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In a recently published opinion, the Pennsylvania Commonwealth Court in Johnson v. Pocono Township Zoning Hearing Board, 2024 Pa. Commw. LEXIS 46 (Feb. 7, 2024), found that an owners’ use of their property as a short-term rental was a legal, existing nonconformity even after an ordinance outlawed such a use in the municipality.

In 2016, the owners in Johnson purchased a property to use as a vacation home and to provide short-term rentals during periods in which they were not using the property, the opinion said.

According to the opinion, the property is located in a low-density residential zoning district and the zoning ordinance that was implemented in 2003 did not expressly include short-term rentals as a permitted use.

However, the zoning ordinance did include “transient dwelling accommodations” in the recreation and commercial zoning districts.

Although the term “transient dwelling accommodations” is not defined in the zoning ordinance, it is exemplified by hotels, motels, resorts, and lodges, but not including bed-and-breakfasts and boarding houses.

Under the law, bed-and-breakfasts and boarding houses are allowed by-right in commercial districts but require conditional use approval in recreational districts.

Shortly after the owners purchased the property, the case Marchenko v. Zoning Hearing Board of Pocono Township, 147 A.3d 947 (Pa. Cmwlth. 2016), came before the Commonwealth Court.

Marachenko held that short-term rentals were consistent with a board interpretation of the single-family dwelling use and, therefore, were permitted in the low-density residential zoning district.

However, in Marachenko, then-Senior Judge Dan Pellegrini dissented, concluding that “someone who offers a property for rent on a transient basis is not occupying the home as a single-family dwelling, but instead operating a business of renting out the property.”

In response to the holding in Marchenko, in 2017, Pocono Township enacted an ordinance titled “The Short-Term Rental Ordinance of Pocono Township.” This zoning ordinance created a system for inspections, issuance and renewal of licenses, and to established penalties for violations, and applied to “all existing and future properties” that are used for short-term rentals located in low-density residential zoning districts.

In April 2017, the owners obtained a short-term rental license, which they understood to be valid for a one-year period, the opinion said.

The owners proceeded to retain the services of a property management company, which rented the property approximately eight to 12 days per month, the opinion said.

When the license expired in October 2018, the owners were granted a renewal to expire the following November.

In April 2019, the Pennsylvania Supreme Court in Slice of Life v. Hamilton Township Zoning Hearing Board, 652 Pa. 224 (2019), concluded that “the purely transient use of a house is not a permitted use in a residential zoning district limiting use to single-family homes.”

The Supreme Court’s ruling in Slice of Life was incompatible with the decision handed down by the Commonwealth Court in Marchenko, so in July 2019, Pocono Township repealed the zoning ordinance adopted in 2017, eliminating short-term rental licensing in the low-density residential district, the opinion said.

In September 2019, Pocono Township enacted a new zoning ordinance that applied to the commercial and recreation zoning districts and more clearly differentiated short-term rentals, or “TDUs,” from hotels, motels, bed-and-breakfasts, boarding houses, and group homes, by defining them as “any dwelling unit owned or managed by a person which is rented or leased for a period of less than 30 days.”

This zoning ordinance also created separate licensing requirements for TDUs, as well as a process for appeals of licensing decisions to Poconos Township’s Board of Commissioners.

In November 2019, the property owners’ license expired and the zoning officer denied the application to renew the license.

The property owners appealed to the renewal of the license to the Zoning Hearing Board alleging that their TDU should be allowed to continue legal nonconforming use based on the doctrines of vested rights and variance by estoppel.

The property owners also argued that the zoning ordinance enacted in 2019 was invalid because it totally excluded TDUs from all zoning districts.

After the zoning hearing board denied the owners’ appeal, the property owners appealed this administrative ruling to the trial court which affirmed the zoning hearing board’s ruling.

The owners then appeal the trial court’s ruling to the Commonwealth Court.

