Queen Anne's Conservation, Inc. v. County Commissioners

HARRELL, J. Development Rights and Responsibilities • Agreements (“DRRAs”) are a relatively recent addition to the Maryland toolbox of land use and development implements approved by the Legislature for possible use by many local political subdivisions and the legal or equitable owners of real properties desiring to develop their properties. Although many states, such as California in 1979, preceded Maryland in recognizing the use of DRRAs or their equivalents, our Legislature lingered until 1995 before enacting § 13.01 (“Development Rights and Responsibilities Agreements”) of Article 66B (“Land Use”) of the Maryland Code. 1 The legislation seems to ³⁰⁹ be the result of the balancing of developers’ and property owners’ desires for a larger measure of certainty than that offered by proceeding 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. See generally, Brad K. Schwartz, Development Agreements: Contracting for Vested Rights, 28 B.C. Envtl. Aff.

L. Rev 719 (2001); David L. Callies and Julie A. Tappendorf, Unconstitutional Land Development Conditions and The Development Agreement Solution: Bargaining For Public Facilities After Nollan and Dolan, 51 Case W. Res. L. Rev. 663 (2001); John J. Delaney, Development Agreements: The Road From Prohibition to “Let’s Make a Deal!,” 25 Urb. Law. 49 (1993). As explained in the amicus brief of the National Association of Home Builders filed in the present case: “[A] central purpose of the development agreement is to vest development rights in the landowner or developer in exchange for the dedication and funding of public facilities.

A vested right allows development of a proposed use of land to proceed even when subsequent changes in zoning regulations would render the proposed use impermissible.... “Development agreements are public contracts between a municipality and a property owner or developer, and are executed pursuant to state law as part of the development approval process. Such agreements can be executed in conjunction with the rezoning of land, at a post-zoning stage of the development review process (such as subdivision or ³¹⁰ site plan review), or at the time of permit approval. Aside from developers and builders, [local governments] find these agreements advantageous as sources of funding for major infrastructure, and as an assurance for the timely provision of needed public facilities and amenities.” Amicus brief at 2-4 (footnotes omitted). The present case does not call for us to scrutinize the validity of § 13.01 of Article 66B or even of the execution of the particular DRRA that instigated the litigation.

Rather, this appeal touches upon an important, but tangential threshold issue, which necessitates that we determine the correct path to be followed by a person or entity, not a party to a DRRA, but who feels aggrieved by the execution of the agreement, in obtaining scrutiny of the legal bona fides of the DRRA. I. On 17 September 2002, a DRRA was entered into by K. Hovnanian at Kent Island, L.L.C., (“Hovnanian”) and the County Commissioners of Queen Anne’s County (“the County Commissioners”). Shortly thereafter, the Queen Anne’s Conservation Association, Inc., and seven individual plaintiffs (collectively “the Conservation Association”) filed a Complaint in the Circuit Court for Queen Anne’s County, naming Hovnanian and the Commissioners as defendants, seeking declaratory and injunctive relief to the effect that the DRRA was invalid. In response, the defendants filed a Motion to Dismiss urging that the Conservation Association failed to exhaust available, exclusive administrative remedies before seeking judicial scrutiny.

The Circuit Court entered judgment in the defendants’ favor on 25 February 2003, preeminently holding in its declaratory judgment that the Conservation Association failed to follow the statutory procedure for appeals of administrative decisions to the Board of Appeals for Queen Anne’s County. The result was dismissal of the Complaint because the Conservation Association, having missed the deadline for noting such ³¹¹ an administrative appeal, could not now perfect one. The Conservation Association appealed to the Court of Special Appeals. We, on our initiative and before the appeal could be decided in the intermediate appellate court, issued a writ of certiorari to determine whether the Circuit Court properly dismissed the Complaint for declaratory and injunctive relief based on the Conservation Association’s failure to exhaust administrative remedies.

Queen Ann’s Conservation v. County Commissioners, 379 Md. 224 , 841 A.2d 339 (2004). Appellants, the Conservation Association, present the following two questions for our consideration: I. Where Queen Anne’s County has no administrative remedy available to challenge a developer’s rights and responsibilities agreement by appeal to the Queen Anne’s County Board of Appeals, is such a challenge properly brought in a declaratory action?

