[Cite as First N. Corp. v. Olmsted Falls Bd. of Zoning Appeals, 2014-Ohio-487.]

                          [Please see vacated opinion at 2013-Ohio-5580.]


                      Court of Appeals of Ohio
                                   EIGHTH APPELLATE DISTRICT
                                      COUNTY OF CUYAHOGA



                                  JOURNAL ENTRY AND OPINION
                                           No. 99681



                             FIRST NORTH CORPORATION, ET AL.


                                                            PLAINTIFFS-APPELLANTS

                                                      vs.

                                  BOARD OF ZONING APPEALS
                                 OLMSTED FALLS, OHIO, ET AL.

                                                            DEFENDANTS-APPELLEES




                                               JUDGMENT:
                                                REVERSED



                                   Administrative Appeal from the
                               Cuyahoga County Court of Common Pleas
                                Case Nos. CV-627542 and CV-627672

        BEFORE: Stewart, P.J., S. Gallagher, J., and E.A. Gallagher, J.

        RELEASED AND JOURNALIZED:                       February 13, 2014
ATTORNEYS FOR APPELLANTS

Sheldon Berns
Benjamin J. Ockner
Gary F. Werner
Berns, Ockner & Greenberger, L.L.C.
3733 Park East Drive, Suite 200
Beachwood, OH 44122


ATTORNEYS FOR APPELLEES

Paul T. Murphy
Paul T. Murphy Co., L.P.A.
5843 Mayfield Road
Mayfield Hts., OH 44124

James A. Climer
John D. Pinzone
Frank H. Scialdone
Mazanec, Raskin & Ryder Co., L.P.A.
100 Franklin’s Row
34305 Solon Road
Cleveland, OH 44139
ON RECONSIDERATION1

MELODY J. STEWART, P.J.:

       {¶1} Olmsted Industrial Park2 (“OIP”) owns 54 acres of unimproved land in the city of

Olmsted Falls. The land is zoned for light industrial use. OIP claims the land is unsuitable for

that purpose, and when a developer proposed using the land for senior-targeted cluster housing,

OIP asked the city of Olmsted Falls to rezone the land or grant it a variance. The city denied

both requests. As OIP pursued its administrative remedies in the court of common pleas, it filed

a declaratory judgment action seeking to have the zoning classification declared unconstitutional

as applied to the property. It also asked the court to commence proceedings to appropriate the

property and pay just compensation because the deprivation of economically viable use of the

property, as currently zoned, constituted a regulatory taking per se. The court upheld the

administrative decisions and, following a trial on the substantive constitutional issues, ruled that

OIP failed to show beyond fair debate that the present zoning classification constituted a

categorical taking of the property.

       {¶2} We conclude that the court erred by affirming the city’s refusal to grant a variance.

OIP presented unrebutted evidence to show that the present zoning classification worked an

unnecessary hardship because the property was unmarketable as light industrial space due to a


         The original announcement of decision, First N. Corp. v. Bd. of Zoning Appeals Olmsted
       1


Falls, 8th Dist. Cuyahoga No. 99861, 2013-Ohio-5580, released December 19, 2013, is hereby
vacated. Appellants’ application for reconsideration brought to the court’s attention an assignment
of error that should have been, but was not, addressed. This opinion, issued upon reconsideration, is
the court’s journalized decision in this appeal. See App.R. 22(C); see also S.Ct.Prac.R. 7.01.

         First North Corporation, the named plaintiff, “is the development entity associated with OIP”
       2


and both companies are owned and operated by the same principal. Appellant’s brief at fn. 1. The
parties collectively refer to these entities as “OIP,” so we do as well.
poor regional economy, issues with the size and location of the property, and competition from

other light industrial sites (including one funded by the city). The city offered no evidence of its

own, insisting that it could deny a variance in order to diversify its tax base even though it

conceded that the undeveloped property was generating no tax revenue and had not done so in

the 13 years that OIP owned the property. In essence, the city’s position, and one that the court

accepted, was that OIP could be forced to wait indefinitely on the chance that economic

conditions might change in the future and create a demand for light industrial use. This was an

arbitrary and unreasonable position that amounted to an abuse of discretion.

