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Pawn 1st, LLC v. City of Phoenix - 8/10/2017

The Arizona Supreme Court holds that (1) to obtain an area variance, an applicant must show that strictly applying a zoning ordinance will cause “peculiar and exceptional practical difficulties” that deprive a property of privileges enjoyed by other similarly zoned properties, and (2) the applicant’s desire to use the property for purposes allowed on other similarly zoned properties does not constitute a self-imposed special circumstance justifying denial of an area variance.

A businessman obtained a lease on a property, which he intended to operate as a pawn shop.  The property’s commercial zoning designation permitted that use, provided that the shop was at least 500 feet from a residential district.  Because the property did not meet the 500-foot requirement, the businessman applied for a variance.  The zoning officer denied the variance.  The businessman appealed to the city’s Board of Adjustment, which approved the variance.  A competing pawn shop challenged that decision in superior court.  The superior court dismissed the complaint and the court of appeals reversed.  The Supreme Court granted review and reversed the court of appeals, holding that the Board had appropriately granted the variance.

The Supreme Court began by explaining the distinction between area variances, which allow deviations from technical zoning requirements, and use variances, which allow deviations from the types of uses for which a property is zoned.  Because use variances may fundamentally alter the nature of an area, they require a heightened showing and can only be granted by legislative bodies, not boards of adjustment.  An area variance requires a showing of “peculiar and exceptional practical difficulties,” while a use variance requires a showing of “exceptional and undue hardship.”  The Supreme Court held that the businessman’s request was technical in nature and therefore for an area variance. 

The Court also held that special circumstances justified the variance.  Prior to the lease, the property had been an adult theatre, and the city had used its eminent domain authority to reduce the property’s size, frontage, and parking.  The Court held that the record supported the Board’s finding that this use of eminent domain had rendered the property dissimilar from nearby parcels, and that the property’s unique characteristics created exceptional practical difficulties, which justified the variance.

Finally, the Court rejected that the court of appeals’ holding that the variance was barred by the rule that a variance is not justified if the circumstances are self-imposed by the owner.  The court of appeals had reasoned that the special circumstances were self-imposed because the businessman had selected this particular property to use as a pawn shop.  The Supreme Court disagreed, reasoning that the special circumstances were not the property’s intended use, but its physical characteristics, which had been created by the city’s eminent domain action.   

The Court therefore vacated the court of appeals’ opinion and affirmed the superior court’s judgment.

Justice Lopez authored the opinion of the court.

Posted by: Josh Bendor

Posted On: 9/5/2017