OTR Media Grp., Inc. v. Bd. of Standards & Appeals of the City of N.Y.

Full title: OTR Media Group, Inc. and OTR 945 ZEREGA LLC, Petitioners, v. Board of…

Court: Supreme Court, New York County

Date published: Mar 16, 2018

2018 N.Y. Slip Op. 50342 (N.Y. Sup. Ct. 2018)

Opinion

158646/2016

03-16-2018

OTR Media Group, Inc. and OTR 945 ZEREGA LLC, Petitioners, v. Board of Standards and Appeals of the City of New York, Respondent.

The appearances of counsel are as follows: Petitioners: The Law Office of Allen Schwartz, 1724 Burnett Street, Brooklyn, NY 11229 Smith, Buss & Jacobs, LLP, Jeffrey D. Buss, 733 Yonkers Avenue, Yonkers, NY 10704 Goldman Harris, LLC, Ariel S. Holzer, 475 Park Avenue South, New York, NY 10016 Respondent: Zachary W. Carter (attorneys on the papers are Sheryl Neufeld, Sherrill Kurland, and Frances Polifone), Corporation Counsel of the City of New York, 100 Church Street, New York, NY 10007

Carmen Victoria St. George, J.

The appearances of counsel are as follows: Petitioners: The Law Office of Allen Schwartz, 1724 Burnett Street, Brooklyn, NY 11229 Smith, Buss & Jacobs, LLP, Jeffrey D. Buss, 733 Yonkers Avenue, Yonkers, NY 10704 Goldman Harris, LLC, Ariel S. Holzer, 475 Park Avenue South, New York, NY 10016 Respondent: Zachary W. Carter (attorneys on the papers are Sheryl Neufeld, Sherrill Kurland, and Frances Polifone), Corporation Counsel of the City of New York, 100 Church Street, New York, NY 10007 Carmen Victoria St. George, J.

In this Article 78 proceeding, petitioners OTR Media Group, Inc. and OTR 945 Zerega LLC (collectively "petitioners") seek an order annulling the July 12, 2016 Resolution of the respondent Board of Standards and Appeals of the City of New York (the "BSA"), which upheld the decision of the Department of Buildings (the "DOB"), denying the registration of an advertising sign located at 945 Zerega Avenue, Bronx, New York (the "Subject Sign" or "Sign") and revoking permit numbers 201143253 and 210039224 for the Subject Sign, on the grounds that the Subject Sign did not qualify as a non-conforming use. The BSA in its verified answer seeks the denial and dismissal of the Article 78 petition.

BACKGROUND

Petitioner OTR Media Group, Inc., is an outdoor advertising company and the affiliated parent company of OTR 945 Zerega LLC. Petitioner OTR 945 Zerega LLC is an outdoor advertising company and lessee of the Subject Sign. Respondent the BSA is a five-member body of experts in land use and planning, architecture, and engineering (New York City Charter § 659) which is empowered under the New York City Charter to, among other things, review and decide appeals from land use determinations by the DOB (New York City Charter § 666 [6]). The DOB is the municipal agency responsible for enforcing the rules and regulations governing the construction and use of buildings and structures in New York City, including the Zoning Resolution (New York City Charter § 643).

The Subject Sign is a billboard bulletin located on the roof of 945 Zerega Avenue, Bronx, New York, measuring 14 feet in height and 48 feet in length (672 square feet). The Subject Sign is located 50 feet from the Cross-Bronx Expressway, an arterial highway pursuant to Appendix H of the Zoning Resolution. As a general rule, advertising signs located specific distances from City highways have been subject to a general prohibition under the Zoning Resolution since 1940 (Zoning Resolution § 42-5). It is undisputed that 945 Zerega Avenue is a location that falls into that general prohibition. However, the Zoning Resolution makes an exception for advertising signs that have continuously existed since prior to November 1, 1979. Pursuant Section 42-55 (c)(2) of Article IV, Chapter 2 of the Zoning Resolution ("ZR § 42-55" or "Zoning Resolution"), advertising signs that have continuously existed since prior to November 1, 1979, are eligible for registration for non-conforming use. Zoning Resolution § 42-55(c)(2) provides, as follows:

"Any advertising sign erected, structurally altered, relocated or reconstructed between June 1, 1968. and November 1, 1979, within 660 feet of the nearest edge of the right-of-way of an arterial highway, whose message is visible from such arterial highway, and whose size does not exceed 1,200 square feet in surface on its face, 30 feet in height and 60 feet in length, shall have legal non-conforming use status pursuant to Section 52-83, to the extent of its size existing on November 1, 1979. All advertising signs not in conformance with the standards set forth herein shall terminate."

Zoning Resolution § 12-10 defines an advertising sign as: "[a] sign that directs attention to a business, profession, commodity, service or entertainment conducted, sold or offered elsewhere than upon the same zoning lot and is not accessory to the use located on the zoning lot." Zoning Resolution § 12-10 also defines accessory use as follows:

(a) is a use conducted on the same zoning lot as the principal use to which it is related (whether located within the same or an accessory building or other structure, or as an accessory use of the land); and

(b) is a use which is clearly incidental to, and customarily found in connection with, such principal use; and

(c) is either in the same ownership of such principal use, or is operated and maintained on the same zoning lot substantially for the benefit or convenience of the owners, occupants, employees, customers of the principal use.

