ROADS AND SUBDIVISIONS

WHITE PAPER

by Bill Bardenwerper

Executive Summary

This “White Paper” is divided into several sections, the first being how the new versus old local Subdivisions Regulations compare as respects adjoining/connecting streets; the second being the historical approach to local development exactions both practically speaking and in light of the U.S. Supreme Court Dolan “rough proportionality” test; the third being other Kentucky law on subdivisions both generally and specifically as respects the imposition of those conditions of approval often in the form of exactions relating to such things as improvements to public streets; and the fourth being public versus private streets and the rationale for private streets under certain circumstances.

The sum and substance of this “White Paper” is as follows. First, the old versus the new Subdivision Regulation provisions regarding the adequacy of adjoining/connecting streets are pretty much the same, with one change that should give the new government some pause -- that specifically being the requirement that an actual determination of adequacy be made as opposed to the road simply being adequate. The cause for concern is expressed below.

Second, historically, the Jefferson County Department of Public Works and Transportation engaged in a process of negotiated “exactions”, which took into account both the practical limitations of imposing a requirement to build the infrastructure on developers as well as the U. S. Supreme Court “rough proportionality” test set forth in the famous Dolan case. Developers in this community have funded thousands of miles of state and county roads and local streets, and that will and should continue, as long as done in accordance with the Dolan decision and other state and federal court decisions interpreting that law.

Third, Kentucky has developed other law as respects the approval of subdivisions and the requirement to make public improvements in connection with the subdivision of land. First and foremost is that the Planning Commission is the sole body authorized to approve subdivisions of land. Second is the rule that approval of a subdivision that conforms with the underlying zoning is a ministerial act. Third is the rule that a Planning Commission acts arbitrarily if it imposes an unreasonable condition on approval of a subdivision or one that goes beyond the express authority of the applicable regulation. Fourth is the rule that a Planning Commission cannot impose a condition that an applicant cannot perform.

Fourth, there are strong practical and legal reasons for local government continuing to allow developments to be built on private, as opposed to public, streets. Home buyers are looking for innovation in housing and for safer communities. Taxpayers are looking for relief, and one way to achieve this is to insure that limited tax dollars available for local road resurfacing and maintenance is spent on those roads that are already public or that need to be created as public streets, as opposed to streets where homeowners have agreed to assume that undertaking themselves.

1. Subdivision Regulations Regarding Adjoining/Connecting Streets

Both the old and the new Subdivision Regulation provisions regarding the adequacy of adjoining/connecting streets are pretty much the same, a subject discussed below. But there is one principal change that should be noted at the outset after reading the specific regulatory language attached at Appendix A. That change is the added requirement that the Planning Commission, with input from the Public Works Department, must make an actual determination that such roads have “sufficient pavement width to safely handle projected traffic volumes.” Previously, such roads just needed to have “adequate pavement width….”; no specific determination needed to be made.

This is a significant language change that caught many by surprise, and I dare say was not well thought out. The reason is that, if a proposed new subdivision is approved, the new language gives ammunition to opponents, particularly opposing attorneys, to claim that the Planning Commission is now mandated by law to make a specific finding in every case of road adequacy. It is hard to believe that the Planning Commission will ever want to do that. The Public Works Department, for example, many times previously has understandably stated its reluctance to stick its neck out this far in this regard because of concerns about legal liability, even personal liability on the part of government officials when traffic accidents occur. If Metro Government thought about this and realized the way that plaintiffs’ lawyers look at things, they would be horrified by the legal liability that this new language adds to the government’s decision-making when roads are involved.

A return to the previous language and to the historical way of interpreting this regulation is the only wise course and, in fact, is mandated by law as described below.

