North End Realty, LLC v. Thomas Mattos, et al
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STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
KENT, SC.
SUPERIOR COURT
(FILED: April 24, 2013)
NORTH END REALTY, LLC
v.
THOMAS MATTOS, in his capacity as
Finance Director for the Town of East
Greenwich, Rhode Island; and,
LEE R. WHITAKER, in his capacity as
Town Planner for the Town of East
Greenwich,
MICHAEL B. ISAACS
KIM A. PETTI
MARK SCHWAGER
HENRY V. BOEZI, and
JOHN M. McGURK, in their capacities as
Members of the Town Council for the Town
of East Greenwich, Rhode Island
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C.A. No. KC 07-1008
DECISION
NUGENT, J. Before the Court are Plaintiff‘s motion for summary judgment and Defendants‘
cross-motion for summary judgment. For the reasons set forth in this Decision, the Court denies
Plaintiff‘s motion for summary judgment and grants Defendants‘ motion in part. Jurisdiction is
pursuant to Superior Court Rules of Civil Procedure 56(c).
I
Facts and Travel1
As a means of addressing the state‘s affordable housing shortage, G.L. 1956 § 45-53-1 et
1
The following facts, stipulated to by the parties and filed with the Court on February 22, 2008,
were subsequently used by the Supreme Court in the opinion, North End Realty v. Mattos, 25
A.3d 527 (R.I. 2011).
seq.,2 the Rhode Island Low and Moderate Income Housing Act (LMIHA or the Act), requires
all local towns and cities to provide affordable housing that ―is in excess of ten percent (10%) of
the year-round housing units reported in the census.‖ Sec. 45-53-3(4)(i). The Act stipulates that
any municipality lacking the requisite number of affordable housing units must have prepared a
comprehensive plan by December 31, 2004, including a ―housing element,‖ that would serve to
bring the municipality into compliance with the Act. Sec. 45-53-4(c). The LMIHA further
provides that the municipality‘s comprehensive plan must be adopted and approved pursuant to
G.L. § 45-22.2-1 et seq., the Rhode Island Comprehensive Planning and Land Use Regulation
Act. Sec. 45-53-3(4)(ii). Pursuant to this latter act, the municipality‘s comprehensive plan must
be enacted by the municipality‘s legislative body and then submitted for approval to the State
Director of Administration. Sec. 45-22.2-8(c).
In 2004, a study conducted by the Rhode Island Housing and Mortgage Finance
Corporation determined that only 4.36 percent of the available housing in the Town of East
Greenwich (Town) qualified as affordable and that the Town needed 292 additional units of
affordable housing to meet the ten percent (10%) requirement outlined in the Act. N. End Realty,
25 A.3d at 531. Due to this shortage, the Town prepared a comprehensive plan to bring the
municipality into compliance with the Act. Id. Prior to the 2004 year-end deadline established
by the LMIHA, the East Greenwich Town Council (Town Council) adopted a comprehensive
plan, which was then submitted to the State Director of Administration for approval. Id. This
plan was approved on September 26, 2005 by the State Director of Administration, and on
November 6, 2006, the Town Council adopted three ordinances designed to implement the
strategies outlined in the plan. Id.
2
The LMIHA was originally enacted in 1991 and subsequently amended.
2
These ordinances—numbered 778, 779, and 780—included a requirement that real estate
developers either designate fifteen percent (15%) of the units in any subdivision or major
residential land development as affordable housing or pay the Town $200,000 as a ―fee-in-lieu‖
of constructing the required number of affordable housing units. Id. at 532. According to the
ordinances, the ―fee-in-lieu‖—or a fractional percentage thereof—was to be paid for each
affordable housing unit that should be built in order to meet the fifteen percent (15%) affordable
units required out of the total approved number of units. Id. Pursuant to ordinance 780, an
―Affordable Housing Commission‖ would receive fees paid and would deposit such fees into an
―Affordable Housing Trust Fund.‖ This commission would then oversee distribution of the
funds to different loan and grant programs which would be established for the purpose of
developing and preserving affordable housing.
Plaintiff North End Realty, LLC (Plaintiff or North End), is a real estate developer which
owns real property located in East Greenwich, comprised of approximately 20.72 acres, which is
specifically designated as Assessor‘s Plat 19C, Lots 31 and 32 (Property). Id. at 528. On March
28, 2006, North End filed a pre-application with the Town of East Greenwich Planning Board
(Planning Board) for the development of a five-lot subdivision on the Property. Id.
On
November 6, 2006, subsequent to the Plaintiff‘s filing, the Town adopted the three new abovementioned ordinances for the purpose of promoting development of affordable housing within
the Town. Id. at 529.
On February 20, 2007, North End filed a petition for both master and preliminary plan
review and approval with the Planning Board for development of the planned subdivision,
pursuant to the Town‘s Planning Board requirements. Id.
These plans outlined Plaintiff‘s
intention to build five residential dwellings and also indicated that North End did not intend to
3
include any affordable housing units as part of the subdivision. Id. On May 16, 2007, the Town
approved North End‘s preliminary plan with conditions, one of which required that North End
pay a fee-in-lieu before Plaintiff would be allowed to record the subdivision approval or begin to
develop the Property.3 Id.
On September 13, 2007, North End filed a Complaint seeking declaratory and injunctive
relief against Thomas Mattos, in his capacity as Finance Director for the Town; Lee R. Whitaker,
in his capacity as Town Planner; and Michael B. Isaacs, Kim A. Petti, Mark Schwager, Henry V.
