Local Governments Granting Priority To Preferred Businesses Must Provide All Permit Applicants An Equal Opportunity To Submit Applications
California law permits local governments to favor some types of businesses over others. For example, in Madain v. City of Stanton, a city ordinance prohibited adult-oriented businesses from operating within 300 feet of “sensitive uses,” including churches. Local governments may not, however, manipulate the permit application system to allow preferred uses to gain priority over disfavored uses.
In Madain, the plaintiff submitted plans to obtain a permit to build tenant improvements for an adult-oriented business, the name of which included the words “show” and “girls.” Over two weeks later, the city returned the plans, stating that the building permit application should not have been accepted because the applicant had not first obtained a permit to operate an adult-oriented business. When the applicant returned to apply for that permit, he was turned away because, in the interim, someone submitted an application for a permit to operate a church in an adjoining property. The plaintiff appealed the denial of his application, but the city denied his appeal.
The Madain court reviewed the city’s denial of the appeal, ultimately concluding that the city failed to make specific findings to support its decision and remanding the matter back to the city for further hearing. The Madain court also offered guidance for the future hearing. First, the court noted that where a local government bars certain types of businesses due to the nature of pre-existing neighboring uses, it may not manipulate the permit process to allow a more favored use to jump in line for a permit. Further, if there are additional requirements for a permit for certain types of businesses, the local government should advise the applicant before accepting an application that is certain to be rejected. The Madain court stated that when a local government’s ordinances “establish a priority among competing uses for a specific area, it must give all applicants an equal opportunity to join the line.”