Forest City Enterprises, Inc. v. City of Eastlake

324 N.E.2d 740, 41 Ohio St. 2d 187, 70 Ohio Op. 2d 384, 1975 Ohio LEXIS 446

• Court: Ohio Supreme Court
• Decided: March 19, 1975
• Docket: No. 73-901
• Status: Published

Opinions

Paul W. Bkowr, J.

Appellant challenges the validity of Section 3, Article VIII of the Eastlake City Charter, which provides that no ordinance changing land use becomes effective until ratified by 55 percent of the voters in a citv-wide election. Because such provision denies appellant due process of law, we hold it unconstitutional.

I

Since Euclid v. Ambler Realty Co. (1926), 272 U. S. 365, the constitutionality of zoning has not been questioned. Modern authorities agree that some restrictions on the use of land are essential to orderly community development. But because the power to zone infringes upon the individual use of private property, the exercise of such authority has been carefully hedged with procedural and substantive safeguards. To be sustained as valid, a zoning ordinance must be comprehensive in nature, must bear a reasonable relationship to the public health, safety, welfare, or morals, and must provide for the amelioration of unnecessary hardships imposed upon the owners of specific property.

In Ohio, the power to zone or rezone, via the passage or amendment of a comprehensive zoning ordinance, is clearly a legislative function. Berg v. Struthers (1964), 176 Ohio St. 146; Tuber v. Perkins (1966), 6 Ohio St. 2d 155; Donnelly v. Fairview Park (1968), 13 Ohio St. 2d 1. See also, Justice Corrigan’s concurrence in Mobil Oil Corp. v. Rocky River (1974), 38 Ohio St. 2d 23, 31. As such, the zoning or rezoning of property is subject to the referendum process. Hilltop Realty v. South Euclid (1960), 110 Ohio App. 535.

Grants of relief from unnecessary hardship, on the other hand, are classified as administrative acts, regardless of the label placed on them. Donnelly v. Fairview Park, supra; Myers v. Schiering (1971), 27 Ohio St. 2d 11. See also, Justice Corrigan’s concurrence in Mobil Oil Corp. v. Rocky River, supra. This is so because the action executes or administers a zoning ordinance, rather than brings it into existence. Donnelly v. Fairview Park, supra. Whether such administrative relief is provided by council, acting in an administrative capacity, or by an administrative zoning board, created pursuant to R. C. 713.11, the proper routp of appeal is to the Court of Common Pleas, via R. C. Chapter 2506. The power to referend an administrative zoning determination, by whatever body made, has long since been foreclosed. Myers v. Schiering, supra.

n

Section 3, Article VIII of the Eastlake charter sets forth the procedures prerequisite to a zone or land-use change in that city. Those procedures specifically govern “any change” in existing land use, or “any change whatsoever to any ordinance,” or “the enactment of any ordinance,” affecting the use of land. Several steps are required to effectuate a proposed change.

First, the proposed change must be submitted to the City Planning Commission, which has the power to approve or disapprove the change. Next, regardless of the action taken by the Planning Commission, the proposal goes to city council, which may approve or disapprove. Finally, if the approval of council has been obtained, the proposed change must be ratified by 55 percent of the voters of Eastlake, at the next regular municipal election, or at a special election falling on the generally established election day. The cost of this required election, including the cost of the requisite advertising, must be borne by the applicant. In their briefs, and during oral argument, the parties have characterized the election requirement as a “mandatory referendum.”

Under the provisions of Section 3-, Article VUE, all changes in land nse require approval by city council. On its face, the charter provision makes no distinction between those changes made by council in an administrative capacity, and those made by council in a legislative capacity. Thus, the requirement of a mandatory referendum falls upon all changes with equal weight. Insofar as this purports to mandate a referendum as to an administrative determination, it is clearly invalid. Myers v. Schiering, supra; Kelley v. John (1956), 162 Neb. 319, 75 N. W. 2d 713.