Boezi and John M. McGurk, all in their capacities as members of the Town Council (collectively
Defendants). In the Complaint, North End alleged that the fee-in-lieu requirement contained in
the Town‘s ordinances violated its right to substantive due process, constituted a regulatory
taking in violation of Article 1, section 16 of the Rhode Island Constitution, and was an illegal
tax in violation of Article 13, section 5 of the Rhode Island Constitution.
On January 7, 2008, North End filed a motion for injunctive relief, requesting that the
Town be ―enjoined from mandating a fee-in-lieu of construction of affordable housing units to be
assessed and charged upon [North End] and similarly situated property owners seeking to
develop and/or subdivide their property.‖ In this motion for injunctive relief, North End made
the same allegations as it had in its Complaint, with additional claims that the Town‘s fee-in-lieu
requirement violated Plaintiff‘s right to procedural due process and equal protection under the
3
The amount of the fee-in-lieu required to be paid by Plaintiff is currently disputed. Although
the parties filed stipulated facts with the Court on February 22, 2008, stating that Plaintiff was
required to pay a fee of $200,000—the figure used by the Supreme Court throughout its
decision—the preliminary plan approval clearly states that ―fifteen percent of the units in a five
lot subdivision, which is equal to .75 of an affordable unit, is required and payment to the
Affordable Housing Trust Fund for the fraction of a unit not built shall be provided.‖ The
fractional amount that would therefore be required, $150,000, is supported by an affidavit,
submitted by Defendants, of Lisa Bourbonnais, Planning Director for the Town of East
Greenwich.
4
Rhode Island Constitution, and also that the Town had imposed the fee-in-lieu ―without any
explicit authority from the General Assembly.‖ This motion was heard on February 22, 2008,
before a Superior Court justice who issued a written Decision on April 22, 2008, denying North
End‘s motion for injunctive relief.
After final judgment entered, North End filed an appeal with our Supreme Court. Our
Supreme Court held that state statutory provisions which require municipalities to provide
affordable housing do not authorize the Town to charge a fee-in-lieu of undertaking the
construction of affordable housing, and thus the Town could not require developers to pay such a
fee in the absence of legislative authority. Id. at 538. Because the Supreme Court determined
that the Town could not properly impose a fee-in-lieu without specific legislative authorization,
it did not entertain Plaintiff‘s other arguments on appeal. Id. at n.10.
Plaintiff filed an Amended Complaint on September 14, 2011, and on February 12, 2013,
filed the instant motion for summary judgment as to Counts I, III, and VI, claiming that no
genuine issues of material fact remain and that Plaintiff is entitled to judgment as a matter of law.
Defendants filed an objection to this motion, claiming that Plaintiff has failed to exhaust all
available administrative remedies prior to pursuing the matter with this Court, warranting
dismissal of the action. Defendants also filed a cross-motion for summary judgment, claiming
that if the Court will entertain Plaintiff‘s claims at this time, Defendants are instead entitled to
summary judgment on Counts I, III, and VI of Plaintiff‘s Amended Complaint. At a March 25,
2013 hearing, the parties offered their respective arguments, and this Court reserved decision on
all issues presented.
5
II
Exhaustion of Administrative Remedies
As a preliminary matter, this Court must first determine whether Plaintiff has failed to
exhaust all administrative remedies available before pursuing an action before this Court.
Defendants maintain that Plaintiff failed to appeal the Planning Board‘s preliminary decision to
the Town‘s Zoning Board of Review, as provided for in both the General Laws and the Town‘s
Code of Ordinances, and has also failed to return to the Planning Board to complete the appeal
process after the Supreme Court issued its opinion.4 Defendants assert that this Court should
therefore dismiss Plaintiff‘s action for failure to exhaust its administrative remedies and not
adjudicate Plaintiff‘s motion for summary judgment.
As a general rule, an aggrieved party must exhaust all administrative remedies before
resorting to the judicial system for relief. Burns v. Sundlun, 617 A.2d 114, 116 (R.I. 1992). This
exhaustion rule mandates the withholding of judicial review ―until the administrative process has
run its course.‖ U.S. v. Western Pac. R.R. Co., 352 U.S. 59, 63 (1956); R.I. Emp‘t Sec. Alliance
v. Dep‘t of Emp‘t & Training, 788 A.2d 465, 467 (R.I. 2002). There are exceptions to this
general rule, however, and a court may forego the exhaustion of administrative remedies when
an appeal to an administrative review board would be futile or uselessly delay judicial review.
Burns, 617 A.2d at 117; M.B.T. Construction Corp. v. Edwards, 528 A.2d 336, 228 (R.I. 1987).
In Nardi v. City of Providence, 89 R.I. 437, 153 A.2d 136 (1959), our Supreme Court
stated that the exhaustion rule is applicable to cases where a litigant contends that an ordinance is
unconstitutional in its application to only a specific property. Id. The Court reasoned that in such
instance, an appeal to a zoning board—seeking a variance or an exception—could be met with
4
The right to, and process for, an appeal of a planning board decision is pursuant to §§ 45-23-66
and 45-23-77, respectively.
6
success, thus avoiding a needless judicial determination. Id. at 446, 153 A.2d at 141.
