Cleanwater Linganore, Inc. v. Frederick County

Berger, J. This case is the most recent in a series of cases to come before us challenging various issues related to development in the Lake Linganore area of Frederick County. In this appeal, we address a challenge by the Appellants 1 to the Frederick County Board of County Commissioners’ (“BOCC”) 2 approval of a Development Rights and Responsibilities Agreement (“DRRA”). The Appellants present three issues for review on appeal, which we have reordered and rephrased slightly as follows: ⁶²⁵ 1. Whether the DRRA violates § 7-304 of the Land Use Article of the Maryland Code, Md. Code (2012, 2014 Repl.

Vol). 2. Whether the DRRA lawfully contains a provision providing that the DRRA constitutes a covenant running with the land. 3. Whether the DRRA is void because it lacks any “enhanced public benefits” and/or consideration. For the reasons explained herein, we shall hold that the DRRA is void for lack of enhanced public benefits and reverse the judgment of the Circuit Court for Frederick County.

FACTS AND PROCEEDINGS This is an administrative appeal from an opinion and order of the Circuit Court for Frederick County affirming two separate actions of the BOCC, a rezoning action and the DRRA approval. Although the Appellants raised issues with respect to both actions before the circuit court, on appeal to this Court, the Appellants have raised issues only with respect to the DRRA approval. Nonetheless, we set forth certain facts and proceedings relevant to both issues in order to provide context. This case involves two parcels of land (“the Property”) owned by the Blentlinger family.

The Blentlinger family farmed the Property for multiple generations before deciding to explore development opportunities. Until 2007, the Property had a Low Density Residential (“LDR”) land use designation, pursuant to which a property owner is permitted to apply for a Planned Unit Development (“PUD”). In 2007, the BOCC reclassified the Property and removed the LDR designation, rendering the Property ineligible for PUD designation. In 2012, however, the BOCC again reclassified the Property (as well as multiple other properties in the Lake Linganore area) as LDR.

The 2012 rezoning action was challenged before the circuit court in this case and was unsuccessfully challenged in ⁶²⁶ various other appeals before this Court. 3 The 2012 rezoning action is not an issue in the present appeal. After the Property was rezoned as LDR, Lillian C. Blent-linger, LLC and William L. Blentlinger, LLC (“the Blentling-ers”), appellees, filed a PUD zone application for the Property on February 25, 2014. The Blentlingers filed a DRRA petition on March 11, 2014, which included a draft DRRA. The BOCC accepted the DRRA petition on April 15, 2014.

After two public hearings before the Frederick County Planning Commission and one public hearing before the BOCC, the BOCC voted to approve the PUD rezoning application and the proposed DRRA, The PUD rezoning application was approved with conditions that limited the total unit count to 675 residential dwelling units, consisting of 500 single-family units and 175 townhomes. 4 An additional condition required that the first ⁶²⁷ building permit for the construction of a residence not be issued before January 1, 2020. The BOCC enacted the PUD rezoning ordinance and executed the final DRRA on November 24, 2014. The final DRRA (“the Blentlinger-County DRRA”) was recorded in the Land Records of Frederick County on the same date. The Appellants filed a petition for judicial review of both the PUD and DRRA actions in the Circuit Court for Frederick County.

The circuit court upheld both actions. This timely appeal followed. STANDARD OF REVIEW In general, although we generally defer to the factual findings of an administrative agency, “[w]e review an agency’s decisions as to matters of law de novo for correctness.” Wallace H. Campbell & Co. v. Maryland Comm’n on Human Relations, 202 Md.App. 650, 663 , 33 A.3d 1042 (2011). However, “[e]ven with regard to some legal issues, a degree of deference should often be accorded the position of the administrative agency.

Thus, an administrative agency’s interpretation and application of the statute which the agency administers should ordinarily be given considerable weight by reviewing courts.” Grasslands Plantation, Inc. v. Frizz-King Enterprises, LLC, 410 Md. 191, 204 , 978 A.2d 622 (2009) (quoting Bd. of Physician Quality Assurance v. Banks, 354 Md. 59, 69 , 729 A.2d 376 (1999)). DISCUSSION I. A DRRA is “an agreement between a local governing body and a person having a legal or equitable interest in real property to establish conditions under which development may proceed for a specified time.” Md. Code (2012, 2014 Repl. Vol.), § 7-301(b) of the Land Use Article (“LU”). DRRAs are attempts to balance “developers’ and property owners’ desires for a larger measure of certainty than that offered by proceed ⁶²⁸ ing to market through the traditional development processes, while risking the monetary investment to develop their property, against local governments’ desire to receive greater public benefits on a more predictable schedule than might otherwise be attainable through the traditional processes.” Queen Anne’s Conservation, Inc. v. Cty.

