NORTH CAROLINA APPEALS COURT AFFIRMS REVERSAL OF CONDITIONAL USE PERMIT APPROVAL ON RES JUDICATA AND COLLATERAL ESTOPPELS GROUNDS

Wireless TowerMount Ulla Historical Preservation Society, Inc. v. Rowan County, 2014 WL 619584 (NC. App.) involved the second attempt of a broadcast company secure a conditional use permit to build a radio tower.  The first application had been denied in 2005 on grounds of an air safety hazard to a nearby airport.  That denial had been appealed to the North Carolina Court of Appeals but was upheld.  In 2010, a slightly lower tower was proposed and approved after the governing body denied a motion to dismiss the application on res judicata and collateral estoppel grounds.  The trial court reversed and the Historical Society appealed.

The Court characterized conditional use permit conditions as quasi-judicial and asserted that the trial court decision on this question of law was subject to de novo review.  Utilizing North Carolina case law, the Court found that res judicata and collateral estoppels could apply to parties in privity if the facts have not materially changed as to the grounds of the previous denial.  In this case, the 2005 denial was due to an air safety hazard and the question was whether a reduction of height by 150-feet of the tower, which was now proposed to 1,200 feet high, was a material change.  The Court characterized this as a fact question to which the Court normally deferred to the governing body.  However, the Court, in viewing the whole record, found there was nothing that would materially undermine the reasoning of the 2005 decision.  The Court said the Respondent essentially had the same facts in both cases and failed to show that the 2005 decision was incorrectly decided based on new facts.  Lacking such a basis, the doctrines of res judicata and collateral estoppel applied and the grant of the conditional use permit was found to be correctly reversed by the Trial Court.

Oregon courts in LUBA have been reluctant to apply res judicata and collateral estoppel to quasi-judicial land use decisions.  Plans and regulations, as well as facts, change over time and the identity of parties in two cases is rarely the same.  However, this North Carolina decision, which turns on whether facts have been materially changed, is an interesting excursion into this area of law. Mount Ulla Historical Preservation Society, Inc. v. Rowan County, 2014 WL 619584 (NC. App.)

AFFIRMATIVELY FURTHERING FAIR HOUSING: A NEW RULE IN TOWN

Affordable_Housing_Clackamas_CountyLast September, the comment period on a federal Department of Housing and Urban Development’s (“HUD”) proposed rule closed. That rule portends a very different course in the expectations of state and local governments in dealing with affordable housing.  While retaining the prohibitions on housing discrimination, the new rule (now being reviewed by the Office of Management and Budget) requires taking proactive steps “to address significant disparities in access to community assets, to overcome segregated living patterns and support and promote integrated communities, to end racially and ethnically concentrated areas of poverty, and to foster and maintain compliance with civil rights and fair housing laws.”

Most local governments take federal funds for housing or urban development, which implicates the new rules.  Those funds take the form of loan guarantees, urban renewal grants, homelessness programs, disaster relief, transportation and other infrastructure funds and a variety of other means.  A state or local grantee is “required to submit a certification that it will affirmatively further fair housing (“AFFH”), which means that it will (1) conduct an analysis to identify impediments to fair housing choice within the jurisdiction; (2) take appropriate actions to overcome the effects of any impediments identified through that analysis; and (3) maintain records reflecting the analysis and actions in this regard.”  The AFFH obligation extends to all housing and housing-related activities in the grantee’s jurisdictional area whether publicly or privately funded.

One effect of the new rule, which is likely to be challenged in the federal courts, is that housing issues will not be treated in isolation, but in a relationship with other drivers of urban development.  Thus, the connections between affordable housing and transportation or zoning, community expenditures in public services and facilities, racial or ethnic segregation and residency preferences or requirements are relevant issues for analysis and action.

Potentially, the new rule is not another effort at paper shuffling to deal with housing needs.  Receipt of federal housing funds requires repeated AFFH certifications of compliance with the analysis, action and records obligations noted above.  The rule requires action to deal with problems identified, in part, by the use of uniform data.  A state or local government may thus be sued for doing nothing in the face of an identified problem.  Moreover, for those public agencies that certify compliance and do nothing or which support efforts to thwart affordable housing, litigation may be brought under the False Claims Act and if the AFFH certifications were false, treble damages and attorney fees may be awarded, with a possible share going to a “relator,” one who “blows the whistle” on a non-complying government.