However, in the later case Frank Ansuini, Inc, v. City of Cranston, 107 R.I. 63, 73, 264
A.2d 910, 915-16 (1970), the Court determined that there is no need to seek administrative relief
where the basis of a suit is the contention that an ordinance is invalid on its face. Id. In such a
situation, the Court reasoned, it is futile for the complainant to appeal to a board of review
because the board lacks the authority to grant the relief sought; namely, the ability to declare a
provision null and void. Id. at 73, 264 A.2d at 916. Therefore, in such circumstances, seeking
administrative relief ―would only delay judical determination of those issues which of necessity
must be resolved in court rather than at the administrative level,‖ and thus, ―courts will not deny
judicial relief on the ground that one invoking its protection has first failed to do that which
would be futile.‖ Id.
Here, Plaintiff, in its Amended Complaint, seeks a declaratory judgment challenging the
constitutionality of the Town‘s ordinances which require payment of a fee-in-lieu of construction
of affordable housing and seeks a declaration from this Court that such ordinances contravene
state law and are thus patently invalid. Plaintiff‘s allegations focus on how the ordinances apply
in their general scope and effect, and not as they pertain specifically to Plaintiff‘s property.
Furthermore, a review of the ordinances in question shows that they were adopted by the Town
Council in the Town‘s effort to comply with § 45-53-1 et seq., the ―Rhode Island Low and
Moderate Income Housing Act,‖ and allow the Town to charge fees when a developer has not
provided the required number of low and moderate income housing units in its development
project. As such, there is no indication that either the planning board or the zoning board of
review has the authority to declare the ordinance void. Thus, here, like the situation in Ansuini,
it would have been futile for Plaintiff to have appealed to the board of review, since that agency
7
lacked authority to declare the ordinance void.
Moreover, our Supreme Court has stated that an exhaustion of administrative remedies
serves two important roles; namely, (1) ―aid[ing] judicial review by allowing the parties and the
agency to develop the facts of the case,‖ and (2) ―promot[ing] judicial economy by avoiding
needless repetition of administrative and judicial fact finding, perhaps avoiding the necessity of
any judicial involvement.‖ Doe v. East Greenwich School Department, 899 A.2d 1258, 1266
(R.I. 2006) (quoting Almeida v. Plasterers‘ and Cement Masons‘ Local 40 Pension Fund, 722
A.2d 257, 259 (R.I. 1998)).
Consequently, the Supreme Court has stated that if there is
essentially little or no material fact-finding at hand, then remanding or dismissing a case for
failure to exhaust administrative remedies results in useless delay. Burns, 617 A.2d at 117.
Here, the current action was filed with this Court in 2007, since which time the parties
have engaged in discovery, and the court file has grown to encompass three volumes. In 2008,
the parties also filed four pages of stipulated facts with the Court. Additionally, this action has
traveled to the Supreme Court, where a full-length written opinion was issued based on the facts
presented. Hence, at this stage in the litigation, there would be no factual record that an appeals
board could develop that would assist this Court, and remanding or dismissing this case for
failure to exhaust administrative remedies would clearly result in useless delay. Accordingly,
this Court finds that the case is ripe for judicial review and now turns to Plaintiff‘s motion for
summary judgment in conjunction with Defendants‘ cross-motion.
III
Standard of Review
―Summary judgment is ‗a drastic remedy,‘ and a motion for summary judgment should
be dealt with cautiously.‖ Estate of Giuliano v. Giuliano, 949 A.2d 386, 390 (R.I. 2008). This
8
Court will grant a motion for summary judgment only if ―after reviewing the admissible
evidence in the light most favorable to the nonmoving party[,]‖ ―the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to judgment
as matter of law.‖ Liberty Mut. Ins. Co. v. Kaya, 947 A.2d 869, 872 (R.I. 2008) (quoting Roe v.
Gelineau, 794 A.2d 476, 481 (R.I. 2002)). Alternatively, the nonmoving party ―‗has the burden
of proving by competent evidence the existence of a disputed issue of material fact and cannot
rest upon mere allegations or denials in the pleadings, mere conclusions or mere legal opinions.‘‖
Liberty Mut., 947 A.2d at 872 (quoting D‘Allesandro v. Tarro, 842 A.2d 1063, 1065 (R.I.
2004)). To meet this burden, ―‗[a]lthough an opposing party is not required to disclose in its
affidavit all its evidence, he [or she] must demonstrate that he [or she] has evidence of a
substantial nature, as distinguished from legal conclusions, to dispute the moving party on
material issues of fact.‘‖ Bourg v. Bristol Boat Co., 705 A.2d 969, 971 (R.I. 1998) (quoting
Gallo v. Nat‘l Nursing Homes, Inc., 106 R.I. 485, 489, 261 A.2d 19, 21-22 (1970)).
IV
Analysis
Our Supreme Court has already determined that ―before a municipality may impose a
fee-in-lieu on developers, it must have specific statutory authorization from the General
Assembly.‖ N. End Realty, 25 A.2d at 537. In said opinion, which specifically concerned the
instant parties, the Court held that ―[t]he imposition by East Greenwich of the fee-in-lieu
‗constitutes an action ultra vires of the authority delegated by the home rule charter‘ to the town
council—due to the fact that, in imposing the fee-in-lieu, the council was not exercising its
‗authority over purely local concerns,‘ which authority inures to the [T]own by virtue of its
9
charter.‖ Id. at 537-38 (citing Town of East Greenwich v. O‘Neil, 617 A.2d 104 at 111, 112 (R.I.