                                                    I

                                                   A

          {¶3} R.C. 2506.04 states:

          The court may find that the order, adjudication, or decision is unconstitutional,
          illegal, arbitrary, capricious, unreasonable, or unsupported by the preponderance
          of substantial, reliable, and probative evidence on the whole record. Consistent
          with its findings, the court may affirm, reverse, vacate, or modify the order,
          adjudication, or decision, or remand the cause to the officer or body appealed
          from with instructions to enter an order, adjudication, or decision consistent with
          the findings or opinion of the court.

          {¶4} The Ohio Supreme Court has given the following characterization of the type of

review to be given by the court of common pleas in an administrative appeal:

          Although a hearing before the Court of Common Pleas pursuant to R.C. 2506.01
          is not de novo, it often in fact resembles a de novo proceeding. R.C. 2506.03
          specifically provides that an appeal pursuant to R.C. 2506.01 “shall proceed as in
          the trial of a civil action,” and makes liberal provision for the introduction of new
          or additional evidence. R.C. 2506.04 requires the court to examine the
          “substantial, reliable and probative evidence on the whole record,” which in turn
          necessitates both factual and legal determinations.

(Emphasis sic.) Cincinnati Bell, Inc. v. Glendale, 42 Ohio St.2d 368, 370, 328 N.E.2d 808

(1975).
       {¶5} The power to review and hear additional evidence necessarily means that the court

of common pleas “must weigh the evidence in the record.” Dudukovich v. Lorain Metro. Hous.

Auth., 58 Ohio St.2d 202, 207, 389 N.E.2d 1113 (1979). But the court of common pleas cannot

simply substitute its judgment for that of the administrative agency. The standard of review set

forth in R.C. 2506.04 is limited to determining whether there is a “preponderance” of evidence to

support the administrative decision, so the court of common pleas must affirm if a preponderance

of reliable, probative, and substantial evidence exists. Id.; Smith v. Granville Twp. Bd. of

Trustees, 81 Ohio St.3d 608, 612, 693 N.E.2d 219 (1998).

                                                B

       {¶6} When a court of appeals reviews a common pleas appellate decision in an

administrative appeal, its standard of review is far more circumscribed. In an R.C. Chapter 2506

administrative appeal from a common pleas court decision in a zoning case, we can review the

judgment of a lower court only on questions of law — we do not have the same extensive power

to weigh the preponderance of substantial, reliable, and probative evidence as is granted to the

lower courts. Henley v. Youngstown Bd. of Zoning Appeals, 90 Ohio St.3d 142, 147, 735

N.E.2d 433 (2000). However, “within the ambit of ‘questions of law’ for appellate court review

would be abuse of discretion by the common pleas court.” Kisil v. Sandusky, 12 Ohio St.3d 30,

34, 465 N.E.2d 848 (1984), fn. 4.

                                                II

       {¶7} The city’s zoning code defines a “variance” as a “modification of the literal

provisions of this Planning and Zoning Code where such modification will not be contrary to the

public interest.”   Olmsted Falls Codified Ordinances 1204.03(b)(129).          Under the city’s

ordinances, its board of zoning appeals has the authority to authorize a variance when “strict and
literal interpretation and enforcement” of the zoning code would yield “results inconsistent with

the general purpose of this Code.” Olmsted Falls Codified Ordinances 1206.05(b)(2).

       {¶8} In general terms, a use variance is an application for a deviation from the permitted

uses in a zoning district. The city zoning code allows the board of zoning appeals to grant a use

variance if it determines that (1) the variance will result in no substantial detriment to any

surrounding property, (2) the intent and purpose of the zoning code is not impaired, and (3) the

applicant shows either: (a) unnecessary hardship or (b) exceptional circumstances. Olmsted

Falls Codified Ordinances 1032.08(c).         “Unnecessary hardship” exists when the “literal

interpretation” of the zoning code would result in “unnecessary hardships peculiar to the property

involved and not based on conditions created by the owner[.]”           Olmsted Falls Codified

Ordinances 1032.08(c)(1)(a).     In addition, the ordinance makes it clear that “limiting of

possibilities of economic advantage do not constitute unnecessary hardship.”        “Exceptional

circumstances” exists when zoning code restrictions apply to the property in question “that do

not apply generally to other properties or classes of uses in the same zoning district.” Olmsted

Falls Codified Ordinances 1032.08(c)(1)(b).