The case of Westchester County, New York, even though brought under current law, is instructive.  Although certifying that it was affirmatively furthering fair housing when it received over $52 million in federal grants over the years, the County did not consider race-based impediments to fair housing choice even though it was part of one of the most segregated regions in the country.  The County made no mention of housing discrimination or residential segregation and was successfully sued by a nonprofit activist organization under the False Claims Act.  The federal government joined the suit and a settlement was ultimately reached under which 750 affordable housing units must be built within 7 years in the “whitest” neighborhoods of the County, the County must return $30 million to HUD because of its false certifications, $21.6 million of which was to Fund Integrative Units (which was supplemented by another $30 million from the County), which was also required to pay $7.5 million to the “Relator” for ferreting out false claims and another $2.5 million in attorney fees and costs.  While the racial overtones of the County’s actions were extreme, the new rule raises the bar for reporting, actions and records required of state and local governments in housing matters.

Because the new rule does not depend on federal funding for enforcement, it is likely that nonprofit affordable housing organizations will follow the lead of their environmental brethren to undertake enforcement activity, using the “bounty” provided by the False Claims and Civil Rights Acts to fund further enforcement.  If the rule is enacted and survives OMB review and court challenges, the national housing picture will be very much changed indeed.  In Oregon, the new rule may spell the end on the statutory provision against inclusionary zoning and Metro’s prohibition on forcing higher densities in existing neighborhoods.  We all may be in for a very bumpy ride indeed.

 

Fair Housing Violations Bring Steep Penalties

HUD housing and urban developmentOn June 10, 2014, the City of San Jacinto, in Riverside County, California, entered into a consent decree with the Department of Housing and Urban Development (HUD) to resolve a lawsuit alleging disability discrimination under the Fair Housing Act (FHA) and Americans with Disabilities Act (ADA).  The City agreed to change its land use laws governing group home living, and to pay a total of $746,599 in compensatory damages to housing providers and former residents with disabilities, as well as a $10,000 civil penalty to the United States.  The damages also include private plaintiffs’ attorneys’ fees and costs.

The settlement marks an end to an almost two-year-old complaint, but a six–year-old battle, where private group home operators claimed the City enacted an ordinance intended to exclude unlicensed and some licensed homes for persons with disabilities, and by targeting homes for persons with disabilities for enforcement of the ordinance and other local laws.

On October 3, 2008, the City Council amended the San Jacinto Zoning Code (the “Zoning Code”) by approving Ordinance 08-14 (the “ordinance”), which was passed by unanimous vote of the council.  The ordinance amended the Zoning Code’s definition of “Group Home” or “Group Housing” to “[a] residence or dwelling, other than a hotel, wherein two (2) or more rooms, with or without individual cooking facilities, are rented to individuals under separate rental agreements or leases, either written or oral, whether or not an owner, agent, or rental manager is in residence, in order to preserve the residential character of the neighborhood.”  The ordinance specifically exempted certain state-licensed congregate living facilities, such as “community care facilities,” from its definition of “group homes,” making those with six or fewer residents permitted uses in residential zones.

Prior to and after the City’s enactment of the ordinance, the city’s zoning code defined “family” as “an individual or two (2) or more persons related by blood, marriage or legal adoption, or a group of not more than 6 persons who are not related, living together as a single house-keeping unit in a dwelling unit.”

In conjunction with the passage of the ordinance, the City’s code enforcement officers, including uniformed officers of the County Sherriff’s Department, investigated group homes. These actions included intrusive and direct questioning of residents about whether they were on parole, on medication and/or recovering from addiction.  After these investigations, the City continued to cite providers of group homes for persons with disabilities for illegal operation of a group home in a residential zone.

Thereafter, the City allowed for a reasonable accommodation process to consider placing group homes in residential neighborhoods, but its proposed conditions were not acceptable to group home providers and they filed a complaint.

HUD’s investigation led to findings that the City had, in fact, discriminated against people with disabilities under the FHA and ADA.  The consent decree provides the following injunctive relief:

  • The City shall not impose restrictions on housing for persons with disabilities not imposed on housing for an equal or greater number of persons without disabilities.  Actions prohibited include, but are not limited to, the imposition, through any provision or practice, of numerical occupancy limits on group housing for unrelated persons with disabilities that is more restrictive than numerical occupancy limits for families or other unrelated persons.
  • The City was required to adopt new ordinances to establish a new zoning classification, “Group Homes for Persons with Disabilities,” and amend the City’s reasonable accommodation procedure.
  • The City is required to maintain records of all oral and written requests for reasonable accommodation or modification and the City’s responses thereto for a period of three (3) years following the date of the request and the group home’s response, as applicable.
  • The City shall not impose any additional fees, costs, or otherwise retaliate against any person who has exercised his or her right under the FHA or ADA to make one or more requests for reasonable accommodation or modification.
  • Immediately upon entry of the consent decree, the City shall cease any efforts to close or bring other enforcement actions against housing for persons with disabilities operated in accordance with the FHA and the ADA, including but not limited to, homes for persons with disabilities operated by the complainants (City by Aurora Beltran and Rajeeyah Bilal-Vamey located at 325 East Third Street and 1835 Rogers Way, respectively), so long as these homes continue to operate in compliance with all laws.
  • The City is required to appoint a Fair Housing Compliance Officer, and City staff, City Council members, Planning Commissioners, and the Sherriff’s officers are required to undergo fair housing training.

