Daily Development for Monday, December 22, 2003 by: Patrick A. Randolph, Jr. Elmer F. Pierson Professor of Law UMKC School of Law Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri dirt@umkc.edu ZONING AND LAND USE; CONTRACT ZONING. Rezoning of property for industrial use was not improper contract zoning, despite offer by electric utility that sought rezoning to donate $8 million to town if property was rezoned, as town followed the procedures dictated by zoning statute, because at no time before town meeting were voters bound to approve rezoning. Durand v. IDC Bellingham, LLC, 793 N.E.2d 359 (Mass. 2003). In 1993, an Economic Development Task Force was appointed by the Town's Board of Selectmen to study ways to increase its property tax base. The Task Force prepared a report recommending that development of industrial land in the town be a priority. It identified a certain parcel, which abutted land that was already zoned for industrial use, as a candidate for rezoning from agricultural and suburban use to industrial use. Subsequently, at the Town's May, 1995, town meeting, a zoning article proposing the industrial rezoning of the parcel in question and an adjacent parcel fell eight votes short of the required two-thirds majority. In 1997, IDC Bellingham, LLC ("IDC"), which owned a power plant in the town, began discussions with town officials about the possibility of rezoning the parcel for construction of a second power plant. These discussions included the subject of what public benefits and financial inducements IDC might offer the town with regard to the proposed plant. The Town Administrator told IDC officials that the town was facing an $8 million short fall in its plans to construct a much needed new high school. Shortly thereafter, the president of IDC publicly announced that IDC would make an $8 million gift to the town if IDC (1) decided to build the plant; (2) obtained the financing and permits necessary to build the plant; and (3) operated the plant successfully for one year. IDC made it clear that the Town could use the money for any municipal purpose. The Town's High School Building Committee, the Town's Finance Committee, the Town's Master Plan Steering Committee, and certain Town officials the formed a committee to support the plant and the zoning change. Some committee members engaged in a campaign to get voters to the town meeting at which the rezoning was to be considered. On May 28, 1997, the Town held its open town meeting and a rezoning article calling for the rezoning was introduced. IDC made a presentation of its proposed use for a second power plant and reiterated its offer of an $8 million gift to the Town if the plant was built and became operational. The Planning Board and the Finance Committee both recommended passage of the zoning article. Residents for and against a proposal to build a plant on the site spoke, and IDC responded to their comments. The Zoning article passed by more than the necessary two-thirds vote of the town meeting. Subsequent negotiations regarding the size of the plant resulted in an agreement by IDC to reduce the size of the plant and in April, 1999, an "agreement for water/wastewater services" between IDC and the Town was executed. The agreement provided in part that: "IDC shall provide funds ($8 million) to the town for its various capital expenditures, municipal projects and municipal improvements. . . . This agreement is intended to memorialize, without duplicating the $8 million commitment IDC and its affiliates previously made to the town in connection with the plant." Thereafter, IDC submitted a request for five special permits to the Town Zoning Board of Appeals, and the special permits were granted on January 2nd, 2001. Shortly thereafter, plaintiffs, 8 landowners located near the parecel, filed suit in the Land Court against IDC, the Town, the Town Zoning Board of Appeals, and the owners of the property. Plaintiff's complaint sought, among other things, declaratory judgment, that the rezoning of the locus on May 28, 1997, was void because it constituted illegal "contract" or "spot" zoning and because the text of the inactive zoning amendment differed substantially from the text of the proposed amendment. The defendants filed an answer alleging several affirmative defenses, including statute of limitations and laches. The Trial Judge granted the summary judgment to the plaintiffs because he viewed the $8 million gift offer as extraneous consideration and offensive to public policy. The Judge ultimately concluded that the fact that the offer was made was sufficient, without the necessity of finding that voting town meeting members were influenced by it, to nullify the rezoning vote. On appeal: held: Reversed. The Supreme Judicial Court of Massachusetts reversed because it concluded that the voluntary offer of public benefits beyond what might be necessary to mitigate the development of a parcel of land does not, standing alone, invalidate a legislative act of the town meeting. The Court found that the enactment of a zoning by-law by the voters at the town meeting is not only the exercise of an independent police power, it is also a legislative act, carrying a strong presumption of validity. Such an enactment will not normally be undone unless the plaintiff can demonstrate "by a preponderance of the evidence that the zoning regulation is arbitrary and unreasonable, or substantially unrelated to the public health, safety . . . or general welfare." "Contract zoning," as the court defined it, involves a promise by the municipality to rezone a property either before the vote to rezone has been taken or before the required amendment process has been undertaken. Because no such advance agreement existed, the rezoning was not invalid on statutory grounds. Moreover, the Court concluded that the rezoning was neither arbitrary nor unreasonable, and was substantially related to the public health, safety, or general welfare of the town. The Court concluded that in the absence of any infirmity other than the existence of a voluntary offer to make a gift to the Town at sometime in the future when the power plant became operational, the Trial Judge erred in holding the zoning ordinance invalid. Accordingly, the Court reversed. Comment: In most jurisdictions, zoning decisions are regulated to a certain extent by statute, although charter cities and counties often have broader discretion than statutory municipal entities. It is quite possible that there are certain restrictions that apply even to a town that decides its zoning issues through a town meeting. For instance, many jurisdictions authorize courts to set aside land use decisions that appear to be "spot zoning" - where a zoning decision is inconsistent with the overall development plan of the area, and thus is arguably inconsistent with appropriate rationales for exercise of the police power. Further, there are federal statutory and Constitutional constraints on the land use process in such areas as housing discrimination that would provide further restraints on town hall decision making. See, e.g. Buckeye Community Hope Foundation v. City of Cuyahoga Falls, 2001 FED App. 0299P (6th Cir. 6th Cir. 8/31/01) (A violation of Constitutional Equal Protection and Substantive Due Process and of the Fair Housing Act may occur when a City fails to issue a permit for a low income housing project when the project meets existing zoning standards, even when the City's failure to act is in response to a referendum process expressly authorized by the City Charter if the court can conclude that the private citizens who prepared the referendum petition were motivated by racial or antifamily bias.) Thus, it is clear that there must be a valid police power purpose supported by a land use decision, and where the decision appears motivated by "bad" purposes as well as good ones, the decision also may be questioned. Courts necessarily must allow for a considerable amount of latitude in reviewing zoning decisions to allow for the political process to function properly. There is no one standard of public good that all zoning decisions must pursue. Each community, and in fact, each decision, involves a unique balance. Aside from containing the extremes, the judicial function generally is limited to requiring compliance with basic procedures to insure that all considerations affecting an individual decision are fully and fairly aired. The public policy embodied in zoning decisions necessarily involves a substantial element of naked politics. And what political process is more exposed to public view than a town hall meeting? Here, of course, we had the fact that property adjacent to the subject property already was zoned industrial, making the argument for 'spot zoning" weak. Further, we had the fact that the decision was consistent with prior municipal planning processes and in fact, even without the $8 million "bribe," the questioned rezoning decision came perilously close to being made earlier. This was certainly a close enough case so that the court was wise to avoid "second guessing" the public interest. Compare, as an example of contract zoning analysis: Buckhorn Ventures, LLC v. Forsyth County, 585 S.E.2d 229 (Ga. Ct. App. 2003) A settlement agreement that prohibits the zoning board from changing the zoning of a property at any time in the future is void as an ultra vires act because it constitutes a commitment to determine zoning without relevance to issues particularly relevant to the exercise of the police power in making the zoning decision at the time it is to be made.. Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. The same is true of all commentary provided by contributors to the DIRT list. 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