State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: April 9, 2015 519264 

________________________________

In the Matter of JOSEPH NEMETH

et al.,

Appellants,

v MEMORANDUM AND ORDER

VILLAGE OF HANCOCK ZONING BOARD

OF APPEALS et al.,

Respondents.

________________________________

Calendar Date: January 8, 2015

Before: Peters, P.J., Lahtinen, McCarthy and Lynch, JJ.

__________

Sussman & Watkins, Goshen (Michael H. Sussman of counsel),

for appellants.

Coughlin & Gerhart, LLP, Binghamton (Robert M. McKertich of

counsel), for Village of Hancock Zoning Board of Appeals,

respondent.

Pope & Schrader, LLP, Binghamton (Alan J. Pope of counsel),

for Rosa Kuehn and others, respondents.

__________

Peters, P.J.

Appeal from a judgment of the Supreme Court (Becker, J.),

entered October 4, 2013 in Delaware County, which dismissed

petitioners' application, in a proceeding pursuant to CPLR

article 78, to review a determination of respondent Village of

Hancock Zoning Board of Appeals granting a request by respondents

Rosa Kuehn, Perry Kuehn and K-Tooling for a use variance.
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The pertinent facts are fully set forth in an earlier

appeal in a related matter (Nemeth v K-Tooling, 100 AD3d 1271

[2012]). Briefly stated, petitioners own property adjacent to

property owned by respondents Rosa Kuehn and Perry Kuehn, upon

which respondent K-Tooling operates an industrial manufacturing

business as a nonconforming use (id. at 1274-1275). Previously,

this Court determined that K-Tooling and the Kuehns (hereinafter

collectively referred to as respondents) unlawfully expanded

their nonconforming use by constructing an addition onto the

manufacturing facility in 2001, after a zoning code was enacted

prohibiting manufacturing use in the zone in which the property

was located, and issued an injunction prohibiting use of the

addition for any nonresidential purposes (id. at 1275). 

Thereafter, respondents applied for and received a use variance

from respondent Village of Hancock Zoning Board of Appeals

(hereinafter ZBA) allowing the continued use of the addition in

the manufacturing process. Petitioners commenced this CPLR

article 78 proceeding to annul the ZBA's determination, arguing

that respondents failed to establish an unnecessary hardship

warranting a use variance for the addition. Supreme Court

dismissed the petition, prompting this appeal.

We reverse. An applicant for a use variance bears the

burden of demonstrating, among other things, that the property

cannot yield a reasonable return if used for any of the purposes

permitted as it is currently zoned (see Town Law § 267-b [2] [b];

Matter of Village Bd. of Vil. of Fayetteville v Jarrold, 53 NY2d

254, 257 [1981]; Matter of Jones v Zoning Bd. of Appeals of the

Town of Oneonta, 90 AD3d 1280, 1281 [2011]). Where, as here, a

use variance is sought to expand a nonconforming use, "the

applicant must demonstrate that the land cannot yield a

reasonable return if used as it then exists or for any other use

allowed in the zone" (Matter of Upper Delaware Ave. Assn. of

Delmar v Fritts, 124 AD2d 273, 274-275 [1986], appeal dismissed

69 NY2d 933 [1987] [emphasis added and omitted]; see Matter of

Crossroads Recreation v Broz, 4 NY2d 39, 44 [1958]). Such an

inability to yield a reasonable return must be established

through the submission of "dollars and cents" proof with respect

to each permitted use (see Matter of Dreikausen v Zoning Bd. of

Appeals of City of Long Beach, 98 NY2d 165, 174 [2002]; Matter of

Jones v Zoning Bd. of Appeals of the Town of Oneonta, 90 AD3d at
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1281; Matter of Supkis v Town of Sand Lake Zoning Bd. of Appeals,

227 AD2d 779, 780 [1996]). 

Since the operation of the industrial manufacturing

facility, as it existed at the time the prohibitory zoning

ordinance was enacted in 1983, was a nonconforming use that was

permitted to continue because the property was devoted to such a

use before the ordinance took effect, it was a use that was

permitted in that zone. Further, the property is located in an

R1 residential district and, thus, residential uses were also

permitted in that zone. Therefore, respondents had the burden of

proving that their property could not yield a reasonable return

if used as a presently existing nonconforming use – i.e., as a

manufacturing facility without use of the addition for

manufacturing purposes – or if used for any residential use (see

Matter of Crossroads Recreation, Inc. v Broz, 4 NY2d at 44). 