Paragraph one of the syllabus in Myers states: “Under Section If of Article II of the Ohio Constitution, municipal referendum powers are limited to questions which municipalities are ‘ authorized by law to control by legislative action.’ ”

However, construing the mandatory referendum requirement as applying only to those land-use changes granted by council acting in a legislative capacity, we must determine whether such a requirement denies appellant due process of law.

in

Appellant has not claimed, nor does the record indicate, that the zoning of appellant’s 8-aere parcel for industrial use is unreasonable and unconstitutional. Rather, appellant’s narrow claim is that Eastlake’s charter provision constitutes a delegation of legislative power to the people, and as such violates the requirement that the police powers be exercised in a reasonable and unarbitrary fashion. The focus of our inquiry, then, is whether Eastlake’s mandatory referendum provision allows the exercise of legislative power by the voting public, such that zoning regulations might be imposed which are arbitrary and unreasonable.

The Supreme Court of the United States has addressed this issue. In Eubank v. Richmond (1912), 226 U. S. 137; Thomas Cusack Co. v Chicago (1917), 242 U. S. 526; and Washington, ex rel. Seattle Title Trust Co., v. Roberge (1928), 278 U. S. 116, that court established guidelines by which an appropriate due process determination might be made.

In Eubank, a Virginia statute authorized city and town councils to enact regulations concerning the building of houses, including the establishment of building lines. Pursuant to such authority, Richmond’s city council passed an ordinance providing “that whenever the owners of two-thirds of the property abutting on any street shall, in writing, request the committee on streets to establish a building line on the side of the square on which their property fronts, the said committee shall establish such line * * Two-thirds of the property owners on plaintiff’s block filed such a request, and a building line was subsequently established. When plaintiff challenged that action, the Virginia courts sustained both the statute and the ordinance, finding neither “unreasonable nor unusual.”

The United States Supreme Court reversed, holding the ordinance to be an unlawful delegation of legislative power. In analyzing the facts, the court declared, at 226 U. S. 143-144:

“It [the Richmond ordinance] leaves no discretion in the committee on streets as to whether the street line shall or shall not be established in a given case. The action of the committee is determined by two-thirds of the property owners. In other words, part of the property owners fronting on the block determine the extent of use that other owners shall make of their lots, and against the restriction they are impotent. This we emphasize. One set of owners determines not only the extent of use but the kind of use which another set of owners may make of their property. In what way is the public safety, convenience or welfare served by conferring such power? The statute and ordinance, while conferring the power on some property holders to virtually control and dispose of the property rights of others, creates no standard by which the power thus given is to be exercised; in other words, the property holders who desire and have the authority to establish the line may do so solely for their own interest or even capriciously. Taste (for even so arbitrary a thing as taste may control) or judgment may vary in localities, indeed in the same locality. * # #

“We are testing the ordinance by its extreme possibilities to show how in its tendency and instances it enables the convenience or purpose of one set of property owners to control the property right of others, and property determined, as the case may be, for business or residence— even, it may be, the kind of business or character of residence.* * *”

In Cusack, a Chicago ordinance prohibited the erection of any billboard or signboard in any block “in which one-half of the buildings on both sides of the street are used exclusively for residence purposes without first obtaining the consent in writing of the owners * * * owning the maturity of the frontage of the property on both sides of the •'street in any block in which such billboard or signboard is to be erected * * Plaintiff, relying on Eubank, challenged the ordinance as an unlawful delegation of legislative power, but the Supreme Court of Illinois upheld the enactment, and the United States Supreme Court affirmed.

The court drew a sharp distinction between Eubank and Cusack, because the facts presented were significantly different. In Eubank, a reasonable use of property was prohibited by arbitrary fiat; in Cusack, an unreasonable use of property was prohibited by valid legislative action, subject to said prohibition’s being lifted by those affected. As the court noted, at 242 U. S. 531:

“* * * [the Eubank ordinance] left the establishment of the building line untouched until the lot owners should act and then made the street committee the mere automatic register of that action and gave it the effect of law. The ordinance in the case at bar absolutely prohibits the erection of any billboards in the blocks designated, but permits this prohibition to be modified with the consent of the persons who are to be most affected by such modification. The one ordinance permits two-thirds of the lot owners to. impose restriction's upon the other property in the block, while the other permits one-half of the lot owners to remove a restriction from the other property owners. This is not a delegation of legislative power, but is, as we have seen, a familiar provision affecting the enforcement of laws and ordinances.”