Zoning Resolution § 12-10 defines non-conforming use, in relevant part, as follows:

"A 'non-conforming' use is any lawful use, whether of a building or other structure or of a zoning lot, which does not conform to any one or more of the applicable use regulations of the district in which it is located, either on December 15, 1961 or as a result of any subsequent amendment thereto."

Zoning Resolution § 52-61 prohibits the continuation of non-conforming use where the use has been discontinued for a period of two years, as follows:

"If, for a continuous period of two years, either the non-conforming use of land with minor improvements is discontinued, or the active operation of substantially all the non-conforming uses in any building or other structure is discontinued, such land or building or other structure shall thereafter be used only for a conforming use. Intent to resume active operations shall not affect the foregoing "

In sum and as is relevant here, advertising signs in existence prior to November 1, 1979 may remain as non-conforming uses pursuant to Section 52-83, which provides that non-conforming advertising signs may continue provided there is no lapse in continuous use lasting more than two years (additional emphasis added; ZR § 42-55[c]).

In early 2008, Petitioner OTR 945 Zerega LLC entered into a lease agreement with the property owner for the Subject Sign for a term of ten years.¹ In March and April 2008, OTR filed professionally certified permit applications with the DOB in order to refurbish and repair the Subject Sign. On March 27, 2008, the DOB issued Permit No. 210039224 for the repair of the structural elements of the Sign, and on April 21, 2008, the DOB issued Permit No. 21143253 for the repair of the Sign itself.

1 Petitioners allege that prior to entering into the lease agreement, petitioner OTR 945 Zerega LLC, undertook research to ensure the Subject Sign was in compliance with the requirements of the Zoning Resolution. Petitioners maintain that multiple discussions and consultations with people involved with outdoor advertising during the relevant time period confirmed that the Subject Sign existed as an advertising sign prior to November 1, 1979, which would entitle it to non-conforming use status under ZR § 42-55(c)(2).

On September 5, 2012, pursuant to the requirements of Article 502 of the New York City Building Code² and Title 1 of the Rules of the City of New York ("RCNY") § 49-15³ ("Rule 49"), the petitioners submitted a Sign Registration Application to the DOB, along with various documents in support of its application for establishment and continuity of the Subject Sign as a non-conforming advertising sign prior to November 1, 1979. After a review of the information submitted by the petitioners, the DOB ultimately denied the registration of the Subject Sign on the grounds that there was insufficient evidence to establish that the Sign had existed prior to November 1, 1979 and revoked the previously issued permits. Thereafter, petitioners filed an appeal with the BSA asserting that the DOB improperly denied the Sign registration, and improperly revoked the permits. The BSA held a hearing on July 16, 2013 during which time petitioners presented evidence that the Subject Sign qualified for the protection under ZR § 42-55(c)(2). The BSA denied petitioners' appeal and affirmed the DOB's determinations in its resolution issued on September 24, 2013. The BSA concluded that petitioners had not met their burden of proving that the Subject Sign was established prior to November 1, 1979. As the BSA determined that the petitioners had not proven legal establishment, it did not reach a decision on the continuous use of the Subject Sign.

2 Administrative Code (Building Code) § 28-502.4 — Reporting Requirement provides, in pertinent part: "[a]n outdoor advertising company shall provide the department with a list with the location of signs, sign structures and sign locations under the control of such outdoor advertising company in accordance with the following provisions: [1] The list shall include all signs, sign structures and sign locations located (i) within a distance of 900 linear feet (274 m) from and within view of an arterial highway "

3 RCNY § 49-15 requires that each sign in a sign inventory be identified as "advertising" or "non-advertising," and if it is a non-conforming sign it must be further identified as "non-conforming advertising" or non-conforming non-advertising." Signs that are identified as "non-conforming advertising" or "non-conforming non-advertising" shall be submitted to the DOB for confirmation of its non-conforming status pursuant to RCNY § 49-16 (brief for respondent's at 7).

On October 24, 2013, petitioners commenced an Article 78 proceeding, seeking to annul the BSA's determination of September 24, 2013. By stipulation dated August 13, 2014, petitioners and the BSA agreed that the matter would be remanded to the BSA for the limited purpose of reconsidering the resolution in light of the BSA's decision in a similar case- matter No. 96-12-A (dated January 8, 2013, pertaining to 2284 12th Avenue, New York, New York). On September 16, 2014, the BSA issued a revised determination yet still concluded that petitioners had not proven legal establishment. The revised determination was substantially similar to its initial determination, except for the addition of several supplementary paragraphs wherein the BSA attempted to distinguish the subject case from its dissimilar findings in the 2284 Case.

On January 14, 2015, petitioner moved to restore the Article 78 proceeding and annul the amended BSA determination. Thereafter, on May 4, 2015, Justice Alice Schlesinger granted the petition, annulled the BSA resolution, and remanded the case back to the BSA for further proceedings. The Court directed the BSA to answer two questions regarding the Subject Sign: (1) whether the Subject Sign has continuously existed at the premises since its establishment prior to November 1, 1979, and (2) whether the Subject Sign has continuously been used for advertising purposes.

Subsequently, a hearing was held at the BSA on October 27, 2015, to determine the two issues of continuous use and continuous advertising use of the Subject Sign. During the hearing, it was revealed that Philip Morris utilized the Subject Sign from the late 1980's through the early 1990's during which time it featured a Marlboro sign. The DOB noted that if the Marlboro sign was being used as an accessory sign (a/k/a "business sign")⁴ during that timeframe, then it was no longer being used as an advertising sign. Meaning, the non-conforming advertising use was discontinued.

