Crofton Partners v. Anne Arundel County

²³⁶ WENNER, Judge. Although the substantive issues raised by this appeal are fairly significant, they are not nearly as significant as the procedural quagmire that we find before us. What began as a developer’s test of a newly enacted Anne Arundel County tax ordinance has brought to light an apparent anomaly in the statutory scheme that provides administrative review by both the Anne Arundel County Board of Appeals (the Board) and the Maryland Tax Court of the imposition of certain local taxes. The Anne Arundel County ordinance in question governs the assessment of charges for connection to county water and wastewater facilities.

Anne Arundel County Code, Article 6, § 5-208. The ordinance was amended in 1988 to provide for a five year phase-in of increased connection fees. To accomplish this, the amount of the connection fee was tied to the “date application [for a connection permit] is made.” Appellant, Crofton Partners (Crofton), was in the initial planning and permitting stages of a proposed eleven building “luxury apartment complex,” to be known as Saddle Ridge Apartments, when the first increase occurred. In order to “lock-in” at the lower connection rates, Crofton sought to apply for water and sewer connection permits for each building in Saddle Ridge Apartments on the day before the fee increase, although neither water and sewer lines nor buildings were yet on the property.

The application forms were returned to Crofton a week later, without comment. Crofton eventually paid connection charges based upon an application filed nearly a year later. Crofton appealed appellee Anne Arundel County’s (the County) refusal to recognize its first application to the Board. The Board determined that Crofton’s appeal was untimely, and granted the County’s motion to dismiss.

Crofton then filed with the County a claim for a tax refund, asserting that the higher connection charge based upon the date of the later application was erroneously assessed. Crofton treated the County’s failure to respond as a rejection of its claim, and ²³⁷ noted an appeal to the Tax Court of Maryland. The Tax Court determined that the County’s assessment of the higher connection charges was proper and upheld the denial of Crofton’s claim for a refund. Crofton’s appeals from the decision of the Board and the decision of the Tax Court were consolidated in the Circuit Court for Anne Arundel County.

The circuit court affirmed the decision of the Board, but failed to address Crofton’s appeal from the Tax Court. On appeal, Crofton presents us with the following questions: 1. Did the Circuit Court err in not reviewing the decision of the Tax Court, thereby depriving Appellant of its right to judicial review? 2. Did the Circuit Court err in affirming the decision of the County Board of Appeals dismissing the administrative appeal as untimely? 3.

Is Crofton Partners entitled to a refund of $162,400.00 plus interest, because the County has retained this sum in violation of Article 6, § 5-208 of the Anne Arundel County Code? For reasons hereinafter explained, we shall reverse the judgment of the circuit court. Background On May 9, 1988, the County Council of Anne Arundel County approved and enacted Bill No. 22-88 for the purpose of “altering certain utilities charges, assessments, and fees.” Among other things, Bill No. 22-88 amended Article 6, § 5-208 of the County Code, increasing the water and wastewater system connection charges and assessments on July 1 of each year from 1989 through 1992. In pertinent part, § 5-208 now reads: (e) For connections to the County’s water system, the capital facility connection charge for each single-family dwelling and each equivalent unit for a commercially or industrially zoned property is: (2) For properties with new improvements: ²³⁸ (i) For connection permits for which application is made on or after April 19, 1988, $1,900; (ii) For connection permits for which application is made on or after July 1, 1989, $2,175; (iii) For connection permits for which application is made on or after July 1, 1990, $2,450; (h) For connections to the County’s wastewater system, the capital facility connection charge for each single-family •dwelling and each equivalent unit for a commercially or industrially zoned property is: (2) For properties with new improvements: (i) For connection permits for which application is made on or after April 19, 1988, $1,500; (ii) For connection permits for which application is made on or after July 1, 1989, $1,625; (iii) For connection permits for which application is made on or after July 1, 1990, $1,750; Thus, prior to July 1, 1989, the total capital facility connection charge for both water and wastewater was $8,400.

