December 6, 2022

The Nerve

Where Government Gets Exposed

Zoned out: Why a small SC business might be forced to close

By RICK BRUNDRETT

In less than three months, Jeremy Sark’s U-Haul dealership on North Main Street in the city of Mauldin could close after nine years in operation.

But it’s not by choice.

Although his automotive repair shop, called Sarks Automotive, can stay open at the same location, a city zoning change would require him to move his U-Haul business to another part of the city of about 26,000 residents, located between Greenville and Simpsonville.

The current zoning ordinance, which the Mauldin City Council approved amending in January, would ban the rental or sale of “moving trucks, trailers, intermodal containers and temporary portable storage units” in areas not zoned “S-1” after Dec. 31 of this year. Sark’s U-Haul truck-and-trailer rental business currently is in a different zoning district.

In a lawsuit filed last month, Sark contends the city changed the zoning to attract a private developer as part of its plan to turn the center of the city into a “walkable downtown area.” Sark’s approximately 1.6-acre property, which he leases, is located over a mile from the proposed “City Center” project; another U-Haul dealership not operated by Sark abuts the planned project area.

The case is not a typical zoning dispute. Instead, it highlights what critics contend has been a practice by some states to use a little-known zoning procedure to push private economic development – at the expense of other private property owners without paying them anything.

Contacted recently by The Nerve, Sark said while he’s not opposed to the planned downtown project, “you don’t run out your small businesses to do something.”

“It’s very hard just to see them try to bully the little guys,” Sark said about the city’s zoning change.

Sark, who’s been at his North Main location since 2013 and operates the automotive shop with general manager Marie Dougherty, said he will have to lay off one of his 10 employees if he’s forced to close his U-Haul dealership with the expected loss of revenue. U-Haul rentals generate a total of about $60,000 yearly, he said, adding that doesn’t include income from repairing rental trucks or new business from U-Haul customers who later use his auto repair services.

The Phoenix-based U-Haul company, which has been operating since 1945, describes itself on its website as the “biggest do-it-yourself rental operation in the world,” noting it owns the largest fleet of trucks, trailers and towing devices “in the industry.”

A lawyer representing Sark told The Nerve he’s concerned that if the lawsuit, which alleges state constitutional violations, isn’t successful, other South Carolina municipalities could make similar zoning changes to force out reputable businesses that those governments no longer want in particular areas.

“If the city (of Mauldin) is allowed to destroy a normal business like a U-Haul dealership by giving the person who runs the dealership 11 months to wind it up – expressly for the purpose of benefiting a private investor or a private developer – it’s hard to conceive of a motivation that would stop Greenville from doing the same thing next week or Simpsonville from doing it the week after,” said Bob Belden, an attorney with the Virginia-based Institute for Justice.

Belden noted his organization has litigated similar zoning issues in Texas and North Carolina.

In a recent interview with The Nerve, S.C. Sen. Chip Campsen, R-Charleston, said he believes Mauldin’s amended zoning ordinance raises several potential legal issues. Campsen authored a 2006 constitutional amendment banning government agencies in South Carolina from using their eminent domain powers to take private property for private economic development,

“Normally when you have this happen, you have a nonconforming use that is permitted,” said Campsen, who is an attorney, about Sark’s situation, though he is not involved with the legal case. “When you go to do rezoning, you just don’t wipe existing businesses off the face of the landscape.”

Sark, Sarks Automotive and John Abney Jr., who owns the property where the auto repair shop and U-Haul dealership are located, are plaintiffs in the lawsuit, which was filed Sept. 8 in Greenville County Circuit Court. Besides the city of Mauldin, the Mauldin City Council, mayor Terry Merritt and David Dyrhaug, the city’s business and development services director, are named as defendants.

Sark and Abney are being represented for free by the Institute for Justice and the Columbia-based Nelson Mullins Riley & Scarborough law firm, according to Institute for Justice attorney Seth Young, who is one of the plaintiffs’ lawyers.

On its website, the Institute for Justice describes itself as a “nonprofit, public interest law firm” with a mission to “end widespread abuses of government power and secure the constitutional rights that allow all Americans to pursue their dreams.” Nelson Mullins is South Carolina’s largest law firm, according to this year’s annual ranking of the state’s law firms by the South Carolina Lawyers Weekly publication.

Mauldin city officials have not yet formally responded to the suit. The Nerve on Sept. 22 asked in writing for a response to the allegations in the suit and was referred to city attorney Daniel Hughes, who didn’t reply by publication of this story.

