Anne Arundel Cnty. v. 808 Bestgate

Anne Arundel County, Maryland v. 808 Bestgate Realty, LLC, No. 38, September Term, 2021, Opinion by Booth, J. INTERPRETATION OF LOCAL CODE—ADMINISTRATIVE REVIEW OF BOARD OF APPEALS DECISION Under the plain language of Anne Arundel County Code (“Code”) § 17-11-207(c), a developer was entitled to receive transportation impact fee credits for improvements made to a county road that went “over and above the adequate road facilities requirements” required by the Code. It is undisputed that the road improvements exceeded the requirements of the County’s adequate road facilities provisions set forth in § 17-5-401 of the Code and were approved by the County’s Engineer Administrator. Under the plain language of the Code, the developer was entitled to receive transportation impact fee credits and the County Board of Appeals of Anne Arundel County (“Board”) erred in its interpretation of the Code. REMAND UNDER MARYLAND RULE 8-131(a)—WHERE PARTIES HAVE STIPULATED THAT THE ISSUE IS UNDISPUTED After the Court of Special Appeals raised an issue pertaining to the interpretation of the Code sua sponte and ordered a remand to the Board for consideration of the same, the parties stipulated that the code provision raised by the intermediate appellate court does not apply to the facts of this case.

Given the County’s concession that the code provision raised by the intermediate appellate court does not apply and that it has joined the developer’s requested relief on that issue, the Court of Appeals determined that there was no reason for a remand to the Board on that issue. Circuit Court for Anne Arundel County Case No.: C-02-CV-18-002979 Argued: February 3, 2022 IN THE COURT OF APPEALS OF MARYLAND No. 38 September Term, 2021 ANNE ARUNDEL COUNTY, MARYLAND v. 808 BESTGATE REALTY, LLC *Getty, C.J. *McDonald, Watts, Hotten, Booth, Biran, Battaglia, Lynne A., (Senior Judge, Specially Assigned), JJ. Opinion by Booth, J. Filed: July 7, 2022 *Getty, C.J. and McDonald, J., now Senior Judges, participated in the hearing and conference Pursuant to Maryland Uniform Electronic Legal Materials Act of this case while active members of this Court. (§§ 10-1601 et seq. of the State Government Article) this document is authentic.

After being recalled pursuant to Maryland 2022-07-07 16:01-04:00 Constitution, Article IV, Section 3A, they also participated in the decision and adoption of this opinion. Suzanne C. Johnson, Clerk In this case, we must determine whether the County Board of Appeals of Anne Arundel County (“Board”) erred when it denied a request by a developer, 808 Bestgate Realty, LLC’s (“Bestgate”), for transportation impact fee credits in connection with certain road improvements that it made to a county road as part of a redevelopment project. Under the Anne Arundel County Code, § 17-11-207(c),1 when transportation improvements are constructed in connection with a development project that provide “transportation capacity over and above the adequate road facilities requirements” required by § 17-5-401 of the Code, then “[t]ransportation impact fee credits shall be allowed[.]” There is no dispute that Bestgate proposed to construct improvements to Bestgate Road, which were approved by the County’s Engineer Administrator, and that the improvements provided transportation capacity that was “over and above” the requirements of the County’s adequate public facilities (“APF”) standards that are applicable to roads. However, in a 4-3 decision, the Board determined that Bestgate was not entitled to transportation impact fee credits under its interpretation of § 17-11-207.

After the Board denied Bestgate’s request for transportation impact fee credits, Bestgate appealed the decision to the Circuit Court for Anne Arundel County. The circuit court reversed the Board’s decision. Anne Arundel County (the “County”) filed an appeal to the Court of Special Appeals, which affirmed the circuit court in part, and reversed it in part. The intermediate appellate court determined that, under the plain language of § 17-11- 1 All references to the Anne Arundel County Code are references to Article 17.

For simplicity’s sake, we shall sometimes refer to the provisions of Article 17 only by their Section reference. 207(c), the Board erred in its interpretation. Anne Arundel County v. 808 Bestgate Realty, Inc., No. 1156, 2021 WL 1985434 (May 18, 2021) (“808 Bestgate”). However, the Court of Special Appeals remanded the case to the Board for further findings on an issue that it raised sua sponte—specifically, whether the improvements to Bestgate Road were “site- related transportation improvements” under the Code, which would render them ineligible for transportation impact fee credits. Because both parties agree that the road improvements are not “site-related improvements” under the provisions of the Code, they filed a joint motion for reconsideration of that issue, which the Court of Special Appeals denied.