                                                III

                                                A

       {¶9} The land in question is located within an I-2 light industrial district. That zoning

restriction has been in place for more than 130 years, however, the property has never been used

for industrial purposes (it was apparently farmland until the 1930s and went fallow). The I-2

industrial district provides for industrial and manufacturing uses “which may utilize products,

materials, and/or processes that create smoke, noise, odor, dust, fumes, glare, or other

objectionable characteristics, but the impacts of which are controlled in compliance with
permitted uses, performance standards, and setback and screening requirements.” Olmsted Falls

Codified Ordinances 1258.01(b).        In essence, the I-2 light industrial use zone prohibits

manufacturing utilizing raw goods and is limited to the “processing, assembling or packaging of

goods, conducted within wholly enclosed buildings.”           Olmsted Falls Codified Ordinances

1258.03.     Other permitted uses include offices of professional occupations, research

laboratories, nonmanufacturing business conducted in wholly enclosed buildings, storage and

distribution, wireless communication towers or facilities, and household services like laundry or

dry-cleaning. Id. Expressly excluded as an I-2 use are “dwellings of any kind[.]” Olmsted

Falls Codified Ordinances 1258.04(a).

                                                 B

       {¶10} OIP purchased the unimproved land in 2000 from Dairypak Corporation. The site

is a mostly rectangular lot, with residential housing on the north perimeter and train tracks on the

south perimeter. An electrical substation and electrical transmission towers intersect the far

southwest corner of the land.      Dairypak Corporation maintains a packaging plant on the

southeast corner of the property. There is access to the property by only two roads: Fitch Road

on the west; Mapleway Drive on the east. Both roads carry only two-lanes of traffic with no

left-turn lanes. Residential housing exists on the other side of each road.

       {¶11} In its application for a variance, OIP made the following argument relative to the

property’s location making it unsuitable for development as light industrial:

       The features of the Property that underlie its unsuitability for [light industrial]
       uses include without limitation its location, remoteness from interstate access, and
       proximity to transportation alternatives (i.e., rail) that are outmoded, given that the
       Property’s permitted light industrial uses would be more suited to truck access.
       But even the truck access limitations of its permitted light industrial use clash
       with the surrounding residential environment. The transportation infrastructure
       surrounding the Property is by its nature suited to the area’s abundant residential
       users, not for significant truck traffic incident to light industry. Moreover, the
       Property’s remoteness from similar industrial users and districts disconnects it
       from area where such suitable infrastructure might be available. These
       exceptional circumstances uniquely affect the Property in ways not generally
       applicable to other industrially zoned property.

(Emphasis sic.)

       {¶12} OIP also argued that external economic factors had softened the need for the type

of “flex” industrial space contemplated by the zoning. “Flex” industrial space can, consistent

with uses permitted under the I-2 zoning classification, be used to house several different types of

traditional business structures, from office space to warehouses to light industrial. At the time

OIP purchased the land, the vacancy rate for industrial flex space in the greater Cleveland area

was 12 percent, but at the time of the variance application, the vacancy rate stood at 21 percent.

       {¶13} The high vacancy rate for flex industrial space was brought about for two reasons:

lack of demand and an influx of industrial flex space to the region. The commercial real estate

experts collectively testified that the demand for new, light industrial flex space in the greater

Cleveland metropolitan area was functionally nonexistent. In addition to the lack of demand,

area plant closures had resulted in a repurposing of existing factories into industrial flex space.

These newly-repurposed spaces were priced significantly cheaper than any space that OIP might

construct. For example, one expert noted that a closed auto factory in Lorain, Ohio, had been

bought by a developer. The expert believed the converted factory would charge $1.50 per

square foot in rent for what he called a “feature rich facility.”        Were OIP to build on a

speculative basis (meaning without any commitment from prospective tenants), its cost in new

construction would require it to charge as much as $5 per square foot in rent for similar space.

The experts agreed that industrial flex space was exceptionally price-sensitive, with only slight

differences in rent being the determining factor for many businesses. And the higher price that
OIP would have to charge would be in a market in which the lack of demand and surplus

inventory had caused the price charged per square foot to fall in the last five years.

        {¶14} A real estate appraiser was more blunt in his assessment of the viability of the site

for light industrial flex space: “The conclusion is flatly that this is not an industrial development

location.   The reason that it is not is that there is no way that you can get a reasonable

investment back, a reasonable rate of return, from this property because it starts out with so many

debilitating factors.”

