The “Reasonable Return” Standard – An Antiquated Approach to the Use Variance Burden of Proof

birds eye view of New York city

Since there has been zoning, there have been requests from property owners to bend the strict rules which govern how one may use their property. The specific dictates as to what kind of operations or uses may be undertaken in zoning districts have often been in conflict with property owners and other developers seeking to push the limits of what is suitable within a given area. New York’s statutory standard for allowing uses which are typically prohibited in a designated zoning district is a particularly burdensome standard to meet. This is not unusual since obtaining a “use variance” is, and should be, the most difficult type of relief to secure from a land use board. In old-fashioned zoning parlance, a use variance lets the “pig in the parlor.

The Use Variance Standard

Despite the seeming sagacity in making it difficult on property owners to obtain a use variance, the state legislature has clung to the standard of review which has guided decision makers since the advent of zoning in the beginning stages of the 20th Century. Of course, old does not always mean bad. Many times, it is quite the contrary. However, when it comes to use variances, the vestigial standard in place suffers from an ancient, myopic view of ordered land use development. In particular, it is the first prong of the four-part use variance test which has created this anomalous situation. This standard asserts that to obtain relief, an applicant must prove that she may not achieve a “reasonable return” on her property unless the use variance approval was granted. This arbitrary requirement offers nothing towards sound planning considerations, and runs afoul of the underlying purposes of zoning regulation. Originally intended to supply legitimacy to zoning itself, which is now entrenched as the definite way to regulate land use, the “reasonable return” standard has outlived its useful life as a means to evaluate use variance applications.

Under the “reasonable return” prong, the general rule is that: “[t]he applicant is required to demonstrate the impossibility of realizing a reasonable return by disproving the possibility of realizing a reasonable return for every permissible use, whether those uses are permitted by zoning ordinances, nonconforming use, or a previously granted variance.