Aug 152012

Tennessee Supreme Court: Tennessee’s Nonconforming Use Statute Applies Only to Zoning Change or Zoning Restriction

In the recent case of SNPCO, Inc. v. City of Jefferson City, 363 S.W.3d 467 (Tenn. 2012), the Tennessee Supreme Court analyzed Tennessee’s nonconforming use statute in the context of an annexation. The Court addressed the question of whether a city’s ordinance banning the sale of fireworks within its city limits implicates Tenn. Code Ann. § 13-7-208(b) which permits pre-existing nonconforming businesses to continue to operate despite a zoning change.

In November of 2003, Jefferson City banned the sale of fireworks within its city limits. In 2008, the city annexed property adjacent to its borders which included the property on which SNPCO, a fireworks retailer, was located. After the city annexed the property, the retailer asked the city for permission to continue selling fireworks as a pre-existing nonconforming use. The city refused and SNPCO filed suit.

The trial court dismissed SNPCO’s complaint finding that the combination of the fireworks ordinance and the annexation of the property was not an “unlawful taking” and that the fireworks ordinance was not a zoning ordinance subject to grandfathering protection under Tenn. Code Ann. § 13-7-208(b). SNPCO appealed. The Tennessee Court of Appeals affirmed concluding that the test mandated by Cherokee Country Club, Inc. v. City of Knoxville, 152 S.W.3d 466 (Tenn. 2004) did not apply to determinations of whether an ordinance was a “zoning restriction” for the purpose of Tenn. Code Ann. § 13-7-208(b).

Tenn. Code Ann. § 13-7-208(b) is a grandfather clause that allows businesses that may be adversely affected by changes in zoning codes after the business has already opened to remain open under certain circumstances. The statute provides a vehicle for avoiding the legal problems that can arise whenever a newly enacted zoning ordinance or an amendment to a zoning ordinance might otherwise force a property owner to discontinue an otherwise permissible use of the property. Property owners seeking to invoke this statute have the burden of proving it applies to their business.

The Tennessee Supreme Court concluded the retailer could not take advantage of the grandfather clause in § 13-7-208(b). The pivotal question was whether the combined effect of the city’s fireworks ordinance and its decision to annex the land on which the retailer’s business was located was tantamount to a “zoning restriction” or “zoning change.” The Court relied on the “substantial effects” test it adopted in Cherokee Country Club, Inc.; a two-part test that examines both the terms and the effects of the challenged ordinance. It requires the court to first determine whether the challenged ordinance relates to the city’s “general plan of zoning.” If the court determines that it does, then the second step is to ascertain whether the ordinance results in a substantial interference with the use of land. The Court notes that the fireworks ordinance was not related to the city’s general plan of zoning and could not be characterized as a zoning ordinance or a zoning restriction. The fireworks ordinance did not refer to land, zones, buildings, lot lines, or any other terms and concepts customarily associated with comprehensive zoning plans. The ordinance simply reflected the exercise of the city’s traditional, general police power. Thus, the Court held that because the ordinance was not a zoning ordinance, it was neither a “zoning change” nor a “zoning restriction” for the purpose of Tenn. Code Ann. § 13-7-208(b).

About J. David Wicker

J. David Wicker is a founding member of the Law Office of J. David Wicker, PLLC located in Nashville, Tennessee. David focuses his practice on corporate and commercial transactions, middle market and small business matters, commercial real estate, and real estate development.