        {¶15} The experts said that the lot was too small to contemplate development of a light

industrial park. One expert said the property lacked the kind of visibility needed to “get some

synergy, if you will, as far as industrial development.” Another expert said: “54 acres is too

small to make a dent in anything. And nobody is going to look at that property for [light

industrial] use.”

        {¶16} The property also suffered from poor access to roads and highways, making it

incompatible with the needs of industrial users. The property is served only by two-lane roads

that run through residential areas. The size of truck utilized by light industrial companies is too

big for the type of roads running through residential areas. This problem is exacerbated because

neither road contains a left-turn only lane.

        {¶17} Location was another issue — the property bordered on residential areas and lacked

direct access to interstate highways and other commercial amenities. The OIP property had been

unused for more than 70 years and local residents who presumably enjoyed the quiet, nonuse of

the property over that period voiced significant opposition to the planned industrial park.

        {¶18} Apart from resident concern over increased traffic was the problem of getting to the

site. All of the experts agreed that the property lacked immediate access to interstate highways.
The property had been zoned for light industrial at a time when its direct access to a rail line was

considered a positive and the interstate highway system had not been fully developed. However,

in the present day, light industrial users rely on trucking, not rail. One expert noted that where

light industrial expansion had recently occurred in other locales, that expansion had been driven

by direct highway access. He said that, barring direct highway access at the OIP property,

“you’re going to have trucks coming * * * back and forth, and it is just not practical.”

       {¶19} In addition to the lack of highway access was the property’s isolation from similar

business activities that could act as “other industrial demand generators” to drive additional

development. In other words, the property lacked proximity to retail-commercial activities,

restaurants, amenities, and services that would naturally support an expansion of industrial use.

       {¶20} OIP also showed that the property faced competition from the city’s own Joint

Economic Development District (“JEDD”) with Olmsted Township. According to the JEDD’s

marketing materials, the site (to be known as “Stearns Crossing Business Park”) consists of more

than 250 acres of land within Olmsted Township with “immediate access to major highways.”

The JEDD sits just 1.35 miles west of the OIP site, and is located along the same rail line that

borders the OIP property. The JEDD has the inherent competitive advantage of being developed

by governmental entities that can improve off-site infrastructures with government funding.

One expert said that larger properties like the JEDD have “a shot at getting * * * public funding

and having users in there that have special uses.”

       {¶21} Viewing all of these factors together, the experts unanimously concluded that the

site was simply unsuitable for light industrial development. A real estate broker who spent two

years unsuccessfully marketing the property for OIP concluded that
       [t]he potential for development of the subject Olmsted site is so distant as to be
       undefinable; therefore we might guess that it would take at least 25-30 years to
       reach full development, even assuming that the Greater Cleveland Market were to
       become robust soon (which it is not and likely will not).

(Emphasis sic.)

       {¶22} The broker concluded that without commitments from prospective tenants, “it

would be a serious mistake” for OIP to build industrial flex space on a speculative basis.

       {¶23} Another real estate broker said that if OIP came to him and asked him to market the

property for industrial use, “I would not market it and I would not waste my time trying to market

this as an industrial use. It’s just not there and won’t be there.” A city planner for a number of

area communities echoed the concerns of OIP’s experts and gave his opinion that “regardless of

the market, I don’t believe that this property will ever be developed for industrial use.”

                                                 C

       {¶24} The city’s objections to the rezoning were based on its desire to pursue a long-term

strategy to diversify its tax receipts away from the current 92 percent residential. The OIP site

constituted more than 50 percent of the city’s industrially-zoned land (the JEDD is located in

Olmsted Township). The city feared that granting a variance would negatively impact the city’s

desire to have a more balanced tax base.

       {¶25} In addition to diversifying its tax base, the city feared that additional residential

expansion would increase the financial burden on its school system at a time when the residents

had defeated three consecutive school levies. City officials also expressed the concern that

senior residents who did not have children who used the school system would be disinclined to

vote for school levies. The superintendent of the Olmsted Falls School District testified that he

was “hard pressed to believe that a residential development for senior citizens in Olmsted Falls is
any more marketable than an industrial park” and that a 192-unit development could produce an

additional 200 students for the school system.