HUD’s investigations of fair housing violations are taking an expensive toll on local governments.  If you advise a city that is considering restrictive zoning; or differential treatment of the number of family members as compared to the number of unrelated people with disabilities that can live together in the same zone, then consider the San Jacinto consent decree as a warning to take such actions cautiously.  If the ordinance ultimately results in unfair treatment to group home providers, then do not be surprised if fair housing advocates complain to HUD.

 

CITY’S “UTILITY FEE” IS A TAX AND THUS INVALID WITHOUT A VOTE SAYS MICHIGAN APPELLATE COURT

Michigan road signCounty of Jackson vs. City of Jackson, 2013 WL 3957695 (Mich. App.) involved defendant’s attempt to raise revenue for certain city services such as street sweeping, catch basin cleaning, leaf pickup, and mulching by a storm water management utility charge on all property owners.  The Headlee Amendment to the Michigan Constitution prohibited imposition of a tax on property without an affirmative popular vote.  Before the imposition of the utility charge, the city had funded its obligations under the federal Clean Water Act through property and gas taxes from the general fund and road fund, respectively, as well as certain surcharges on water and sewer bills.  By ordinance, the city created a storm water utility to manage surface and storm water through an annual charge imposed on all property, whether developed or not, in the city and limiting the revenue derived from the charge to storm water facility construction operation and maintenance.  The charge was computed based on an estimate of storm water runoff from each parcel which charge considered whether the surface is all or partially impervious (although it had a uniform charge on small, single family residential lots).  The ordinance also provided for various credits for reducing the amount of storm water and surface water discharge, provided for administrative appeals in the computation of charges, and allowed for enforcement through civil actions, discontinuation of water service and the like.  Plaintiff local government and various private entities brought an action for declaratory, and for monetary and injunctive relief against the ordinance.

The Court found that plaintiffs bore the burden of proof to show the ordinance was invalid or unconstitutional and required plaintiffs to show that the fee was a “tax,” and thus not permitted without a popular vote.  In Bolt v. City of Lansing, 221 Mich App 79, 561 NW2d 423 (1997), a similar scheme was found invalid by the Michigan Supreme Court, which used a 3-factor analysis to distinguish a fee from a tax, i.e.: (1.) a fee serves a regulatory purpose; (2.) a fee is proportional to services rendered; and 3. a fee is voluntary.  Neither of the first two factors were met, especially as two-thirds of parcels in the city already had a separated sewer and storm water system which those owners had already paid for through general taxes or individual assessments.  The Bolt ordinance failed to distinguish between charges based on services provided as to the relationship between the charges and benefits conferred.  Moreover, the ordinance in that case and this, while relating to rainfall on a parcel, did not deal with the treatment of pollutants from which parcels discharge into navigable waters.  Finally, the fees in both cases were neither voluntary nor avoidable.  Also important in Bolt were the following: (1.) the fee revenues were to be used on projects which had been financed by the general fund; (2.) the indebtedness from the fee could be secured by a lien; and (3.) the fee was sent along with property tax statements.

The Bolt court concluded:

We conclude that the storm water service charge imposed by Ordinance 925 is a tax and not a valid user fee.  To conclude otherwise would permit municipalities to supplement existing revenues by redefining various government activities as “services” and enacting a myriad of “fees” for those services.  To permit such a course of action would effectively abrogate the constitutional limitations on taxation and public spending imposed by the Headlee Amendment, a constitutional provision ratified by the people of this state.  In fact, the imposition of mandatory “user fees’ by local units of government has been characterized as one of the most frequent abridgments “of the spirit, if not the letter,” of the amendment.

The danger to the taxpayer of this burgeoning phenomenon [the imposition of mandatory user fees] is as clear as are its attractions to local units of government.  The “mandatory user fee” has all the compulsory attributes of a tax, in that it must be paid by law without regard to the usage of a service, and becomes a tax lien of the property.  However, it escapes the constitutional protections afforded voters for taxes.  It can be increased any time, without limit.  This is precisely the sort of abuse from which the Headlee Amendment was intended to protect taxpayers.  [Headlee Blue Ribbon Commission Report, supra, § 5, pp-26-27.] [Bolt, 459 Mich at 169.]