1992)). Our Supreme Court then remanded the case with directions that this Court ―issue an
order enjoining East Greenwich from imposing, assessing, or collecting the fee-in-lieu.‖ Id. at
538.
Accordingly, it was our Supreme Court‘s directive to this Court that such an order must
enter, and Plaintiff shall prepare this order for entry by the Court. This Court will now continue
to address Plaintiff‘s motion, discussing and rendering a decision upon only those issues which
were not previously addressed in our Supreme Court‘s Decision.
A
Substantive Due Process
The Court now turns to Plaintiff‘s motion for summary judgment—and Defendants‘
cross-motion—on Count I of the Amended Complaint, which seeks a declaratory judgment as to
Defendants‘ violation of Plaintiff‘s substantive due process rights under article I, section 2 of the
Rhode Island Constitution.5 In moving for summary judgment on this Count, Plaintiff relies on §
45-23-41, L.A. Ray Realty v. Town Council of Cumberland, 698 A.2d 202 (R.I. 1997), and
Jeffrey v. Platting Board of Review of the Town of South Kingstown, 103 R.I. 578, 239 A.2d
731 (1968), for the proposition that under Rhode Island law, Plaintiff‘s preliminary development
plan, which was approved by the Planning Board with conditions, is a vested right and a
protected property interest. Plaintiff also argues that the Planning Board had no discretion to
5
Article I, section 2 of the Rhode Island Constitution states, in pertinent part:
All free governments are instituted for the protection, safety, and
happiness of the people. All laws, therefore, should be made for
the good of the whole; and the burdens of the state ought to be
fairly distributed among its citizens. No person shall be deprived of
life, liberty or property without due process of law, nor shall any
person be denied equal protection of the laws . . . . Id.
10
disapprove Plaintiff‘s request for final subdivision approval of the Property, claiming the project
conformed to all Town zoning and subdivision requirements. Plaintiff further contends that the
Defendants‘ ultra vires enactment and imposition of the ordinances which required payment of a
fee-in-lieu of construction of affordable housing are arbitrary, capricious, and a violation of the
substantive due process clause of the Rhode Island Constitution.
Pursuant to G.L. 1956 § 45-23-41(f), ―[a] complete application for a major subdivision or
development plan shall be approved, approved with conditions[,] or denied in accordance with
the requirements of §§ 45-23-60 and 45-23-63 . . . .‖ Id. Section 45-23-60, entitled ―Procedure,‖
mandates that a town‘s regulations include a provision requiring planning and zoning board
authorities to make required findings, as part of a proposed project‘s record prior to approval,
including that ―[t]he proposed development is consistent with the comprehensive community
plan and/or has satisfactorily addressed the issues where there may be inconsistencies,‖ and that
―[t]he proposed development is in compliance with the standards and provisions of the
municipality‘s zoning ordinance.‖ Sec. 45-23-60(a)(1),(2). Once approved, a preliminary plan is
vested for a period of two years with the right to extend for two, one-year extensions upon
written request of the applicant. Sec. 45-23-41(h). However, pursuant to § 45-23-43, entitled
―Major land development and major subdivision—final plan,‖ ―if the administrative officer
determines that an application for final approval does not meet the requirements set by local
regulations or by the planning board at preliminary approval, the administrative officer shall
refer the final plans to the planning board for review.‖ Sec. 45-23-43(c) (emphasis added). At
that point, the planning board is given sufficient time to ―approve or deny the final plan as
submitted.‖ Id.
Here, on February 20, 2007, North End filed a petition for preliminary plan review and
11
approval with the Planning Board for development of the planned subdivision, pursuant to the
Town‘s Planning Board requirements. These plans affirmed that North End did not intend to
include any affordable housing units as part of the subdivision. On May 16, 2007, the Town
approved North End‘s preliminary plan; however, it included sixteen separate conditions to this
approval, many not related to the affordable housing requirement.
The Planning Board‘s
decision also made specific findings as to Plaintiff being notified of the Town‘s affordable
housing requirement on June 21, 2006; the requirement of affordable housing in the district in
which Plaintiff sought to develop real estate; and Plaintiff‘s objection to the affordable housing
requirement due to a lack of municipal subsidy. North End, however, did not seek final approval
of the development plans, nor did Plaintiff seek an exemption from the Town‘s affordable
housing requirement.
Notably, our Supreme Court—in its opinion concerning these parties—stated that it was
―unable to sustain those provisions in the town‘s ordinances that provide for the imposition of
the fee-in-lieu.‖ North End Realty, 25 A.3d at 538 (emphasis added). While the Supreme Court
ordered that this tribunal must ―issue an order enjoining East Greenwich from imposing,
assessing, or collecting the fee-in-lieu,‖ the Court neither struck down the ordinances in their
entirety, nor mandated that the Town be enjoined from enforcing other provisions which relate to
affordable housing requirements.6 Id. As such, it is clear that Plaintiff would still be required to
6
It is worth noting that the East Greenwich Town Code of Ordinances contains a severability
provision:
[i]t is hereby declared to be the intention of the Town Council that
the sections, paragraphs, sentences, clauses and phrases of this
Code are severable, and if any phrase, clause, sentence, paragraph
or section of this Code shall be declared unconstitutional, invalid
or unenforceable by the valid judgment or decree of any court of
competent jurisdiction, such unconstitutionality, invalidity or
unenforceability shall not affect any of the remaining phrases,
12
comply with those provisions requiring construction of affordable housing—or seek an
exemption therefrom—before final approval of any development plans would be granted.