                                                 D

       {¶26} The city council upheld the board of zoning appeals, finding that the property was

suitable for light industrial use given that Dairypak, the entity that sold the property to OIP, had

been using adjacent property for that very purpose for more than 50 years. The city council also

expressed its concern that granting a variance would upset the city’s goal of expanding its

industrial tax base to counter its heavy reliance on residential taxes. The city council was

unsympathetic to OIP’s claim that the shape of the property was ill-suited to industrial

development, claiming that OIP knew the shape of the property when it purchased it and that the

city did not have “the onus * * * to save [OIP] from a bad investment.” The city council

rejected OIP’s assertion that the economic downturn meant that there was no demand for the type

of industrial use required by the present zoning — it believed (as of May 2007) that the economy

“has begun to rebound to turning positive” and that in any event OIP “made a hasty purchase”

and “failed to investigate the business cycle” and that the city “should not rezone the property

against the concepts of our Master Plan just because there is a kink in the business cycle.”

Finally, the city council found that its commitment to a joint economic development district lying

outside its borders did take away from its commitment to pursue other light industrial

development within the city.

       {¶27} The court affirmed the city’s decision, finding the order “is not unconstitutional,

illegal, arbitrary, capricious, unreasonable or unsupported by a preponderance of substantial,

reliable and probative evidence on the whole record.”

                                                 IV
       {¶28} OIP argues that the court abused its discretion by upholding the city’s refusal to

grant it a use variance from the I-2 light industrial zoning classification.        OIP sought the

variance on grounds that strict enforcement of the zoning code would result in an unnecessary

hardship peculiar to the property. That hardship, claimed OIP, was that external economic

factors dried up demand for light industrial facilities. And that lack of demand, coupled with

intrinsic issues relating to the size of the lot and poor access to public highways, meant that there

would be no demand for light industrial facilities for the foreseeable future.

                                                 A

       {¶29} There is no question that OIP presented uncontradicted evidence in support of the

use variance. However, the city’s position in the court of common pleas was that it “does not

have the burden to prove anything, and in fact in most variance proceedings the municipality

presents no evidence with regard to any question of fact. Consequently, the lack of evidence

presented by the City has nothing to do with whether or not [OIP] carried [its] burden.” R. 17,

Brief of appellee City of Olmsted Falls, at 8.

       {¶30} The city’s argument is correct only insofar as it states the basic premise that a

decision by a board of zoning appeals is presumed correct and the party contesting the board’s

decision has the burden of showing why it was wrong. Consol. Mgt., Inc. v. Cleveland, 6 Ohio

St.3d 238, 240, 452 N.E.2d 1287 (1983). But the standard of review applied by the court of

common pleas is to weigh the evidence to determine whether the board’s decision is supported

by a preponderance of reliable, probative, and substantial evidence. Dudukovich, 58 Ohio St.2d

at 207. The party seeking a variance has the initial burden of offering evidence, but once that

burden has been met, the opposing party cannot demur — it must come forward with its own
evidence. And it requires no citation to say that the absence of any factual issue turns a matter

into a question of law that we review de novo.

       {¶31} Our recitation of the facts should make it clear that OIP carried its burden of

presenting evidence that an unnecessary hardship would result if the city denied it application for

a use variance. It offered significant evidence to show not only that the property could not be

developed consistent with the I-2 light industrial zoning classification, but that it would not be

viable for that purpose in the future. The market for light industrial use had evaporated given

the poor economic climate and the availability of other cheaper, more accessible sites, including

the city’s own attempt to market industrial flex space with its nearby JEDD.

                                                 B

       {¶32} The city offered nothing to contest OIP’s evidence and, in fact, agrees that the

present business climate precludes light industrial development. Its primary reason for denying

the use variance was twofold. First, it appeared to argue a form of caveat emptor, stating its

belief that OIP made a bad business decision in purchasing land that it knew was zoned for light

industrial use and that decision “does not put the onus on the city to save the owner from a bad

investment.” Second, it argued that its desire to balance its overwhelming residential tax base

with a commercial base was paramount to any short-term hardship that OIP might suffer in a

cyclical economy.