Respondents' proof was insufficient to meet either of these

showings.

With regard to whether the property could yield a

reasonable rate of return if continued to be used for

manufacturing purposes without utilizing the 800-square-foot

addition, the evidence presented at the hearing established that

the addition is used to house older equipment that has been

replaced by more advanced, efficient equipment. While the record

is unclear as to whether the older machinery stored in the

addition is still being put to productive use and contributing to

the manufacturing process, no financial evidence was presented as

to the profitability, if any, generated from those machines in

relation to the business as a whole. Perry Kuehn's bare

conclusory statements that an additional "10 to 20 percent" of

revenue would be needed to find a similarly sized location to

house the older manufacturing equipment, and that "we [would] go

out of business" without the addition, are simply insufficient to

constitute the requisite "dollars and cents" proof necessary to

demonstrate an inability to realize a reasonable return (see

Matter of Village Bd. of Vil. of Fayetteville v Jarrold, 53 NY2d

at 259; Matter of Conte v Town of Norfolk Zoning Bd. of Appeals,

261 AD2d 734, 736 [1999]; Matter of Miltope Corp. v Zoning Bd. of

Appeals of Town of Huntington, 184 AD2d 565, 566 [1992], lv

denied 80 NY2d 760 [1992]; Matter of Drake v Zoning Bd. of
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Appeals of Vil. of Colonie, 183 AD2d 1031, 1032 [1992]). 

Even if there were sufficient proof to demonstrate an

inability to realize a reasonable return on the property if used

as it presently exists for manufacturing purposes, no evidence

was presented as to the financial implications of converting the

entire property to residential use, which is a use permitted in

that zone. While financial evidence was presented on the cost of

converting the addition to a residential use, "[it] is . . . with

respect to the whole tract that reasonableness of return is to be

measured" (Northern Westchester Professional Park Assoc. v Town

of Bedford, 60 NY2d 492, 503-504 [1983]; see Matter of Concerned

Residents of New Lebanon v Zoning Bd. of Appeals of Town of New

Lebanon, 222 AD2d 773, 774 [1995]; Matter of Amco Dev. v Zoning

Bd. of Appeals of Town of Perinton, 185 AD2d 637, 638 [1992];

Matter of Citizens for Ghent v Zoning Bd. of Appeals of Town of

Ghent, 175 AD2d 528, 529 [1991]; Matter of Upper Delaware Ave.

Assn. of Delmar v Fritts, 124 AD2d at 275). The fact that

respondents' application for a use variance was limited to the

addition is of no moment; the inquiry as to an inability to

realize a reasonable return may not be segmented to examine less

than all of an owner's property rights subject to a regulatory

regime (see Matter of Concerned Residents of New Lebanon v Zoning

Bd. of Appeals of Town of New Lebanon, 222 AD2d at 774; Matter of

Amco Dev. v Zoning Bd. of Appeals of Town of Perinton, 185 AD2d

at 638; Matter of Citizens for Ghent v Zoning Bd. of Appeals of

Town of Ghent, 175 AD2d at 529-530).

Since there was insufficient proof that the land could not

yield a reasonable return as it existed as a nonconforming use or

for any other use permitted in the zone, the ZBA should not have

granted the variance.

Lahtinen and McCarthy, JJ., concur.

Lynch, J. (dissenting).

I respectfully dissent. "Judicial review of a zoning board

determination is limited to an examination of whether it has a

rational basis and is supported by substantial evidence" (Matter
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of Sullivan v City of Albany Bd. of Zoning Appeals, 20 AD3d 665,

666 [2005], lv denied 6 NY3d 701 [2005] [citation omitted]). To

qualify for a use variance, an applicant must demonstrate that

limiting the use to applicable zoning restrictions would cause

"unnecessary hardship," demonstrated by showing that (1) the

applicant cannot realize a reasonable return through permitted

uses, (2) the hardship flows from the unique characteristics of

the property, (3) the proposed use would not alter the essential

character of the neighborhood, and (4) the hardship has not been

self-created (Village Law § 7-712-b [2] [b]; see Matter of

Village Bd. of Vil. of Fayetteville v Jarrold, 53 NY2d 254, 257

[1981]; Matter of Sullivan v City of Albany Bd. of Zoning

Appeals, 20 AD3d at 666). Notably, counsel for each party

acknowledged at oral argument that the use variance here is

limited to the addition, i.e., the balance of the property

utilized for manufacturing continues as a permitted,

nonconforming use. 

