                          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.
                              -2-                519264

      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
                              -3-                519264

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
                              -4-                519264

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
                              -5-                519264

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 K-
Tooling, 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
                              -7-                  519264

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