The two primary issues on appeal to the Commonwealth Court are whether the zoning ordinance enacted in 2019 is impermissible exclusionary because it does not permit TDUs in any zoning district; and whether the owners’ TDU constitutes a lawful, nonconforming use of the property that they must be permitted to continue.

Regarding the first issue on appeal, the owners faced an uphill battle because, citing to Bloomsburg Industrial Ventures v. Town of Bloomsburg, 242 A.3d 969 (Pa. Cmwlth. 2020), “a party challenging the lawfulness of an ordinance bears a heavy burden because an ordinance is presumptively valid and constitutional.

The Commonwealth Court in Johnson ultimately held that Pocono Township intended to, and in fact permitted short-term rentals, or TDUs, in the commercial and residential zoning districts and developed and enacted comprehensive licensing scheme to regulate them.

The Commonwealth Court in Johnson rejected the owners’ attempts to invalidate the zoning ordinance on the basis that it was impermissibly exclusionary because nothing in the record, nor the holding in Slice of Life, prohibited Pocono Township from partially excluding the use of TDUs in certain residential zoning districts.

Regarding the second issue on appeal, the owners argued that their TDU was a legal, nonconforming use that they should be allowed to continue.

The Commonwealth Court in Johnson noted that a lawful nonconforming use is a use that predates the enactment of a prohibitory zoning restriction and the ability to maintain a nonconforming use is only available for uses that were lawful when they came into existence, and which existed when the ordinance took effect.

According to the Commonwealth Court in Johnson, the fundamental basis for the protection of uses and structures that were lawful when instituted is the “inherent and indefeasible” right of the commonwealth’s citizens to possess and protect property guaranteed by Article I, Section 1 of the Pennsylvania Constitution, Pa. Const. art. I, Section 1.

The Commonwealth Court in Johnson pointed out that the burden was on the owners to establish the existence of a nonconforming use, and to do so, they must provide “objective evidence that the subject land was devoted to such use at the time the zoning ordinance was enacted.

The Commonwealth Court in Johnson emphasized that satisfying this burden requires “conclusive proof by way of objective evidence of the precise extent, nature, time of creation and continuation of the alleged nonconforming use.”

Keep all of this mind, the Commonwealth Court in Johnson then reviewed the underlying factual circumstances.

In summary, the zoning ordinance was initially enacted in 2003, and after the Commonwealth Court’s ruling in Marchenko in 2016, it was interpreted to allow TDUs in low-density residential districts, and, after the zoning ordinance in 2017 was enacted to regulate such uses, the owners obtained a license for their TDU, and when the Supreme Court issued its decision in Slice of Life, the zoning ordinance in 2017 was rescinded and a zoning ordinance in 2019 was enacted to limit TDUs to commercial and recreational zoning districts.

The Commonwealth Court found that the zoning ordinance enacted in 2017 first legitimized the owner’s TDU and the zoning ordinance in 2019 created nonconformity.

In doing so, the Commonwealth Court concluded that the owners, therefore, had established a legal, nonconforming use that should continue and remanded the second question back to the trial court for further remand to the zoning hearing board.

It will be interesting to see how the Commonwealth Court’s ruling will affect how short-term accommodations are treated in Philadelphia. Due to recent changes in the Philadelphia Zoning Code, an owner who owns a property in a residential district must now obtain a variance from the city of Philadelphia’s Zoning Board of Adjustment in order to use that property for short-term accommodations must obtain a variance. It is clear to us that such property owners throughout Philadelphia could argue that their property should be deemed a legal, nonconforming use.

Alan Nochumson is a shareholder of Nochumson P.C., a legal services firm with a focus on real estate, land use and zoning, litigation, and business counseling for the people of Pennsylvania and New Jersey. Nochumson is a frequent author and lecturer on issues commonly confronting businesses, individuals and professionals. You can reach him at 215-600-2851 or alan.nochumson@nochumson.com.

Alex Goldberg is an associate attorney at the firm. You can reach him at 215-399-1346 or alex.goldberg@nochumson.com.