Moreover, this Court finds Plaintiff‘s reliance on L.A. Ray Realty, 698 A.2d 202, and
Jeffrey, 103 R.I. 578, 239 A.2d 731, for the proposition that a planning board has no discretion to
disapprove a subdivision application that conforms to its rules, misplaced. In Jeffrey, the Court
addressed whether a planning board had abused its discretion when it approved a proposed
subdivision plan after the planning board had recommended to its city council that the existing
zoning requirement that proposed subdivisions average 20,000 square feet be increased to 80,000
square feet. Id. at 581, 239 A.2d at 734. The Supreme Court upheld the planning board‘s
approval of the proposed subdivision which averaged 40,000 square feet, noting that the board
had approved the subject proposal before the city council had voted to change the zoning
regulation, and that the planning board had ―no discretion to disapprove a plat that conforms‖ to
the board‘s rules. Id. at 588, 239 A.2d at 737.
However, in Restivo v. Lynch, the Court clarified that in Jeffrey, ―[i]t was in the context
of the discussion of this narrow issue that the Court reasoned that planning board and city
council members must act pursuant to rules and regulations pertaining to subdivisions that they
have enacted, ‗and they have no discretion to disapprove a plat that conforms to those rules.‘‖
Restivo, 707 A.2d 663, 668 (R.I. 1998) (quoting Jeffrey, 103 R.I. at 588, 239 A.2d at 737)
(italics in original). The Court explained that ―we do not view this language, when considered in
its appropriate context, as dictating that a planning board may in no circumstances reject a
proposed plan that conforms to existing zoning regulations but might otherwise be problematic.‖
clauses, sentences, paragraphs and sections of the Code, since such
part of the code would have been enacted by the Town Council
without the incorporation in this Code of any unconstitutional
phrase, clause, sentence, paragraph or section. Art. I, § 1-5.
13
Id. The Court further clarified that its subsequent use of this particular language from Jeffrey in
L.A. Ray Realty case—where the Court struck down a zoning amendment—was ―because the
only basis for denial [of the plaintiffs‘ subdivision applications] was the application of the
town‘s invalid referendum amendment[;] [otherwise the] plaintiffs were entitled as a matter of
law to final approval of those subdivisions.‖ Restivo, 707 A.2d at 668 (quoting L.A. Ray Realty,
698 A.2d at 210 (emphasis in original).7
In the present case, however, despite the striking down as ultra vires the imposition of a
fee-in-lieu of construction of affordable housing, it would be pure speculation for this Court to
find that Plaintiff is entitled as a matter of law to final approval of a development plan at some
point in the future when such a plan was never submitted, and if it does not otherwise comply
with the Planning Board‘s decision or those provisions of the Town‘s zoning ordinances still in
effect. See L.A. Ray Realty, 698 A.2d at 210 (no protected property interest exists in a proposed
subdivision at a preliminary stage, with the possibility of denial for a number of reasons). Thus,
Plaintiff has not shown that it has a vested right to final approval at some point in the future of a
land development plan that did not comport with the Planning Board‘s decision or include an
affordable housing component as required by the Town‘s ordinances. See Town of Coventry
Zoning Bd. of Review v. Omni Dev. Corp., 814 A.2d 889, 900 (R.I. 2003) (communities that do
7
Plaintiff‘s argument that a planning board lacks discretion to deny approval of a plan that
comports to its requirements also fails because of this Court‘s standard applied when reviewing a
planning board‘s decision. See Grossman & Sons, Inc. v. Rocha, 118 R.I. 276, 285, 373 A.2d
496, 501 (1977) (―It is well settled that the Superior Court does not engage in a de novo review
of board decisions pursuant to [§45-23-20]; [r]ather, the Superior Court reviews the decisions of
a plan commission or board of review under the ‗traditional judicial review‘ standard applicable
to administrative agency decisions.‖); see also Restivo, 707 A.2d at 668 (―Grossman established
that ―any competent evidence‖ in the record will obligate a trial justice to affirm a planning
board‘s decision. The Grossman Court did not hold, and we decline to so hold today, that a trial
justice must affirm a planning board‘s denial of an application only when any competent
evidence exists on the record and the proposed subdivision fails to comply with existing zoning
regulations.‖) (emphasis in original).
14
not reach the established minimum number of low and moderate income housing units must
apply zoning and land use ordinances relating to low and moderate income housing
―evenhandedly to all development proposals and not intended to frustrate or defeat low and
moderate income housing initiatives‖).
Plaintiff further argues that Defendants‘ ultra vires enactment and imposition of the
ordinances which required payment of a fee-in-lieu of construction of affordable housing was
arbitrary, capricious, and a violation of the substantive due process clause of the Rhode Island
Constitution.8 ―Substantive due process, as opposed to procedural due process, addresses the
‗essence of state action rather than its modalities; such a claim rests not on perceived procedural
deficiencies but on the idea that the government‘s conduct, regardless of procedural swaddling,
was in itself impermissible.‘‖ L.A. Ray Realty, 698 A.2d at 211 (quoting Jolicoeur Furniture Co.
v. Baldelli, 653 A.2d 740, 751 (R.I. 1995)). ―Substantive due process prevents the use of
governmental power for purposes of oppression, or abuse of governmental power that is
shocking to the conscience, or legally irrational action that is not keyed to a legitimate state
interest.‖ Id. (quoting PFZ Properties, Inc. v. Rodriguez, 928 F.2d 28, 31-32, (1st Cir. 1991),
cert. granted in part, 502 U.S. 956, 112 S. Ct. 414, 116 L. Ed. 2d 435 (1991), cert. dismissed as
improvidently granted, 503 U.S. 257, 112 S. Ct. 1151, 117 L. Ed. 2d 400 (1992)).