                                                 1

       {¶33} Although the city’s zoning code states that an “unnecessary hardship” does not

exist when the reasons for requesting the variance are based on conditions created by the owner,

there was no evidence that OIP caused its own hardship. At the time it purchased the land in

2000, vacancy rates for industrial flex space were low and the experts agreed that OIP could
viably construct for that purpose. However, by the end of 2001, an economic downturn occurred

that caused a lowering of rents. As businesses closed or moved out of state, those facilities

came on the market for lease. Preexisting facilities had the advantage of being able to offer

lower rents (they cost less to build); new facilities of a kind contemplated by OIP were

handicapped by construction costs that forced them to charge more rent to be competitive. So

OIP’s new facility could not hope to compete against existing facilities, particularly when those

existing facilities were more accessible to highways.           The economic conditions were

intervening, external factors not caused by OIP.

                                                   2

       {¶34} The city desired to balance its tax revenue because its current tax base was more

than 90 percent residential. It characterized current economic conditions as “a kink in the

business cycle” that OIP should wait out. The court found this rationale persuasive, stating:

       If the Property were rezoned and OIP’s residential development came to fruition
       and economic times change, then there would be no way to revert the property to
       industrial, and the City’s tax base will remain heavily imbalanced with no room
       for recovery. If the City is correct and the economy begins to improve, and
       should a business choose to build on that property then the City and the
       community will benefit from additional income and real property taxes.

       {¶35} The court relied on a number of implied “ifs” to support its conclusion, but “ifs”

are not facts. The city offered no evidence of any kind to show the future viability of the land as

industrial. Instead, it relied on conclusions such as “real estate development is cyclical, and one

type of development is not always the most profitable at a certain point in time.” See Appellee’s

brief at 13. In fact, the court appeared to accept the city’s assertion that an improving economy

would permit light industrial development without regard for the uncontradicted expert testimony
that the land would never be developed as light industrial, regardless of whether business

conditions improved.

       {¶36} We agree that temporary economic downturns do not justify knee-jerk zoning

changes. On the other hand, the city’s position would require a landowner to wait indefinitely

before showing that economic conditions have created an unnecessary hardship.                 This

conclusion is supported by the city’s argument that one of OIP’s experts said that he held onto

land in the city of Strongsville for 25 years before developing it, so it would be reasonable to

expect OIP to do the same.

       {¶37} OIP purchased the land in 2000 and spent four years unsuccessfully marketing it

for light industrial development. At present, conditions have not improved to the point where

there is any demand for light industrial facilities within the city. Indeed, those same conditions

have meant that the city has yet to turn the first shovel on its own JEDD — a joint venture that

predated OIP’s purchase of the property — even though the experts agreed that the JEDD was a

superior industrial development opportunity because of its size, location, and public funding.

While it is true that the land was privately owned for many years, it is equally true that the

company that owned the land did nothing with it for more than 40 years. From the point of view

of a private investor, idle land is nonproductive, so it stands to reason that it was not developed

because of lack of demand. That lack of demand continues to this day. To accept the city’s

argument would condemn the land to lie fallow in perpetuity, or until the city tires of collecting

no revenue from the land.

       {¶38} At this juncture, it is useful to ask why the city would be content to forsake

residential development and prospect of tax revenue to let the land lie unused and generate no tax

revenue. The city’s primary answer — diversification of tax revenue — provides only a part of
the answer. With more than 90 percent of the city zoned for residential use, those residents

require significant services from the city. The cost of providing those services has, by all

accounts, led to high taxes in Olmsted Falls. The city believes that industrial users are far less of

a burden on city services than residential users, so it wishes to encourage industrial development.

 In this case, retaining land for light industrial use that generates no income would be more

valuable to the city than using the land for residential housing that would require potentially

more services than the land would generate in tax revenue.               For example, the school

superintendent testified that the city school system was stretched beyond physical capacity, with

some students being taught in modular classrooms. The city residents had rejected three straight

school levies and the school superintendent feared that new housing could bring as many as 200

more children into the district.

       {¶39} The superintendent testified outside of his field of competency. He gave his

opinion that “I’m hard pressed to believe that a residential development for senior citizens in

Olmsted Falls is any more marketable than an industrial park.” Unlike OIP’s experts who had

extensive credentials in urban planning and commercial real estate, the superintendent offered no

reason for the board to give any credence to his opinion on the potential marketability of

senior-focused housing.