The lawsuit asks a judge to declare the amended zoning ordinance unconstitutional as it applies to Sark’s U-Haul dealership. It also seeks temporary and permanent orders allowing Sark to continue operating the business at his current location.

‘Naked land grab’

Among other claims, the lawsuit alleges the city’s actions amount to an “unconstitutional taking.”

The S.C. Constitution specifies that private property “shall not be taken for private use without the consent of the owner,” and that private property can’t be “condemned” by government agencies through their eminent domain powers for the “purpose or benefit of economic development.”

Sark contends that Mauldin city officials want his U-Haul dealership out of its current location as part of its plan for the City Center project.

The suit cites a December 2021 story by Greenville television station WYFF quoting mayor Merritt as saying potential investors or developers have remarked that “your main street looks old,” and that a “convenient (sic) center with U-Haul is parked on the side of N. Main St.” with “40 to 50,000 cars passing you every day.”

Merritt in the story also was quoted as saying that “we need to clean that up,” according to the suit. The city in December 2020 announced it had a retained a Greenville-based development firm for the proposed City Center project, the suit noted.

Sark told The Nerve he can’t understand why the city wants him to move his U-Haul dealership given that he never has been cited for any safety, health or nuisance violations.

“They’ve had no problem with it since 2013, and now all of a sudden this guy (private developer) comes in and says, ‘This looks trashy,’” he said.

The state constitution was amended about 16 years ago to protect private property owners from government overreach.

In 2006, S.C. voters overwhelmingly approved strengthening the state constitution following a 2005 U.S. Supreme Court ruling in a Connecticut case, commonly known as the “Kelo” decision, which allows government agencies to take private property through their eminent domain powers and turn it over to a private developer for the purpose of economic development. The controversial ruling sparked a nationwide backlash, with many states changing their laws or constitutions to protect their citizens’ property rights.

“Kelo was a horrible decision,” Sen. Campsen told The Nerve. “The (U.S. Supreme) Court got it wrong, and that’s why I authored the constitutional amendment in the wake of Kelo that basically says that if you condemn (private) property, it must be for public uses.”

Under S.C. law, government agencies must go through a formal process to take private property for public uses, such as building a public road or school. Affected property owners must receive “just compensation” for their property, either in a settlement or determined in a trial.

Sark’s lawsuit contends the city of Mauldin is trying to circumvent the state constitution’s ban on the taking of private property for private use through “amortization,” which is allowed under a longstanding but little-known state law. That process often involves rezoning an area where a targeted business is located – making that business a “nonconforming use” – and requiring it to close it after a certain period of time without paying anything to the affected property owner.

“Amortization is something cities do to avoid their compensation obligation under eminent domain,” said Belden of the Institute for Justice. “It allows them, in their view, to take property on the cheap.”

Belden described amortization as a “pernicious tool” and an exercise of a local government’s “police power,” contending that it “cloaks this naked land grab on the presumption of validity that attaches to zoning ordinances.”

The S.C. Supreme Court in a 2000 ruling allowed amortization in a Myrtle Beach case involving now-banned video poker machines, though Belden noted that decision dealt with what legal observers generally classify as a “sin” or “vice” business, not a nationally reputable company such as U-Haul.

Other alleged violations

Sark in his lawsuit also alleges the city of Mauldin violated his equal rights and due process protections under the state constitution. The suit contends that in amending the zoning ordinance, the city classified Sark’s U-Haul dealership and certain other businesses in the general-commercial zoning district as “nonconforming,” but required only truck-and-trailer rental businesses like Sark’s to move after Dec. 31.

As examples, the suit noted that an auto parts store, a used car dealership and a car rental business on North Main Street near Sark’s location are “all treated as legal nonconforming uses and allowed to continue operating as they were before.”

Belden told The Nerve he is aware of three other U-Haul businesses in the city, two of which are located in same zoning district where Sark’s dealership operates, which he said means those businesses would have to move along with his client’s under the amended ordinance. Sark said his current contract with U-Haul doesn’t allow him to immediately move his dealership to another location in the city.

Generally, state law allows municipalities to grandfather in “nonconforming” properties that lawfully existed before zoning changes were made.

“It has been operating continuously for more than nine years now and doesn’t pose a nuisance to any other properties,” Belden said about his client’s U-Haul dealership. “Under a South Carolina law, Jeremy and Sarks Automotive have what’s called a vested right to continue operating the U-Haul business.”

In the end, Sark said he just wants to be treated fairly.

“It comes down to, don’t push my business out the door,” he said.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-3948273 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

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