4 A "business sign" is alternatively described as an "accessory sign" in the Zoning Resolution and is distinct from an "advertising sign" (respondent's answer at FN 12). Petitioners and respondent used these terms interchangeably in their papers, however, for the sake of consistency, this decision will refer to said signs as accessory signs.

On November 24, 2015, petitioners filed a BSA Submission to respond to the issues and questions raised by the BSA during the hearing. As is relevant here, petitioners' submission included the following evidence to support its claim of the Subject Sign's continuity once the issue of a three-year lapse was raised at the hearing: a Leo Burnett Advertising expense document for January 1987 through December 1987 stating that Philip Morris used the Sign for advertising that year; an eight-year lease from March 1, 1988 between the landlord of the property and Allied Outdoor Advertising which stated that the Subject sign was to be a business sign; a photograph from the late 1980's that showed the Marlboro sign; accounting sheets which indicated that the continued display of the Marlboro sign from 1990 through 1993; and other lease continuation documents form the early 1990's through 1998. Through its submission papers, petitioners attempted to show that the Subject Sign operated as an advertising sign on a continuous basis since prior to November 1, 1979, as required under ZR § 42-55(c)(2).

In its response, the DOB argued that petitioners failed to provide evidence establishing the Subject Sign's continuous use as an advertising sign without an interruption in that use since November 1, 1979. DOB additionally cited to a number of "gaps" in the evidence wherein the DOB stated such "gaps" proved periods of longer than two years where there was no evidence that the Subject Sign was used for advertising purposes. In particular, the DOB pointed to the 1987 DOB permit for an accessory sign on the roof with the same dimensions as the Subject Sign and the March 1, 1988 lease.

Petitioners subsequently addressed DOB's contentions in its December 21, 2015 submission. Petitioners asserted that outdoor advertising leases should be enough to qualify the Subject Sign as an advertising sign. In support, petitioners submitted photographs to establish that Marlboro products were displayed on the Sign in the late 1980's. In its March 2, 2016 submission, DOB reiterated its position in its prior submission in that petitioners failed to submit evidence establishing the signs continuous use as an advertising sign without an interruption in that use since November 1, 1979. In support of its position, the DOB submitted permits to "install roof structure for an accessory sign" from 1986, 1987, and 1988.

In addition to the arguments made by the petitioners and the DOB and the evidence submitted by each in support thereof, the BSA identified additional facts previously submitted into the record⁵ that required amplification. On April 5, 2016, the BSA requested additional briefing from petitioners and the DOB to address the following issues: the lease in the record that showed the Subject Sign was leased to Philip Morris in 1988 as an accessory sign to its rental space in the building; the 1990 DOB permit in which the permit applicant sought and was issued a permit to "legalize" the Subject Sign as an accessory sign; and allegations that the lease and permits were a "sham" to allegedly circumvent legal non-conforming advertising sign proof requirements.

5 The record of the proceedings before the BSA, as referenced in respondent's answer, has been provided in separately bound volumes, consisting of over 1200 pages. Citations to the administrative record are indicated as R __.

According to hearing transcripts from the administrative record, the BSA took issue with a March 1, 1988 rental agreement ("1988 rental agreement") between Philip Morris and the owner of 945 Zerega Avenue. Philip Morris, a manufacturer of Marlboro cigarettes, and one of the tenants in the building, utilized the Subject Sign to display Marlboro cigarette advertisements in the late 1980s and early 1990s. Philip Morris rented rooms 105 and 107, approximately 1,585 square feet, on the ground floor of the premises. This March 1, 1988 rental agreement coincided with the March 1, 1988 lease ("1988 lease") between the landlord of the property and Allied Outdoor Advertising, which stated that the Subject Sign was to be used as an accessory sign. The BSA noted that the lease was for a term of eight years with the right to terminate the agreement "in the event that Philip Morris may not utilize any sign on the roof of the premises for advertising of products manufactured by Philip Morris, whether by legislation or governmental order, cancellation of the lease for such signage or for any other reason." The BSA also questioned the 1987 DOB permit for an accessory sign and a 1990 DOB work permit application which sought to "legalize" the Subject Sign as an accessory sign.

To this end, petitioners argued that the 1988 rental agreement was put into place for the purpose of avoiding regulation of the Subject Sign as an advertising sign. Petitioners characterized it as a "sham lease" commonly used by the tobacco industry in the late 1980s. According to petitioners, these said "sham leases" allowed applicants to obtain signage permits from the DOB more easily, but did not necessarily indicate that the signs were not used for advertising purposes. Petitioners also argued that despite the lease and accessory sign work permits, the Subject Sign was continuously used as an advertising sign. Further, petitioners asserted that the Subject Sign's use was not accessory to Philip Morris' tenancy pursuant to ZR § 12-10 because Marlboro products were not available to the consumers from the zoning lot.

