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SD Supreme Court Finds Standing on Appeal for Aggrieved Property Owner in Variance Dispute

This post was authored by Gregory Ahlsen, Jacob D. Fuchberg Touro Law Center

In April 2018, the Lake County Commission (the “Board”) conducted a public hearing concerning a variance and conditional use permit. The variance and conditional use permit (“CUP”) was sought by Hodne Homes, LLC as part of a proposal to construct a 5,760 square-foot building to store and display boats for Sodak Marina. The property on which the proposed building would be constructed lies in the LP-3 zoning district which has a 4,000 square-foot limit for private and commercial storing facilities. Additionally, regulations for the LP-3 district require that there must be a minimum setback of two feet on side yards and ten feet for rear yards for all properties. The proposed building exceeded the square footage restriction and violated the setback requirements. On April 17, 2018, the Board approved the variance and CUP. Neighboring property owner Karen Dunham opposed both the variance and the CUP.

On May 11, 2018, Dunham filed a petition challenging the Board’s approval of the variance and the CUP. The circuit court found in favor of the Board, determining that the Board had the proper jurisdiction to grant or deny the variance and CUP, and that the variance and CUP were granted in compliance with the zoning ordinance. Following the decision, Dunham appealed the circuit court’s decision to the Supreme Court of South Dakota. On appeal, the Supreme Court found that the Board failed to follow the two-prong test required by SDCL 11-2-53(2) (the “Statute”). The Court found that the Board failed to make adequate findings that an “extraordinary and exceptional” situation on the property owned by Hodne Homes, LLC existed. Additionally, the Court found that the Board failed to consider whether a denial of the variance and CUP would create “peculiar and exceptional practical difficulties” or “exceptional and undue hardship” on Hodne Homes. The Supreme Court remanded the case to the circuit court.

On remand, the circuit court promptly remanded the matter to the Board to have the Board consider the special conditions of the two-prong test required by the Statute. On July 21, 2020 the Board held a special hearing regarding the circuit court’s order. At this hearing, Hodne Homes argued that the property was unique because it was the only property in Lake County that was adjacent to an LP-3 zone and that Hodne Homes had an obligation to construct a larger building in order to sell two specific brands of boats at Sodak Marina in order to avoid exceptional and undue financial hardship. Dunham asserted that the Board must not consider the nature of the marina’s business in granting the variance because it would be used for retail sales, which violated the LP-3 zoning regulations. On September 1, 2020, the Board unanimously voted to find that Hodne Homes would suffer peculiar and exceptional practical difficulties if the variance was denied and that there was an extraordinary and exceptional situation for the lot.

On September 30, 2020, Dunham filed a second petition with the circuit court challenging the Board’s approval of the variance and CUP. In response, the Board filed a motion to dismiss, asserting that Dunham lacked standing because she was not harmed by the variance. In its motion, the Board claimed that the variance did not affect Dunham because it did not alter the side yard and setback requirement between the proposed building and her property. To prove that she was aggrieved, Dunham claimed that the proposed oversized building would directly interfere with her use and enjoyment of her property because it would cause drainage issues and interfere with her property’s access to natural sunlight. In the end, the circuit court granted the motion to dismiss because it was found that Dunham lacked standing for lack of injuries.

Dunham appealed the circuit court’s decision to dismiss for lack of standing to the Supreme Court. The Supreme Court found that Dunham did have standing because she properly asserted in her original petition for writ of certiorari that the Board’s decision to grant the variance and CUP would cause her to experience a lack of access to daylight and drainage issues. After finding that she had proper standing, the Supreme Court reversed the circuit court’s dismissal and remanded the matter to address the merits of Karen Dunham’s second petition.

Dunham v. Lake County Commission, 976 NW 2d. 247 (SD 6/1/2022)