The County and Bestgate each filed a petition for writ of certiorari to this Court, which we granted. We granted the County’s petition to consider the following question, which we have rephrased as follows: Did the Board of Appeals err in denying Bestgate’s application for transportation impact fee credits under the applicable language of the Anne Arundel County Code?2 We granted Bestgate’s petition to consider the following question, which we have rephrased as follows:3 2 The County’s petition for writ of certiorari phrased the question as follows: Is CSA’s interpretation of § 17-11-207 of the Anne Arundel County Code in conflict with the County Charter and the County budget process as it relates to the funding of public improvements? 3 Bestgate’s petition for writ of certiorari phrased the question as follows: Did the Court of Special Appeals abuse its discretion under Maryland Rule 8-131(a) in requiring remand on an issue not raised or briefed by the parties nor mentioned in the agency order under appeal, and not in dispute? 2 Given that both parties agree that the improvements to Bestgate Road are not “site-related improvements” as defined by the Code, and the County agrees that a remand to the Board is unnecessary for a determination of that issue, is a remand warranted? For the reasons set forth below, we affirm the Court of Special Appeals’ decision as to the first question, and as to the second question, we reverse the Court of Special Appeals’ decision to remand the case to the Board to consider whether the improvements are “site- related” given the County’s concession on that issue. I. Factual Background and Procedural History A. The Redevelopment Project Bestgate redeveloped a 9.4-acre parcel located at 808–810 Bestgate Road in Annapolis.

The redevelopment project included an addition to an existing veterinary clinic and the construction of a new four-story medical office building with an associated parking lot (“the Project”), which is accessible from Bestgate Road—a county road. Prior to the issuance of a building permit, Bestgate paid transportation impact fees to the County in the amount of $199,756 for the veterinary clinic and $590,775 for the medical office. As part of the Project, Bestgate hired a traffic engineer, Traffic Concepts, Inc. (“Traffic Concepts”). Traffic Concepts performed a traffic impact study to determine if the Project complied with the County’s APF road requirements, which mandate that road intersections at a development site will operate at a minimum “D” level of service and that the road sections will have a rating of 70 or higher.

If a traffic impact study reveals that a development project will not meet these requirements, the County may mandate that the 3 developer construct mitigation improvements to bring the transportation facilities up to the standards in the Code. The Project was initially designed with a right-in/right-out intersection from Bestgate Road.4 The traffic impact study revealed that after development of the Project, with the right-in/right-out road network, the County road intersections would continue to operate at an acceptable level of service, and the road ratings would remain adequate. Accordingly, the traffic impact study concluded that no mitigation would be needed to satisfy the County’s APF road requirements. Based upon these conclusions, the County approved the Project with the right-in/right-out intersection, without requiring any mitigation.

Even though mitigation was not required to satisfy the APF road requirements, Traffic Concepts recommended the construction of an off-site median break and traffic signal on Bestgate Road across from the entrance to the Project. In a May 2, 2017 letter to Larry Tom at the Office of Planning and Zoning, Kenneth Schmid, a Vice President of Traffic Concepts, explained that “[i]f the site were to retain the existing right-in/right-out access, vehicles wishing to enter the site from eastbound Bestgate Road would be forced to make a U-turn at the Medical Parkway intersection in order to enter the development,” 4 The traffic impact study concluded that a right-in/right-out road access from Bestgate Road would require “left turn inbound and left turn outbound trips to be U-turns at the upstream and downstream intersections at Gate Drive and Severn Grove Road/Medical Parkway.” In other words, for example, if a driver was approaching the development site traveling eastbound, the driver would have to make a U-turn at the Severn Grove Road/Medical Parkway intersection with Bestgate Road and then turn right into the Project site. 4 which would increase the “morning peak hour critical lane volume” at that intersection. With the median break and traffic signal, however, the critical lane volume would be reduced, which would both increase capacity and improve safety by eliminating the weaving requirement to attempt a U-turn movement.5 In that letter, Mr. Schmid requested approval of transportation impact fee credits for the “total cost of design and installation of the median break and traffic signal[,]” which was estimated to be $554,697.98. David Braun, the County’s Engineer Administrator for the County’s Department of Public Works, supervised the review of the traffic impact study and approved the plans and construction details for the median break and traffic signal on Bestgate Road as recommended by Traffic Concepts.6 Although the County’s Engineer Administrator approved the Bestgate Road improvements, in a letter dated October 26, 2017, the County’s Planning and Zoning Officer, Philip Hager, denied the request for transportation impact fee credits, on the basis 5 Specifically, in the May 2, 2017 letter from Mr. Schmid to the Planning and Zoning Officer, Bestgate explained how the additional improvements would provide additional safety and capacity beyond the APF requirements by stating the following: In addition to increasing capacity, the median break and traffic signal will improve safety over the existing right-in/right-out condition because it will eliminate the weaving movement required to attempt a U-turn movement.