Turning to the case at hand, the Court found the fee served a dual purpose – financing treatment of solid pollutants in storm and surface water runoff, as well as supplementing general revenue-raising efforts by shifting funding of those activities already provided from the city’s general and street funds to a charge-based system that augments the city’s general fund.  The Court concluded that the “minimal” regulatory purpose was far outweighed by its revenue-raising features.  In fact, there was no effective regulation of discharge from an individual parcel (aside from the ordinance’s credit scheme).  The background of the challenged ordinance shows its primary rationale was revenue raising and thus violates Bolt by allowing the city to supplement its existing revenue streams by redefining a governmental activity as a “service” for which a user fee may be charged.  Moreover, there was no relationship or proportionality between the service and the fee – rather the charge resulted in a benefit to the general public.  While larger parcels were more susceptible to proportionality under the city’s fee schedule, the bulk of parcels in the city (83%) were single family residential lots for which a uniform single charge was imposed.  Finally, the ordinance in this case, as in Bolt, was compulsory and effectively enforced through various means.  Given these attributes, the ordinance was deemed to be a tax and thus invalid without a popular vote.

This case deals with the details of property tax limitation measures, which differ from state to state.  As a matter of logic, the case makes a great deal of sense and distinguishes fees from taxes. County of Jackson vs. City of Jackson 2013 WL 3957695 (Mich App).

Discovery of Environmental Contamination

Historical Brick Wall.Innocent Property Owners may no longer be protected by federal legislation meant to toll the statute of limitations on an action against a late discovery of contaminated property.

In CTS Corporation v Peter Waldburger et al., 573 U.S. ____ (2014),  the United States Supreme Court ruled that state law may override federal legislation meant to protect a property owner when the discovery of environmental contamination is years after the release.

Congress enacted the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), including a provision that, by its terms, pre-empts statues of limitations applicable to state-law tort actions in certain circumstances with respect to an injury from a release of hazardous substances. Under these provisions, the statute of limitations begins to run on an action after the property owner or person discovers that the harm to their property or person was caused by contamination of a previous property owner or another person.

However, several states, including Oregon, Connecticut, Kansas, North Carolina, and Alabama, have statutes of repose that limit the time frame a property owner may bring a cause of action regardless of the date of discovery of the contamination or its source.

In North Carolina, homeowners challenged their state’s statute of repose that limited its ability to seek compensation for the release of hazardous substances 24 years before by an electronic manufacture that contaminated their property. The state’s statute of repose limited any cause of action to 10 years after the last culpable act, regardless of discovery of the contamination or its source.  The question presented to the United States Supreme Court was whether a federal statute on the timeliness of suits for harm caused by environmental contamination, 42 U. S.C. §9658, preempts North Carolina’s 10 year statute of repose provision.

In the ordinary course, a statute of limitations creates a time limit for suing in a civil case, based on the date when the claim accrued, and is often based on the date of discovery of the harm.  A statute of repose puts an outer limit on the right to bring a civil action, not from the date of discovery, but from the date of the last culpable act or omission of the defendant. In a 7 to 2 decision, the Supreme Court held that a statute of repose is not within the pre-emption mandate of the act, and that §9658 addressed statute of limitations by its express terms but that language did not include pre-emption of a state’s statute of repose. Thus, because the states are independent sovereigns, the police powers of the state are not superseded by the Federal Act, unless there is a clear manifest from Congress.

The Court reversed the Court of Appeals for the Fourth Circuit dismissing the homeowners’ state law claim for water contamination against the electronic manufacturer; 42 U.S.C. §9658 pre-empts only statutes of limitations and not statutes of repose.  The question now remains, will additional state legislatures adopt statutes of repose in light of this decision.

Cynthia M. Fraser is an owner at Garvey Schubert Barer in the firm’s Portland Oregon office.

The West Park Avenue Project: Negotiating to a F.A.R.

FAR.V2Floor area ratio – commonly referred to as FAR – is the ratio of a building’s floor area to the size of the parcel on which the building is situated.  The higher the FAR the bigger the building.  A maximum FAR limits the size of the building on a parcel and many jurisdictions, including the City of Portland, have maximum FAR standards that place limits on how large a FAR is allowed within different zones (see City Code 33.510.200).