Comm’rs of Queen Anne’s Cty., 382 Md. 306, 308-09 , 855 A.2d 325 (2004). One feature of a DRRA is that certain local laws, rules, regulations, and policies are “frozen” at the time the DRRA is executed. This “freeze provision” permits developers to move forward with long-term development projects with certainty. The “freeze provision” is set forth in LU § 7-304, which provides: 5 (a) Except as provided in subsection (b) of this section, the local laws, rules, regulations, and policies governing the use, density, or intensity of the real property subject to an agreement shall be the local laws, rules, regulations, and policies in force at the time the parties execute the agreement.

(b) If the local jurisdiction determines that compliance with local laws, rules, regulations, and policies enacted or adopted after the effective date of an agreement is essential to ensure the public health, safety, or welfare, an agreement may not prevent a local government from requiring a person to comply with those local laws, rules, regulations, and policies. The Appellants argue that the Blentlinger-County DRRA is invalid because it violates LU § 7-304 by purporting to “freeze” certain local laws, rules, regulations, and policies beyond those specifically identified in LU § 7-304. Specifically, Section 8.1 of the Blentlinger-County DRRA provides: 8.1 Effect of Agreement ⁶²⁹ A. Except as otherwise specifically provided herein, the local laws, rules, regulations and policies governing the use, density, or intensity of the Property, including but not limited to those governing development, subdivision, growth management, impact fee laws, water, sewer, stormwater management, environmental protection, land planning and design, and adequate public facilities (hereinafter collectively the “Development Laws”) shall be the laws, rules, regulations and policies, if any, in force on the Effective Date of the Agreement, and the Developer shall comply with all Development Laws. Before turning to the merits of this issue, we comment briefly on whether this issue is ripe for our review. “A controversy is justiciable when there are interested parties asserting adverse claims upon a state of facts which must have accrued wherein a legal decision is sought or demanded.” Michael, LLC v. 8204, Assocs.

Liab. Co., 207 Md.App. 666, 672 , 53 A.3d 509 (2012) (quoting 1 W. Anderson, Actions for Declaratory Judgments § 17 (2d ed. 1951)). We recently found a nearly identical issue regarding the scope of a DRRA freeze provision ripe for review and addressed the merits. Cleanwater Linganore, Inc., et al. v. Frederick County, Maryland, et al., 231 Md.App. 373 , 151 A.3d 44 (Ct. of Spec.

App. 2016) (“Casey”). 6 In our view, this case presents “an accrued set of facts, beyond the merely theoretical, that bears directly on the justiciable question[s]” of whether the Blentlinger-County DRRA properly froze a wide range of laws, whether the Blentlinger-County DRRA lawfully contains a provision providing that it runs with the land, and whether the Blentlinger-County DRRA is supported by adequate consideration and/or enhanced public benefit pursuant to the DRRA Act. See id., ⁶³⁰ 281 Md.App. at 385-86, 151 A.3d 44 . At oral argument, neither party disputed this issue is ripe for our consideration. Further, the parties agreed at oral argument that the issues in this appeal are ripe for our consideration.

Of course, the parties, by agreement, may not confer jurisdiction on a court where none exists; however, we conclude for other reasons expressed above that the questions presented here are ripe for appellate review. As such, we will address the merits in the present appeal. We now turn to the merits of the DRRA freeze provision issue and consider whether § 8.1 of the Blentlinger-County DRRA contains an impermissibly broad range of laws. This Court recently addressed this issue at length in Casey, supra.

