What Hath New Jersey Wrought?

In a case with the unlikely title of In re Adoption of N. J. A. C. 5:96 & 5:97 by N. J. Council on Affordable Housing, the New Jersey Supreme Court put an end to forty years of litigation over the responsibilities of New Jersey local governments to provide for their fair share of affordable housing.  As a result of two cases decided in 1975 and 1983 both named Southern Burlington County NAACP v. Township of Mt. Laurel, that Court established a state constitutional right to require local governments exercising land use regulatory powers to “make realistically possible the opportunity for an appropriate variety and choice of housing for all categories of people who may desire to live there, of course, including those of low and moderate income.”  In doing so, the Court granted broad relief that included a “builder’s remedy” – allowing an applicant who prevails before a trial court on a constitutional claim of this nature to ask the same court to approve its application. Continue Reading

Is What is Good for the Goose Only for the Goose? Partial Taking:  A novel attempt to exclude “Cost-to-Cure” evidence at trial

Geese photo

In a condemnation when only a portion of the property is taken, the property owner is entitled to just compensation based on the value of the property taken plus damages to the remaining property, if any.  However, if the damage to the remaining property can be cured, the property owner is only entitled to the lesser of the damage to the remaining property or the cost to cure.

Impact on remaining property and the ability to “cure” damage is probably the most subjective area in any condemnation appraisal.  The ODOT ROW Manual instructs the appraiser to first determine if the remaining property is damaged and to quantify that damage.  Only after the appraiser has determined there has been damage and the extent or amount of the damage is the appraiser to consider if the damage can be “cured” and, if so, the “cost of the cure.”  Often, however, an appraiser will go directly to the cure and its costs, bypassing any quantification of the amount of the damages.  The “cure” and “cost of cure” are often the significant issue in partial takings with the condemner and owner positions challenging each other as to what would constitute a cure and its costs.

In two recent condemnation trials, the State of Oregon has sought to exclude evidence and testimony about potential “cures” considered by the property owner’s appraiser in concluding the just compensation for a partial taking.  In both cases, the State’s appraiser presented evidence that the damage to the property owner’s remaining property could be cured, and measured the damages to the remaining property using the “cost-to-cure” valuation methodology.  In each case, the property owner’s appraiser considered and rejected potential cures as not resulting in a cure or the cost was more than the damage.  The owner’s appraiser determined the damage to the remainder, i.e., its diminution in the value, based on a change in the highest and best use of the property, as the appropriate measurement of just compensation.

The owner did seek to present testimony and evidence as to potential cures and then costs.  The State argued to exclude this evidence based on the Oregon Evidence Code Rule 403 and the Oregon Supreme Court’s holding in Tunison v. Multnomah County, 251 Or 602 (1968). The State argued that evidence of the potential cures rejected by the property owner’s appraiser would mislead and confuse the jury, resulting in substantial prejudice to the State that would outweigh the probative value of the evidence.  The specific language in Tunison relied on by the State reads:

“[The property owner argues] that since, under the circumstances . . . restoration costs may be used as a measure of damages, it is necessary for the appraiser to make an initial estimate of such costs in order to determine whether they were less than the depreciation in the market value of the property not taken and thus binding upon the owner. We reject this argument. The appraiser may find it advisable to make such a calculation but if the owner seeks to recover the depreciation in the market value of the property remaining, he cannot testify as to restoration costs. To permit him to do so would be to inject into the case evidence which the jury is likely to improperly consider in estimating the owner’s loss.  (emphasis added.)”

Id. at 604-05

In response, the property owners made three arguments: (1) that the property owner was entitled to put on evidence of potential cures considered and rejected by the appraiser to rebut the State’s evidence that the damage to the remainder should be measured by the State’s proposed “cost-to-cure”; (2) that USPAP requires an appraiser to consider “cost-to-cure” in determining just compensation in a partial taking; and (3) that later Court of Appeals opinions favor allowing the jury to consider evidence of competing valuation methodologies in determining just compensation.  The trial court denied the motion to exclude in each case finding that the property owner was entitled to present the rejected “cures” as rebuttal evidence.  The trial courts appeared to reject (or at least did not reach a decision on) the property owners’ other two arguments.

