Sunrise Check Cashing and Payroll Services, Inc., et al., Respondents.
Town of Hempstead, Appellant.
Peter Sullivan, for appellant.
Jeffrey R. Stark, for respondents.
Matthew W. Grieco, for amicus curiae Superintendent of Financial Services.
We hold that a zoning measure that prohibits check cashing establishments in a town's business district is invalid, because it violates the principle that zoning is concerned with the use of land, not with the identity of the user.
The provision in question is section 302 (K) of article XXXI of the Building Zone Ordinance of the Town of Hempstead, adopted January 10, 2006. It says in pertinent part: "In any use district except Y Industrial and LM Light Manufacturing districts, check-cashing establishments are hereby expressly prohibited."
The only document explaining the purpose of this enactment is a memorandum from a deputy town attorney dated December 13, 2005, the date of a public hearing held on the proposal that became section 302 (K). The subject of the memorandum is " Public Policy behind Check Cashing Ordinance." The memorandum says that the measure "represents sound public policy" because:
"Essentially, it serves the interest of encouraging young people and those of lower incomes to establish savings and checking accounts, do their banking at sound and reputable banking institutions, and develop credit ratings. It also eliminates predatory and exploitative finance enterprises from commercial areas, which is beneficial because these enterprises tend to keep a neighborhood down."
The memorandum consists of several pages criticizing check-cashing establishments on social policy grounds. It says that such establishments make it convenient for young and lower income people "to remain in the cash-only economy" and adds: "This is bad for society as a whole." The memorandum refers to studies finding that "check-cashing establishments actually exploit the poor and African Americans." It concludes that the proposal under consideration "encourages young and lower income people to open up bank accounts, save their money, and develop a credit rating" and "also removes a seedy type of operation, akin to pawnshops and strip clubs, from the commercial areas of the Town." Section 302 (K) was adopted by the Town Board some four weeks after the memorandum was issued.
Several check-cashing establishments brought the present action, seeking a declaratory judgment that section 302 (K) is invalid, and an injunction against its enforcement. Supreme Court granted summary judgment dismissing the complaint. The Appellate Division reversed, holding section 302 (K) to be preempted by article IX-A of the Banking Law and related regulations, which govern the licensing of check-cashers (Sunrise Check Cashing & Payroll Servs., Inc. v Town of Hempstead, 91 A.D.3d 126 [2d Dept 2011]); the Town appeals to us as of right, pursuant to CPLR 5601 (b) (1). We affirm without reaching the preemption issue, because the challenged provision is not a proper exercise of the zoning power.
A town's power to adopt zoning regulations derives from Town Law § 261, which authorizes town boards:
"to regulate and restrict the height, number of stories and size of buildings and other structures, the percentage of lot that may be occupied, the size of yards, courts, and other open spaces, the density of population, and the location and use of buildings, structures and land for trade, industry, residence or other purposes"
(see also Town Law § 263 [listing the purposes of zoning]).
Our cases make clear that the zoning power is not a general police power, but a ...