restrictive Covenants on Zoning Decisions

Chambers v. Old Stone Hill Road Associates

1 NY 3d 424, 774 NYS 2d 866, 806 NE 2d 979 (2004)

In Chambers v. Old Stone Hill Road Associates, which was decided February 24, 2004, the Court of Appeals draws a clear distinction between the rules governing administrative approval of a wireless facility application, on the one hand, and private restrictive covenants that may affect the use of a given parcel, on the other.

The Facts

Beginning in 1957, the owner of a tract of land in the Town of Pound Ridge began subdividing the tract and conveying lots, with deeds containing mutual restrictive covenants against any uses other than single-family homes. In 1998, Stone Hill Associates (hereinafter “defendants”), the corporate owner of two of the lots in the subdivision, leased space on one of them, with a right of access over the other, to New York SMSA Limited Partnership, doing business as Verizon Wireless. The lease granted permission for construction of a 120-foot tall cellular phone tower and a two-story equipment storage shed disguised as a barn, and parking space for maintenance vehicles. Under the Town’s amended zoning law, special permits were issuable for “wireless telecommunications services facilities”, provided the applications met special standards and requirements for such uses.

In 2000, after a lengthy selection process involving the consideration of 18 alternative sites, the town board of the Town of Pound Ridge approved Verizon’s application for a special permit to construct the facility on defendant’s property (the “Stone Hill site”). That same year the plaintiffs, a residents’ group, brought two lawsuits: an action to enforce the restrictive covenants, and an Article 78 proceeding challenging approval of the special permit. Verizon subsequently obtained a building permit and substantially completed construction in September, 2000.

Late in 2001, Supreme Court, Westchester County, decided both cases. The court issued a permanent injunction against violation of the restrictive covenants and ordered removal of the facility, dismissing Verizon’s claim for extinguishment of the covenants. The court, however, dismissed the Article 78 proceeding, holding that the town board had properly approved the site in that the primary alternative site, a town department of public woks garage (the “DPW site”), could not provide necessary cellular coverage and adequate capacity.

On appeal, the Appellate Division affirmed, holding that the restrictive covenants evinced an intent to limit the property to residential use, and rejecting the defendants’ hardship claim on grounds that any hardship was self-created. Another defense raised was that of Real Property Actions and Proceedings Law (RPAPL) §1951, which allows a court to extinguish a restrictive covenant upon a showing that no actual and substantial benefit would accrue to the landowner who seeks its enforcement. The court found that the plaintiffs indeed derived substantial benefit from enforcement of the covenant against nonresidential uses.

The court also rejected the defendants’ claim that the public policy established by Congress in enacting the Federal Telecommunications Act of 1996 (“TCA”) was sufficient to overcome the restrictive covenants. While the TCA recognizes the authority of states and localities to regulate wireless communications facilities, the Act makes any state or local regulation unlawful which “prohibit[s]” or has “the effect of prohibiting the provision of personal wireless services”. The TCA further requires all siting decisions to be made within a reasonable time and all denials to be in writing, and prohibits any state or locality from denying an application based on the environmental effects of radio frequency emissions from wireless facilities.

The Appellate Division held, however, that the TCA does not expressly or impliedly preempt the power of private citizens to enforce restrictive covenants, or otherwise limit their judicial enforcement.

The same arguments--hardship and public policy--were placed before the Court of Appeals on appeal by the defendants. The defendants argued that enforcement of the covenants would have the effect of prohibiting wireless services in violation of the TCA’s sanction against such prohibition. The defendant also argued that if the covenants were upheld, the town’s authority would effectively be negated.

Analysis

Neither argument was accepted. In a decision written by Chief Judge Kaye, the court held that the fact that the town was actively considering other sites up to the time of its decision shows that denial of the Stone Hill site would not have had the effect of prohibiting wireless service. The court also rejected the defendants’ argument that enforcing the covenants would effectively negate the town’s zoning power. Citing its 1985 decision in Friends of the Shawangunks v. Knowlton, 64 NY 2d 387, 487 NYS 2d 543, 476 NE 2d 988, the court affirmed the principle that a zoning approval constitutes only a conclusion that the proposed project comports with applicable zoning regulations; it should neither affect, nor be affected by, the existence of private restrictive covenants.

The court rejected the defendants’ argument that the restrictive covenants offend public policy under the holding in Crane Neck Association v. NY City/Long Island County Services Group, 61 NY 2d 154, 472 NYS 2d 901, 460 NE 2d 1336 (1984). The Crane Neck case dealt with the siting of a residential facility for the mentally handicapped under Mental Hygiene Law §41.34. In that statute, the Legislature had expressly preempted local zoning regulations which would bar the use of single-family homes for use as residential facilities for the mentally handicapped. While the court had found therein a public policy that it extended to encompass a preemption of inconsistent restrictive covenants, the court found no such expression of public policy in the Telecommunications Act. Indeed, the TCA expressly preserves the power of states and localities to enact reasonable restrictions over wireless facilities.

The court also refused to find that the defendant had suffered or would suffer hardship, in that it knew of the restrictive covenants and of the plaintiffs’ intent to enforce them, yet proceeded with the project anyway, and that there was no reason to hold that the property in question was not still be viable as residential property. Finally, the court found substantial evidence on the record to uphold the Supreme Court’s finding that the plaintiffs indeed derived substantial benefit from enforcement of the covenant against nonresidential uses, and that the covenants could not therefore be extinguished under RPAPL §1951.

In an extensive dissent, Judge Read read Federal case law to support a particular interpretation of the TCA sanction against local laws which would prohibit or have the effect of prohibiting wireless service. Her position, citing Sprint Spectrum, L.P. v. Willoth, 176 F. 3d 630 (2d Circuit, 1999), is that the anti-prohibitory language of the TCA was not meant merely to prohibit blanket municipal bans on telecommunications facilities. Instead, where a provider shows that construction of a facility will allow users in remote locations to connect to the national wireless network, and where the plan for the facility is the least intrusive in terms of land use planning considerations, an individual project denial will “have the effect” of prohibiting wireless service, and is therefore unlawful under the TCA.

In Judge Read’s opinion, under this reading of Federal law, the Town of Pound Ridge was required to issue Verizon a permit. That being so, the plaintiffs were precluded from enforcing restrictive covenants, as such covenants could not thereby thwart a Federal law carrying out national telecommunications policy.

The majority refused, however, to give the Telecommunications Act such a broad interpretation.

Implications

The decision in Chambers should serve as a reminder to local governments that their land use approval powers are not in any way affected by private restrictive covenants. Projects should proceed through the appropriate processes under local regulations regardless of the existence of such covenants. Practitioners and local officials should also be aware that the Telecommunications Act does not establish a policy that private covenants must surrender to the administrative approval process for wireless facilities. Unless a statute expressly provides otherwise, land use approvals and the enforcement of private restrictive covenants are administered independently of each other.