II

Is an administrative appeal from a developer’s rights and responsibilities agreement mandated by Article 66B, § 4.08, which applies to “zoning actions” of a local legislative body? We hold that Appellants, in pursuing a challenge to the execution of the DRRA in this case, were first required to file an appeal to the Board of Appeals and obtain a final administrative decision prior to seeking judicial review in the Circuit Court. Therefore, we shall affirm the Circuit Court’s judgment dismissing this action for Appellants’ failure to exhaust an available and exclusive administrative remedy. Accordingly, we need not address the second question raised by Appellants.

II

Hovnanian is the developer of a proposed “active adult, age-restricted community” on Kent Island in Queen Anne’s County. The 560-acre community is to be known as Four Seasons at Kent Island (“Four Seasons”) and would consist of 1,350 residential units, an assisted living facility, and recreational uses. The Four Seasons property is zoned, in the vernacular ³¹² of the Queen Anne County zoning ordinance, Stevensville Master Planned Development Zone and Chester Master Planned Development Zone. The property is identified in both the Chester Community Plan of 1997 and the Stevensville Community Plan of 1998 as a “Planned Growth Area” and was “pre-mapped” to receive a Chesapeake Bay Critical Area Growth Allocation.

The uses sought by Hovnanian were permitted ones generally under the existing zoning, but subject to subdivision and site plan review and approval processes. A. Administrative Proceedings Hovnanian submitted an application to the Queen Anne’s County Planning Commission (the Planning Commission) for Concept/Sketch Plan approval for Four Seasons in June 1999. The application was reviewed by Queen Anne’s County planning and public work officials, Chesapeake Bay Critical Area Commission staff, and various other State and County departments and agencies. On 26 April 2000, the Planning Commission approved the Concept/Sketch Plan.

Hovnanian next filed a petition with the County Commissioners requesting Growth Allocation approval to change the Chesapeake Bay Critical Area Land Use Designations on the property. The petition requested that roughly 293.25 acres be redesignated from the Chesapeake Bay Critical Area designation of Resource Conservation Area to Intense Development Area, and roughly 79.55 acres be redesignated from Limited Development Area to Intense Development Area. Following a public hearing before it on 13 July 2000, the Planning Commission recommended that the County Commissioners approve Hovnanian’s request for Growth Allocation, subject to certain conditions, one of which was that Hovnanian enter into a DRRA with the County before final plan approval. On 6 December 2000, after yet another public hearing, the Chesapeake Bay Critical Area Commission endorsed the Petition for Growth Allocation, also with certain conditions.

The County Commissioners conducted another public hearing on 27 February 2001. As a result, the County Commissioners made substantial and detailed findings of fact concern ³¹³ ing Hovnanian’s request for Growth Allocation. On 10 April 2001, the County Commissioners approved the redesignation of the Chesapeake Bay Critical Area Land Use Designations of the Four Seasons property, subject to conditions, including the execution of a DRRA. On 14 June 2001, the Planning Commission reviewed and approved an amended Concept/Sketch Plan for the Four Seasons, which had been revised to reflect the later conditions imposed by the Planning Commission, the Critical Area Commission, and the County Commissioners during the Growth Allocation process.

On 20 August 2001, the County Commissioners adopted ordinances that required a DRRA as a condition of the Growth Allocation approval. Ultimately, on 20 May 2002, Hovnanian filed a Petition for a DRRA, pursuant to the enabling legislation in Maryland Code (1957, 2003 RepLVol.), Article 66B § 13.01 2 and the imple ³¹⁵ menting provisions of Queen Anne’s County Code (“QACC”) §§ 18-1301 through 1311. 3 The draft DRRA was vetted ³¹⁷ through a series of hearings before the Planning Commission and the County Commissioners. On 11 July 2002, the Planning Commission considered the proposed DRRA at a public hearing. At the hearing, the Planning Commission indicated that there were certain technical issues that yet needed to be addressed, but concluded nonetheless that the proposed DRRA was consistent with the 2002 Comprehensive Plan for Queen Anne’s County, as well as the applicable Stevensville and Chester Community Master Plans.