The Tunison case is most often cited in support of using a “cost-to-cure” methodology in valuing damages to the remainder in condemnation cases.  As a result, the State’s use of this case in an attempt to exclude competing “cost-to-cure” evidence is clever, but also disconcerting. First, USPAP (and the ODOT Right of Way Manual) requires an appraiser to consider potential cures in determining damages to the remainder in a partial taking case.  To exclude evidence of rejected potential cures would prevent an appraiser from testifying to a key underpinning of his or her opinion on value. Second, the argument runs counter to Oregon Court of Appeals cases issued after Tunison that set a liberal standard for presenting expert testimony on valuation methodology to juries.  See Tri-Met v. Posh Ventures, LLC, 24- Or App 425, at 437-438 (2011) (finding that jury is entitled to “hear expert testimony regarding the appropriateness of a particular valuation methodology”) and City of Bend v. Juniper Utility Co. 242 Or App 9, 20 (2011) (it is left to the trier of fact to assess the evidence, including expert testimony regarding the appropriateness of a particular valuation methodology, and to then make a factual call as to the fair market value of the property in question).  Third, any danger that a jury will be misled or confused by evidence of rejected “cures” is mitigated by the uniform jury instructions used in most condemnation cases.  For these reasons, it is the authors’ opinion that a property owner should be entitled to present evidence of competing potential cures in it case in chief, and not just as rebuttal evidence.

Effectively, the State asserted that only it could present evidence and testimony of a potential cure and its costs, but the owner, if relying on just compensation using diminution in value to the remainder, could not present testimony or evidence as to a cure or its costs, i.e., what is good for the goose is only for the goose.   Fortunately, in both cases, the court allowed the owner to put in evidence and testimony regarding potential cure and their costs as rebuttal to the State’s assertion of a specific cure and its costs.  Overall, a practitioner should carefully consider this aspect of the Tunison case in preparing for any trial that involves a partial taking in which either party intends to present “cost-to-cure” evidence.

Spring Training: Games Begin; Cubs Win (in Court)!

2010 GrassSpring Training has begun!  The boys of summer have reported to camp and pre-season games are underway.  While major league teams are preparing for the coming baseball season in sunny Arizona and Florida, the Chicago Cubs baseball club has started its season in federal court in Illinois.  The Cubs are renovating historic Wrigley Field, which includes adding a large video board and signs in the outfield.  The new video board and signs happen to block the view of the field for neighbors beyond right field who have rooftop businesses that provide patrons with food, drinks and views of Wrigley Field events.  The rooftop businesses have sued the Cubs to stop construction.  They have also sued the City of Chicago and the City’s Landmark Commission for approving the renovation to the ballpark in the first place.

In their suit against the Cubs, the rooftop businesses have alleged that the Cubs are violating the Sherman Antitrust Act by strategically constructing the video board and signs in locations that block the views of the rooftop businesses, while not blocking views from other rooftops that the Cubs own or control.  The rooftop businesses have also alleged that the Cubs’ renovations violate a 2004 settlement agreement between the Cubs and the rooftop owners, which provided that the rooftop owners would pay the Cubs a royalty based on gross revenues in return for unobstructed views of the field.

Last month, the rooftop businesses sought a temporary restraining order against the Cubs to halt construction of the video board and signs.  After considering arguments from both sides, the federal judge threw the rooftop businesses a curve and denied their request for a TRO.  The judge ruled that the rooftop businesses failed to satisfy their burden of proving immediate and irreparable harm from the construction, because the businesses did not provide evidence of potential loss of income.

The ruling is not a home run for the Cubs, however.  A further hearing is scheduled for March 23 to determine whether the rooftop businesses are entitled to a preliminary injunction to halt construction.  With opening day in Wrigley Field scheduled for April 5, and with renovations reportedly behind schedule, the Cubs will be hoping to turn a double play and prevail again so the renovation can be completed.

