N. End Realty, LLC v. Mattos

NORTH END REALTY, LLC v. THOMAS MATTOS, in his capacity as Finance Director for the Town of East Greenwich, Rhode Island and, LEE R. WHITAKER, in his capacity as Town Planner for the Town of East Greenwich MICHAEL B. ISAACS KIM A. PETTI MARK SCHWAGER HENRY V. BOEZI, and JOHN M. McGURK in their capacities as Members of the Town Council for the Town of East Greenwich, Rhode Island

C.A. No. KC 07-1008

STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS KENT, SC. SUPERIOR COURT

FILED: April 24, 2013

DECISION

NUGENT, J. Before the Court are Plaintiff's motion for summary judgment and Defendants' cross-motion for summary judgment. For the reasons set forth in this Decision, the Court denies Plaintiff's motion for summary judgment and grants Defendants' motion in part. Jurisdiction is pursuant to Superior Court Rules of Civil Procedure 56(c).

IFacts and Travel¹

As a means of addressing the state's affordable housing shortage, G.L. 1956 § 45-53-1 etseq.,² the Rhode Island Low and Moderate Income Housing Act (LMIHA or the Act), requires all local towns and cities to provide affordable housing that "is in excess of ten percent (10%) of the year-round housing units reported in the census." Sec. 45-53-3(4)(i). The Act stipulates that any municipality lacking the requisite number of affordable housing units must have prepared a comprehensive plan by December 31, 2004, including a "housing element," that would serve to bring the municipality into compliance with the Act. Sec. 45-53-4(c). The LMIHA further provides that the municipality's comprehensive plan must be adopted and approved pursuant to G.L. § 45-22.2-1 et seq., the Rhode Island Comprehensive Planning and Land Use Regulation Act. Sec. 45-53-3(4)(ii). Pursuant to this latter act, the municipality's comprehensive plan must be enacted by the municipality's legislative body and then submitted for approval to the State Director of Administration. Sec. 45-22.2-8(c).

In 2004, a study conducted by the Rhode Island Housing and Mortgage Finance Corporation determined that only 4.36 percent of the available housing in the Town of East Greenwich (Town) qualified as affordable and that the Town needed 292 additional units of affordable housing to meet the ten percent (10%) requirement outlined in the Act. N. End Realty, 25 A.3d at 531. Due to this shortage, the Town prepared a comprehensive plan to bring the municipality into compliance with the Act. Id. Prior to the 2004 year-end deadline established by the LMIHA, the East Greenwich Town Council (Town Council) adopted a comprehensive plan, which was then submitted to the State Director of Administration for approval. Id. This plan was approved on September 26, 2005 by the State Director of Administration, and on November 6, 2006, the Town Council adopted three ordinances designed to implement the strategies outlined in the plan. Id.

These ordinances—numbered 778, 779, and 780—included a requirement that real estate developers either designate fifteen percent (15%) of the units in any subdivision or major residential land development as affordable housing or pay the Town $200,000 as a "fee-in-lieu" of constructing the required number of affordable housing units. Id. at 532. According to the ordinances, the "fee-in-lieu"—or a fractional percentage thereof—was to be paid for each affordable housing unit that should be built in order to meet the fifteen percent (15%) affordable units required out of the total approved number of units. Id. Pursuant to ordinance 780, an "Affordable Housing Commission" would receive fees paid and would deposit such fees into an "Affordable Housing Trust Fund." This commission would then oversee distribution of the funds to different loan and grant programs which would be established for the purpose of developing and preserving affordable housing.

Plaintiff North End Realty, LLC (Plaintiff or North End), is a real estate developer which owns real property located in East Greenwich, comprised of approximately 20.72 acres, which is specifically designated as Assessor's Plat 19C, Lots 31 and 32 (Property). Id. at 528. On March 28, 2006, North End filed a pre-application with the Town of East Greenwich Planning Board (Planning Board) for the development of a five-lot subdivision on the Property. Id. On November 6, 2006, subsequent to the Plaintiff's filing, the Town adopted the three new above-mentioned ordinances for the purpose of promoting development of affordable housing within the Town. Id. at 529.

On February 20, 2007, North End filed a petition for both master and preliminary plan review and approval with the Planning Board for development of the planned subdivision, pursuant to the Town's Planning Board requirements. Id. These plans outlined Plaintiff's intention to build five residential dwellings and also indicated that North End did not intend toinclude any affordable housing units as part of the subdivision. Id. On May 16, 2007, the Town approved North End's preliminary plan with conditions, one of which required that North End pay a fee-in-lieu before Plaintiff would be allowed to record the subdivision approval or begin to develop the Property.³ Id.