Portland, however, like many jurisdictions, allows FAR beyond the maximum otherwise allowed by transferring FAR from one parcel to another under certain circumstances.  Generally, how this works is a parcel with a maximum FAR the owner doesn’t intend to use, can transfer the “excess FAR”, i.e., the difference between the amount of FAR the property owner intends to use, and the maximum that otherwise is allowed on the owner’s parcel, to another parcel.  The receiving parcel would then be able to “add” this additional FAR to the otherwise maximum FAR allowed on the receiving parcel and develop a bigger building.  A bigger building generally brings more value to the “receiving” parcel and the “donating” parcel will likely expect some consideration for the transfer of the excess FAR, as the “donating” parcel will enter into a covenant that runs with the land that restricts development on the donating parcel to a FAR less than the maximum otherwise allowed.

The West Park Avenue (“WPA”) Parcel, commonly known as the hole in the ground west of Nordstrom in downtown Portland, was the recipient of excess FAR.  In 2010, Fox Tower, LLC (“Fox Tower”) the owner of property next to the WPA Parcel and including a parcel now known as Director Park, transferred FAR that would otherwise be available to the Director Park Parcel to the WPA Parcel.  The transferred FAR was the difference between the maximum FAR the City Code would allow on the Director Park Parcel and the amount of FAR that was actually being used for the development of Director Park.  The Park is basically hardscape with little building development, so there was a significant amount of excess FAR that was not used.  By adding the amount of excess FAR from the Director Park Parcel to the base FAR for the WPA Parcel, the WPA Parcel was able to achieve 354,000 square feet of floor area, i.e., a building significantly larger then would otherwise have been allowed on the WPA Parcel.

But the City Code in addition to allowing transfer of FAR from one parcel to another also allows “bonus floor area options” (City Code 33.510.210 C.), i.e., a parcel can have “Bonus FAR” if it does certain things including providing a “water feature or public fountains.”  Director Park has a water feature.  The City Code also allows additional FAR when a parcel provides bicycle parking and locker rooms, i.e., a “locker room bonus option” (to encourage bicycling).  The Director Park Parcel did not have any bicycle parking and locker rooms, however, Fox Tower, the previous owner of the Director Park Parcel had reserved an easement on the Director Park Parcel for underground parking.   That easement would allow for the construction of bicycle parking and locker rooms – creating additional FAR opportunity for the Director Park Parcel.

Clearly, the Director Park Parcel did not need additional FAR,   although the WPA Parcel could use more FAR and the Director Park Parcel had those “bonus floor area options”.  By now the Director Park Parcel was owned by the City of Portland.   In order for the WPA Parcel to obtain the benefit of the “bonus floor area options” in May of this year, the three parcel owners – WPA, City of Portland and Fox Tower – entered into an amendment (the “Bonus FAR Amendment”) to the 2010 Agreement that transferred the excess FAR from the Director Park Parcel to the WPA Parcel.  The Bonus FAR Amendment resulted in the City transferring the Bonus FAR available to the Director Park Parcel because of the water fountain to the WPA Parcel.  This “Water Feature Bonus FAR” qualified the WPA Parcel to get an additional 10,000 square feet of FAR.  The Bicycle Parking and Locker Room Bonus FAR, Fox Tower, owner of the subsurface easement on the Director Park Parcel agreed to allow WPA to construct bicycle parking and locker rooms within the easement resulting in a Bonus FAR of an additional 50,000 square feet for the Director Park Parcel, which the City as the owner of the Director Park Parcel transferred to the WPA Parcel.

As mentioned above, additional FAR has value and consideration, which is typically paid by the receiving parcel for the additional FAR.  The WPA Parcel was receiving a significant increase in FAR from the Director Park Parcel and in return, although Fox Tower did not get any of the Bonus FAR, Fox Tower agreed to pay the City $100,000 to be used in maintaining and improving Director Park (Fox Tower and WPA are related entities- with the President of each entity being the same person).

But that is not the only consideration that was provided under the parties “Bonus FAR Amendment” as this Amendment provides if WPA elected to contract for security and janitorial services at its building that it would only contract “with contractors whose employees that directly perform security and janitorial services …. are represented in collective bargaining by a labor union” and “if the WPA employs persons directly to perform such work, WPA shall remain neutral during any union organizing campaign directed at security and janitorial employees …. and shall recognize the union as the representative of such employees upon a showing of majority status by the union through cards signed by such employees authorizing union representation.”