Substantive due process is violated when ―‗the constitutional line has been crossed‘‖ by
state actions that transgress ―some basic and fundamental principle.‖ Id.
Accordingly, the
substantive due process standard employed in this jurisdiction is meant to protect individuals
against state actions that are ―egregiously unacceptable, outrageous, or conscience-shocking.‖ Id.
8
As the drafters of the Rhode Island Constitution intended that document‘s Due Process Clause
to parallel the Due Process Clause of the Fourteenth Amendment, the Court‘s analysis implicates
both. See Jones v. Rhode Island, 724 F. Supp. 25, 34-35 (D.R.I. 1989); Pawtucket Transfer
Operations, LLC v. City of Pawtucket, 539 F. Supp. 2d 513, 517 n.4 (D.R.I. 2008).
15
(quoting Jolicoeur, 653 A.2d at 751). Moreover, a plaintiff claiming deprivation of a protected
property interest in violation of his or her substantive due process rights ―must prove that the
government‘s action was clearly arbitrary and unreasonable, having no substantial relation to the
public health, safety, morals, or general welfare.‖ Brunelle v. Town of South Kingstown, 700
A.2d 1075, 1084 (R.I. 1997).
Notably, our Supreme Court, as well as a majority of courts in other jurisdictions, have
been hesitant to find violations of substantive due process purely based on legislative conduct,
instead looking to ―only the most egregious official [or executive] conduct‖ when considering
actions that are ―arbitrary in the constitutional sense.‖ Collins v. Harker Heights, 503 U.S. 115,
129 (1992); see also L.A. Ray Realty, 698 A.2d at 211. Moreover, the First Circuit ―has
repeatedly held that local planning disputes ‗do not ordinarily implicate substantive due
process.‘‖ Pawtucket Transfer Operations, LLC v. City of Pawtucket, 539 F. Supp. 2d 513
(2008) (quoting Licari v. Ferruzzi, 22 F.3d 344, 348 (1st Cir. 1994)). Speaking specifically to
ultra vires enactments, it has consistently been held that ―[a] regulatory board does not transgress
constitutional due process requirements merely by making decisions for erroneous reasons or by
making demands which arguably exceed its authority under the relevant state statutes.‖ Id.
(quoting Licari, 22 F.3d at 350) (internal quotation marks omitted); see also Amsden, 904 F.2d at
757; Chiplin Enters., Inc. v. City of Lebanon, 712 F.2d 1524, 1528 (1st Cir. 1983); Creative
Env‘ts, Inc. v. Estabrook, 680 F.2d 822, 832 n.9 (1st Cir. 1982) (adversarial claims are ―too
typical of the run of the mill dispute between a developer and a town planning agency, regardless
of the plaintiff‘s characterization of it and the defendants‘ alleged mental states, to rise to the
level of a due process violation‖); Mongeau v. City of Marlborough, 492 F.3d 14, 17-18 (1st Cir.
2007) (―a defendant must have engaged in behavior that is ‗conscience-shocking‘; the
16
substantive due process doctrine may not, in the ordinary course, be invoked to challenge
discretionary permitting or licensing determinations of state or local decision makers‖).
Here, the Town of East Greenwich prepared a comprehensive plan, which included the
provision allowing for payment of a fee-in-lieu of constructing affordable housing, following a
mandate from our General Assembly that all municipalities provide affordable housing that ―is in
excess of ten percent (10%) of the year-round housing units reported in the census.‖ Sec. 45-533(4)(i). The East Greenwich Town Council adopted a comprehensive plan that would bring it
into compliance with our General Laws, and then submitted the plan to the State Director of
Administration, who approved the plan containing the fee-in-lieu provision. The Town then
enacted the ordinances and assessed a fee that would be used to create affordable housing
options in the area if a developer chose not to include affordable housing in their development
plan. Accordingly, the most that Plaintiff can establish is that Defendants acted erroneously or in
excess of their authority and, indeed, this is essentially what our Supreme Court has stated. See
N. End Realty, 25 A.3d at 538. However, such behavior does not reach the ‗conscienceshocking‘ threshold for a denial of substantive due process as outlined in our case law. See L.A.
Ray Realty, 698 A.2d at 211 (―egregiously unacceptable‖ and ―outrageous‖ actions implicate
constitutionally protected property rights); Licari, 22 F.3d at 350 (the threshold for establishing
an ―abuse of government power is a high one indeed,‖ reserved for ―truly horrendous‖
circumstances); Amsden, 904 F.2d at 754 (―the constitutional line has been crossed‖ only when
some basic and fundamental principle has been transgressed); Pawtucket Transfer Operations,
539 F. Supp. 2d at 521 (substantive due process claims rejected even ―where premised on
outright maliciousness‖). Accordingly, Plaintiff has failed to show that the Defendants‘ actions
in enacting ordinances which required payment of a fee-in-lieu of constructing affordable
17
housing rose to the level of ‗conscience-shocking‘ conduct that is necessary to establish a
violation of substantive due process as a matter of law. Thus, Plaintiff‘s motion for summary
judgment on this count is denied, and Defendants‘ cross-motion on this count is granted.