       {¶40} What is more, the superintendent’s statement about an influx of new students was

premised on his assumption that OIP’s development would not be age-restricted. OIP told the

board of zoning appeals and city council that senior-focused housing would necessarily target

“empty nester” homeowners. In fact, OIP raised the possibility that the proposed development

could legally be limited to residents of a preestablished age in order to minimize the school

district’s exposure to more students. See Housing for Older Persons Act, 42 U.S.C. 3601 et seq.
(allowing communities to market themselves as “55+”or “age-restricted” provided that 80

percent of the occupied units are occupied by at least one person who is 55 years of age or older).

 Admittedly, OIP’s witnesses conceded that even if restricted to seniors, its planned residential

housing could bring in up to 15 additional students. But that number is significantly lower than

the 200 postulated by the superintendent.

       {¶41} In any event, OIP offered evidence to assuage the city’s concerns about

diversifying its tax base, noting that recent changes in Ohio’s tax structure had made reliance on

a light industrial base less appealing as a source of tax revenue for municipalities. A public

policy analyst said that in ten years the percentage of tax revenue generated by business

properties had fallen from 31 percent to less than 12 percent. For that reason, the public policy

analyst said, “these industrial office pieces that we were telling people to hold aside and save to

balance out their long-term sustainability don’t do that anymore.” Her testimony was based on

her conclusion that “you can build a whole boatload of business today in your community and

not get nearly the tax base balance that we all thought we were going to get in 1994.”

       {¶42} OIP also offered an opinion by an urban planner — the same urban planner that

assisted the city in drawing up its master plan — challenging the continued classification of the

property as light industrial. He noted that the city designated the property light industrial

because it had been the practice to do so with land adjacent to railroad tracks. The planner noted

that the practice was changing, and “the more marketable industrial sites are increasingly located

convenient to freeway interchanges or along major highways.” The planner recognized the

city’s desire to diversify its tax base away from residential, but noted that the city’s master plan

acknowledged that “alternative housing (other than a standard single-family home and lot) could

result in tax revenues that exceed service costs.”
        {¶43} The city assails the planner’s opinion, noting that he helped write the 1997 zoning

code to comply with the master plan that sanctioned the continued use of the land as light

industrial.   It argues that as a paid expert for OIP, the planner’s opinion carries no credibility.

The planner’s opinion, however, was consistent with other experts who testified that the market

for light industrial space had become extremely competitive and that the location of the property

put OIP at a huge disadvantage for developing it. So to the extent the planner’s position had

changed in 15 years, that change reflected the new realities facing light industrial development.

                                                  V

        {¶44} OIP more than carried its burden of offering evidence showing that the present I-2

light industrial zoning classification worked an unnecessary hardship on it because changing

economic conditions, inherent site limitations, and competition from other sources made light

industrial development unviable. In response, the city offered no evidence of any kind because

it erroneously insists that it need not offer anything. That position is patently wrong — once

OIP met its burden of showing that the present zoning works an unnecessary hardship on it, the

burden shifted to the city to show otherwise. To accept the city’s argument that it had no

obligation to offer evidence to rebut a landowner’s evidence in support of a variance would mean

that no opposed variances should ever be granted.

        {¶45} The city agrees that presently, the land cannot viably be developed as zoned, but

maintains that its interest in diversifying its tax base is sufficient reason to deny the variance.

The city’s argument appears to be premised on an outdated sense of the kind of revenue it could

generate. What is more, diversification as a long-term goal is simply unrealistic because the

land as presently zoned is not generating any tax revenue nor does there appear to be any

possibility that it will at some point in the future. OIP spent four futile years trying to market the
property and now 13 years have passed with no development opportunity in sight. In fact, the

city’s own joint venture industrial park, conceived before OIP purchased its property, has yet to

be constructed, even though both parties agreed that the city’s joint venture was a superior

opportunity. While the economy does operate in cycles, the city offered no evidence to counter

the expert opinion that the current bad economy is not just a product of a cycle, but an economic

reality endemic to the entire region.

       {¶46} With no evidence in dispute, we find as a matter of law that the court erred by

affirming the city’s refusal to grant OIP’s request for a use variance based on unnecessary

hardship. The city’s decision to deny the use variance in the face of unrebutted evidence of

unnecessary hardship was arbitrary and its insistence that the land lay fallow indefinitely was

unreasonable. The first assignment of error is sustained.

                                                VI

       {¶47} We next consider OIP’s argument raised in its second assignment of error that the

city’s zoning regulations resulted in a taking for which just compensation must be paid.