On September 13, 2007, North End filed a Complaint seeking declaratory and injunctive relief against Thomas Mattos, in his capacity as Finance Director for the Town; Lee R. Whitaker, in his capacity as Town Planner; and Michael B. Isaacs, Kim A. Petti, Mark Schwager, Henry V. Boezi and John M. McGurk, all in their capacities as members of the Town Council (collectively Defendants). In the Complaint, North End alleged that the fee-in-lieu requirement contained in the Town's ordinances violated its right to substantive due process, constituted a regulatory taking in violation of Article 1, section 16 of the Rhode Island Constitution, and was an illegal tax in violation of Article 13, section 5 of the Rhode Island Constitution.

On January 7, 2008, North End filed a motion for injunctive relief, requesting that the Town be "enjoined from mandating a fee-in-lieu of construction of affordable housing units to be assessed and charged upon [North End] and similarly situated property owners seeking to develop and/or subdivide their property." In this motion for injunctive relief, North End made the same allegations as it had in its Complaint, with additional claims that the Town's fee-in-lieu requirement violated Plaintiff's right to procedural due process and equal protection under theRhode Island Constitution, and also that the Town had imposed the fee-in-lieu "without any explicit authority from the General Assembly." This motion was heard on February 22, 2008, before a Superior Court justice who issued a written Decision on April 22, 2008, denying North End's motion for injunctive relief.

After final judgment entered, North End filed an appeal with our Supreme Court. Our Supreme Court held that state statutory provisions which require municipalities to provide affordable housing do not authorize the Town to charge a fee-in-lieu of undertaking the construction of affordable housing, and thus the Town could not require developers to pay such a fee in the absence of legislative authority. Id. at 538. Because the Supreme Court determined that the Town could not properly impose a fee-in-lieu without specific legislative authorization, it did not entertain Plaintiff's other arguments on appeal. Id. at n.10.

Plaintiff filed an Amended Complaint on September 14, 2011, and on February 12, 2013, filed the instant motion for summary judgment as to Counts I, III, and VI, claiming that no genuine issues of material fact remain and that Plaintiff is entitled to judgment as a matter of law. Defendants filed an objection to this motion, claiming that Plaintiff has failed to exhaust all available administrative remedies prior to pursuing the matter with this Court, warranting dismissal of the action. Defendants also filed a cross-motion for summary judgment, claiming that if the Court will entertain Plaintiff's claims at this time, Defendants are instead entitled to summary judgment on Counts I, III, and VI of Plaintiff's Amended Complaint. At a March 25, 2013 hearing, the parties offered their respective arguments, and this Court reserved decision on all issues presented.

IIExhaustion of Administrative Remedies

As a preliminary matter, this Court must first determine whether Plaintiff has failed to exhaust all administrative remedies available before pursuing an action before this Court. Defendants maintain that Plaintiff failed to appeal the Planning Board's preliminary decision to the Town's Zoning Board of Review, as provided for in both the General Laws and the Town's Code of Ordinances, and has also failed to return to the Planning Board to complete the appeal process after the Supreme Court issued its opinion.⁴ Defendants assert that this Court should therefore dismiss Plaintiff's action for failure to exhaust its administrative remedies and not adjudicate Plaintiff's motion for summary judgment.

As a general rule, an aggrieved party must exhaust all administrative remedies before resorting to the judicial system for relief. Burns v. Sundlun, 617 A.2d 114, 116 (R.I. 1992). This exhaustion rule mandates the withholding of judicial review "until the administrative process has run its course." U.S. v. Western Pac. R.R. Co., 352 U.S. 59, 63 (1956); R.I. Emp't Sec. Alliance v. Dep't of Emp't & Training, 788 A.2d 465, 467 (R.I. 2002). There are exceptions to this general rule, however, and a court may forego the exhaustion of administrative remedies when an appeal to an administrative review board would be futile or uselessly delay judicial review. Burns, 617 A.2d at 117; M.B.T. Construction Corp. v. Edwards, 528 A.2d 336, 228 (R.I. 1987).

In Nardi v. City of Providence, 89 R.I. 437, 153 A.2d 136 (1959), our Supreme Court stated that the exhaustion rule is applicable to cases where a litigant contends that an ordinance is unconstitutional in its application to...