Petitioners maintained that even though the Subject Sign was stated as an accessory sign in leases and permits, those were fraudulent or a "sham" and the Subject Sign was always really an advertising sign. Further, petitioners argued that the DOB regularly permits the registration of non-conforming advertising signs in the cases where the record includes similar "sham" leases. Petitioners presented the BSA with seven specific examples where the DOB accepted registration of advertising signs where there was evidence of "accessory" signs post-1979 (R0907 — R0961). As such, petitioners argued, leases and permits representing the Subject Sign as an accessory sign were not determinative. July 12, 2016 BSA Resolution

In its July 12, 2016 Resolution, the BSA determined that while the Subject Sign has been in existence prior to November 1, 1979, it has not continuously been in use as an advertising sign and therefore is an illegal advertising sign. In reaching its determination, the BSA found, inter alia, that: (1) the Subject Sign was not used as an advertising sign for at least a two-year period starting in 1988; (2) Philip Morris had utilized the Subject Sign as an accessory sign rather than an advertising sign and as such allowed the Subject Sign's legal prior non-conforming advertising use to lapse. In deciding the appeal, the BSA relied on the 1988 lease between the property owner and Philip Morris and the DOB permits. The BSA dismissed petitioners' argument that the 1988 lease and DOB permits which identified the Subject Sign as an accessory, were actually "shams." Instead, the BSA determined that Philip Morris was truly and legitimately using the space it was renting in the warehouse — the principal use, and found that the Subject Sign was indeed accessory to Philip Morris' tenancy at the site.

Positions of the Parties

Petitioners' Position

Petitioners now bring this Article 78 proceeding challenging the BSA's July 12, 2016 determination and seek the above-referenced relief, on the grounds that the resolution is arbitrary, capricious, and an abuse of discretion. Petitioners' one and only argument is that the BSA's determination in this case is incompatible with its earlier decisions and that this is evidence that it acted arbitrarily and capriciously. Petitioners cite to an earlier BSA resolution in 2368 12th Avenue, Block 2005, Lot 32, Borough of Manhattan, BSA Calendar No. 24-12-A (the "2368 Case"), in which the applicant was seeking to establish an accessory sign and the BSA and DOB ruled it an advertising sign. Here, petitioners are seeking to establish an advertising sign, but it was deemed an accessory sign. Petitioner maintains that the 2368 Case features similarities to that of the Subject Sign in that both cases involved interior lease "schemes," for the purpose of legalizing the sign.

In the 2368 Case, Tommy Hilfiger Corporation had used the warehouse for the limited purpose of storing products and display fixtures. After May 1, 2010, Wodka, LLC leased the premises for staging promotional activities. Both Tommy Hilfiger and Wodka used the adjoining signs to advertise their products "offered elsewhere," but did not direct any customers to the warehouse. Petitioners emphasize that the BSA found that, even if the principal use identified by the interior lease were deemed to be legitimate it still would not qualify as an accessory sign under the zoning resolution because the relationship between the 2368 Sign and the warehouse is such that the sign could not be considered "clearly incidental to" the warehouse (ZR § 12-10 [b]). The BSA concluded that the small building at 2368 12th Avenue looked more like a "sham" warehouse intended to justify the use of the site solely for advertising and as such upheld the DOB's denial of the 2368 sign as an accessory sign.

Petitioners assert that this finding contradicts the BSA's ruling in the instant case, where despite the fact that the use by Philip Morris of the Subject Sign could not be considered incidental to a warehouse use, the BSA still deemed the Subject Sign to have been used as an accessory sign. Further, petitioners stress that the Subject Sign throughout the term of its use by Philip Morris directed attention to a business, conducted, sold or offered elsewhere than upon the same zoning lot (cigarette sales), and the Subject Sign did not provide information which would direct attention to the purported principal use of the subject zoning lot, yet the BSA still concluded that the Subject Sign was used as an accessory sign.

Respondent's Position

The BSA opposes the instant petition, asserting that its determination is rational, reasonable, and supported by the record. The BSA maintains that it is petitioners' burden to establish continuity. The BSA asserts that it rationally determined that the Subject Sign was used as an accessory sign for two or more years based on the DOB permits and the 1988 lease documents submitted for the Sign. Specifically, the BSA points to the 1988 rental agreement between the property owner and Philip Morris, which stated that Philip Morris, as the tenant, was entitled to use the sign for advertising purposes, and if they could not use the sign, Philip Morris was allowed to break the lease and the 1988 rental agreement. The BSA suggests that the fact that the 1988 lease and the 1988 rental agreement were entered into on the same day for the same length of time is significant. Further, the BSA argues that the size of the rented space on the ground floor could be used for "any number of business operations" including storing and distributing tobacco products, Additionally, the BSA notes that the DOB permits taken out to "legalize" the Subject Sign as an accessory sign warranted considerable weight. According to the record, the term "legalize" stood out to the BSA as being noteworthy because using that term in DOB permits means a very specific thing. In light of the leases, the terms in said leases, the size and location of the rented space, the BSA contends that it is very possible that Philip Morris was using that location as an active warehouse and the Subject Sign was connected to that use.

Further, the BSA maintains that it carefully considered petitioners' arguments regarding sham leases including their position that the 1988 lease/rental agreements and DOB permits were shams and that the warehouse "use" was a merely a way for Philip Morris to use the signs for advertising purposes without having to prove they were legal non-conforming advertising signs. In doing so, the BSA states that it also took note of a City Planning Commission Report dated December 13, 2000:

"WHEREAS, additionally, the Board takes note of a CPC Report dated December 13, 2000, concerning proposed amendments to signage regulations in the Zoning Resolution (the "2000 CPC Report"), which noted testimony given from an outdoor advertising trade association that its members used "creative methods" to obtain building permits for arterial signs; testimony from a building owner representative that large signs placed on a building by a tenant occupying less than one percent of the floor area in the building qualify as "accessory signs" rather than "advertising signs"; and the CPC's conclusion that the problem with the proliferation of illegal advertising signage in the City was not with the definitions in the text "but with outdoor advertising companies and building owners who have stretched the zoning definitions to an almost absurd degree because they have [been] able to do so with impunity; " (BSA Resolution dated July 12, 2016, petitioner's exhibit 13 at 7-8)

