It’s A High-Flying Flag: Shurtleff v. Boston and Municipal Flag Policies

Yesterday, the U.S. Supreme Court issued its decision in Shurtleff v. Boston in which it ruled unanimously that the City of Boston violated the Constitution by denying a request from a religious organization to fly a Christian flag on a flagpole in front of City Hall. The Supreme Court held that Boston’s actions violated the First Amendment by restricting speech based on a religious viewpoint.

The Court’s decision supports the advice that Preti Flaherty has been providing to its municipal clients for several years. While community members may pressure municipalities to fly flags showing support for various causes, there is simply no clear way for municipal governments to avoid expressing impermissible viewpoint preferences when deciding what flags may or may not be flown. As a result, the best policy is to avoid the problem in the first place by only flying federal, state, and local government flags from municipal buildings. 

The full text of the Supreme Court’s decision may be found here.

An Update on the Pending Affordable Housing Legislation (LD 2003)

On March 16, after a marathon eight-hour work session, the Committee on Labor and Housing issued a divided report on LD 2003, Speaker Fecteau’s emergency affordable housing bill. The bill did many things in an effort to address Maine’s continued housing crisis; some good and some bad. On April 7, in response to extensive public comments, Speaker Fecteau introduced a significant amendment to LD 2003. The amendment removes many problematic provisions within LD 2003 and limits changes to residential zoning density requirements but also removes much of the financial and technical assistance offered to municipalities. Brief discussions of the key changes are below.

No More Human Rights Act Provisions

Speaker Fecteau’s amendment entirely removes LD 2003’s earlier provisions that prohibited municipalities from restricting local housing development based on the character of a location, overcrowding, or density. Several commenters had raised issue with those restrictions as they appeared to conflict with established law governing shoreland zoning, comprehensive planning, subdivision review, and zoning variances. Their removal from LD 2003 removes a significant cloud over the impact LD 2003 would have on existing zoning laws and review processes and should come as a relief for most municipalities. The amendment does require municipalities to ensure that zoning ordinances affirmatively further the purposes of the Federal Fair Housing Act and Maine Human Rights Act; however, this more nebulous requirement provides additional leeway for implementation and interpretation of municipal ordinances and regulations.

No More State Review of Local Decisions

Also removed from LD 2003 is the controversial Municipal Housing Development Review Board, which would have had the authority to review municipal decisions on housing development permit applications. It had been unclear how the Review Board would affect existing appeal processes and many commenters had expressed concern that State review of municipal decisions represented a loss of local control over distinctly local matters.

Modification of Local Assistance

Speaker Fecteau’s amendment further modifies the technical and financial assistance offered to municipalities to adopt and implement ordinances promoting housing development. Many municipalities lack the capacity and funding to draft, adopt, and properly administer comprehensive zoning and land use ordinances. State support for these activities has been lacking since the closure of the State’s Planning Office in 2012. As originally drafted, LD 2003 committed over $4,000,000 for the Department of Economic and Community Development to provide municipalities with technical assistance and grants for the development and implementation of zoning and land use ordinances.

The amendment creates the Housing Opportunity Program, administered by DECD, to provide grants to “experienced service providers” providing a range of services to municipalities related to promoting affordable housing development. The amendment commits $3,000,000 to the Housing Opportunity Program. The amendment removes funding originally committed to DECD to provide municipalities with technical assistance and instead authorizes DECD to provide such assistance to the extent possible “with available resources.” Additionally, the amendment removes the incentive funding available to municipalities working to adopt ordinances promoting affordable housing development. Together, these changes will reduce the much-needed technical assistance and funding available to municipalities but will generally expand DECD’s ability to assist municipalities.

While the reduction in available assistance is an unfortunate development, it is offset by the removal from LD 2003 of the requirement that all municipalities adopt zoning ordinances that prioritize areas for housing development. This requirement would have placed a significant burden on many smaller municipalities without comprehensive zoning that would not have been able to comply without technical and financial support from DECD.

Modified Density Requirements

Much of the controversy around the original LD 2003 involved its changes to municipal density restrictions. As drafted, LD 2003 required municipalities to permit affordable housing developments with dwelling unity densities at least 2.5 times greater than what was otherwise allowed in the underlying zone and allowed structures within residential zones to have up to four dwelling units, subject to some limitations. The amendment substantially narrows the density requirements of LD 2003 by only applying the 2.5 density multiplier for affordable housing developments in zones that permit multi-family dwelling units, and which are either within a designated growth area or served by public water and sewer systems. Additionally, the density requirement for residential zones has been reduced to two dwelling units for lots without an existing dwelling unit and four dwelling units for lots without an existing dwelling unit that are also within a designated growth area or served by public water and sewer systems. Municipalities are also required to permit lots with an existing dwelling unit to add up to two additional dwelling units, subject to certain restrictions.