2. Historical Approach Locally to Development Exactions in Light of U. S. Supreme

Court Dolan Rough Proportionality Test

Historically, the Jefferson County Department of Public Works and Transportation, which

was responsible until recently for roads where most new development locally takes place, has used the opportunity of discretionary, as opposed as ministerial, approvals to engage applicants/developers in discussions as to the appropriate level of development exactions that should be required. The system has worked well and has produced impressive results. The County Works Department historically took an aggressive position with respect to what should be required (almost always right-of-way dedications and often times extensive public improvements, usually in the form of road widenings and intersection changes such as new or re-timed traffic signals, often well beyond the perimeters of a subject property. In ministerial, as opposed to discretionary actions, however, the County Works Department’s position was usually less aggressive, although still often impressive in terms of result, focusing on perimeter improvements, especially in light of how the Subdivision Regulations as they both previously (and for that matter currently) read.

Here are just a few of several hundred examples. In the case of the Winn-Dixie Center at Blankenbaker Parkway and Shelbyville Road, the developer and property owner were required to dedicate a stretch of land 100 feet wide from Shelbyville Road all the way to Watterson Trail, a several million dollar land contribution, for the future extension of Blankenbaker Parkway - - despite the fact that the proposed retail project would work with Winn-Dixie store access to Old Main Street in Middletown and the existing Shelbyville Road and Middletown Christian Church’s access remaining at Watterson Trail. These other projects included dedications of right-of-way and, in many cases, construction funding: North Hurstbourne Parkway by STM Development Co., and HFH, Inc.; Blankenbaker Parkway south through Blankenbaker Crossings by NTS; KY 22 (Brownsboro Road) both inside and outside of the Snyder Freeway by Main Street Realty; Highway 1694 by the Norton Commons developer; South Preston Highway and Mudd Lane by Southgate Developers; and South English Station Road by Faulkner Hinton, Hogan Real Estate and Hagan Seay Properties. Thousands of miles of county roads that would never have been improved, and thousands of purely local streets would never have been built in the first place without developer funding.

Again, in the specific context of ministerial approvals such as standard or ADI subdivisions, road improvements along the perimeter of these developments and sometimes slightly beyond the perimeter (if the major road leading thereto requires improvements) have routinely been required. The recent Cedar Creek Road project, which grabbed local government’s attention because it was the first ADI subdivision, was mandated to make some $250,000 of County and State road improvements, which the developer willingly agreed to do.

In each and every one of the cited cases, and hundreds, perhaps thousands more, State, County and local roads would not have been built or improved without developer money.

Developers often complain that State or County (now Metro) money is seldom allocated to a local development project, except perhaps to road resurfacing of perimeter roads after the developer makes the principal necessary improvements to the road system. An exception is that State funding is sometimes involved in much larger projects, such as Blankenbaker Parkway which have system wide or regional import.

Part of the reason for these approaches has been practical and part legal.

The practical reason has been, especially in the case of standard and ADI subdivisions, that there has to be some limit to how far public agencies can look in terms of improvements to the public infrastructure. Once people start looking beyond the perimeter area of the subject property, they often see forever.

But the practical approach is also largely grounded in sound legal reasoning, notably the referenced Dolan v. City of Tigard, 512 U.S. 374 (1994), case, wherein the Supreme Court established a three-part test for development exactions, “best encapsulated” by the term “rough proportionality”, as the Supreme Court called it. Said the Court,

No precise mathematical calculation is required, but the city must make some sort of individualized determination that the required [exaction] is related both in nature and extent to the impact of the proposed development.

This is where the debate legally must always end. In other words, are the development exactions roughly proportional to the anticipated impacts of the proposed development? If government reaches farther into a developer’s pocket than the law allows, its hand will be slapped and the exaction will be disallowed. Damages for a “temporary regulatory taking” could even be imposed.

In a recent Supreme Court of Washington case, Benchmark Land Company v. City of Battleground, Supreme Court of Washington, July 11, 2002, it was held that a city could not require a developer to improve a street adjoining a development as a condition for issuing a development permit. In that particular case, the Benchmark Land Company filed a preliminary subdivision application with the City of Battleground, Washington, seeking to develop a 20-acre site into 56 residential lots. Two streets bordered the development, and Benchmark initially proposed to improve both of them. The City Council voted to approve the application with the condition that Benchmark make the road improvements. Benchmark began development activities but rescinded its offer to make the street improvements because the work proved more costly than had been anticipated. The City maintained its position that approval of the subdivision was contingent on the street improvements. Benchmark challenged the City’s condition, and the lower courts ruled for Benchmark. On appeal to the Supreme Court of Washington, the City claimed that one of the streets that it wanted Benchmark to improve was failing to meet the City’s roadway standards even before the development was proposed. Thus, the Supreme Court said that “the required expenditure for street improvements was not directly related to the traffic generated by the development.” Rather, the Court emphasized the required improvements would relieve a pre-existing deficiency. Thus, in line with the Dolan decision, the Washington Supreme Court found that there was no substantial evidence to support the City’s decision to require Benchmark to improve the street as a condition of development approval.