The distance between the access and the U-turn movement is less than 400- ft in both directions. The U-turn movement is tight for larger cars, vans, and pick-up trucks. Some of these vehicles need to make multiple maneuvers to complete the U-turn movement. During peak times this could create safety issues. 6 Bestgate has since completed the Project and constructed the additional off-site improvements to Bestgate Road as recommended by Traffic Concepts and approved by the County. 5 that: (1) there was no benefit to the County since the intersection was already operating at an “A” level; (2) the additional improvements were not associated with any traffic mitigation required by the County to satisfy the APF road requirements; (3) there were no capital improvement plan projects in the corridor associated with the Project; and (4) there were no deficiencies in the traffic impact study area.

Bestgate appealed to the Board, which reviewed the matter de novo. B. The Board Proceedings The Board heard testimony on the appeal on April 12 and May 22, 2018. Mr. Braun testified that he reviewed the traffic impact study and agreed that the Bestgate Road improvements would provide additional safety measures and capacity to the County’s road network. Bestgate also introduced into evidence a written memorandum from Mr. Braun to the Office of Planning and Zoning which stated that “[t]he benefit to the County, as outlined in the proposal, is providing additional capacity at the Bestgate/Severn Grove Road intersection and improving safety due to the reduction in the number of U-turns.” Mr. Schmid, who was qualified as an expert traffic engineer, testified that the proposed improvements would eliminate both potential and existing U-turns and confirmed that the development would add to the congestion at the intersection of Severn Grove Road and Bestgate Road where U-turns are being made by people going to the existing veterinary clinic: And then we would be adding more left turns and U-turns onto that intersection by our site.

So when we eliminate all those potential U-turns and the existing U-turns, we provide extra capacity at the intersection of Severn Grove Road and Bestgate Road. Now, it’s acceptable capacity today, but we are providing additional capacity to that intersection by diverting that 6 traffic away. We’re also providing extra capacity to the unsignalized U-turn movement up at Gate Drive, which was the other U-turn exit. And that wasn’t a studied intersection in our analysis, but by not pushing traffic up there and making U-turns, you’re providing capacity for that intersection.

In addition to explaining the benefits that the additional signal would provide to the Bestgate Road corridor generally, Mr. Schmid also described examples of similar road improvement projects in which he had been involved where the County granted transportation impact fee credits in similar situations.7 Specifically, Mr. Schmid testified that the County had previously approved traffic impact fee credits for BWI Technology Park III which, like Bestgate, passed the APF road test without the requirement for any 7 Impact fee credit agreements applicable to other development projects were admitted into evidence before the Board. The agreements reflected prior instances in which the County granted transportation impact fee credits for off-site improvements that provided additional transportation capacity. For example, the transportation impact fee agreement between the County and Patel Associates, LLC states that the developer was eligible for transportation impact fee credits for those “[i]mprovements meeting the same needs as the transportation impact fees” by “providing expanded capacity over and above the requirements of Article 17, Title 11 of the Code.” The eligible improvements were limited to “off-site” improvements providing “new road capacity and safety.” The agreement provides for an accounting when the application for a building permit is made. An agreement between the County and Creekstone Village contains similar language regarding “off-site improvements,” stating that 100% of the off-site improvements providing “new road capacity” be eligible for credits and defining “the nature and amount” of the credits.