The County Commissioners held a public hearing on the proposed DRRA on 6 August 2002. Following the public hearing, the proposed DRRA was modified based on comments from all the previous hearings. On 17 September 2002, a final DRRA was executed by Hovnanian and the County Commissioners. In pertinent part, the DRRA: (1) established limitations on allowable development, including limitations on density and intensity; (2) established detailed requirements concerning public improvements to be financed by Hovnanian, ³¹⁸ including a dedication of parkland, construction of park facilities, purchase of off-site parkland, construction and reconstruction of public roads and paths, and construction of public facilities both on-site and off-site; (3) established timing for water and sewer allocation; (4) required substantial cash payments to the Kent Island Volunteer Fire Department and to the County; and (5) froze the laws and regulations governing the use, density or intensity of the development as of the date of the execution of the Agreement for the duration of the Agreement.

The DRRA was recorded on 18 September 2002. B. Circuit Court Proceedings The Conservation Association filed a Complaint for Declaratory and Injunctive Relief with the Circuit Court for Queen Anne’s County on 8 October 2002, asserting an array of legal defects with regard to the DRRA. The Conservation Association requested a declaration that the DRRA was an illegal contract violative of a prohibition against conditional use zoning; that the DRRA was illegal contract zoning; that the DRRA was violative of constitutional due process because it created preferences for Hovnanian’s project denied to other developers under the law; that the process leading to approval and execution of the DRRA violated the hearing requirements of § 13.01(j)(2) of Article 66B because certain provisions were inserted in the final draft which did not appear in the earlier versions that were the subject of public hearings; and, that the DRRA violated the County’s existing moratorium on new development and, thus, rendered the moratorium a special law contrary to Article III, § 33 of the Maryland Constitution. Hovnanian and the County Commissioners filed a Motion to Dismiss, under Maryland Rule 2-322, arguing, among other things, that the Conservation Association failed to exhaust available administrative remedies by not appealing to the Board of Appeals for Queen Anne County.

After briefing and oral argument on 25 February 2003, the Circuit Court dismissed the Complaint, reasoning preeminently that the Conservation Association should have appealed the County Commissioners’ approval and execution of the DRRA to the ³¹⁹ County Board of Appeals (“the Board”), as required by Maryland Code (1957, 2003 RepLVol.), Article 66B § 4.07 and QACC §§ 18-1-174 through 18-1-180. The Board is to “hear and decide appeals where it is alleged there is an error in any order, requirement, decision, or determination made by an administrative officer in the enforcement of [Art. 66B] or of any ordinance adopted under this article.” Md.Code (1957, 2003 RepLVol.), Art. 66B § 4.07(d)(1). Similarly, QACC § 18-l-175(a) provides that “the Board shall have the power to hear and decide appeals where it is alleged that ... there is error in any order, requirement, decision, or determination made by an administrative official in the enforcement of Article 66B of the Annotated Code of Maryland or this subtitle....” The Circuit Court concluded that, when the County Commissioners approved and executed the DRRA, it acted collectively as an “administrative officer,” i.e., as the “public principal” contemplated in the DRRA enabling legislation, defined as “the governmental entity of a jurisdiction that has been granted the authority to enter agreements under ... this section.” Md.Code (1957, 2003 Repl.Vol.), Article 66B § 13.01(a)(4). The administrative process of appealing to the Board, therefore, was available to the Conservation Association and a necessary step in the process of seeking redress on its claims.