B
Regulatory Taking
Count III of Plaintiff‘s Amended Complaint alleges a violation of article I, section 16 of
the Rhode Island Constitution, claiming that a fee-in-lieu of construction of affordable housing
units is so excessive that it amounts to an unconstitutional taking.9 Plaintiff further claims that
the Town‘s enactment and imposition of the ordinances requiring payment of the fee-in-lieu
rendered Plaintiff‘s property worthless and useless, and without building permits or being
subdivided, the Property would only have value as passive land. At hearing, Plaintiff also argued
that it was entitled to judgment for a temporary taking of the Property, based on the claim that
Plaintiff was unable to have any beneficial use of the Property from 2006 to 2011. In opposition,
Defendants acknowledge the Supreme Court holding that the Town exceeded its authority in
adopting payment of a fee-in-lieu of building affordable housing; however, Defendants claim
that Plaintiff has not shown that it was deprived of its Property by adoption of the ordinance.
In arguing that the Town‘s imposition of a fee-in-lieu has resulted in an unconstitutional
9
Article I, section 16 of the Rhode Island Constitution states:
Private property shall not be taken for public uses, without just
compensation. The powers of the state and of its municipalities to
regulate and control the use of land and waters in the furtherance
of the preservation, regeneration, and restoration of the natural
environment, and in furtherance of the protection of the rights of
the people to enjoy and freely exercise the rights of fishery and the
privileges of the shore, as those rights and duties are set forth in
Section 17, shall be an exercise of the police powers of the state,
shall be liberally construed, and shall not be deemed to be a public
use of private property. Id.
18
deprivation of its Property, Plaintiff relies primarily on the case Q.C. Construction Company,
Inc. et al. v. Frank Gallo et al., 649 F. Supp. 1331 (R.I. Dist. 1986) aff‘d, 836 F.2d 1340 (1st Cir.
1987). In Q.C. Construction, a developer purchased over thirty (30) lots with the intention of
developing them. Id.
While a number of the lots were developed, the town subsequently
imposed a moratorium on development which rendered the plaintiff unable to obtain building
and sewer permits for the final fifteen (15) lots, thus effectively making it impossible for the
plaintiff to develop the remaining lots. Id. The Q.C. Construction court stated that in order for
the plaintiff to establish unconstitutional deprivation of property without due process, the owner
must show that the regulation interferes so severely with use of property as to render the property
worthless or useless. Id. (quoting Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 414–15
(1922)). The court went on to note that it is insufficient to show only that a regulation deprives a
landowner of best use of his property or that the regulation has caused a severe decrease in the
value of the property. Id.
Here, unlike the situation in Q.C. Construction, where the town‘s moratorium rendered
the plaintiff‘s land unbuildable, North End was required to comply with the Town‘s affordable
housing requirements prior to developing the Property. Accordingly, this Court acknowledges
particularly instructive language on this issue, taken from the Supreme Court opinion regarding
the instant parties: ―[t]he ordinances included a requirement that developers either designate 15
percent of the units in any subdivision or major residential land development as affordable
housing or pay the sum of $200,000 as a ‗fee-in-lieu‘ of constructing the required number of
affordable housing units.‖ N. End Realty, 25 A.3d at 529 (italics in original). Thus, Plaintiff had
a choice to either build affordable housing units or be assessed a fee—albeit one that was later
declared ultra vires. Consequently, Plaintiff was never denied the ability to develop the land—
19
despite having to comply with affordable housing requirements—and has the ability to develop
the land in the future, albeit in compliance with those affordable housing provisions still in
effect. See contra Q.C. Construction, 649 F. Supp. 1331.
Here, there is an absence of proof that a total taking has occurred. However, it is well
settled that ―while property may be regulated to a certain extent, if regulation goes too far, it will
be recognized as a taking.‖ Alegria v. Keeney, 687 A.2d 1249 (R.I. 1997) (citing Pennsylvania
Coal Co. v. Mahon, 260 U.S. 393, 415 (1922)). In determining whether a taking has occurred,
this Court must analyze ―(1) [t]he economic impact of the regulation on the claimant; (2) the
extent to which the regulation has interfered with distinct investment backed expectations, and
(3) the character of the governmental action.‖ Id.
With respect to the first prong, North End claims that the affordable housing
requirement—with or without payment of a fee-in-lieu—prevents Plaintiff from pursuing what it
deems to be the most profitable use of the land; namely, developing five residential homes on the
Property. However, as our Supreme Court pointed out in Alegria, ―a property owner does not
have a vested property right in maximizing the value of his property.‖ 687 A.2d at 1253 (quoting
Annicelli v. Town of South Kingstown, 463 A.2d 133, 140 (R.I. 1983)). In fact, our case law
makes clear that ―a zoning ordinance is not confiscatory merely because the property cannot be
put to its most profitable use.‖ Annicelli, 463 A.2d at 140 (citing with approval, Agins v. City of
Tiburon, 447 U.S. 225 (1980), for the proposition that an ordinance may properly limit what is
considered to be the best use of the land without denying an owner all ―economically viable use‖
of the property).
Here, the Town‘s ordinances did not deny Plaintiff all economic use of the Property
during the time Plaintiff claims there was a taking, or otherwise. As stated earlier, even with
20
removal of the ability to make a payment of a fee-in-lieu of constructing affordable housing,
Plaintiff has not shown entitlement to the final approval of a development plan that does not
include an affordable housing component as required by those ordinances still in effect. Thus,
Plaintiff may not develop its land without first complying with those affordable housing
regulations in place, or seeking an exemption therefrom, and ―any diminution in the value of [its]
property resulting‖ from this requirement does ―not in itself rise to the level of interference with
a vested property right‖ that our takings jurisprudence requires. Id.