 As stated above FAR has value and it is common when FAR is conveyed from one parcel to another that consideration is paid.  In this case the City as the owner of the donating parcel is receiving consideration in the form of $100,000 to maintain Director Park.  The other consideration granted was the above obligation of the WPA owner to use union labor.  An obvious question is “why” was this included in the Bonus FAR Amendment?   Was this an effort to obtain some assurance that those affected employees might receive a livable wage?  Another question is “how” did this consideration end up in the Bonus FAR Amendment?  Was it proposed by the City?  The answers to these questions are not known, but there is an answer to “who” is benefitted by this consideration.  The “who” is organized labor.

It must have been an interesting negotiation

Prospective I-502 marijuana retail licensee sues city over local ban on marijuana businesses

Washington’s Initiative 502 decriminalized, licensed and regulated marijuana sales under state law, and prospective retail licensees are gearing up to begin operations. On June 3, 2014 a suit was filed by one prospective licensee against the City of Wenatchee over its prohibition on issuing business licenses for business activities that are not lawful under city, state, and federal law. Because the sale of marijuana remains unlawful under federal law, Wenatchee has made clear that it will not license marijuana businesses that are duly licensed by the state Liquor Control Board to operate in Wenatchee. In October 2013, the Wenatchee City Council voted 4-3 against a proposed ordinance that would have allowed business licenses to be issued to state-licensed marijuana businesses.

The suit challenges Wenatchee’s authority to prohibit business activity that is lawful under state law and licensed by the state. This issue is being hotly debated by Washington legal authorities. In January the Washington Attorney General issued a non-binding opinion in which he concluded that I-502 did not prevent local governments from banning marijuana businesses within their jurisdictions. In April, a Washington Court of Appeals issued an opinion concluding that local governments could prohibit collective medical marijuana gardens because they remained unlawful under the State’s medical marijuana law. It remains an open question whether Washington courts will allow a local government to prohibit business activity that is lawful under state law or whether the state-licensed and regulated marijuana market will preempt local bans.

This suit will be closely watched by local governments and marijuana businesses alike. If the reaction of Wenatchee’s Mayor reported, as by The Wenatchee World, is any indication, local governments are not excited about becoming the subject of costly litigation to establish the boundaries of state and local law: “‘I’m trying to balance a budget.’ . . . ‘We’ve got big issues in the city. Having the distraction of this marijuana issue is not something I want to deal with.’”  These concerns could rise dramatically if Wenatchee chooses to respond to such suits by arguing that the state’s licensing and regulation of marijuana businesses is in conflict with federal law. That claim would expand the lawsuit while threatening newly forming marijuana businesses statewide, and could invite the participation of groups like the American Civil Liberties Union and possibly Washington State itself to defend state law.

Unless expressly stated otherwise, any federal tax advice contained in this communication (including attachments) is not intended to be used, and cannot  be used, for the purpose of avoiding federal tax penalties.

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A Seductive Solution: The Grand Bargain and the Future of Oregon Planning

The train of events from the release of the Oregon Court of Appeals decision in the Metro urban and rural reserves case to the resolution of that case in the Oregon legislature has been an interesting one to follow. The Court of Appeals remanded a decision that followed four years of public hearings and actions to establish urban and rural reserves in the Portland area. Following various stages of shock, denial and anger, the development community, Metro and Portland area local governments changed their positions from one that this was strictly a regional problem with which the legislature should not enter, to one in which such entry was invited.

In enacting the resolution of this case in the so-called “Grand Bargain,” the legislature imposed a solution in one particularly contested part of the region – Washington County – rather than to have the reserves decision reconsidered as the court had commanded. Other deficiencies in Multnomah and Clackamas Counties were left for the Land Conservation and Development (LCDC), those counties and the region to sort out. Within days, the legislature expanded the Urban Growth Boundary (UGB), as well as the urban and rural reserves in Washington County and declared victory to the applause of much of the development and business community and local governments.

Expanding the UGB is important, as urban type development is allowed only within that boundary and significantly affects the price of real estate. Similarly, placing land in an urban reserve presumptively puts that land first in line for addition to the existing UGB for urban development over a 50-year period. And placing land in a rural reserve makes it likely that such land will not urbanize over the next 50 years.

The legislature, local and regional governments, and public interest groups characterized these actions as nothing more than a mediated settlement with the parties to the lawsuit resulting in an outcome that was consistent with initial predictions. This does not change the fact that it was the legislators, rather than local governments, drawing colored lines on a map. Often these supplicants and the legislative leaders will assert that the UGB and reserves processes are just too complex and need to be simplified. Yet these parties might consider their own roles in shaping these processes. Instead of providing a checklist of objective requirements for expanding the UGB, the legislature left in place a system of unquantified “factors” to apply so as to give decision-makers the “flexibility” to reach whatever decision they wished. The legislature and LCDC used a similar system of applying “factors” to the reserves process for the same reason.