“Civil War” Brewing in Iowa: Urban vs. Rural Confrontation Over Nutrient Pollution

Green leaf with water dropIn the non-fiction best-seller (and Hollywood film) A Civil Action a New England community confronts the very serious consequences that followed when a manufacturing company’s chemical waste contaminated the local water supply. While chemical wastes can continue to present health and environmental concerns, an increasing concern today focuses on a different type of contamination – “nutrient pollution,” which is affecting many of the nation’s waterways. The “civil war” metaphor referenced above reflects the fact that actions to address nutrient pollution can find state and local government entities squaring-off against each other. A recent example is in Iowa, where the City of Des Moines has issued formal notice that it intends to file a suit to enjoin nutrient pollution from neighboring communities.

Background. “Nutrient pollution” may sound like an oxymoron since plants and animals require nutrients as part of their food supply. But too much of a good thing can be bad, which in this case means the nutrients nitrogen and phosphorus. As the U.S. Environmental Protection Agency explains, excessive amounts of nitrogen and phosphorus in rivers, lakes, etc., cause significant increases in algae (“algal blooms”) that deplete the oxygen aquatic life requires. The algae also produce toxins and bacteria that can cause illness for humans through consumption of contaminated fish, shellfish or drinking water. In fact, for several days last summer Toledo, Ohio imposed water usage restrictions, which included a ban on all potable uses, due to nutrient pollution in the form of toxic algae in Lake Erie. In addition, nitrates (a form of nitrogen) in surface waters and groundwater pose a significant health concern because nitrates can lead to serious illness in adults and can be fatal for infants and small children. http://www2.epa.gov/nutrientpollution. Nutrient pollution from the Mississippi River basin (which drains all or portions of 31 states) is also responsible for the more than 5,000 square-mile “dead zone” in the Gulf of Mexico where hypoxia (oxygen deficiency) has excluded many forms of aquatic life. Given these facts, EPA’s admonition is not surprising: “Nitrogen and phosphorus pollution has the potential to become one of the costliest and the most challenging environmental problems we face.” http://www2.epa.gov/sites/production/files/documents/memo_nitrogen_-framework.pdf.

Nutrient pollution results from several factors. That includes urban stormwater runoff, residential sources (e.g., lawn fertilizers, yard and pet waste, certain soaps and detergents), fossil fuel use (increased air emissions of nitrogen) and sanitary wastes (from septic systems and sewage treatment). But while those sources can contribute to nutrient pollution, the primary source, as noted by the National Oceanic and Atmospheric Administration, is agriculture, including fertilizers and animal waste. See generally http://oceanservice.noaa.gov/-products/hypox_t3final.pdf. Paradoxically, however, when Congress enacted the Clean Water Act (CWA) in 1972 (the CWA is the primary federal law for controlling water pollution), it chose to exempt two agricultural categories, agricultural stormwater and return flows from irrigation. Absent the exemptions, those sources could be required to have permits under the Clean Water Act’s National Pollutant Discharge Elimination System (NPDES) program. Although the CWA does not require states to mirror the federal exemptions for agriculture, as a general rule states choose not to be more stringent than the CWA (to do otherwise would be akin to exporting jobs and tax revenue to more lenient states, a non-starter for state policymakers). That is the case with nutrient pollution from agriculture – state regulation is voluntary and generally regarded as inadequate. See https://www.nacwa.org/images/stories-/public/2012-03-06wp.pdf at 15 (voluntary control measures “have been unable to deliver reliable and sustained nutrient loading[] reductions from the agriculture sector”); see also http://www.gao.gov/assets/660/659496.pdf at 60-61 (water quality improvement is restricted nationally due to inadequate regulatory authority over non-point source pollution, which includes agriculture).