The agreement requires that the developer maintain an accounting of the cumulative credits and provide the County with statements of the same upon request of the County at no more than quarterly intervals. In the BWI Technology Phase III agreement, it was agreed that “100% of the total improvement [c]osts are attributable to off-site transportation improvements that provide new road capacity over and above the adequate road facilities requirements.” It further provided that all credits had to be redeemed within 12 years. 7 mitigation. Mr. Schmid noted that the developer had received traffic impact fee credits for 100% of the improvements. Mr. Schmid testified that, in the case of the Creekstone Village Residential development on Jumpers Hole Road, the only required mitigation to pass the APF road requirements was trimming of vegetation to improve sight lines.

Mr. Schmid testified that the developer had also received transportation impact fee credits for 100% of the improvements. In Mr. Schmid’s view, the Planning and Zoning Officer’s denial of the credits requested by Bestgate was inconsistent with the County’s approvals of credits on other projects where minimal or no mitigation was required to comply with the APF road requirements. The County’s Planning and Zoning Officer, Mr. Hager, testified regarding his October 26, 2017 letter responding to Bestgate’s request for impact fee credits: I believe the letter succinctly sets forth the reasons why the Office of Planning and Zoning denied the applicant’s request in this particular instance. First of all, there does not appear to be any benefit to the county, only to the applicant.

The county did not request the median break. They did not request the construction of the traffic control device. No inadequacies are being remedied in this particular case. The work that was performed by the applicant at this site was not part of something that was required by the adequacy of facilities requirements.

In addition, there is no other project in the area that’s been identified in any of our planning or transportation related studies, whether they be functional master plans, needs assessments or otherwise that identify a problem with regard[] to the need to actually construct this type of project, to cure some type of an existing deficiency. So it was based upon those factors that it was not found to be any reasonable 8 use, reasonable benefit to the taxpayers to have their funds utilized in this manner. In cross-examination, Mr. Hager was asked about the Board’s grant of transportation impact fee credits to Walmart in a previous case:8 [Bestgate’s Counsel]: So those were improvements to a state road. So that wasn’t part of a required traffic mitigation to satisfy the county standards, correct? [Mr. Hager]: That was a state road. * * * [Bestgate’s Counsel]: Okay.

Now, I will refer back to the Walmart decision in which this Board referred to section 17.11.207[(]c[)]; are you familiar with that section of the Code? [Mr. Hager]: Yes. [Bestgate’s Counsel]: And doesn’t that state, transportation impact fee credits shall be allowed for transportation improvements providing transportation capacity over and above the adequate road facility requirements for a development project as set forth in this Code? [Mr. Hager]: I’m reading it here now as you’re stating it. I’ve read this previously. What is your question, counsel? 8 The Board’s decision in Board Case No. BA2414A was presented to the Board as part of the record in this case. Although it was not admitted as an exhibit, counsel for Bestgate asked that the Board take judicial notice of its previous decision.

In that case, Walmart appealed a decision of the Planning and Zoning Officer denying impact fee credits. Walmart was developing a retail store to replace and enlarge another development that had access to a state road and a county road. The State required improvements to the state road, including related utility and traffic signal modifications. In that case, Walmart argued that the state road improvements were not required to meet the County’s APF road requirements, and therefore, it was entitled to transportation impact fee credits for the cost of those improvements.

The Board—in a 4-member decision, with 3 other members not participating—found the language of § 17-11-207(c) “clear, unambiguous, and mandatory” and the improvements to the state road to be “over and above” the APF road requirements. The language of § 17-11-207(c) has remained the same since that decision. 9 [Bestgate’s Counsel]: Well, the determination was the word “shall” would be an obligation, right, to grant credits? Would you interpret as a Planning and Zoning Officer, if you are reading a Code section that you “shall,” that would be mandatory as opposed to discretionary? * * * [Mr. Hager]: Yes. And I would interpret that that way.

Except there is a couple of points in that passage that bear further scrutiny in terms of when that “shall” shall actually apply. [Bestgate’s Counsel]: Right. I understand. But the period is that -- and this is a section that was cited by this Board in the Walmart case, is that that language is clear, and unambiguous, and mandatory; you would agree with that? [Mr. Hager]: Yes. In spite of that, we still interpret it differently, counsel. [Bestgate’s Counsel]: Okay.