The BSA took the following documents and arguments into account in assessing whether the evidence supported the existence of a sham lease: the 1987 DOB permit applications stating that the Subject Sign was being used as an accessory sign; the 1990 DOB permit application to perform work on the sign was to "legalize" the Subject Sign as an accessory sign; and the DOB's assertion that there was no evidence in the record that the warehouse space was not being used by Philip Morris for actual business activities. These documents coupled with the BSA members' specialized knowledge of the historical practices of the advertising sign industry led it to conclude that the 1988 lease and DOB permits were not shams. Instead, the BSA maintains that Philip Morris was legitimately using the space it was renting in the warehouse, that being its principal use and the Subject Sign was an accessory to Philip Morris' tenancy at the site.

In addition, the BSA rejects petitioners' contention that the DOB regularly overlooks "sham leases" in the sign registration process. The BSA simply states that the "DOB does not often have the resources necessary to undertake such exhaustive investigations and that DOB may revoke registrations as it is presented with evidence that such registrations are unwarranted" (BSA Resolution dated July 12, 2016, petitioner's exhibit 13 at 8).

The BSA also dismisses petitioners' assertion that the instant BSA resolution is inconsistent with its prior determinations. The BSA stresses that each determination rests on a very fact specific analysis. Further, the BSA claims that the 2368 Case was not presented during the briefing of this matter before the BSA and therefore their argument is outside of the administrative record.

However, counsel for the BSA states that if the Court does consider it, the 2368 Case is distinguishable from the instant matter.⁶ According to the respondent's brief, the issue in 2368 Case was whether the record supported a finding that the sign at issue was shown to be an accessory sign despite a "presumption established by RCNY § 49-43 and the administrative interpretation, established by DOB in OPPN 10/99,⁷ that beginning in the late 1990s, signs on warehouses were presumed by the DOB to be advertising signs unless the principal use of the warehouse was clearly established" (respondent's brief at 23). Counsel maintains that RCNY § 49-43 and OPPN 10/99 do not apply to the instant case. Further, counsel alleges that unlike the instant case, there was sufficient evidence in the 2368 record to establish that the leases and DOB permits were indeed shams and that the warehouse "use" was merely a way for the tenants to use the signs for advertising purposes without having to prove they were legal advertising signs. Counsel for the BSA further claims that the evidence in the 2368 record did not provide a basis for the board to find that the warehouse in question was the legitimate principal use because the warehouse consisted of mainly unused space, with the occupied portions used for the storage of a small amount of promotional material. Based on the foregoing, counsel contends that the evidence before the Board in the instant matter is substantially and significantly different from the 2368 case.

6 The 2368 Case was not presented during the BSA proceedings and there is no indication that the BSA commissioners considered it or distinguished it. In the brief opposing the petition, counsel for the BSA set forth several arguments as to how the 2368 Case is purportedly distinguishable from the instant case. However, the Court cannot rely on the reasoning of respondent's counsel, as the analysis set forth in the answer and brief were not contained in the BSA Resolution or in the administrative record.

7 While respondent failed to explain what OPPN stands for, petitioners addressed it in their reply stating, "[a]n OPPN is an acronym for "operational policy and procedure notice" published by the Department of Buildings. The notice does not create new laws or rules (that power is invested in the City's legislative body) but rather publicizes Department of Building operational policy with regard to the enforcement of existing laws and rules" (OTR reply at 3).

Discussion

Generally, judicial review in an Article 78 proceeding is limited to whether the administrative determination "was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion" (CPLR § 7803 (3); see Peckham v Calogero, 12 NY3d 424, 431 [2009]; Pell v Board of Educ., 34 NY2d 222, 231 [1974]. "An action is arbitrary and capricious when it is taken without sound basis in reason or regard to the facts" (Peckham, 12 NY3d at 431; see Pell, 34 NY2d at 231). "If the court finds that the determination is supported by a rational basis, it must sustain the determination even if the court concludes that it would have reached a different result than the one reached by the agency" (Peckham, 12 NY3d at 431; see Terrace Ct., LLC v New York State Div. of Hous. & Comm. Renewal, 18 NY3d 446, 454 [2012]).

A determination of the BSA, therefore, "' 'may not be set aside in the absence of illegality, arbitrariness or abuse of discretion,' and 'will be sustained if it has a rational basis and is supported by substantial evidence'" (Soho Alliance v New York City Board of Standards & Appeals, 95 NY2d 437, 440 [2000] (citation omitted); see Kettaneh v Board of Standards & Appeals, 85 AD3d 620, 621 [1st Dept 2011]; Neighborhood in the Nineties, Inc. v City of New York, 82 AD3d 602, 603 [1st Dept 2011]; see also Pecoraro v Board of Appeals of Town of Hempstead, 2 NY3d 608, 613 [2004]). Further, as the BSA's five commissioners include experts in land use and planning, and the BSA "is the ultimate administrative authority charged with enforcing the Zoning Resolution [its] interpretation of the statute's terms must be 'given great weight and judicial deference, so long as the interpretation is neither irrational, unreasonable nor inconsistent with the governing statute'" (Toys "R" Us v Silva, 89 NY2d 411, 418-419 [1996] (citations omitted); see New York Botanical Garden v Board of Standards & Appeals, 91 NY2d 413, 419 [1998]; Appelbaum v Deutsch, 66 NY2d 975, 977-978 [1985]; Chelsea Bus. & Prop. Owners' Assn. v City of New York, 107 AD3d 414, 415 [1st Dept 2013]).