This is but one example of how Courts are dealing with the Dolan “rough proportionality” test, often finding in favor of developers against the municipal authority that imposes an exaction that reaches too far.

3. Additional Kentucky Law of Subdivisions and Streets

(a) The Planning Commission is the sole body authorized to approve subdivisions of land.

KRS 100.273, 100.277 and 100.281 grant authority over the subdivision of land in communities that have adopted a planning program pursuant to KRS Chapter 100 to a local planning commission. In Metro Louisville, pursuant to these specific provisions, the Planning Commission is the only body with authority over the subdivision of land, which by law (discussed below) is a ministerial act. Pursuant to this authority, local governments adopted the Subdivision Regulations to regulate the subdivision of land within Metro Louisville.

(b) Approval of subdivisions that conform with the underlying zoning is a ministerial act.

The Planning Commission has a legal obligation to approve subdivision applications that comply with the Subdivision Regulations, and that includes Alternative Development Incentives (ADI) subdivisions. KRS 100.277 grants planning commissions exclusive authority over the subdivision of land, and KRS 100.281 sets out minimum contents for subdivision regulations against which planning commissions test whether a subdivision application can or cannot be approved. The authority of a planning commission to approve or disapprove subdivision applications is controlled by these statutes and the regulations promulgated pursuant to that statutory authority. Important to this is the fact that the review of subdivision applications is a ministerial, not discretionary, act. Snyder v. Owensboro, Ky., 528 S.W.2d 663, 664 (1975). Thus, if a subdivision application satisfies the provisions of the local subdivision regulations adopted pursuant to state statute, it is the duty of planning commissions to approve it.

In Wolf Pen Preservation Association, Inc. v. Louisville and Jefferson County Planning Commission and Canfield-Knopf Properties, Inc., Ky. App., 942 S.W.2d 310 (1997), the court, citing Snyder, supra, and Smith v. Howard, Ky., 407 S.W.2d 139 (1966), went further to explain, in this context, that there are certain “rights attendant to ownership of property, specifically the right to use property as one sees fit within the parameters of zoning legislation.” This means, as the local court said in the Wolf Pen case, that opposition to a standard subdivision can amount to an “illegal attempt” to try to down-zone a property owner’s property.

(c) A Planning Commission acts arbitrarily if it imposes an unreasonable condition on approval of a subdivision or one that goes beyond the express authority of the applicable regulation.

Section 2 of the Kentucky Constitution provides that “Absolute and arbitrary power over the lives, liberty and property of freemen exists nowhere in the republic, not even in the largest majority.” Kentucky Constitution, Section 2. Arbitrariness is defined in leading case of American Beauty Homes Corporation v. Louisville and Jefferson County Planning and Zoning Commission, Ky. App., 379 S.W.2d 450, 456 (1964), as, among other things, when an agency acts in excess of its statutory powers.

Basically, judicial review of administrative action is concerned with the question of arbitrariness…. There is an inherent right of appeal from orders of administrative agencies where constitutional rights are involved, and Section 2 of the Constitution prohibits the exercise of arbitrary power.

Obviously within the scope of a proper review the court may determine whether the agency acted in excess of its statutory powers. Henry v. Parrish, 307 Ky. 599, 211 S.W.2d 418. Such action would be arbitrary within the prohibition of Section 2 of the Kentucky Constitution.