Emerging Battleground. Given the increasing concerns it presents, nutrient pollution has become a catalyst for testing the scope of the CWA’s agricultural exemptions. A recent example is the previously referenced pre-litigation notice the City of Des Moines issued to neighboring counties and their drainage districts last month (although CWA enforcement is primarily a state and federal government responsibility, individuals, organizations and local governments can also file enforcement actions – “citizen suits” – for which a 60-day notice of intent to sue is required). Des Moines’ would-be suit (which could be filed shortly) concerns groundwater the drainage districts remove artificially (using drainage tiles and other conveyances) from moisture laden agricultural lands and then discharge to local rivers. The result is a lower water table, which benefits agriculture through reduced interference with root growth and enhanced crop development. But there’s also a downside: discharging the groundwater to nearby rivers significantly increases the nitrate concentration in the rivers, which are the primary local water supply. That, in turn, requires Des Moines to augment its water treatment system – at considerable cost – to reduce nitrates to meet the federal Safe Drinking Water Act limit. Des Moines’ notice of intent concludes that the drainage districts’ discharges are not covered by the CWA’s agricultural exemptions because they are not stormwater or associated with irrigation, and as consequence are unpermitted discharges in violation of the CWA. There is very little precedent interpreting the CWA’s agricultural exemptions, and it does not appear to address facts such as those pertinent to Des Moines.

It is not yet known whether Des Moines will proceed with litigation. Although extension of the NPDES permit program to a presumably vast number of agricultural sources could be daunting, that concern must be juxtaposed with the increasing national focus on the adverse impact of nutrient pollution from agricultural sources. These concerns far transcend Des Moines’ individual circumstances and implicate a number of additional states, broad agricultural interests and a considerable number of municipalities as well. Developments in this matter will be very useful to monitor.

New Hampshire Supreme Court Allows Unused SDC Fees to Go to Successor Landowners

House on euros in forestK.L.W. Construction Co., Inc. v. Town of Pelham, 2014 WL 6967664 (N.H.) involved petitions for declaratory judgment by a construction company and a developer for a refund of what in Oregon are termed “systems development charges” authorized by a New Hampshire statute. Under the statutory scheme, local governments may assess fees for capital improvements; however, if the fees are not spent within six years, they must be refunded. Defendant’s ordinance authorized a refund, but only to the “current owner” of the land assessed. Plaintiff Construction Company paid the fee, which refund was also sought by the original developer. The land in question was sold to homeowners after development and the Town contended that only these successors could claim the refund.

The assessments were levied to build a new Town fire station; however, after some of the funds had been spent for feasibility studies and architectural plans, the voters of the Town declined to authorize construction. The trial court upheld the Town’s restriction of refunds to current owners and granted its motion to dismiss Plaintiffs’ claims, determining that the statutory direction for a refund of unused fees did not require that such refund be paid to the original payee.

On appeal, the court found no factual disputer and reviewed the trial court’s order of dismissal on a de novo basis, as Plaintiffs’ standing was jurisdictional and a question of law over statutory interpretation of “refund,” a term not otherwise defined by the enabling legislation. Plaintiffs contended that local governments must follow the statutory mandate and that “refund” must be given its ordinary meaning of “pay back” or “reimburse.” Plaintiffs also contended that another statute relating to exactions was more specific, providing refunds in those cases to the payer or the payer’s successor in interest. However, the SDC statute did not contain such language and the court declined to insert the same, finding the two statutes enacted at different times and dealing with different situations.

Moreover, the court cited decisions from other courts that allowed refunds to go to other than the original payers and rejected the possibility that local governments could enter into an agreement a payer to have payments specifically refunded to that payer as requiring this arrangement to be made. Moreover, the court declined to use legislative history to interpret the refund statute, finding no necessary ambiguity that would allow for such an examination. Finally, the court rejected Plaintiffs’ takings challenges, finding no adequate preservation of constitutional issues.  The court thus affirmed the trial court’s conclusion that the local ordinance authorizing SDC refunds to current landowners to be within the statutory authorization.

This is a case of statutory interpretation. Although Oregon law does not speak to the refund issue, common practice is that unspent systems development charges must be refunded. Refunding those charges to current landowners provides for better predictability in the use of those funds and for allocation of the risk of that possibility as part of the sales price for land.