In addition, instead of allowing the Land Use Board of Appeals (LUBA) to review these decisions, the legislature specifically directed that review to LCDC, a government-friendly forum that did not work as hard to consider those pesky legal questions that occur in making land use decisions. Both left it to the Court of Appeals to weigh the reserves decision against the criteria and were duly shocked and appalled with the result. It is far easier to blame the process and other participants than to fess up to admitting to the source of the complexities in that process.

In reality, there was an attempt to game the process (through an assertion of “flexibility” which was designed to place a patina of respectability on the result) to justify putting certain lands over other lands into urban reserves than was justified, regardless of what the law said, because some of the participants wanted that result.

However the real problem created by the “Grand Bargain” is the precedent it sets. While both the UGB and reserves processes are difficult (and are supposed to be difficult as the decisions are significant and long-lasting), on what basis can the legislature turn down similar requests for imposition of a legislative solution in Woodburn, Bend or McMinnville which have similarly complex decisions? Will the watchdogs and the environmental community continue to be coy about the application of raw political power to make local planning decisions on the ground?

The quickest and easiest decision is not always the best one. The legislature may yet rue the day it stepped in to impose its will in the reserves case. It will be difficult to deny the second supplicant, much less the third, fourth and others.

Master Planning and Religious Uses

The U.S. District Court in Ohio recently considered religious land uses in Tree of Life Christian Schools v. The City of Upper Arlington, Case No. 2:11-cv-009 (U.S. Dist. Ct., Southern Dist. OH, April 18, 2014).  The City’s  adopted Master Plan, recognizes that only 4.7% of its useable land area was zoned “Commercial,” included that one purpose of preserving the limited commercial land is to generate more revenue from commercial uses.  As a result, the Master Plan specifically limited the uses permitted in commercial zones.  The City did not offer a pathway for an applicant to obtain approval for school uses in a commercial zone.

In early 2009, City officials became aware that Tree of Life was considering purchasing a commercial office building within city limits for use as a school.  The City’s Economic Development Director advised the Tree of Life school superintendent directly that schools were not a permitted use.  Notwithstanding, Tree of Life filed an application for a conditional use permit to use the property for a place of worship, a church and residential use, to the extent that residential use includes a private school.  The City responded that a private school is neither a permitted nor conditional use in the commercial zone.  The church responded that the primary purpose of the application was a church or place of worship that could be considered a conditional use.  The City disagreed with this characterization and found that the primary use of the property as a private school did not constitute the use of the property as a “place of worship, church.”  The City instructed that the church could file for a zone change to a zone that would allow a private school use.

Despite that City’s denials of its applications, Tree of Life completed the purchase of the commercial office building,  then proceeded to file suit for violations of the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA), among other claims.  The Court determined the case was not ripe because Tree of Life had not petitioned the City to rezone the property.  While the appeal was pending to the Sixth Circuit Court of Appeals, Tree of Life made the rezone application, which the City denied.  The Sixth Circuit allowed Tree of Life to supplement the record on appeal with the denial of the rezoning and the Sixth Circuit remanded back to the District Court.

Tree of Life’s RLUIPA claim was made under the “equal terms” provision that states, “No government shall impose or implement a land use regulation in a manner that treats a religious assembly or institution on less than equal terms with a nonreligious assembly or institution.”  RLUIPA’s equal terms provision is treated differently between the various Circuits of Court of Appeals.   The District Court analyzed the Circuit split related to its analysis of the “equal terms” provision, and recognized that the Sixth Circuit has yet to frame its own interpretation.

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The District Court determined the Third and Seventh Circuits’ equal terms analysis to be the most reasonable and pragmatic.  Under the Third Circuit’s “Regulatory Purpose” approach, a regulation will violate the equal terms provision only if it treats religious assemblies or institutions less well than secular assemblies or institutions.  The regulatory purpose approach allows cities or local governments to justify unequal treatment by pointing to their objectives in enacting zoning regulations and proving that the secular assemblies treated more favorably do not damage those objectives.  The burden of proof is on the church to show that equal terms have been violated.  In the Tree of Life case, the court found that the City had carefully set forth its regulatory purpose for designating a commercial district to allow office and research facilities that contribute to the City’s physical pattern of planned, healthy, safe, and attractive neighborhoods; provide job opportunities; contribute to the City’s economic stability; and that all schools are forbidden in the district.  Therefore, the City’s decision to deny Tree of Life’s proposal for a school in the commercial district was proper.