Kentucky courts have held that a planning commission cannot place unreasonable burdens upon subdivision approvals. Such actions are arbitrary under Kentucky’s Constitution and the case law (especially American Beauty Homes) interpreting same. In Lexington-Fayette Urban County Government v. Schneider, Ky. App., 849 S.W.2d 557 (1992), the government sought to have a developer pay for the total cost of a bridge that would cross a stream on property dedicated as part of a subdivision approval. The developer challenged the condition, asserting that other projects would also use the road and that he should only be responsible for a proportional amount of the cost. Sounding like the U.S. Supreme Court in Dolan, the Kentucky Court of Appeals held that the government could not pin the total cost on the developer just because the stream ran across his land. In so holding, the court stated that “local governments … may not put unreasonable burdens on developers as a condition precedent to approval of a subdivision.” Id. at 560.

In the leading Kentucky case on the matter of road dedications, Lampton v. Pinaire, Ky. App., 610 S.W.2d 915 (1980), wherein the developer challenged the right of the planning commission to compel dedication of land for street improvements, the court upheld the right of the planning commission to compel the dedication of the right of way but stated that the planning commission could not compel Oldham County Fiscal Court to accept dedication and allow the improvements of the streets. The court held that:

We subscribe to the view expressed by the trial court that the planning and zoning commission has no control over the construction or improvement of county roads. That is a function of the fiscal court. The planning commission conditioned the approval of [a] subdivision plat contingent upon acceptance by the fiscal court of Goshen Lane being improved with a twenty-four-foot wide pavement.

Goshen Lane presently is paved to a width of fifteen feet. The planning commission cannot compel the fiscal court to enlarge the width of the pavement. The developer cannot require the pavement to be widened. The subdivision regulation requires only that the developer dedicate sufficient right-of-way to allow the abutting county road to be widened. When such a dedication is made, the subdivision regulation is complied with and the plat should be approved.

The attempt to attach, as a condition of plat approval, a requirement that the fiscal court accept the improvement of the county road was an unlawful exercise of power by the commission and the condition was properly invalidated.

Id. at 920. According to the Lampton court, the subdivision regulations control whether a planning commission can compel the improvement of a street or even whether it can condition approval on such an improvement. In Metro Louisville, the Subdivision Regulations read as stated in Subsection A above.

The Lampton court held that a planning commission cannot condition the approval of a subdivision plat on anything other than what is in the applicable subdivision regulations and cannot cede to another governmental body approval power over a subdivision application.

In a recent important local case named C & M Development vs. Louisville and Jefferson County Planning Commission, 99-CI-02854, Jefferson Circuit Court Judge Thomas B. Wine entered an opinion and order dated March 19, 2002 in which the Court mandated that the Louisville- Jefferson County Planning Commission approve a denied standard residential subdivision because the Planning Commission “acted arbitrarily in refusing to” allow the construction of Blakely Woods subdivision, which should have been ministerially approved along Woodside Road, despite the narrowness of the road, which was admitted by all the parties, (i.e., the applicant/developer, by Planning Commission and by City of Glenview). The Court’s rationale was that Woodside Road, despite its narrowness, was still adequate in width according to all expert testimony presented at the Planning Commission (including the Harrods Creek Fire Department, the developer’s engineer and the County Road Engineer) in addition to neighbors who simply did not want the road widened. Judge Wine first ruled, noting that Woodside Road “is more than one hundred (100) years old”, that

This Court finds that §3.10 [of the Subdivision Regulations] is not applicable as it applies to “all new streets located in or adjoining …..” [emphasis added by the Court.]

He continued to wit:

Paragraph (e) of §3.10 provides that an existing street have ‘adequate pavement width to provide for ingress and egress to the requested development.’ Because ‘adequate’ is not defined within the [Subdivision] Regulations, the Commission must rely upon testimony and present conditions to determine if Woodside Road is adequate. The engineer for C & M testified before the Commission that, even without the [road] pull-offs, safety was not an issue because motorists can always see a vehicle approaching … At an earlier meeting of the LD&T [Committee] …, the Harrods Creek Fire Department stated they had no problem servicing the current homes on the existing Woodside Road. There was no contradictory evidence other than the City’s refusal to widen or otherwise improve the road (which would certainly benefit the current homeowners).