The Circuit Court also considered Article 66B, § 4.08, which provides for immediate judicial review by a circuit court of a “zoning action of a local legislative body.” Md.Code (1957, 2003 Repl.Vol.), Article 66B § 4.08(a)(1). The court concluded, however, that because the County Commissioners had acted administratively as a statutory “public principal” when it executed the DRRA, it did not act as a “local legislative body,” a prerequisite to immediate judicial review under Article 66B, § 4.08. Alternatively, it seems, the court also concluded that “if no distinction is made between the exercise of the county’s powers as a governing body and its powers as public principal, i.e., ³²⁰ it is viewed as ‘a local legislative body’ in both instances, the result would be direct review by this Court under § 4.08.” In other words, Article 66B, § 13.01, in the Circuit Court’s view, might countenance different methods of review. In either event, however, because the Conservation Association sought neither an administrative appeal to the Board of Appeals nor judicial review pursuant to Maryland Rules 7-201 through 7-209, dismissal of the Complaint for Declaratory and Injunctive Relief was proper.

We shall affirm the judgment of the Circuit Court in dismissing this case for Appellants’ failure to exhaust their available administrative remedies. The Conservation Association’s proper recourse in the present case was an administrative appeal to the Board of Appeals under Article 66B, § 4.07 and, if aggrieved by the Board of Appeals’s final action, a petition for judicial review in the Circuit Court.

III

As alluded to earlier, Queen Anne’s County is a Code home rule county within the purview of Article 25B of the Maryland Code. Article 66B of the Maryland Code, governing land use, applies to Code counties and requires the legislative bodies of such counties to “provide for the appointment of a board of appeals.” Md.Code (1957, 2003 Repl.Vol.), Art. 66B, § 4.07(a)(1). Each board of appeals possesses expressly delegated general powers, including the power to “[h]ear and decide appeals where it is alleged there is an error in any order, requirement, decision, or determination made by an administrative officer in the enforcement of this article [i.e., Art. 66B] or of any ordinance adopted under this article.” Md.Code (1957, 2003 Repl.Vol.), Art. 66B, § 4.07(d)(1). In Miller v. Pinto, 305 Md. 396 , 403 n. 4, 504 A.2d 1140 , 1143 n. 4 (1986), we stated that “the local legislative body in a code county is required to enact local laws authorizing the county’s board of appeals to exercise the powers provided by § 4.07(d) of Article 66B.” Accordingly, the County Commissioners enacted an ordinance establishing the Board of Ap ³²¹ peals of Queen Anne’s County.

QACC § 18-l-174(a). The establishing ordinance states that “the Board shall have the powers and duties provided in Article 66B of the Annotated Code of Maryland and in this subtitle.” QACC § 18 — 1—174(b). Mirroring the delegation of powers in Article 66B, the County Commissioners granted the Board “the power to hear and decide appeals where it is alleged that: (i) there is error in any order, requirement, decision, or determination made by an administrative official in the enforcement of Article 66B of the Annotated Code of Maryland.” QACC § 18 — 1—175(a)(l)(i). A. “Administrative Officer” 4 The Conservation Association contends that the County Commissioners did not act as an “administrative official” because its determination of the DRRA’s contents was a fundamentally legislative, rather than an administrative act.

In particular, the Conservation Association points to the DRRA’s “description of the conditions, terms, restrictions or other requirements determined by the governing body of the local jurisdiction to be necessary to ensure the public health, safety, or welfare,” as being the “heart and soul” of the agreement. Md.Code (1957, 2008 Repl.Vol.), Art. 66B, § 13.01(f)(ix). The Conservation Association concludes that a determination by the governing body of the local jurisdiction as to what terms, conditions, restrictions or other requirements are necessary to ensure the public health is the “very essence” of the legislative function performed by local elected officials. We disagree with this analysis for two reasons.

First, the negotiation of terms protective of public health, safety, or welfare, in a contract entered into by a local government body is a discretionary executive act, not a legislative one. See Montgomery County v. Revere Nat’l Corp., Inc., 341 Md. 366, 390 , 671 A.2d 1, 12 (1996) (“When the executive ³²² branch of the county government, in carrying out the laws and functions of government, enters into a contract, such action constitutes the exercise of executive discretion.”). A DRRA is not an ordinance or legislation as those terms are commonly understood; rather, it is a contract whose purpose is to vest rights under zoning laws and regulations, in consideration of enhanced public benefits. Second, the “public principal,” not the “governing body,” has the principal responsibility and authority under the DRRA statute to protect the public health, safety, and welfare.