As to the first element, petitioners maintain that

respondents K-Tooling, Rosa Kuehn and Perry Kuehn (hereinafter

collectively referred to as respondents) failed to provide

sufficient financial proof that using the addition for

residential purposes would not yield a reasonable return. In an

instance, as here, where a use variance is required to expand a

nonconforming use "the applicant must demonstrate that the land

cannot yield a reasonable return if used as it then exists or for

any other use allowed in the zone" (Matter of Upper Delaware Ave.

Assn. of Delmar v Fritts, 124 AD2d 273, 274-275 [1986], appeal

dismissed 69 NY2d 933 [1987]; see Matter of Crossroads Recreation

v Broz, 4 NY2d 39, 44 [1958]). As such, the question here is not

simply the economic feasibility of converting the addition to a

residential use. The core question remains whether respondents

established that the property could not yield a reasonable rate

of return without utilizing the addition in the manufacturing

process, or otherwise utilizing the entire parcel for residential

purposes. Generally, this element "require[s] proof, in dollars

and cents form, of all matters bearing upon the return available

under existing zoning" (Matter of Village Bd. of Vil. of

Fayetteville v Jarrold, 53 NY2d at 257). In considering the

property as it then exists, however, we must account for the fact

that the addition had been utilized in the manufacturing process
-6- 519264 

since 2001, until precluded by this Court's decision in 2012. 

Respondent Village of Hancock Zoning Board of Appeals

(hereinafter ZBA) concluded that the cost of converting the

addition to a residential use, relocating the facility and/or 

shutting down manufacturing in the addition demonstrated that

respondents could not realize a reasonable return on the property

without a use variance for the addition. The ZBA relied upon

documented proof, including a construction cost estimate and a

market assessment from a licensed real estate broker, that a

renovation of the addition for residential use, and corresponding

conversion of the brick building, would cost over $160,000,

resulting in a net monthly loss of $333. In addition, the

Delaware County Department of Economic Development estimated the

cost of relocating the manufacturing facility at between $1.5 and

$2.2 million. Perry Kuehn testified that, without the addition,

respondents would have to conduct part of the manufacturing

process in a separate location off site, resulting in an

estimated 10% to 20% extra cost that would put them out of

business. Moreover, as a practical matter, given the prohibitive

cost of relocating the manufacturing facility, a conversion of

the entire property to a residential use would effect a closure

of the business, which employs approximately 12 people. As such,

it is manifest that a residential conversion would not yield a

reasonable rate of return, such that specific dollars and cents

proof for a residential option is simply unnecessary. 

Cumulatively, these factors provide substantial evidence for the

ZBA's determination that respondents could not realize a

reasonable rate of return from the property absent a use variance

for the addition. 

Since it has been judicially established that the property

contains a long-standing, nonconforming industrial use that has

included the addition since 2001, the ZBA could readily conclude

that the property is unique (see Matter of Douglaston Civic Assn.

v Klein, 51 NY2d 963, 965-966 [1980]). For the same reason, the

ZBA reasonably determined that the proposed use would not alter

the character of the neighborhood, particularly in view of the

rejection of petitioners' earlier nuisance claim (see Nemeth v KTooling, 100 AD3d 1271, 1272-1273 [2012]). Finally, since the

Kuehns purchased this property in 1971 and the Village enacted

its first zoning law in 1983, placing this property in an R1
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residential district, the ZBA could rationally conclude that the

hardship was not self-imposed (see Matter of Jones v Zoning Bd.

of Appeals of the Town of Oneonta, 90 AD3d 1280, 1283-1284

[2011]). For these reasons, I would affirm Supreme Court's

judgment.

ORDERED that the judgment is reversed, on the law, without

costs, and petition granted.

ENTER:

Robert D. Mayberger

Clerk of the Court