However, the BSA's interpretation "is not entitled to unquestioning judicial deference, since the ultimate responsibility of interpreting the law is with the court" (Exxon Corp. v Board of Standards and Appeals of the City of New York, 128 AD2d 289, 296 [1987]). Where "the question is one of pure legal interpretation of statutory terms, deference to the BSA is not required" (Toys "R" Us, 89 NY2d at 419). On the other hand, when applying its special expertise in a particular field to interpret statutory terms, an agency's rational construction is entitled to deference (Jennings v New York State Off. of Mental Health, 90 NY2d 227, 239 [1997]; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459 [1980]; Beekman Hill Assn. v Chin, 274 AD2d 161, 167 [1st Dept 2000]). Even in those situations, however, a determination by the agency that "runs counter to the clear wording of the statutory provision" is given little weight (Kurcsics, 49 NY2d at 459).

Upon review of the BSA resolution and the evidence submitted in support of petitioners' application at each juncture, the Court finds the BSA's determination that the Subject Sign is not entitled to non-conforming use status due to the claim that the non-conforming advertising use had been discontinued, is arbitrary and capricious. The BSA's determination rests upon its adoption of the DOB's conclusion that the Subject Sign's non-conforming advertising use was abandoned for a continuous period of more than two years when it was used as an accessory sign by Philip Morris in 1988. In rendering its finding that this determination lacks a rational basis, this Court considered the administrative record, the parties' papers, and assertions raised during oral argument on November 14, 2017.

Section 12-10 of the Zoning Resolution defines both "advertising" and "accessory use." An "advertising sign" is a sign that directs attention to a business, profession, commodity, service or entertainment conducted, sold or offered elsewhere than upon the same zoning lot and it not accessory to the use located on the zoning lot" (ZR § 12-10). Section 12-10 defines accessory use as follows:

(a) is a use conducted on the same zoning lot as the principal use to which it is related (whether located within the same or an accessory building or other structure, or as an accessory use of the land); and

(b) is a use which is clearly incidental to, and customarily found in connection with, such principal use; and

(c) is either in the same ownership of such principal use, or is operated and maintained on the same zoning lot substantially for the benefit or convenience of the owners, occupants, employees, customers of the principal use.

(ZR § 12-10).

The distinction between advertising and accessory signs "depends on an analysis of the nature and character of the principal use of the land in question in relation to the accessory use, taking into consideration the over-all character of the particular area in question" (New York Botanical Garden, 91 NY2d at 420). While this Court is mindful that this type of inquiry is one "which will clearly benefit from the expertise of specialists in land use planning" (Id. at 420), the BSA is not entitled to unquestioning judicial deference (Exxon Corp., 128 AD2d at 296).

The BSA's finding that the Subject Sign was used as an accessory by Philip Morris for two or more years starting in 1988, is irrational because as evidenced by the administrative record, the Subject Sign does not meet the criteria of accessory use under ZR § 12-10. For one thing, the BSA's conclusion that the Subject Sign was an accessory to Philip Morris' tenancy in the building is based on the BSA's unsubstantiated speculation that the rented space could have been used for the storage and distribution of Philip Morris products. The BSA's resolution stated, in relevant part:

"WHEREAS, accordingly, the Board deduces that Philip Morris' rental of space within the building on the subject premises and the simultaneous utilization of the Sign, located on the same zoning lot and atop said premises, to advertise a product Philip Morris manufactures evidences the Sign's use as an accessory, rather than an advertising sign; and

***

WHEREAS, in response, DOB argues that based on the 1988 Lease and 1988 Rental Agreement which were entered into the same day for the same duration, and permitted Philip Morris to terminate its agreement to rent space at the premises should it no longer be able to utilize the rooftop signage — evidence that the Sign was accessory to Philip Morris' use of the zoning lot as a storage facility and that any previously established advertising use of the Sign was discontinued for the duration of Philip Morris' eight year tenancy at the premises; and

***

WHEREAS, the Board finds it reasonable for Philip Morris to have utilized the 1,585-sq. ft. of floor it rented on the ground floor of the premises for any number of business operations, including the storage and distribution of tobacco products; and

WHEREAS, the Board thus concludes that even if the Sign was established as an advertising sign prior to November 1, 1979, its advertising use was abandoned when, in 1988, Philip Morris rented space at the premises and utilized the Sign in connection with its tenancy at the premises pursuant to the 1988 Rental Agreement, entered into on March 1, 1988, for a period of eight years; and " (BSA Resolution dated July 12, 2016,

petitioner's exhibit 13 at 8-9)

This Court has searched the entire record, and cannot locate any statements or evidence definitively identifying storage and/or distribution of Marlboro products as the use of the warehouse. The Court notes that during the last hearing before the BSA, counsel for the DOB stated that it didn't have affirmative evidence that cigarettes were being stored and distributed at the subject location (R1237). To which counsel for petitioners responded, "I certainly, if the Board wants it, I can look into evidence of whether there was actual storage there. At 1500 square feet, I tend to doubt it " (R1238). Tellingly, the BSA declined petitioners' offer and issued its decision shortly thereafter (R1238). Indeed, this Court is surprised that the BSA rejected petitioners' proposal as such evidence is essential to whether or not the Subject Sign satisfied the criteria of accessory under ZR § 12-10.

