Austin Shea (Arizona) v. City of Phoenix, 1 CA-CV 05-0062.

• Decision Date: 03 August 2006
• Docket Number: No. 1 CA-CV 05-0062.,1 CA-CV 05-0062.
• Citation: 142 P.3d 693,213 Ariz. 385
• Parties: AUSTIN SHEA (ARIZONA) 7TH STREET AND VAN BUREN, L.L.C., an Arizona limited liability company, Plaintiff/Appellee, v. CITY OF PHOENIX, a political subdivision of the State of Arizona; City of Phoenix Board of Adjustment, Defendants/Appellants.
• Court: Arizona Court of Appeals

Page 693

142 P.3d 693

213 Ariz. 385

AUSTIN SHEA (ARIZONA) 7TH STREET AND VAN BUREN, L.L.C., an Arizona limited liability company, Plaintiff/Appellee, v. CITY OF PHOENIX, a political subdivision of the State of Arizona; City of Phoenix Board of Adjustment, Defendants/Appellants.

No. 1 CA-CV 05-0062.

Court of Appeals of Arizona, Division 1, Department D.

August 3, 2006.

Jaburg & Wilk, P.C. By Kathi M. Sandweiss and Roger L. Cohen, Phoenix and David K. Jones, Chandler, Attorneys for Plaintiff/Appellee.

Office of the City Attorney By Gary Verburg, Acting City Attorney and L. Michael Hamblin, Assistant City Attorney, Phoenix, Attorneys for Defendants/Appellants.

OPINION

NORRIS, Judge.

¶ 1 This appeal arises from a decision by the City of Phoenix Board of Adjustment ("the Board") to rehear an appeal taken by Plaintiff/Appellee Austin Shea (Arizona) 7th Street and Van Buren, L.L.C. ("Shea") from a zoning ordinance interpretation made by the City of Phoenix Zoning Administrator. On rehearing, the Board reversed a decision it had previously rendered in Shea's favor. Shea filed a special action proceeding against Defendants/Appellants City of Phoenix ("the City") and the Board, asserting the Board abused its discretion, first, in deciding to rehear its appeal and, second, in reversing its original decision. Deciding the first but not the second issue, the superior court ruled in Shea's favor and found the Board had abused its discretion in rehearing the appeal.

¶ 2 The issue before us is whether the superior court correctly determined the Board had abused its discretion in deciding to rehear Shea's appeal. To decide this issue, we must first interpret the zoning ordinance provision that provides an "appeal may be reheard only when there has been a manifest error affecting the Board's action." We must then decide whether the Board acted arbitrarily, capriciously or abused its discretion in deciding to rehear Shea's appeal. For the following reasons, we reverse the superior court's judgment and remand for further proceedings consistent with this decision.

FACTS AND PROCEDURAL HISTORY

¶ 3 Shea owns property in a City-designated redevelopment area at the northeast corner of 7th Street and Van Buren Street, near downtown Phoenix. Section 705.2(A)(7)(d) (2005) of the Phoenix Zoning Ordinance prohibits "outdoor advertising" structures in any designated redevelopment area.

¶ 4 In 1999, Shea began efforts to construct a "media sculpture" on the site. The Phoenix Planning Department opposed the project because it believed the project was "outdoor advertising"¹ and therefore prohibited. In March 2000, Shea filed a proposed text amendment to the Zoning Ordinance that would have allowed a use permit procedure for outdoor advertising in redevelopment areas. The Phoenix City Council denied the proposal in November 2000.

¶ 5 Shea then revised its proposed project. Shea proposed building a two-story 900 square foot glass structure that would house a television broadcast station and four video screens, each 16' × 12', set back at least 6'1" from the structure's inside windows.² Shea planned on displaying commercial advertising, news, weather, political messages, and general information on downtown events and activities on the video screens. Shea also planned on selling specialized motion picture and video equipment from the glass structure. The City placed a hold on Shea's building permit application because the video screens constituted, in its view, off-site advertising in violation of § 705.2(A)(7)(d) of the Zoning Ordinance.

¶ 6 In October 2001, Shea filed an Application for Zoning Adjustment with the City's Zoning Administrator and requested an interpretation of § 705.2(A)(7)(d). After holding a public hearing on the application, the Zoning Administrator concluded Shea's proposed use of the video screens was "not addressed in the [zoning] [o]rdinance" and was therefore "prohibited."³ Shea appealed the decision to the Board and it upheld the Zoning Administrator's decision.