Judge Wine also ruled that “the Planning Commission cannot impose a condition which cannot be performed, to wit, forcing the City [of Glenview] to either widen or provide additional turn-offs to Woodside Road.” Judge Wine went on to say that Jefferson County Ordinance Section 150.068 requiring 18-foot wide roads

clearly refers to construction roads to access the development. If it applied to existing roads, as the Planning Commission suggests, then C & M or any adjacent property owner could seek redress to compel the City to reconstruct the road. Such is not the law. Leslie Co. et al v. Wooten, et al, Ky. 75 S.W.2d 208 (1903); Clay City v. Roberts, et al, Ky., 99 S.W.2d 61 (1907).

(d) A Planning Commission cannot impose a condition that an applicant cannot perform.

Finally, although there are no cases in Kentucky regarding the imposition of a condition that is impossible, as opposed to unreasonable, to perform, several other jurisdictions have addressed this very situation, and virtually all of them have held that the practice is illegal. For example, V.S.H. Realty v. Zoning Board of Appeals of Plymouth, 570 N.E.2d 1044 (Mass. App. Ct. 1991), the court struck down a condition on a special use permit because the condition could not be satisfied by the developer. The Plymouth Board conditioned the approval of the permit on the widening of an adjacent road. However, the widening of the road was strictly a governmental decision. The court held that “[I]t is unreasonable to impose a condition the performance of which lies entirely beyond the applicant’s power.” Id. at 1046.

In City National Bank of Miami v. City of Coral Springs, 475 So. 2d 984 (Fla. App. 4 Dist. 1985), which involved a conditional approval of a plat for the location of a convenience store, the city sought to condition approval of a plat on the widening of an adjacent road. The city gave no timetable of when or even if the road would be widened, and, from the language of the opinion, it appears that it was not up to the developer. The court held that that condition was essentially a moratorium on the development of a single parcel and that, since the condition did not conform with the prerequisites of a moratorium, it must be struck down.

4. Public Versus Private Streets

Private streets historically have been allowed in a variety of condominium and old “Innovative Residential Development Regulation” subdivisions. Today they are permitted under the new Planned Residential District (“PRD”) regulation just as they were before under the old Innovative Residential Development Regulation. There are lots of good reasons for private streets, not the least of which is that they allow for narrower rights-of-way, buildings located closer to the street, greater density development and so forth -- all things important to (a) the more productive use of our community’s diminishing resource, which is land, and (b) innovation in housing and safe communities, which is what people want. Residents definitely like them because they provide opportunities for private communities without cut-through traffic. Government and taxpayers should love them because they ease the financial burden on government otherwise to improve these private, non-public roads. The amount Metro Government has budgeted locally for road maintenance is inadequate to handle the roads that are already public, so why add to the burden?

Why Public Works is suddenly voicing such strong objections to private roads is a mystery. It appears to stem from three things: the first being the substandard construction of some, but actually very few, of these private roads in some developments; the second being the Planning Commission’s preference for connected streets; and the third being the apparent pressure on politicians and the Metro Works Department to assume maintenance of these private streets.

As to the first concern, most of these streets, as all of our engineers have pointed out, are already constructed to public standards.

As to the second concern, residents prefer private developments and non-connected streets; but still there is no reason a public street and a private street with an easement for public access cannot connect.

As to the third concern, as respects condominium developments, by law (KRS 381.835(1)(d), it is impossible to “partition a common element”, meaning that, unless all of the unit owners and probably even all of the stakeholders (such as lien holders) agree to dedicate a private street (which is owned by all of the unit owners in common) to public use, it cannot be done. As to PRD and ADI subdivisions with private streets, these streets are either constructed along easements, meaning each lot owner owns the fee over his lot, or the homeowners association (HOA) owns the streets, which create legal situations not unlike that with condominiums, as described above. Consequently, there is a perfect argument for politicians and the Metro Works Department to make in every private road case. Private streets simply, for both practical and legal reasons, cannot be dedicated. When they have been, I would question in many cases the legal efficacy of what was done.

WBB-NOV2002/Abramson White Paper

JTR Rev. 10/13/2003 10:01 AM