Developer loses constitutional challenge to MoCo zoning change

Montgomery County did not violate a developer’s constitutional rights by adopting a water system amendment to a master zoning plan, changes that devalued the planned development, a federal appeals court ruled last week.

In its reported 3-0 decision, the 4^th U.S. Circuit Court of Appeals said the developer, Pulte Home Corp., had no constitutionally protected property interest in its planned residential development in Clarksburg. In addition, the county’s change in its master plan was rationally related to its legitimate, stated interest in protecting the environment and drinking water, thus satisfying the constitutional standard for economic regulation, the 4^th circuit added in upholding a U.S. district judge’s rejection of Pulte’s challenge.

“This court has stated repeatedly in similar cases … that federal courts are not the appropriate forum to challenge local land use determinations,” Judge James P. Jones wrote for the 4^th Circuit. “Because Pulte had no constitutional property interest in developing its land as it had contemplated, and the local authorities had a plausible, rational basis for their actions, we affirm the district court’s entry of judgment on the pleadings.”

Deborah J. Israel, an attorney for Pulte, called the ruling “an extraordinary land use decision, particularly at this early stage of the litigation, in that it puts the 4^th Circuit at odds with the other federal circuits and the U.S. Supreme Court.”

Israel, of Womble Bond Dickinson LLP in Washington, added in the email message Monday, “Pulte is reviewing the recent decision and evaluating its options.”

Attorneys for the county hailed the ruling.

“Montgomery County was pleased with the 4th Circuit’s opinion, because it affirmed the County’s ability to implement necessary land use measures, such as impervious caps, to preserve and protect environmentally sensitive watersheds,” said Howard R. Feldman, of Whiteford Taylor Preston LLP in Baltimore.

Erek L. Barron, Feldman’s co-counsel and Whiteford Taylor partner in Bethesda, called the 4^th Circuit’s decision “the last nail in the coffin” for constitutional challenges to local land use determinations.

“These are well-considered zoning decisions by the local legislatures that the court is very reluctant to second-guess,” Barron said.

Pulte intended to build about 1,000 detached homes and townhomes on the 540 acres of land it bought in Clarksburg between 2004 and 2006 based on the county’s 1994 master plan, the terms of which the company satisfied by 2009, the 4^th Circuit’s opinion stated.

However, in 2013, the county reopened its consideration of the master plan with regard to the watershed where Pulte’s land was located. Ultimately, the county adopted an amendment implementing regulatory changes that reduced the number of homes Pulte could build and which required the developer to dedicate parkland.

Pulte challenged the county’s amendment to the master plan as a violation of the developer’s constitutional rights to due process and equal protection, saying Montgomery had essentially singled its property out for regulatory review and that its water-safety explanation was mere subterfuge. Pulte also argued that the regulatory burdens amounted to a governmental taking of its property without just compensation.

U.S. District Judge George Jarrod Hazel, who presides in Greenbelt, held that Pulte’s constitutional rights were not violated, prompting the company’s appeal.

Agreeing with Hazel, the 4^th Circuit said a zoning decision passes constitutional muster so long as it is based on “any rational reason,” such as environmental protection, “even if (that) purported rationale was not the actual motivation behind it,” as Pulte claims.

“It is not this court’s place to second-guess the wisdom of elected local officials in making inherently discretionary zoning decisions,” wrote Jones, a judge on the U.S. District Court for western Virginia who was sitting by designation.

“Local land use decisions are a quintessential example of subjective and individualized action by decisionmakers vested with the discretion needed to balance competing interests,” Jones added. “The county … provided rational reasons for treating Pulte’s land differently, and that is the end of our inquiry.”

The court added that Pulte has no claim for a regulatory taking by the government because his interest in the property was subject to the “significant discretion” of the county’s zoning authorities.

“The 1994 Master Plan plainly apprised all who read it that it was intended to be revised about every 10 years and that even after prerequisites had been satisfied, the county could delay action on water and sewer change applications, conduct further studies, or take whatever land use actions it deemed necessary,” Jones wrote in an opinion Judges J. Harvie Wilkinson III and G. Steven Agee joined.

“It is hard to imagine a land use plan granting greater discretion to local officials,” Jones added. “Development restrictions designed to protect a vulnerable watershed and source of drinking water are an entirely appropriate form of local regulation, and they are unlikely to amount to a regulatory taking particularly where, as here, the landowner is not left with a mere token interest but instead can still develop its property.”

The 4^th Circuit rendered its decision in Pulte Home Corp. et al. v. Montgomery County, Md., et al., No. 17-2112.