Finally, in Washington, ex rel. Seattle Title Trust Co., v. Roberge, the trustee of a philanthropic home sought to replace an existing building with a new and enlarged structure, sufficient in size to lodge 30 persons. A Seattle ordinance, amending the city’s comprehensive zoning scheme, permitted the erection of the structure as contemplated, but made such approval subject to the trustee’s obtaining the written consent “of the owners of two-thirds of the property within four hundred (400) feet of the proposed building. ’ ’ When the trustee failed to comply with the consent requirement, a permit to erect the new home was denied, and the validity of such action was affirmed by the state Supreme Court.

The United States Supreme Court reversed, holding that the consent requirement constituted an unlawful delegation of legislative power. The court distinguished Cusack by finding construction of the home in Roberge to be a reasonable use, subject to arbitrary prohibition via the consent requirement, while the ordinance in Cusack prohibited an unreasonable use unless consent was given. At 278 U. S. 121-122, the court declared :

“The right of the trustee to devote its land to any legitimate use is properly within the protection of the Constitution. The facts disclosed by the record make it clear that the exclusion of the new home from the first district is not indispensable to the general zoning plan. And there is no legislative determination that the proposed building and use would be inconsistent with public health, safety, morals or general welfare. The enactment itself plainly implies the contrary. The grant of permission for such building and use, although purporting to be subject to such consents, shows that the legislative body found that the construction and maintenance of the new home was in harmony with the public interest and with the general scope and plan of the zoning ordinance. The section purports to give the owners of less than one-half the land within 400 feet of the proposed building authority — uncontrolled by any standard or rule prescribed by legislative action — to prevent the trustee from using its land for the proposed home. The superintendent is bound by the decision or inaction of such owners. There is no provision for review under the ordinance; their failure to give consent is final. They are not bound by any official duty, but are free to withhold consent for selfish reasons or arbitrarily and may subject the trustee to their will or caprice. Yick Wo v. Hopkins, 118 U. S. 356, 366, 368. The delegation of power so attempted is repugnant to the due process clause of the Fourteenth Amendment. Eubank v. Richmond, 226 U. S. 137, 143. Browning v. Hooper, 269 U. S. 396.”

The distinction to be drawn between the court’s decisions in Eubank and Roberge, on the one hand, and the court’s decision in Cusack, on the other, is this: A reasonable use of property, made possible by appropriate legislative action, may not be made dependent upon the potentially arbitrary and unreasonable whims of the voting public. Such a rule was announced by the Supreme Court of Delaware in Myers v. Fortunato (1920), 12 Del. Ch. 374, at page 375:

“If the existence of the law depends upon the vote or act of the people it is an unconstitutional delegation of legislative power, but if the law is complete in and of itself the fact that it provides for the removal or modification of its prohibition by the act of those most affected thereby, does not make it a delegation of legislative power.”

The facts in the present case parallel those in Roberge. Here, the city council of Eastlake, by appropriate legislative action, permitted the use of appellant’s 8-acre parcel for multifamily high-rise apartments. But before such ordinance and the use there allowed could become effective, appellant was required to obtain the consent of 55 percent of Eastlake’s voting public, in a mandatory referendum. No standards were established whereby that action would be reasonable, rational and unarbitrary. Nor, indeed, could any be. Applying the principles enunciated by the Supreme Court, the Eastlake referendum requirement denied appellant due process of law.