On July 1, 1989, however, that charge increased to $3,800, a difference of $400 per unit. Inasmuch as Crofton’s proposed Saddle Ridge Apartments consisted of 406 units, Crofton could realize a potential savings of $162,400 if application were made before July 1, 1989. In an attempt to realize these savings, Crofton submitted application forms to the County’s Department of Utilities on June 30, 1989 for connection permits for each building in the Saddle Ridge Apartments. Whether the submission of these forms constitutes an “application made” under § 5-208 is the sole substantive issue upon which our determination of this ²³⁹ appeal turns. 1 For some reason, it also appears to have been an issue to be avoided at all costs, judging from the sequence of events that followed.

At Crofton’s insistence, the first application form was marked “Rec’d 6-30-89 3:00 Buildings 1 thru 11 D. Woodrow” and the forms were left with the Department of Inspections and Permits. The forms were returned to Crofton about one week later, unaccompanied by a cover letter or correspondence of any sort. Crofton met with various officials from the County’s Department of Utilities in October 1989. At this meeting, Crofton was advised verbally that the County did not consider Crofton’s earlier submission to be an application, and that applications for connection permits could be made only after the water and sewer lines to which the housing units were to be connected had been installed and inspected by the County.

Notwithstanding this discussion, in November Crofton sent Trudy Yox, an official in the Department of Utilities, a letter setting forth its contention that the lower fees should be assessed and asking Ms. Yox to indicate her concurrence with Crofton’s view by signing at the bottom of the letter. The County did not respond. In January 1990, as required by Article 27, § 3-306(b) of the Anne Arundel County Code, 2 Crofton paid the connection charge in order to obtain a building permit. The amount paid was based upon the higher fee imposed upon “applications made on or after July 1, 1989.” In a letter dated April 17, 1990, the County made a “formal reply to fCrofton’s] written request regarding the water and wastewater capital facility ²⁴⁰ connection charges for Saddle Ridge Apartments.” In its letter the County said “we cannot agree to your request” to accept payment of the lower charges, and continued: As we indicated during our meeting, the County cannot accept an application for public water and wastewater service connections until the necessary lines are installed to serve your project.

The water and wastewater lines for your project must be installed and accepted under the terms of our utility agreement before you submit your applications for the needed connection permits. Also, the dollar amount levied for a connection is established on the basis of the capital facility connection charge in effect at the time a connection is made to the utility line. The legal basis for this practice is set forth in Article 27, 3-309(c). [3] Following construction of the utility lines and the buildings of Saddle Ridge Apartments, the County simultaneously accepted Crofton’s applications for connection permits and issued them on June 30, 1990, one day prior to the next scheduled increase in the capital facility connection charges. The Decision of the Board of Appeals I. Believing that the County’s letter of April 17 represented a “final decision” by the County, Crofton noted an appeal to the Board on May 18,1990.

The County responded with a Motion to Dismiss, arguing, among other things, that the 30-day appeal period 4 began either on the date Crofton’s first appli ²⁴¹ cation was refused, or on the date Crofton paid the higher capital facility connection charge. According to the County, its letter of April 17 “merely states the basis for refusing to receive [Crofton’s] attempted applications on June 30, 1989” and is therefore not an appealable “decision.” The Board convened on October 15, 1990. After hearing argument concerning the County’s Motion to Dismiss, the Board reserved ruling on that motion and heard Crofton’s appeal on its merits. On January 4, 1991, the Board filed a Memorandum and Order of Dismissal, granting the County’s Motion to Dismiss, reasoning that: ...

We believe that [Crofton] should have taken the appeal within the 30 day period after January 10, 1990 when [it] paid the higher fee for the water and sewer connection. Although [Crofton] stated that [it] was negotiating with the county to obtain the lower connection costs, [it] states that [it] was not given any indication when [it] paid the higher fee that [it] would get a rebate. It is our opinion that [Crofton] had nothing to rely upon that the amount of money was negotiable, and the only manner in which [it] could assure some recourse, if [it] was dissatisfied with the decision of the Department of Utilities, would have been to appeal the payment of the greater amount within the required 30 days appeal period after payment was rendered .... Unfortunately, since [Crofton] did not take a timely appeal, this Board does not have jurisdiction to hear the matter.