K.L.W. Construction Co., Inc. v. Town of Pelham, 2014 WL 6967664 (N.H.)

A Lesson on the Importance of Legislative History: The Carman House Decision Reversed

ColumnsAs the Oregon Legislative session moves into full-swing giving spectators a front row seat to frantic lobbying and frenetic lawmaking, the Oregon Court of Appeals issued a decision that should remind those involved in this pastime affectionately known as “sausage-making,” to consider the importance of the deliberations.  The decision relates to efforts to remove the oldest home in Lake Oswego, the historic Carman House, from the City of Lake Oswego’s inventory of historic resources and potentially allow for its demolition, as described in my previous blog post.  In 1995, the Oregon Legislature passed the statute at issue, ORS 197.772, which precludes a local government from imposing a historic designation on a property over “a property owner’s” objection.  Subsection (3) of that same statute further provides that “a property owner” may subsequently seek to remove a historic designation that was imposed.  The issue before LUBA and the Court in the case, Lake Oswego Preservation Society v. City of Lake Oswego, was whether a request to remove a designation after it has been imposed must be made by the same property owner who originally objected or whether a subsequent owner may also seek removal.

The general rule when interpreting a statute is to focus on the text and context of the provision.  However, courts will also look to the legislative history to determine intent.  In the Lake Oswego case, the Court found, as had LUBA, that the text and context for determining who was included as “a property owner” under ORS 197.772 was not particularly helpful and it turned to the legislative history.  This history came largely from two hearings before the House Committee on General Government and Regulatory Reform.  LUBA keyed into a statement by one of the bill’s authors, when asked whether a subsequent purchaser could seek to remove historic designation, responded that “[w]e haven’t thought about that situation.”  LUBA also noted that a proposed amendment making clear that in cases where the property owner does not object, subsequent owners are bound to the designation, and was rejected and not included in the engrossed bill.  Based on those comments, LUBA concluded that the drafters intended to afford relief only to those property owners on whose property the designation had been imposed.

The Court of Appeals analysis of the legislative history makes no mention of those portions of the legislative history that LUBA found important.  Instead, the court highlighted that the legislation was to allow owners that were “coerced into the historic property designation” to seek removal of that designation.  The court quoted from another representative summarizing the scope of subsection (3) to include those cases where “property owners were not allowed to consent and government imposed it on them that now they would have an opportunity to remove their property from that designation.”  From this, the court concluded that the amendment allows “individuals who own property on which historic designations had been involuntarily imposed by the local government – before the enactment of ORS 197.772 – to have that designation removed.”  The court explained that the focus during these committee meetings was on providing relief in cases where a designation was imposed over an owner’s objection and not on whether subsequent purchasers could also take advantage of the previous owner’s objection.  Further, the court found that preservation advocates’ concerns that adoption of subsection (3) would have the effect of “dismantling historic districts” and a lack of response by the proponents indicated an intent to have broad effects.  As a result, the court concluded that any property owner that has a local historic designation forced on their property may remove that designation.

What is so interesting about this case is that two review bodies looked at the same legislative history and reached diametrically opposing conclusions.  Maybe the difficulty is that the Court of Appeals failed to mention, much less explain, why the comments that LUBA found instructive were not helpful.  How could the court find that committee discussions focused solely on giving relief to those owners who were “coerced into a historic preservation designation” and from that extend that same protection to property owners who were not coerced but instead knowingly purchased a designated property?  If this ruling rests on the conclusion that the legislature intended the effect of ORS 197.772 to “dismantle” historic preservation efforts, legislators, both proponents and opponents, need to be much more descriptive and particular in describing their intent.

