Mrose Dev. Co. v. Turner Cnty. Bd. of Cnty. Comm'rs

1

2024 S.D. 28

MROSE DEVELOPMENT CO., LLC and JASON SCHUMACHER, Petitioners and Appellees, v. TURNER COUNTY BOARD OF COUNTY COMMISSIONERS, Respondent and Appellant.

No. 30339-r-MES

Supreme Court of South Dakota

May 22, 2024

ARGUED MARCH 19, 2024

APPEAL FROM THE CIRCUIT COURT OF THE FIRST JUDICIAL CIRCUIT TURNER COUNTY, SOUTH DAKOTA THE HONORABLE DAVID KNOFF Judge

RONALD A. PARSONS, JR. of Johnson, Janklow & Abdallah, LLP

Sioux Falls, South Dakota

KATELYNN B. HOFFMAN of

Tuner County State's Attorney

Parker, South Dakota

Attorneys for respondent and appellant.

ANDREW S. HURD

SHAWN M. NICHOLS of Cadwell, Sanford, Deibert & Garry, LLP

Sioux Falls, South Dakota

Attorneys for petitioners and appellees.

SALTER, Justice

[¶ 1.] MRose seeks to develop Turner County farmland located along Swan Lake into 15 lakefront lots. The land for the proposed development is currently included in an agricultural zoning district. Because of residential density restrictions, MRose applied to rezone the land into a lake residential district. The Turner County Board of County Commissioners (the County) voted to deny the application, and MRose appealed to the circuit court, which reversed the County's decision. The court interpreted Turner County's zoning ordinance to require approval of the rezoning application as a purely ministerial act because the land was situated along Swan Lake. The County appeals, and we reverse.

Factual and Procedural Background

[¶2.] Christe Stewart lives in Sioux Falls but owns 145 acres of family farmland located on the west side of Swan Lake in Turner County. Stewart inherited the land from her parents and indicates that she wants to develop it into residential lots, in part, so that she and her two sons can build homes along the lake. Stewart and real estate agent Jason Schumacher formed MRose Development, Co., LLC, to develop a portion of her land into 15 lakefront lots.

[¶3.] But Stewart's land is currently included in the "A-l Agricultural District" under Turner County's 2008 Revised Zoning Ordinance (2008 Zoning Ordinance). Article 3 of the 2008 Zoning Ordinance governs the Agricultural District and includes residential density requirements to preserve the agricultural nature of the district. Single-family dwellings are permitted uses within the Agricultural District, but only one building eligibility is allowed per 40 acres with the additional requirement that each single-family dwelling must be on at least a 2.5-acre lot.

[¶4.] In order to avoid these restrictions and begin constructing its 15-lot residential development, MRose submitted an application to rezone Stewart's land to the Turner County Planning and Zoning Commission.^[1] The application sought to redesignate the land and include it in the "Lake Residential District," which, according to the 2008 Zoning Ordinance, exists "to provide for orderly residential development around lakes." The parties agree that rezoning the land, if permitted, would allow MRose's planned development as a permitted use.

[¶5.] The Turner County Planning and Zoning Commission considered MRose's rezoning application at a public hearing and recommended approval to the Turner County Board of County Commissioners. A proposed ordinance that would have rezoned Stewart's land to Lake Residential received a first and second reading at regular meetings of the county commission in June 2022. Following public comment, the motion to pass the rezoning ordinance failed to carry by a vote of 2-2 with one of the commissioners absent.

[¶6.] The 2-2 vote effectively denied MRose's rezoning application, but the County decided to reconsider it with all five commissioners present at its June 28, 2022, meeting. Although there is no transcript or further record of the discussion, the parties agree that MRose's rezoning application and the related proposed ordinance produced strong public opposition, principally from current Swan Lake residents. Ultimately, the minutes reveal only that the "motion failed." The parties agree that two commissioners voted to approve the ordinance, and three opposed it.