Md. Code (1957, 2003 Repl.Vol.), Art. 66B, § 13.01. As we shall explain, the County Commissioners was acting as the “public principal,” i.e., acting in its executive and administrative capacities, when it approved and executed the DRRA in this case. As a general matter, “it long has been recognized in Maryland that County Commissioners in much of their functioning act as administrators or in an executive capacity.” City of Bowie v. County Comm’rs for Prince George’s County, 258 Md. 454, 461 , 267 A.2d 172, 176 (1970). It is recognized that the protean nature of a board of county commissioners makes it “a unique body” and “somewhat of a hybrid.” Bd. of County Comm’rs of Washington County v. H. Manny Holtz, Inc., 60 Md.App. 133, 142 , 481 A.2d 513, 518 (1984).

We have noted that: County Commissioners are outgrowths of the old Levy Courts originally established by the Act of 1794, Chapter 53. These courts were composed of the Justices of the Peace of the several counties. Their duties were to meet and to adjust the ordinary and necessary expenses of their counties, and to impose an assessment or rate on property to defray county charges. During the course of the succeeding fifty years the name “County Commissioners” came into existence.

It was first recognized in the underlying law of the state in the Constitution of 1851, Article 7, Section 8. In that constitution it was provided that the commissioners should exercise only such powers and duties as the legisla ³²³ ture should from time to time prescribe. When the present Constitution of 1867 was adopted, Article VII, Section I, provided that the power and duties of County Commissioners should be such “as now or may be hereafter prescribed by Law.” Until the constitution of 1867, County Commissioners were simply administrative officers in charge of county finances, and taking care of the public roads. After the constitution of 1867 these powers could be broadened by legislative authority.

Cox v. Bd. of Comm’rs of Anne Arundel County, 181 Md. 428, 433-34 , 31 A.2d 179, 182 (1943) (citations omitted). A board of county commissioners functions as the county government and “is the county body politic. In performing its various functions, it exercises legislative, quasi-legislative, executive, and quasi-judicial authority, sometimes in combination.” H. Manny Holtz, 60 Md.App. at 144 , 481 A.2d at 518 . A board of county commissioners can, for example, control county property and roads, enact county ordinances, enforce building codes, borrow money and issue bonds — all “in addition to their authority under Art. 66B of the Maryland Code to enact, administer, and enforce zoning and land use laws.” H. Manny Holtz, 60 Md.App. at 143 , 481 A.2d at 518 .

As the present case illustrates, the County Commissioners’ particular exercise of its distinct roles in a given situation determines the appeal rights of those affected. We have held, for example, that a statute that authorized appeal to a circuit court from “an assessment made by the county commissioners” did not authorize an appeal from a tax valuation by a board of county commissioners sitting as the county board of control and review. Chesapeake & Potomac Tel. Co. v. Bd. of County Comm’rs, 116 Md. 220, 226 , 81 A. 520, 522 (1911).

Although the same individuals composed the two boards, we reasoned that “their duties are as separate and distinct in the respective capacities in which they act, as if they were different individuals.” Chesapeake & Potomac Tel. Co., 116 Md. at 225 , 81 A. at 522 . As regards DRRAs in particular, Maryland Code (1957, 2003 RepLVol.), Article 66B, § 13.01(a)(4) defines the “public ³²⁴ principal” as “the governmental entity of a local jurisdiction that has been granted the authority to enter agreements under” a local ordinance. The County Commissioners in Queen Anne’s County exercise the administrative authority of the public principal with respect to DRRAs.

QACC § 18-1302. 5 Maryland Code (1957, 2003 Repl.Vol.), Article 66B, § 13.01 enables the “public principal” to perform a series of essentially administrative tasks that include: § 13.01(c) (accepting the petition of a property owner or its representatives for a DRRA); § 13.01(d) (holding a hearing on the petition); §§ 13.01(b)(2) and 13.01(e) (executing the DRRA after obtaining the local planning commission’s approval); § 13.01(h) (amending the DRRA, if desired, by