Due process of law requires that procedures for the exercise of municipal power be structured such that fundamental choices among competing municipal policies are resolved by a responsible organ of government. It also requires that a municipality protect individuals against the arbitrary exercise of municipal power, by assuring that fundamental policy choices underlying the exercise of that power are articulated by some responsible organ of municipal government. McGautha v. California (1971), 402 U. S. 183, 256, 270. The Eastlake charter provision ignored these concepts and blatantly delegated legislative authority, with no assurance that the result reached thereby would be reasonable or rational. For these reasons, the provision clearly violates the due process clause of the Fourteenth Amendment.³

IY

To support its proposition that Section 3, Article VIII of its charter is constitutional, appellee cites James v. Valtierra (1971), 402 U. S. 137. That case concerned a state constitutional provision requiring that no low-rent housing project be developed, constructed, or acquired by a state public body until approved by a majority of those voting at a community election. The Supreme Court upheld, the validity of the provision, as an appropriate exercise in “democratic decisionmaking.”

Reliance on Valtierra, as authority in this case, is misplaced. Valtierra did not concern zoning, but rather the approval or disapproval of low-rent public housing. The court deemed such a decision to properly involve community-wide policy-making and compared the requirement to similar mandatory referendums for approval of state constitutional amendments, for the issuance of general obligation long-term bonds by local governments, and for certain municipal territorial annexation. At page 143, the court declared: “This procedure ensures that all the people of a community will have a voice in a decision which may lead to large expenditures of local governmental funds for increased public services and to lower tax revenues. ’ ’

It can scarcely be contended that every proposed land use change, no matter how small, in a city with a population of 20,000, either involves or allows community-wide policy-making. Eather, most involve hardships affecting individual parcels of property, which must be alleviated to preserve the constitutional validity of the ordinance.

Appellees also cite E. C. 303.11, 303.12, 519.11 and 519.12, which provide for county and township zoning. E. C. 303.11 provides that a comprehensive zoning resolution, adopted by the county commissioners, shall not become effective until approved by a majority of the voting public. E. C. 303.12 provides that amendments or supplements to such resolutions become effective 30 days after adoption, unless petitions are signed by a requisite number of resident voters, requesting that such change be placed on the ballot. E. C. 519.11 and 519.12 contain similar provisions with regard to township zoning.

Those statutes are of no help in deciding the present case. The imposition of zoning in a state’s rural area is a. matter of substantial significance, restricting severely the individual use of land, and determining, perhaps permanently, the direction of future development. As such, it clearly involves that type of policy decision justifying approval by those affected. Amendments to rural zoning ordinances, on the other hand, are not subject to mandatory voter approval, but rather to permissive referendum elections, when a substantial number of resident voters feel sufficiently aggrieved to circulate the appropriate petitions. Such provision contrasts sharply with the Eastlake charter, and thus is free from the deficiencies implicit in an unlawful delegation of legislative power.

We hold that the mandatory referendum provision of Section 3, Article VIII of the Eastlake charter constitutes an unlawful delegation of legislative power, thereby denying appellant due process of law. Whether the zoning of appellant’s property for industrial use is reasonable, or whether the city of Eastlake has unlawfully attempted to exclude low and moderate income housing,⁴ we do not decide. The judgment of the Court of Appeals, affirming the validity of the mandatory referendum and 55 percent approval provisions of the Eastlake charter, is reversed.

Judgment reversed.

O’Neill, C. J., Herbert, StebN and W. Brown, JJ., concur. Corrigan' and Celebrezze, JJ., dissent.

3 This holding makes it unnecessary to reach appellant’s further contention that a cumbersome zoning appeal process bears no rational relationship to a valid police power objective. In Burt Realty Corp. v. Columbus (1970), 21 Ohio St. 2d 265, we held that unnecessarily onerous administrative remedies need not be exhausted prior to seeking declaratory relief. A time-consuming and costly appellate process, designed solely to delay and discourage land-use changes, would present grave constitutional questions.

4 An amicus curiae brief, filed by Lawyers for Housing, contends that Eastlake’s mandatory referendum provision, and those of other cities, is designed to exclude low and moderate income housing entirely. Whether provisions so designed would be unreasonable and unlawful would depend upon the facts in each individual case. See Belle Terre v. Boraas (1974), 416 U. S. 1. The record herein justifies no finding, one way or the other, in this regard.