[¶7.] MRose appealed to the circuit court using the review procedures set out in SDCL Chapter 7-8. The record reveals considerable imprecision about the correct standard for the circuit court's review of the County's decision. The parties at several points described the County's decision as a quasi-judicial one and suggested the court could effectively retry the rezoning matter "de novo," meaning without any deference. See SDCL 7-8-30 ("Each cause shall be heard and determined de novo, except any appeal relating to a conditional use permit determination."). However, the parties and the court also noted at other points that the court should review the County's decision deferentially under an arbitrariness standard, which is appropriate where a county commission's decision reflects its legislative or administrative—but not quasi-judicial—authority. See infra ¶ 32.

[¶8.] In any event, the circuit court agreed that MRose could present evidence as part of its appeal, much of which appeared to be directed toward a de novo retrial on the merits of the County's decision—i.e., whether the elected commissioners' decision was a good one. For instance, MRose's first witness was its majority owner, Jason Schumacher, who testified that he had carefully planned the proposed development and did "[everything to a T." He explained that MRose had hired a civil engineer and contacted state agencies regarding any impact the development would have on local wildlife and conservation efforts. Schumacher testified that he had also consulted the 2008 Zoning Ordinance while creating the subdivision's Master Declaration of Covenants and Restrictions, which, he explained, went "above and beyond" what the 2008 Zoning Ordinance required for property in the Lake Residential District.

[¶9.] Schumacher also testified about what occurred at the commission meetings. In particular, he testified that he never received an explanation for the "no" votes, despite asking for one. Instead, he was told that "we don't have to provide that."

[¶10.] On cross-examination, Schumacher acknowledged that the subdivision proposal was met with substantial opposition from current Swan Lake residents. He recalled fielding questions at a local informational meeting and stated, "I had, like, 60 people standing in the front yard rapid-firing me." Specifically, Schumacher explained that "they don't want any more neighbors," "they don't want. . . outside people coming in," they do not "want us to ruin their sunset."

[¶11.] However, Swan Lake resident Doug Berens favored MRose's proposed development and testified before the circuit court. He acknowledged that his support was influenced by the fact that he also owned an undeveloped parcel of land along the lake's west bank whose value could increase if residential development was permitted.

[¶12.] Berens also testified about an exchange he had with one of the county commissioners who had voted against the rezoning ordinance. Commissioner Tony Ciampa is a plumber and was performing some work for Berens when Berens asked Ciampa about his vote. The conversation occurred after the tie vote but prior to the final vote, and Berens testified that Ciampa explained his vote by referring to the wishes of Stewart's deceased father who, Ciampa claimed, "really didn't want it developed back" when he was living.

[¶13.] This testimony was the subject of a hearsay objection by the County. The circuit court initially sustained the objection but allowed Berens' testimony as an offer of proof. MRose referenced the arbitrary standard and argued that Berens' testimony concerned the arbitrary nature of Ciampa's vote. The court stated that it would later "determine whether I'm going to consider it" under the hearsay exclusion that allows a statement made by an opposing party when made by an individual in a representative capacity. See SDCL 19-19-801(d)(2).

[¶14.] MRose called Stewart as the third and final witness at the circuit court's evidentiary hearing. Stewart explained she had inherited the land from her parents and remained actively involved with it. Though she lives in Sioux Falls, Stewart testified that she has close and continuing connections to Turner County and the community of Hurley, which is located near Swan Lake. Even with the subdivision, Stewart explained that some of the land would still be available to farm. Stewart expressed her desire to build her retirement home along Swan Lake and create a place for her children and grandchildren to visit and enjoy. In Stewart's view, the County's decision was simply "not fair" because it was her "God-given right and constitutional right" to develop her land as she intended.

[¶15.] Stewart admitted that even with its Agricultural District zoning, her land qualified for four building eligibilities—enough for she and her husband, one for each of her two sons, plus one additional eligibility. But Stewart explained that without the revenue that the subdivision would generate, she could not afford to install the water, sewer, and road infrastructure necessary to develop the land.

[¶16.] At the close of testimony, the circuit court engaged counsel with questions concerning their legal positions. MRose argued that, in its view, the 2008 Zoning Ordinance "already contemplate[s] that this would be a use permitted on the lake[,]" and so the County did not have any discretion to deny the rezoning application. The County, however, claimed that MRose was "skipping a step" that required the County to exercise its independent authority to evaluate the rezoning application and vote on the related ordinance.

[¶17.] Despite several references to the...