In order to determine whether a use satisfies Section 12-10 of the Zoning Resolution's definition of accessory use, the principal use upon which the accessory use depends, must first be identified. Here, there was no verifiable evidence of warehouse operations that would substantiate the BSA's finding that the warehouse was used for storage or distribution. BSA's argument that "it determined that Philip Morris was truly and legitimately using the space it was renting in the warehouse — the principal use, and so, using its subject-matter expertise in applying the 'accessory use' definition, found that the Sign was indeed accessory to Philip Morris' tenancy at the site" is conclusory and unsupported by the record. Moreover, the BSA's determination fails to mention that the warehouse building in question is approximately 57,279 square feet. In essence, the BSA has concluded that a tiny warehouse space (1,585 sq. ft.) with absolutely no proof of active operations, to be a "principal use." This puzzling assumption is based on sheer speculation, and thus irrational.

Importantly, the BSA failed to fully explain the implication of the term "legalize" in reference to the 1990 DOB Work Permit. Respondent's memorandum of law merely cites to a few statements from the BSA hearing where the word "legalize" was discussed:

"VICE-CHAIR HINKSON: But, they wouldn't have used the term legalizing. And, I've seen a lot of these and this struck me as odd because they did say legalization. I know exactly what you're saying but they don't use the term we're going to legalize the sign. So, I'm at a quandary.

MR. HOLZER: The permit you're talking about, I believe it was a 1990 permit.

VICE-CHAIR HINKSON: The 1990 permit started with, I guess, 1989 but I guess it was pulled in 1990 and approved in 1990.

MR. HOLZER: Right" (respondent's brief at 17).

Given the considerable weight the BSA allegedly attributed to this piece of evidence, the Court would expect a better explanation. The same can be said for the BSA's reliance on the 2000 City Planning Commission Report (a/k/a the "CPC Report"). While the BSA resolution provided a brief description of the CPC Report, the Court is yet again having to deduce the effect of this report with its authority left undefined. Of note, there is no cite to the CPC Report in respondent's papers.⁸

8 The Court assumes the CPC Report referenced above is included in the administrative record. While the Court has reviewed the 1200 + pages, it was not included in the papers before this Court.

Although petitioners' reliance on the 2368 Case is crucial to its contention that the BSA's determination in the instant case is at odds with its decisions in similar cases, the Court acknowledges that this case was not submitted during the administrative hearing, and as such, is outside the administrative record. "[J]udicial review of administrative determinations is confined to the 'facts and record adduced before the agency" (Matter of Featherstone v Franco, 95 NY2d 550, 554 [2000]). Nonetheless, the administrative record reflects that petitioners have been arguing the issues of inconsistency in determinations by the DOB and the BSA, and the 2368 Case just strengthens the previously existing arguments advanced by the petitioners. The Court looks to it not because of the facts, but because it amplifies legal positions which the petitioners have asserted before the BSA and the DOB.

During the hearing process, petitioners came forth with evidence indicating that similar signs had been approved by the DOB as advertising signs despite underlying evidence (i.e. an accessory sign permit) that the signs were at one time or another accessory signs after November 1, 1979 (R0911). These sign examples were submitted to show that the DOB has historically recognized sham accessory sign arrangements and credited them as advertising signs, rather than accessory signs. Neither the DOB, nor the BSA, made any meaningful attempts to explain the inconsistent results. In fact, when the opportunity presented itself during the last BSA hearing, counsel for the DOB skirted the question citing "prosecutorial discretion" (R1237). That said, the Court notes that in an earlier DOB submission, DOB's Assistant Counsel Steinhouse stated, "the registration of any non-conforming advertising sign shall not constitute a decision or determination by the Department that a sign or sign structure is lawful under the Zoning Resolution..." (R0976). Astoundingly, the BSA took the position that the DOB does not have the resources necessary to undertake such exhaustive investigations to review each sign application to potentially distinguish the circumstances that might have resulted in approval of said signs as compared to the Subject Sign in dispute (BSA Resolution dated July 12, 2016, petitioner's exhibit 13 at 8). However, as between the petitioners and the DOB, the agency certainly has more ready access to those approval submissions and other business records, and it made no effort to controvert the examples of other advertising sign approvals submitted by petitioners. Petitioners provided the DOB and the BSA with over 50 pages of documentation regarding specific instances where the DOB overlooked the leases and accepted said signs as advertising signs.⁹

9 Said documentation included the addresses of the signs, pictures of the signs, accessory leases relating to those signs, and approval letters from the DOB for each sign, yet DOB still failed to distinguish the cases (R0907 — R0961).

Likewise, the BSA made no effort during the hearing process to harmonize the facts of this case with prior DOB and BSA decisions. Even more troublesome is the BSA's current position that their "determination is consistent with prior determinations," yet they fail to cite to any such prior determination in support of its claim (respondent's brief at 22). Not only is this indicative of the BSA's arbitrariness in dealing with petitioners' appeal, it also puts this Court in a difficult position of having to take the BSA at its word. BSA resolutions are not readily accessible to the public or the Court. The New York City Board of Standards and Appeals' Website provides the following instructions for requesting copies of BSA resolutions:

"Decisions made by the Board of applications filed since January 1, 1998 to the present are available on this site. The decisions include both resolutions on new applications and resolutions on amendments and extensions to earlier decisions. To find a decision, you

must select a borough, and, to narrow your search, you may identify the community district and/or provide a keyword entry. Examples of keyword entries can include project address (e.g., 123 Main Street), authorizing zoning section (e.g., 72-21) and application type (e.g., variance or special permit). For decisions prior to 1998 . please contact the Board office at 212-XXX-XXXX."