Although we have concluded that the court erred by refusing to reverse the city’s refusal to grant

a use variance on the subject property, OIP maintains that refusal was made in the face of

overwhelming evidence that the I-2 zoning regulations precluded all viable economic use of the

property. It thus argues that it was entitled to damages for a temporary taking that occurred

during the period between the time the city refused to grant the variance and the date of our

judgment.

       {¶48} Article I, Section 19 of the Ohio Constitution establishes the inviolability of private

property and requires the state to compensate property owners whenever “taken.” The concept

of a “taking” as embodied in both the Ohio Constitution and the Fifth Amendment to the United
States Constitution (“nor shall private property be taken for public use, without just

compensation”) generally applies to the direct, physical appropriation of private property. It was

not until 1922 that the United States Supreme Court held that the Constitution required the

government to directly compensate a landowner whose property was not physically taken, but

rather whose use of such property was restricted by regulation. See Pennsylvania Coal Co. v.

Mahon, 260 U.S. 393, 412, 43 S.Ct. 158, 67 L.Ed. 322 (1922); Lucas v. South Carolina Coastal

Council, 505 U.S. 1003, 1014, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992). That kind of taking

may occur when a land-use regulation “‘does not substantially advance legitimate state interests

or denies an owner economically viable use of his land.’” Id. at 1016, quoting Agins v. Tiburon,

447 U.S. 255, 260, 65 L.Ed.2d 106, 100 S.Ct. 2138 (1980) (footnote omitted).

       {¶49} Our discussion in part I of this opinion makes it clear that the city should have

granted OIP’s requested use variance because the I-2 light commercial zoning classification

imposed an unnecessary hardship on OIP’s use of the property. This was essentially a finding

that OIP proved that the I-2 light commercial zoning classification deprived it of all beneficial

use of the property because the permitted use was not economically feasible or could not be

efficiently continued. See Warner v. Jerusalem Twp. Bd. of Zoning Appeals, 63 Ohio Misc.2d

385, 392, 629 N.E.2d 1137 (C.P.1993). But that holding does not necessarily mean that OIP

was deprived of all use of the property such that the I-2 light commercial zoning classification

operated as a compensable, temporary taking.

       {¶50} To put it another way, the unnecessary hardship standard for granting use variances

is not the same as the constitutional taking standard. The “hardship” standard necessarily admits

that there is some use for land, but that use works an unnecessary hardship on the landowner.

The taking standard, as applicable here, is one applying to “a regulation that permanently requires
a property owner to sacrifice all economically beneficial uses of his or her land.” Arkansas

Game & Fish Comm. v. United States, ___ U.S. ___, 133 S.Ct. 511, 518, 184 L.Ed.2d 417

(2012), citing Lucas, 505 U.S. at 1019. The difference between the two standards explains why

a variance from a zoning ordinance can be granted under conditions in which the application of

that particular zoning ordinance would not result in an unconstitutional taking of property. See,

e.g., Garelick v. Sullivan, 987 F.3d 913, 917 (2d Cir.1993); 8 McQuillin, Municipal

Corporations, Section 25.167, at 761 (3d Ed.1991). (“A condition of difficulty or hardship is

not deemed equivalent to a taking of property, in the constitutional sense[.]”)            (Footnote

omitted.)

       {¶51} Applying these principles to this case shows that the zoning classification worked

an unnecessary hardship to OIP, but it did not deprive OIP of all economically beneficial use of

its land. In other words, OIP could have built an industrial park on the land consistent with the

I-2 zoning classification. Indeed, it purchased the property with the intention of developing and

building an industrial park and marketed the property accordingly for several years before it was

forced to conclude that economic conditions rendered that type of development a losing

proposition. So even OIP must concede that at the time it purchased the property, the zoning

classification did not deprive it of all economically beneficial use and rise to the level of a taking

without just compensation.

       {¶52} Judgment reversed.

       It is ordered that appellants recover of appellees their costs herein taxed.

       The court finds there were reasonable grounds for this appeal.

       It is ordered that a special mandate issue out of this court directing the Cuyahoga County

Court of Common Pleas to carry this judgment into execution.
       A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the

Rules of Appellate Procedure.




MELODY J. STEWART, PRESIDING JUDGE

SEAN C. GALLAGHER, J., and
EILEEN A. GALLAGHER, J., CONCUR
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