Recent Developments in Comprehensive Planning – A Year in Review

farm Feield cultivatedEd Sullivan and I co-author the annual comprehensive plan update for the American Bar Association’s State and Local Government Law Section. The most recent update was just published by the Urban Lawyer and you can read about it here. The article undertakes an annual survey of state and federal cases dealing with the role of the comprehensive plan (sometimes called the “General” or “Master” plan) in land use regulation. That survey and this resulting article illustrate trends in the current use of three modes of perception regarding comprehensive plans by state legislatures and state courts. The first mode, the “unitary view,” is that planning is neither essential nor possibly even relevant to zoning and land use regulation, and it is the local zoning ordinance that is dispositive. The second view, the “planning factor view,” is that a plan is relevant, but not necessarily dispositive of the validity of a land use regulation. The final view, the “planning mandate” view, is that planning is essential to land use regulation. Please review the article for specific examples and commentary on each of these views.

The trend in case law in this update demonstrates increased respect for comprehensive planning, less tolerance for the view that zoning regulations are isolated from their planning roots, and more emphasis on the role of planning when plans are amended or interpreted. We hope you enjoy the article and that the update assists you in your land use battles.

The Supremes Sing the Banks’ Song: Guarantors Can’t “Stop (Paying) in the Name of Love”

Concept of penalty. Wooden cravel and dollars with coins.As a longtime fan of Motown music and former Washington Supreme Court law clerk and now practicing lawyer, it’s hard to resist a mischievous overlap in nomenclature between our highest legal panel and Diana Ross and the Supremes.  Once in a while our Court also inspires litigants and court watchers to burst out in song.  Perhaps this is such a moment.

The Washington Supreme Court is made up of nine justices with a wide range of legal experience, most of whom have been trial lawyers and judges before being elevated to the state’s highest court.  They are individually and collectively respected as smart and hardworking.  However, it appears that notwithstanding their varied backgrounds, none of the justices has much experience with the Washington Deed of Trust Act.

I reach this conclusion after reading the recent 9-0 decision of the Court in Washington Federal v. Harvey, No. 90078-7(January 8, 2015).  In that case, the Court sided with the unified legions of banks against commercial loan guarantors seeking to avoid liability for loan deficiency judgments after non-judicial foreclosures.  In the wake of the “Great Recession,” during which more real estate loans went into default than at any time since the Depression, it became tragically commonplace that foreclosure sales did not yield proceeds sufficient to pay what were once well-secured loans.  That resulted in large loan deficiencies, and banks looked to whatever source was available to help them repay loan losses, including to loan guarantors.

In Washington, the Deed of Trust Act bars deficiency judgments except in certain narrow circumstances involving commercial loans.  While deficiency actions after trustee’s sales are generally prohibited, RCW 61.24.100(10) provides that a,

“trustee’s sale under a deed of trust securing a commercial loan does not preclude an action to collect or enforce any obligations of a borrower or guarantor if that obligation, or the substantial equivalent of that obligation, was not secured by the deed of trust.”  (emphasis added)

In the cases before the Court, the banks used loan documents which said that the foreclosed deeds of trust secured not only the borrowers’ original notes, but also the loan guaranties.  It’s not clear if the inclusion of the guaranties in the documents secured was intentional, or if the banks did not contemplate that the Washington Deed of Trust Act seemed to prevent actions against guarantors after a non-judicial foreclosure of the deed of trust, as the language quoted above suggests.

But with the ease of a footnote, the Court dismissed the language quoted above, or added its own additional qualification on the exception, in footnote (2) of that opinion:

“. . .  Subsection (10) is clear; it provides clarity about when a deficiency judgment may be brought, but does not protect a guarantor of a commercial loan from deficiency judgments solely because the guarantor’s guaranty is secured by a deed of trust regardless of who granted such deed of trust.  Accordingly, here, even if the borrowers’ deeds of trust secured the guarantors’ guaranties, subsection (10) would not preclude deficiency judgments against the guarantors because the guarantors did not grant such deeds of trust.”