(NYC Board of Standards and Appeals, http://www1.nyc.gov/site/bsa/applications/bsa-decisions.page/ [accessed February 28, 2018]). This means the Court would have to know the exact address of another advertising sign in which the BSA issued a decision before it could even obtain a prior BSA decision. This Court should not be charged with this fact-finding mission nor is this Court in any position to access the prior BSA resolutions to corroborate the BSA's unsupported contention that this resolution is consistent with its prior determinations.

Finally, the BSA's contention that it must make a determination based on the facts contained in the record is equally unavailing in this case, because as stated above, petitioners' June 22, 2016 submission included a sampling of sign approvals purporting to show that the DOB regularly overlooks sham leases. This evidence was part the administrative record and thus warranted the BSA's due consideration.

Although zoning boards have considerable discretion in deciding whether or not to grant "non-conforming advertising use status," decisions must be reasonably consistent with each other. "A decision of an administrative agency which neither adheres to its own prior precedent nor indicates its reason for reaching a different result on essentially the same facts is arbitrary and capricious" (Matter of Field Delivery Serv. [Roberts], 66 NY2d 516, 516-517 [1985]; see also Claim of Martin [Troy Publishing Co. — Roberts], 70 NY2d 679, 681 [1987]; Klein v Levin, 305 AD2d 316, 318 [1st Dept 2003]). In other words, an administrative agency cannot act in such a way as to result in inconsistent treatment of similarly situated parties (Exxon Corp., 128 AD2d at 296). As stated above, the BSA's failure to cite to any prior cases to support its claim leaves this Court with nothing to compare the instant case to. Consequently, this Court finds its necessary to remand this case back to the BSA for further consideration in light of the decision it reached in 2368 12th Avenue, Block 2005, Lot 32, Borough of Manhattan, BSA Calendar No. 24-12-A ("2368 Case").

The Court emphasizes that this is the third BSA resolution regarding the Subject Sign's eligibility for non-conforming advertising use. Notably, the first Article 78 proceeding under Index No. 101422/2013, was remanded to the BSA for the limited and sole purpose of reconsidering that BSA resolution in light of the prior BSA decision in matter No. 96-12-A (the "2284 Case"). While it was the parties that agreed to the remand and entered into a So-Ordered Stipulation, it was at the behest of Justice Alice Schlesinger.¹⁰ The second Article 78 proceeding stemmed from the revised BSA resolution issued pursuant to the stipulated remand. Justice Schlesinger, who originally presided over both Article 78 proceedings, issued her decision on the record¹¹ annulling the revised resolution and remanding it to the BSA. Notably, Justice Schlesinger explained that when she previously heard oral argument she had asked counsel for the BSA how she was able to distinguish the 2284 Case from the resolution before the Court, noting that said BSA resolution failed to mention it. Justice Schlesinger stated that counsel for the BSA did not think it was necessary to distinguish the 2284 Case from petitioners' case which is why she insisted the parties stipulate to the remand during their last appearance.¹² Justice Schlesinger concluded, among other potentially rational reasons, that the BSA failed in their attempt to rationally distinguish its decision in the 2284 Case and petitioners' case.¹³

10 Transcript of oral argument before Justice Alice Schlesinger held on April 15, 2015 (tr at 4, lines 17-26; tr at 5, lines 20-24).

11 Justice Schlesinger decided the second Article 78 proceeding on the record on April 15, 2015, however, the official decision with transcript was dated May 4, 2015.

12 Transcript of oral argument before Justice Alice Schlesinger held on April 15, 2015 (tr at 4, lines 17-26; tr at 5, lines 20-24).

13 Id. at 11, lines 22-26; Id. at 12, lines 2-7.

The Court recognizes that the issues before Justice Schlesinger in the aforementioned Article 78 proceedings are separate and distinct from the instant Article 78 petition. Nevertheless, they are significant to the extent that they represent a pattern on the part of the BSA in this particular matter. Namely, its failure to address and explain its inconsistent decisions. "Agency action must always be rational and decision making that is typified by erratic and unexplained changes in analysis is the antithesis of that standard and undermines the agency's rationale" (20 Fifth Ave., LLC, v New York State Div. of Hous. & Community Renewal, 109 AD3d 159, 165 [1st Dept 2013]; Field Delivery Serv. [Roberts], 66 NY2d at 516-517). Accordingly, the BSA should be mindful of when this when it reconsiders the resolution in light of the BSA's decision in the 2368 Case.

In light of the above, this Court finds that the BSA's findings regarding the accessory use of the Subject Sign together with its unsubstantiated contention that the resolution is consistent with prior BSA determinations is arbitrary and capricious. The matter is remanded to the BSA for the limited and sole purpose of reconsidering the resolution in light of the 2368 Case.

Accordingly, it is

ORDERED and ADJUDGED that the petition is granted to the extent that the BSA's July 12, 2016 Resolution is annulled and the matter is remanded to respondent for further consideration in light of the 2368 Case.

Dated: March 16, 2018

ENTER

______________________________________ Carmen Victoria St. George, J.S.C.