¶ 7 In March 2002, Shea filed a Complaint for Statutory Special Action, claiming the Board's decision was arbitrary, capricious, and an abuse of discretion. The superior court disagreed and found the proposed "land use is simply technology enhanced `outdoor advertising' not appurtenant to any permitted use of the land because the primary land use is outdoor advertising." Accordingly, the superior court concluded the Board had not abused its discretion or acted arbitrarily or capriciously in interpreting and applying the Zoning Ordinance.

¶ 8 Shea appealed. In March 2005, we affirmed the superior court's decision. Austin Shea (Arizona) 7th Street and Van Buren, L.L.C. v. City of Phoenix, 1 CA-CV 02-0479 (Ariz.App. Mar. 22, 2005) (mem.decision).

¶ 9 In November 2002, before we issued our memorandum decision, Shea again revised its proposed project. This time, Shea proposed leasing the glass structure to a tenant who would display and sell motion picture and video equipment and operate a television station that would broadcast commercial and informative programming to the four video screens and over the Internet. An on-site employee would run the sales operation and the television station. Shea asserted that, because of these other on-site activities, the video screens were "appurtenant to a permitted use of the property, [and did] not qualify as outdoor advertising."

¶ 10 In connection with the revised proposal, Shea requested the Zoning Administrator to interpret the Zoning Ordinance by responding to five questions ("interpretive questions"). The interpretive questions were as follows:

1) whether a television screen displaying the video stream being broadcast by a television broadcasting station from within the station's building is appurtenant to the television broadcasting station;

2) whether an operational television screen of the type sold on the premises, displayed in a window display of such merchandise, is appurtenant to a business involved in the sales of specialized motion picture/television equipment;

3) whether a television screen located within a building, more than six feet inside a window but visible from outside the building, is regulated under Section 705 of the Zoning Ordinance;

4) whether a television screen, appurtenant to a permitted use of the building, located within the building and more than six feet inside the window but visible from the exterior, is regulated as a sign under Section 705 of the Zoning Ordinance, and

5) whether the City's regulations on outdoor advertising, as they may apply to the display of television broadcasts on video screens visible from the exterior of a building, are unconsititional [sic].

¶ 11 After holding another public hearing, in February 2003, the Zoning Administrator responded to Shea's request. The Zoning Administrator concluded the proposed use was "sufficiently unusual that it is not part of the current regulatory scheme," was not "sufficiently analogous to any other permitted use," and was "prohibited."

¶ 12 Shea appealed the Zoning Administrator's decision to the Board. The Board heard Shea's appeal on March 6, 2003. During the hearing, speakers representing Shea and the City first clarified that Shea was asking for a citywide, not simply a "site specific," response to the interpretive questions. The speakers then addressed Shea's interpretive questions and focused their presentations on whether the proposed video screens were appurtenant to a permitted use and whether, given their 6'1" setback, they were window signs and thus unregulated by § 705 of the Zoning Ordinance. The Board did not consider whether the video screens were governed by other provisions of the Zoning Ordinance applicable to signs.

¶ 13 On motion by Board member Patrick Paul, the Board voted 3-2 to answer "yes" on questions one and two and "no" on questions three and four. The Board did not respond to question five, deciding it did not need to do so in light of its responses to the other four interpretive questions.⁴ The net effect of the March 6, 2003 Board decision was to approve Shea's proposed project.

¶ 14 By letter dated March 27, 2003, the City asked the Board to reconsider its March decision pursuant to § 303(C)(3) of the Zoning Ordinance. That provision states "[a]n appeal may be reheard only when there has been a manifest error affecting the Board's action." The City argued the Board had committed manifest error in its March decision by failing to consider all of the relevant provisions of § 705 of the Zoning Ordinance as well as other "logical factual scenarios" that would impact the Board's citywide interpretation:

The transcript from the March 6th hearing indicates that the Board based its decisions primarily on the fact that the on-site motion picture/television screen was not a "window sign" because it was located six feet one inch behind the window, and therefore, it was not a "sign regulated by Section 705.["] A window sign is defined as follows in the Phoenix Zoning Ordinance:

Sign, window: Any sign affixed to the interior or exterior of a window, or any sign located inside a building within six feet of the interior side of a window [emphasis added] and displayed so as to attract the attention of persons outside the building. Merchandise which is included in a window display shall not be considered as part of a window sign.

The City of Phoenix concedes that the structure presented by the Applicant to house the motion picture/television screen may have enabled it to avoid being defined as a window sign. However, upon reading the description of it provided by the Applicant's representative, it is clear that the on-site motion picture/television screen still does qualify as a "sign". The Phoenix Zoning Ordinance defines a sign as follows:

Sign: Any identification, description, illustration, symbol or devise which is affixed directly or indirectly upon a building, vehicle, structure, or...