Notwithstanding that footnote, there is no such limitation in the language of RCW 61.24.100(10).  It refers to a guarantor whose guaranty “was not secured by the deed of trust (foreclosed)”.   The Court, in effect, re-writes RCW 61.24.100(10) to read that a,

 “trustee’s sale under a deed of trust securing a commercial loan does not preclude an action to collect or enforce any obligations of a borrower or guarantor if that obligation, or the substantial equivalent of that obligation, was not secured by the deed of trust granted by such borrower or guarantor against whom a deficiency action is sought.”  (the author’s additional language is in bold)

Without the additional language, the statute would apply to both deeds of trust granted by the borrowers, as in the cases decided by the Court, and deeds of trust granted by the guarantors.  Without that language, there is no basis for making the critical distinction made by the unanimous Court!

The Court pointed to no evidence in other portions of RCW 61.24 or the legislative history to suggest that it is only when the guarantor is the “grantor” under the deed of trust foreclosed that the guarantor is then protected against a deficiency judgment.  In effect, the Court decided the entire case on a limitation to the prohibition on deficiency actions which is not mentioned in the statute.

After reading the opinion, I’m sure bankers across Washington started singing that old Supremes hit, “I Hear a Symphony,” while those unfortunate guarantors were shaking their heads and humming, “You Keep Me Hanging On”.

No Collateral Estoppels Defense to Removal of Unconstitutional Condition Says California Appellate Court

Beach sceneBowman v. California Coastal Commission, 2014 WL 5390057 (Cal. App.), involved a now-deceased landowner’s attempt to rehabilitate and improve real property within the California coastal management zone.  The landowner applied to the local County for an “over-the-counter” permit for repairs (which were exempt from Coastal Commission review under the California Coastal Act of 1976), but later added a septic tank repair and rehabilitation of a dilapidated house to that permit application, which were subject to such review.  After beginning the work on the over-the-counter permits, the landowner was told by the County to stop work until a final permit had issued.  He did so but had not done any work on the septic tank or the rehabilitation of the house.  He then passed away and a family trust assumed ownership.

Much later, the County approved the permit but added a condition of approval to require a lateral easement along the shorefront of the property, stating that the building had not been in use for some years and the occupation facilitated by the permit would increase the intensity of the use.  Later that year, the family trust applied for an amended approval and requested removal of the condition, which the County did.  However, the amended permit was appealed to the Defendant Commission under California law regarding the removal of the condition.  The Commission ultimately determined that the condition was binding and its removal would violate a public policy in favor of public access to coastal resources and took action to restore the condition.  A co-trustee of the family trust appealed that determination.

The court said it would review the Commission’s order for abuse of discretion.  Plaintiff contended the exaction was unlawful under Nollan and Dolan, because there was no “rough proportionality” between the impacts of the development and the condition imposed.  Defendant Commission argued that it did not create the condition and that it was final and binding.  The court responded that normally the failure to appeal a condition gives rise to collateral estoppel in a subsequent challenge.  However, the court recognized an exception to this rule:

“But under the facts here, application of collateral estoppel gives primacy to a procedural rule that creates an unjust result and subverts the fair application of the California Coastal Act of 1976.  (Pub Resources Code, § 30000 et seq.) Inherent in collateral estoppel are met when its application comports with fairness and sound public policy.”

In this case, the court noted that the repairs that were made were exempt from the Coastal Act and were done on an “over-the-counter” basis and could not be the subject of a rough proportionality analysis, noting that the County recognized that fact by removing the condition from its permit.  Moreover, the facts also belie the Commission’s acquiescence argument as neither the land owner nor the family trust took the benefits of a permit.  The court reversed the Commission’s action and struck the condition.

The use of equitable principles in review of the land use decision is fraught with peril.  However, the lack of the constitutionality of the condition left the court with an all-or-nothing proposition in which the unconstitutionality of the condition weighed more heavily then the stability of the decision making process.

Bowman v. California Coastal Commission, 2014 WL 5390057 (Cal. App.)

U.S. Supreme Court Gives Life to the “In Writing” Requirement of the Federal Telecommunications Act

Optical fibres around earthT-Mobile South, LLC v. City of Roswell (United States Supreme Court, January 14, 2015), was a case brought by a “personal wireless service provider” under the Telecommunications Act of 1996 (TCA) which, among other things, supported rapid deployment of personal communications devices (e.g., cell phones) by requiring that land use decisions on matters relating to such things as cell towers be “in writing” and supported by substantial evidence from a written record.

