A recent decision by the state’s Supreme Judicial Court reversed a Land Court decision that voided a zoning change made by officials at Bellingham’s Town Hall (pictured above) because the developer offered the community $8 million payment to help build a local school.
Developers can now breathe a sigh of relief. A recent Massachusetts Supreme Judicial Court decision means, for one, that they won’t have to worry about lawsuits questioning the legitimacy of past “contract zoning” decisions and resulting projects, a situation that could have jeopardized financing and left some developments in a sticky mess.
But the case – which enforces municipalities’ power to rezone property based on its own stipulations – still casts a shadow over how much cities and town can ask of developers outside the realm of the project.
“This doesn’t clarify things any further,” said David Begelfer, chief executive officer of the National Association of Industrial and Office Properties’ Massachusetts chapter. “It states that just because a developer is making contributions, that doesn’t mean that it taints the zoning process. If the case had stood at its original decision, it would have put developers in a tough situation – there was no grandfathering, so they could have gone back five years ago and questioned rezoning decisions.”
The case began in 1997, when Belligham approved the rezoning of a parcel of land from agricultural and suburban to industrial use at the request of IDC Bellingham, a company that intended to build a power plant on the site. During negotiations with the town council, IDC said that it would fill an $8 million shortfall the town needed to construct a new high school – if the company decided to build the plant and if it operated successfully for one year.
Four years later, the town approved special-use permits for the power plant’s construction but within a month of the decision, a group of neighbors filed a Land Court suit against IDC, the town and the property owner. They said that the 1997 zoning was illegal because the town based its decision on an $8 million gift.
The Land Court judge agreed, concluding that the decision was “offensive to public policy” and the offer of $8 million, by itself, was enough to void the rezoning decision. The Supreme Judicial Court reversed the decision Aug. 15.
“Sometimes people get a bad taste in their mouth from contract zoning,” said Thomas A. Broadrick, the out-going president of the American Planning Association and the director of planning, zoning and historic preservation for the town of Barnstable. “But if it benefits a town or city then it seems to have a positive aspect.”
The final decision creates more certainty, particularly from a financing perspective, said Robert Fishman, a real estate and land use attorney and partner at Nutter, McClennen & Fish in Boston. Now, developers can rely on a municipality’s decision to rezone. Fish said that it also makes developers’ voluntary offers of aid within or outside the scope of a project valid, in and of themselves.
Bargaining Power
But the case further establishes something else – it gives municipalities back their bargaining power, something that Barnstable Town Attorney Robert Smith said should never have been questioned in the first place.
Legislation in 1966 reversed the long-held “Dillon’s Law,” which said that local governments have few, if any, powers outside those granted specifically by the Legislature. Home Rule, as it’s known, eliminated that reasoning but Smith said that Land Court judges even today don’t always acknowledge the power of municipalities to act in their own interest – just as Bellingham did in the power plant case.
“Here it is, 37 years since Home Rule was adopted and we’re still struggling with the basics,” Smith said. “I hope that this will put that to bed permanently.”
The misconceptions hurt developers and municipalities, according to Smith.
“No one wants to be dealing with someone that can’t deliver; it’s a waste of time,” Smith said.
It’s been six years since the Bellingham case began. Since then, IDC Bellingham has withdrawn its plans to develop the land.
“Although the plaintiffs lost, they won,” said Lee G. Amber, the town attorney for Bellingham. “The power plant people said forget about it.”
But Amber said the real significance is that the land changed from agricultural and suburban use to industrial and there is now nothing to prevent the almost 100 acres from being used for future industrial development. Smith said that, at least with the power plant’s proposal, the company would have developed less than half of the land and provided substantial buffers between the surrounding neighborhoods.
The town also missed out on the $8 million.