All of the laws, regulations, and policies listed in § 8.1 of the Blentinger-County DRRA were also included in the Casey DRRA, which provided as follows: Except as otherwise provided ... the County Development Laws, regulations!],] and policies governing the use, density!],] or intensity of the Property, including but not limited to those governing development, subdivision, zoning, comprehensive planning, moderately priced dwelling units, growth management, impact fees, water, sewer, stormwater management, environmental protection, land planning and design, adequate public facilities laws[,] and architecture shall be the laws, rules, regulations!],] and policies, if any, in force on the Effective Date of the Agreement. Casey DRRA § 8.1. In Casey, we concluded that “the intended scope of ‘the local laws, rules, regulations, and policies’ that ‘govem[ ] the use, density, or intensity’ of real property” was “ambiguous on its face.” 231 Md.App. at 387-88 , 151 A.3d 44 . Accordingly, we engaged in an exhaustive review of the legislative history of the DRRA Act.

We explained that the Fiscal Note for HB 700, the original bill that became the DRRA Act in 1995, as well as the Senate Economic and Environmental Affairs Committee Floor Report, “demonstrate that the General Assembly was aware of, and contemplated presumably, the DRRA Act’s ⁶³¹ freeze provision to embrace more than merely zoning ordinances, including something as seemingly attenuated as a variety of fees related to development.” Id., at 390 , 151 A.3d 44 . Having established that the legislature intended the DRRA freeze provision to apply to a wider range of laws than merely zoning laws, we turned to the specific ordinances and regulations referenced in the Casey DRRA § 8.1. We explained: It is patent that local zoning ordinances govern most directly the “use, intensity, or density” of real property. Subdivision ordinances and regulations, as well as many environmental and public facility or utilities laws (enforced typically during the subdivision process) are to like effect.

Costs and fees associated with public facilities impacts, permits, and water and sewer hookups, on the other hand, seem at first glance rather more attenuated from direct governance of a property’s “use, intensity, or density.” And yet, the DRRA Act’s legislative history demonstrates the Legislature’s contemplated inclusion of them as well as among reachable local laws for purposes of LU § 7-304(a). Viewing relevant local provisions on a continuum from the most direct governance to the least contemplated by the freeze provision, zoning and subdivision would be located at one end and fees at the other. Assuming these outer limits for purposes of the DRRA in the present case, the freeze provision must contemplate, axiomatically, local laws, rules, regulations, and policies that might fit between these poles. Local provisions related to development, comprehensive planning, moderately-priced dwelling units, growth management, environmental protection, land planning and design, adequate public facilities laws, and architecture govern more clearly “use, intensity, or density” than do, for example, impact and permit fees.

We conclude, therefore, that the Maryland General Assembly intended the DRRA Act’s freeze provision to contemplate each of the genres of local laws listed in Article VIII § 8.1(B) of the Casey-County DRRA. ⁶³² Id., 231 Md.App. at 390-91 , 151 A.3d 44 . Because all of the laws, regulations, and policies listed in § 8.1 of Blentlinger-County DRRA were also included in the Casey DRRA, the same reasoning applies to the present appeal. Accordingly, we conclude that the General Assembly intended the DRRA freeze provision to include each of the genres of local laws listed in § 8.1 of the Blentlinger-County DRRA. In Casey, we found further support for a broad reading of the DRRA Act freeze provision by examining the purpose behind the DRRA Act.

See id., 231 Md.App. at 391-93 , 151 A.3d 44 . We discussed the legislative purpose as follows: In its 1995 analysis of H.B. 700, the House Commerce and Government Committee explained that State DRRA laws seek to “solve the vesting problem” by “(1) prohibiting local governments from applying new regulations to on-going projects by defining when vesting occurs, and (2) authorizing the use of development agreements.” H. Commerce and Gov’t Comm., Bill Analysis, H.B. 700, at 3 (Md. 1995). 7 The “vesting problem” refers to the balancing of a developer’s interest in securing and consolidating its legal footing to begin and complete a development project with a local jurisdiction’s interest in governing the pertinent legal domains, including amending laws and policies as necessary. In 1993, the Court of Appeals held that a developer’s rights in the development of a property vest only upon a level of visible commencement of lawful construction. Prince George’s Cnty., Md. v. Sunrise Dev.

Ltd. P’ship, 330 Md. 297 , 623 A.2d 1296 (1993). This opinion recognized that local governments may “change a permissible land use ... very late in the land use approval process. In fact, a change could occur after the issuance of a building permit.” Bill Analysis at 3. The purpose of the DRRA Act, therefore, was to strike a balance between the interests of developers and local governments to “solve the vesting problem.” ⁶³³ The House Commerce and Government Committee explained such a balance as follows: Development agreements can provide benefits for both developers and local governments.