Two members of the Board dissented, asserting that they “believe that the testimony given indicated that [Crofton] was negotiating in good faith with the county and did not believe that it was necessary to file an appeal until a final decision was rendered.” The Circuit Court for Anne Arundel County affirmed the decision of the Board of Appeals, and this appeal followed. In ²⁴² order to determine whether the circuit court erred, we must repeat its task. Mortimer v. Howard Research and Development Corp., 88 Md.App. 432, 442 , 575 A.2d 750, 755 , cert. denied, 321 Md. 164 , 582 A.2d 499 (1990). In reviewing the decisions of a county Board of Appeals, the circuit court must determine whether the decision is “not in accordance with the law.” Maryland Code, art. 25A, § 5(U) (1957,1990 Repl.Vol.); see also Anne Arundel County Charter § 604 (1972).

In short, was the Board’s decision arbitrary, illegal, or capricious? Mortimer, 83 Md.App. at 441 , 575 A.2d 750 . A distinction is made, however, between reviewing an agency’s fact finding and reviewing its legal conclusions: [T]he order of an administrative agency must be upheld on judicial review if it is not based on an error of law, and if the agency’s conclusions reasonably may be based upon the facts proven. But a reviewing court is under no constraints in reversing an administrative decision which is premised solely upon an erroneous conclusion of law.

Younkers v. Prince George’s County, 333 Md. 14, 19 , 633 A.2d 861 (1993) (quoting People’s Counsel v. Maryland Marine, 316 Md. 491, 496-97 , 560 A.2d 32 (1989) (citations omitted)). What is at issue here is which of several events commenced the running of the 30-day appeal period. Therefore, the Board’s determination that Crofton’s appeal was untimely is a conclusion of law. Consequently, we need accord no deference to the Board’s decision.

See Liberty Nursing Center, Inc. v. Department of Health & Mental Hygiene, 330 Md. 433, 443 , 624 A.2d 941 (1993) (no deference is appropriate and reviewing court may substitute its judgment for that of the agency when issue before agency is one solely of law).

II

According to Article 27, § 2-508 of the Anne Arundel County Code, the fee for connecting water and wastewater facilities is determined by the date connection permits are applied for. Crofton asserts that its application was made on June 30, 1989. Conversely, the County asserts that Crofton’s ²⁴³ application was not made until June 30, 1990. It is well established that the decision of an administrative agency or official must be final before it may be judicially reviewed.

U.S. Health, Inc. v. State, 87 Md.App. 116, 120 , 589 A.2d 485 , cert. denied, 324 Md. 69 , 595 A.2d 482 (1991). This requirement is not negated because we are here dealing with administrative review, rather than judicial review. The inquiry we must therefore make is when the County’s decision that Crofton’s submission of application forms on June 30, 1989 did not constitute an “application made” pursuant to § 2-508 was final. Had the County explained in writing why it was returning Crofton’s June 30, 1989 application forms, that explanation may well have constituted a final appealable decision.

Implicit in the requirement that an appeal lies only from a final decision, however, are the correlative requirements that the aggrieved party know that the decision has been made and that the decision is final. See Clarke v. Greenwell, 73 Md.App. 446, 452-53 , 534 A.2d 1344 (1988) (finding appeal time to have begun at point where “all parties are clearly informed of the time running for an appeal” is the “better result”). The County’s unexplained return of Crofton’s June 30, 1989 application forms did not constitute a final appealable decision. We next evaluate the date chosen by the Board as constituting the County’s “final decision,” i.e., the date Crofton’s building permits were issued and the balance of the facility connection charges collected.

If, as the County asserts, a valid connection permit application was not filed until June 30, 1990, the capital facility connection charges could not have been calculated until that date. Until that date, all payments toward the capital facility connection charges would simply have been estimates, subject to revision by the County when the charges became final. Upon plat approval in February 1989, Crofton was required to pay 25% of the connection charges in order to receive its water and wastewater alloca ²⁴⁴ tion. 5 The amount paid, $345,100, was based upon the charges effective prior to July 1, 1989. No one contends that the connection assessment was final at that point.

Neither then can the payment made in January 1990, based upon the charges effective prior to July 1, 1990, be considered a final assessment of charges. In the absence of anything more, neither estimated payment constitutes the County’s final decision with respect to the total assessment. 6 Thus, without further action by the County,