In this case defendant City denied plaintiff’s cell tower application by letter, informing plaintiff that it could find the reasons for the denial in the City Council minutes.  There was a 30-day appeal period under the TCA; however, the City’s draft minutes were not approved until four days before the appeal period ran.   Nevertheless, plaintiff challenged the denial in federal court on the “in writing” requirement and also alleged the denial was not supported by substantial evidence.  The trial court found for the plaintiff but the Eleventh Circuit, following a majority of circuits, found the letter and reference to the minutes to be sufficient.  The Supreme Court granted certiorari.

Justice Sotomayor wrote for the court and interpreted the “in writing” and “substantial evidence” requirements to require reasons to be given for judicial review purposes. Not requiring reasons would make the judicial task much more difficult. The use of “substantial evidence” in the TCA was a “term of art,” describing how an administrative record was to be reviewed by a court under the TCA.  The court inferred that Congress required findings to be derived from the administrative process, rejecting the City’s contention that this requirement would deprive it of its local zoning authority, finding that Congress meant to interfere with local zoning processes to this extent, but stressing that the reasons need not be elaborate – just sufficiently clear to enable judicial review.

Moreover, the court determined that the TCA did not require that the reasons be found in the decision or be in any particular form, as the TCA stated it did not otherwise affect the authority of a local zoning authority noting that FCC rules allowed 90 or 150 days for local governments to make decisions on complete applications.  While it may be a plausible interpretation of the TCA for the reasons to be in the decision, the Act did not specifically require this to occur and the court would not infer it.  However, the court did require that the reasons be given either in the decision or essentially contemporaneous with the same.  By waiting until 26 days after its decision to issue detailed approved minutes, the City failed its statutory obligations and the decision of the Eleventh Circuit was reversed.

Justice Alito concurred, adding that it would be sufficient for the City to state simply that the proposal was “esthetically incompatible with the surrounding area,” that plaintiff was not injured by the City’s delay in providing the final version of the minutes (which he viewed as harmless error) and that this procedural error can easily be corrected.

Chief Justice Roberts authored a dissent, in which Justices Ginsburg and Thomas joined, stating that, while findings or reasons for the decision were required, they need not be issued “essentially contemporaneously” with the decision, as such a requirement was not in the TCA, noting that Congress has in other legislation, such as the Administrative Procedures Act and other sections of the TCA itself, made such a specific requirement.  Moreover, the dissent observed that the “sole issue” before the court was the “in writing” requirement and not the timing of the findings, an issue not raised below.  While agreeing that findings were implicitly required by the use of the “substantial evidence” standard, if they were not given or are inadequate, remand would be justified, rejecting the contention that plaintiff needed to see the reasons in order to decide whether to appeal:

“This concern might have force if towns routinely made these decisions in secret, closed-door proceedings, or if applicants were unsophisticated actors. But the local zoning board or town council is not the Star Chamber, and a telecommunications company is no babe in the legal woods.  Almost invariably in cases addressing [land use decisions under the TCA], the relevant local authority has held an open meeting at which the applicant was present and the issues publicly aired.  In this case and others, T-Mobile has brought its own court reporter, ensuring that it has a verbatim transcript of the meeting well before the town is likely to finalize its minutes.  I strongly doubt that a sophisticated, well-lawyered company like T-Mobile – with extensive experience in these particular types of proceedings – would have any trouble consulting its interests and deciding whether to seed review before it had received a written explanation from the town.”

Finally, the dissent suggests that impacts of this case on local governments will be “small” – they need only hold back the final decision until the minutes be transcribed or reasons given — also suggesting that the delay in making the final version of the minutes available may be harmless error.

It appears the entire court would conclude that the TCA requires reasons for a land use decision involving cell towers; however the justices disagree on the required timing of those reasons.  This result may come as a surprise for some local governments.

T-Mobile South, LLC v. City of Roswell (United States Supreme Court, January 14, 2015).

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