The Seventh Circuit’s test, which substitutes “accepted zoning criteria” for the Third Circuit’s regulatory purpose approach, did not provide Tree of Life with any better position because the City had designated that generating municipal revenue was an important criterion for allowed uses in the commercial district.

Moreover, the District Court held that Tree of Life’s RLUIPA claim lacked merit because an apples-to-apples comparison of a secular and non-secular use showed the City prohibited a school in the commercial zone regardless of whether it had a religious affiliation.

The Ninth Circuit applies the equal terms test of the Third Circuit along with the Seventh Circuit’s refinement to the test.  In Centro Familiar Cristiano Buenas Nevas v. City of Yuma, 651 F.3d 1163 1172-1173 (9th Cir. 2011), that Court held that the “city may be able to justify some distinctions drawn with respect to churches, if it can demonstrate that the less-than-equal-terms are on account of a legitimate regulatory purpose, not the fact that the institution is religious in nature.” (Note the burden of proof in the Ninth Circuit is on the government.) As cases come forward in your neck of the woods, be aware of the circuit split and that your case might be the one to push the question to the U.S. Supreme Court for a determination of the correct analysis of the equal terms provision.

Image courtesy of Flickr by Matt Trostle

Land Use Tribunal Site Inspection Violates Open Meetings Law Says Maryland Appeals Court

WSG Holdings, LLC v. Bowie, 57 A 3d 463 (Md., 2012) involved a contested special exception (conditional use permit) for a gun range which was heard by the Charles County Board of Zoning Appeals.  The Board conducted a site visit accompanied by representatives of the applicant as well as two opponents.  Other opponents were barred from the site and there was no transcript of the visit.  The Board granted the application and trial court affirmed, except for a remand on some findings deficiencies.  The trial court rejected inter alia opponents’ contention that the site visit violated the state’s public meetings law.  The intermediate appellate court found such a violation and remanded the decision.  The applicant then sought review.

The decision to conduct the site visit with limited attendance was made in a public meeting and without opposition from the audience.  There was no discussion of transcription of that meeting at that time.  At the site visit, members of the Board were apparently separated into groups with applicant representative speaking to various aspects of the proposal to different subgroups of the Board.  Before the final vote, a member of the public filed a written objection to the exclusion of the general public, the lack of a transcript, as well as the inability to respond to evidence gained at the visit, requesting that the record be reopened to comply with the Maryland Public Meetings Law.  The Board accepted the applicant’s substantive testimony, but denied other relief, granting the application with findings which included references to the site visit.

The trial court found that the applicants had not preserved their public meetings objection for judicial review, given a lack of objection to the process along with its selection of two opponent representatives at an open meeting.  The intermediate court found the post-site visit objection as sufficient to preserve the public meetings contentions.  On review, the opponents contended that the public meetings law violation could not be raised by those attending the public meeting, or those who had not protested loudly enough to the objections to be recorded and that the post-site visit objection was sufficient to preserve error.

The court began its analysis with the strong commitment of the state legislature to the public meetings law, which was also reflected in the county Code and the procedural rules adopted by the Board for the conduct of its hearings (which referenced that law and provided for site visits to be recorded and for public inclusion).  Noting that neither the Board nor the parties could agree on what had happened on the site visit, the court noted the detailed post-visit objection to the alleged breach of a public meetings law, the county’s Code, and the Board’s rules of procedure which the Board had generally denied without comment.  The court observed further that, while site visits may be common, reliance on them by decision-makers implicates heightened procedural requirements and that when the visit goes beyond mere observation (as it did here) the site visits should be “on the record in the presence of the parties.”  Failing this, there should be an opportunity to challenge the evidence received in that visit by cross-examination or other means.  While the county Code of the Board’s rules refers to the conduct of a “hearing” and did not refer necessarily to “meetings,” state law does so regulate meetings and governs here.  In any event the Board violated the county’s Code and its own rules over the conduct of hearings.

The court concluded that the Board’s site visit without sufficient notice, without a record being kept, and without allowing members of the public to attend, especially where site visit information was used in the findings to justify approval, was not fair to the public.  Proceeding to the remedy, the court cataloged the violations of law and concluded that cumulatively, these violations created an irreparable injury to the opponents so that the decision was void ab initio.  The case was thus remanded for an entirely new hearing.

The efforts of the Oregon Open Meetings law are largely untested in site visit cases in this state; however, there is little reason to believe that the outcome would have been different if the same facts were presented.

WSG Holdings, LLC v. Bowie, 57 A 3d 463 (Md., 2012).

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