For the developer, a development agreement establishes the rules and regulations which will govern the project throughout its construction, and perhaps beyond. For the local government, the development agreement provides for greater certainty in the comprehensive planning process, as well as an opportunity to ensure the provision of necessary public facilities. Bill Analysis at 3. What would achieve best the legislative purpose of balancing a developer’s interest in legal stability against a local government’s interest in certainty and obtaining enhanced public benefits: limiting, for example, the Casey DRRA’s freeze provision to subsequent changes in the zoning code only, as urged by CLI, or allowing it to apply to the expansive list of local provisions in the negotiated DRRA as written?

If the DRRA Act only allowed DRRAs to freeze the application of local zoning ordinance provisions, a local government could undermine still the legal and financial stability of an on-going development project by changing the laws related to, for example, development or site plans, subdivision, or planning compliance. Where a developer assumed that its project could be thwarted by a last-minute or mid-stream change to any of these non-zoning laws, it would be less likely to undertake a substantial development at all in a jurisdiction. This, in turn, would frustrate the local government’s interest in obtaining greater public benefits through negotiation of a DRRA’s terms. Id., 231 Md.App. at 391-93 , 151 A.3d 44 .

The reasoning applied in Casey compels the same conclusion in this case. As in Casey, “[w]e conclude that, like its statutory history, the purpose of the DRRA Act suggests a more expansive reading of the local laws eligible for inclusion in a DRRA’s freeze provision, beyond merely the local zoning ordinance, that includes at least the local law provisions listed in the” Blent ⁶³⁴ linger-County DRRA. Id., 231 Md.App. at 392-93 , 151 A.3d 44 . We, therefore, hold that the BOCC’s approval of the Blentlinger-County DRRA, including the freeze provision set forth in § 8,1, does not impermissibly expand the scope of local laws, rules, regulations, and policies governing use, density, or intensity beyond the limits of LU § 7-304. 8 II.

We next consider the Appellants argument that the DRRA impermissibly included a provision providing that the DRRA constitutes a covenant running with the land. The Appellants maintain that Maryland DRRA law does not authorize a DRRA to be converted into a real property interest. The Blentlingers respond that Maryland and Frederick County law require a DRRA to be recorded and thus to run with the land and that the language of the DRRA merely confirms what is already required under Maryland and Frederick County law. We agree with the Blentlingers.

First, we observe that Maryland law requires that all DRRAs be recorded in the land records of the local jurisdiction. LU § 7—305(d). With respect to the recordation requirement, LU § 7-305(d) provides: (1) If [a DRRA] is not recorded in the land records of the local jurisdiction within 20 days after the date on which the parties execute the [DRRA], the [DRRA] is void. (2) The parties to [a DRRA] and their successors in interest are bound to the agreement after the agreement is recorded.

Id, The statute plainly provides that a properly recorded DRRA binds not only the parties to the DRRA, but any successors in interest as well. Id, Section 1-25-10 of the ⁶³⁵ Frederick County Code of Ordinances contains language identical to that in LU § 7-305(d). 9 Article IV of the Blentlinger DRRA provides, in relevant part: This Agreement shall constitute covenants running with the land and shall bind the Property so long as the Project is under development, provided that this Agreement shall terminate and be void twenty-five (25) years after the Effective Date of this Agreement unless extended by an amendment complying with all procedures required in this Agreement. In our view, the language of the Blentlinger DRRA simply confirms what is required by law. Furthermore, the Blentlinger DRRA satisfies the test set forth by the Court of Appeals for covenants running with the land.

In Mercantile-Safe Deposit & Trust Co. v. Mayor & City Council of Baltimore, 808 Md. 627 , 632, 521 A.2d 734 (1987), the Court of Appeals explained that four elements must be satisfied for a covenant to run with the land: (1) the covenant must touch and concern the land; (2) the original covenanting parties must intend the covenant to run with the land; (3) there be some privity of estate; and (4) the covenant must be in writing. The first element, that the covenant must touch and concern the land, is easily satisfied because the entirety of