Alright. So it states that you are providing transportation capacity over and above adequate road facility requirements, that would be an enhancement to the road system that would benefit the public? [Mr. Hager]: I think it’s important to read item “A” above that which also talks about projects that may be allowed. And it’s, it certainly seems clear to me that there has to be a public benefit to when that “shall” shall be applied. [Bestgate’s Counsel]: Okay. And so would it be your interpretation that if your staff said that an improvement would increase capacity and safety would you agree then that impact fee credits would be justified in a situation because it’s increasing capacity on the road system? [Mr. Hager]: No, sir.

I disagree. [Bestgate’s Counsel]: You disagree even if your own staff would advise you as to that, an improvement was going to increase capacity? [Mr. Hager]: There has to be an inherent public benefit to the utilization of the funds. 10 The Board, in a 4-3 decision, denied Bestgate’s request for transportation impact fee credits based on its interpretation of § 17-11-207(c). Under the Board’s interpretation, in order to receive the transportation credits, the developer must satisfy “two elements”: First, the proposed improvements must increase transportation capacity over and above the APF requirements. Second, the County must allow the credits and memorialize the same in a written agreement. Pursuant to Section 17- 11-207(c), impact fee credits are mandated when capacity is provided over and above the adequate road facilities requirements.

APF requirements refer to mandated mitigation when new development cannot pass APF tests, as a means of adding traffic capacity. §§ 17-5-401(a)(3) and 17-5-901(h). If APF mitigation is not required, independent and additional improvements are not considered “above and beyond” the APF requirements. In this instance, all parties agree that the proposed development passed APF tests, and mitigation is not required; thus, there are no APF requirements to be mitigated. The proposed improvements are not “above and beyond” the APF requirements, and the Petitioner is not eligible for impact fee credits.

The Board’s dissenting members found that the plain language of the Code was “clear and unambiguous” and that nothing in § 17-11-207(c) indicated that “mitigation must be a prerequisite to receive impact fee credits.” The dissenting members of the Board stated that § 17-11-207(c): mandates that a “[t]ransportation impact fee credit shall be allowed for transportation improvements providing transportation capacity over and above the [APF] requirements for a development project . . .” (emphasis added). This section does not mandate that mitigation must be a prerequisite to receiving impact fee credits. Mr. Schmid testified regarding the increased benefit to all citizens of the County, including reduced U-turns and weaving movements. The proposed road improvements adhere to Section 17-11-202 of the Code, which promotes the health, safety, and general welfare of the residents of the County.

The road improvements are over and above the APF requirements. The County is mandated to allow the transportation impact fee credits. Thus, we would grant the Petitioner’s request for the impact fee credits. 11 Bestgate petitioned for judicial review of the Board’s decision in the Circuit Court for Anne Arundel County. C. The Circuit Court’s Decision The circuit court reversed the decision of the Board, concluding that the plain language of § 17-11-207(c) does not condition the issuance of transportation impact fee credits upon the need for mitigation arising from a developer failing to satisfy the APF road test.

The circuit court determined that the applicable language in the Code required the County to issue the transportation impact fee credits because Bestgate increased traffic capacity and safety beyond the APF road requirements. The circuit court also determined that the issuance of the transportation impact fee credits was not dependent upon the County and Bestgate reaching a written agreement on the same, concluding that the agreement is simply a memorialization of the credits to which the developer is entitled to receive under the Code. The County appealed the circuit court’s decision to the Court of Special Appeals. D. The Court of Special Appeals’ Decision In the unreported opinion, the Court of Special Appeals affirmed the circuit court’s interpretation of the County Code—that under the plain language of § 17-11-207(c), the issuance of the transportation credits was mandatory where non-site related improvements exceeded the APF road requirements, without regard to whether the developer had been required to construct mitigation improvements.

See 808 Bestgate Realty, No. 1156, 2021 WL 1985434 . The Court of Special Appeals also held that the County did not have discretionary authority to refuse to enter into a transportation fee credit agreement where 12 the eligible improvements went “above and beyond the APF requirements” of the Code. The Court of Special Appeals, however, remanded the case to the Board on an issue not raised during prior proceedings between the parties. Specifically, the intermediate appellate court remanded the case for the Board to determine whether the improvements to Bestgate Road would be considered “site-related”