Turning to the next prong, ―the extent to which the regulation has interfered with distinct
investment-backed expectations,‖ this Court recognizes that our Supreme Court has stated that
―prior knowledge of applicable regulations is relevant in determining whether a claimant‘s
investment-backed expectations were reasonable under the Penn Central analysis.‖ Alegria, 687
A.2d at 1253. Here, the Town‘s affordable housing requirements were adopted by the Town
Council pursuant to its comprehensive plan prior to Plaintiff‘s purchase of the land. The
ordinances which codified these affordable housing requirements were also in place prior to
Plaintiff submitting its preliminary development plan to the Planning Board for approval.
Moreover, the Rhode Island Low and Moderate Income Housing Act, originally enacted in 1991
and subsequently amended, mandated that municipalities enact legislation to comply with the ten
percent (10%) affordable housing quota by December 31, 2004. Accordingly, any investmentbacked expectation to develop the Property without having to comply, or seeking an exemption
from, the Town‘s affordable housing requirement is unreasonable and supported. See id. (any
investment-backed expectation to develop the property was unreasonable in light of this state‘s
pervasive wetlands regulations).
With respect to the last prong of this Court‘s analysis, ―the character of the governmental
21
action,‖ this Court notes that the municipal ordinance that Plaintiff challenges ―neither
compelled ‗the property owner to suffer a physical invasion of his property‘ nor denied ‗all
economically beneficial or productive use of land‘‖; namely, ―two takings situations that the
United States Supreme Court has found to carry special constitutional significance.‖ Id. (quoting
Penn Central, 438 U.S. at 124).
Here, the Town promulgated its affordable housing
requirements to comply with the mandate of our General Laws. Furthermore, our Supreme
Court in North End Realty, 25 A.3d at 538, despite holding that the Town did not have the
authority to impose a fee-in-lieu of constructing affordable housing, pointed out that ―[t]he
development of affordable housing is a critical statewide need,‖ and ―fees-in-lieu may ultimately
be determined to be an effective means of achieving compliance with the statutory mandate for
some municipalities in this state.‖ N. End Realty, 25 A.3d at 538. Consequently, this Court does
not find the character of the ―governmental action‖ present here weighing in favor of a taking.
This Court, therefore, finds that Plaintiff has not shown an entitlement to judgment as a matter of
law on its takings claims, and Defendants‘ motion for summary judgment on this Count is
granted.
C
Damages
Finally, Count VI of Plaintiff‘s Amended Complaint seeks damages. Plaintiff claims that
as a result of Defendants‘ actions in imposing, assessing, and mandating a fee-in-lieu of
construction of affordable housing units, it was unable to effectuate its master and preliminary
plan approval for the development of the Property and has thus suffered damages in the amount
of $480,000. In opposition, Defendants claim that the evidence relied upon by Plaintiff in
support of its claim of damages is insufficient and speculative.
22
This Court has already determined that at the preliminary approval stage before the
Planning Board, Plaintiff did not have an entitlement to final approval of a plan that did not
comply with the Town‘s zoning regulations or ordinances, including those requiring the
construction of affordable housing. This Court has also determined that Plaintiff has failed to
prove a substantive due process violation, or that being assessed a fee-in-lieu of constructing
affordable housing resulted in an unconstitutional taking of Plaintiff‘s land. Moreover, this
Court notes that Plaintiff continues to own the Property and still has the ability to develop or sell
the Property, which may very well result in a profit to Plaintiff. See Annicelli, 463 A.2d at 140
(―The mere fact that [a] plaintiff may not have received the anticipated return on his investment
does not render nugatory the remaining value of the land.‖). Accordingly, as this Court has
found that no taking has occurred or that Plaintiff has suffered a violation of substantive due
process, this Court finds that Plaintiff is not entitled to damages on those Counts. Id. (reiterating
the proposition that ―pecuniary loss or diminution in value is not controlling on the issue of
confiscation because a property owner does not have a vested property right in maximizing the
value of his property‖). However, as counts still remain to be adjudicated and issues of material
fact still exist as to the damages issue, Defendants are not entitled to summary judgment on
Count VI.
V
Conclusion
For the foregoing reasons, this Court denies Plaintiff‘s motion for summary judgment on
Counts I, III, and VI, and grants Defendants‘ cross-motion for summary judgment on Counts I
and III. Furthermore, pursuant to our Supreme Court‘s directive in North End Realty v. Mattos,
this Court will enter an order ―enjoining East Greenwich from imposing, assessing, or collecting
23
the fee-in-lieu.‖ N. End Realty, 25 A.3d at 538. Counsel shall prepare the appropriate orders.
24
RHODE ISLAND SUPERIOR COURT
Decision Addendum Sheet
TITLE OF CASE:
North End Realty, LLC v. Thomas Mattos, et al.
CASE NO:
KC 07-1008
COURT:
Kent Superior Court
DATE DECISION FILED:
April 24, 2013
JUSTICE/MAGISTRATE:
Nugent, J.
ATTORNEYS:
For Plaintiff:
Michael A. Kelly, Esq.
For Defendant:
Peter A. Clarkin, Esq.
25
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