Supreme Court Victory for our Case: Pawn 1st, LLC, an Arizona Limited Liability Company vs The City of Phoenix, et al

By Larry S Lazarus, Esq.

We Won !!

The Supreme Court upheld the City of Phoenix Board of Adjustment variance that our firm successfully secured in 2010 on behalf of William Jachimek of Central Pawn.

Although the Supreme Court discussed several issues, including the distinction between an area and use variance, the issue of greatest significance to municipalities in the State of Arizona is how to determine whether a special circumstance is self-imposed by the applicant.

Facts of the case

Mr. Jachimek entered into a lease to locate a pawn shop on a parcel of Commercial C-3 zoned property at the southwest corner of McDowell Road and 32nd Street in the City of Phoenix. This property had historically been used for various adult uses under a legal nonconforming use until the owner evicted their tenants and discontinued the adult use. C-3 zoning permits pawn shop uses provided the exterior walls are at least 500 feet from a residential district and the owner obtains a use permit from the zoning administrator. On behalf of Mr. Jachimek and the property owner, our firm applied for both a use permit from the zoning administrator and a variance from the 500-foot residential district separation since that criteria could not be met.

At the successful Board of Adjustment hearing, the following facts were important to establish special circumstances related to the property that were not self-imposed:

  • The unique nature of the discontinuance of the nonconforming use of the property;
  • The City of Phoenix had completed an eminent domain action that resulted in the property size being reduced to only 12,000 square feet which was dissimilar to other C-3 properties in the area;
  • The 12,000 square-foot size was smaller than any of the twelve surrounding C-3 zoned corner parcels.
  • The eminent domain action eliminated the frontage area around the building, resulting in its direct abutment of a public sidewalk.
  • The eminent domain action also restricted parking availability for the property.

Thus, the Board of Adjustment reasoned that the circumstances were “not created by the owner or applicant,” and granted the variance. Variances cannot be granted if the circumstances are “self-imposed” by the property owner.

Issue

A competing pawn shop appealed the City Board of Adjustments decision arguing that the decision by Mr. Jachimek to enter into a lease for this use on a property where he knew a variance would be necessary was self-imposed and therefore any other special circumstances were not relevant to the analysis. The Court of Appeals agreed with the competing pawn shop owner. Fortunately, the Supreme Court disagreed with the Court of Appeals.

The Decision

The Supreme Court reasoned that “Special circumstances are not ‘self-imposed’ when the owner wants to use the property in a way permitted to other similarly situated properties, but cannot do so because of externally imposed circumstances like those involved here. Although it is fair to say that Jachimek voluntarily acquired the Property subject to the special circumstances, he certainly did not create them.[1]

In addition, the court added: “The court of appeals’ rule would impose an undue restraint on the sale of property, as anyone purchasing a property with knowledge of the restriction would have no ability to obtain an area variance. This approach would give purchasers fewer property rights than sellers and, thus, would contravene our case law and longstanding legal tradition in favor of alienation. Accordingly, an applicant or owner’s selection of a property, even with knowledge that an area variance is required for an intended use allowed on other similarly zoned properties, does not itself constitute a self-imposed special circumstance precluding an area variance.1

Conclusion

Many municipal and private practice land use lawyers were pleased with this decision. If the Court of Appeals decision had remained intact, it would make approving any variance incredibly difficult since almost all decisions to locate a use/business on a property involve the owner’s decision-making and the right to pursue entitlements. If the owner decision became the factor to create a self-imposed hardship no variance request could be successful. We thank the Arizona Supreme Court for this well-reasoned decision for both Mr. Jachimek and to sustain the Board of Adjustment variance process.

[1] Pawn 1st, LLC vs City of Phoenix

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