Delayed Implementation

Maine’s long-standing shortage of readily available, affordable housing became a full-blown crisis over the past three years, as the COVID-19 pandemic greatly increased demand and housing costs throughout the State for both home ownership and rentals. Nevertheless, bowing to concerns regarding the timeline for implementation of the changes in LD 2003, Speaker Fecteau’s recent amendment removes the emergency preamble from the bill and delays implementation of many requirements related to affordable housing and residential zone density requirements to July 2023. The delayed implementation should come as welcome news for many municipalities, which would have had very limited time to amend local ordinances and policies and would have had to call special town meetings to adopt them within that timeframe.

Speaker Fecteau’s amendments address many of the concerns raised about LD 2003 and should largely come as welcome news to Maine municipalities. However, the bill will still need to proceed through the House and Senate, where it is likely to undergo additional changes.

What Can the IIJA Do for Your Internet?

As you may have heard, Congress has appropriated $65 billion for broadband projects within the Infrastructure Investment and Jobs Act (IIJA). Of that, $42 billion is being dedicated to the Broadband Equity, Access, and Deployment (BEAD) Program administered by the National Telecommunications and Information Administration (NTIA). Under the BEAD Program, Maine and every other state will receive at least $100 million to use for broadband projects in unserved (areas without 25/3 Mbps speeds) and underserved areas (those with below 100/20 Mbps speeds). The remaining $37 billion will be distributed among the states based on their share of the nation’s unserved areas. Overall, Maine should expect a significant influx of funding for broadband expansion projects over the next five years. These funds may be utilized by the State or distributed to municipalities through a grant-making program, presumably administered by the newly established Maine Connectivity Authority.

So, what does this mean for municipalities? Notably, the IIJA makes it possible for recipients to fund an eligible broadband project without spending a dime of their own funds. The BEAD Program requires recipients to pay for at least 25% of any project but allows them to use CARES Act and ARPA funding to do so. As a result, municipalities will no longer need to dedicate a significant portion of their coronavirus relief funds to broadband expansion. This should provide significant motivation for communities that may have been hesitant to undertake broadband expansion to reconsider.

Additionally, the IIJA will reduce the overall cost of and increase the potential locations for broadband expansion projects. The IIJA appropriates $1 billion for the aptly named Enabling Middle Mile Broadband Infrastructure (EMMBI) Program. The EMMBI Program funds the expansion and extension of middle mile infrastructure to reduce the cost of connecting unserved and underserved areas. Previously, one of the largest obstacles to any broadband project was finding a way to connect to the internet backbone from more remote locations. ARPA discouraged recipients from investing in middle-mile infrastructure and instead favored the use of relief funds for last-mile projects. The goal was to connect as many people as possible to existing broadband infrastructure as quickly as possible. However, that prevented many more remote recipients from investing in fully wired broadband expansion or required them to invest in wireless or gap network projects. The EMMBI Program will, hopefully, allow Maine to extend critical broadband infrastructure into new areas, reducing the cost of local broadband projects and opening up new areas for future-proof wireline broadband projects.

Though the timeline is not yet fixed, the NTIA will begin notifying states of their share of BEAD Program and other funding this spring. Once those funds are received, Maine will be able to begin the process of distributing them through a grant-making process. To capitalize on this opportunity, municipalities should start developing realistic and competitive broadband project proposals as soon as possible. Time is of the essence.

Please contact us if you have any questions on the IIJA or other broadband funding opportunities to expand broadband access in your community.

What Do the Supreme Court's Vaccination Rulings Mean for Your Business?

Reflecting the deep rift in public opinion concerning the government’s role in dictating how businesses, health care entities and public sector employers ought to act to stem the spread of COVID-19, a divided U.S. Supreme Court yesterday blocked an injunction of OSHA’s emergency rule which would have required an estimated 80 million employees to either fully vaccinate or submit to a regular testing program and mandatory onsite face covering requirement. The Court let a separate rule take effect requiring vaccinations for employees in nursing homes, hospitals and other facilities that receive Medicare and Medicaid payments.

With respect to OSHA’s ETS, the Court determined that the Sixth Circuit's decision to lift the injunction on the ETS was unwarranted and re-imposed a stay. Although that ruling does not technically dispose of the underlying legal challenges to the ETS, the decision relieves employers from complying with the ETS during the pendency of the litigation at the Sixth Circuit, and any further appeals. OSHA may opt to push ahead to implement some form of national standard regulation aimed at workplace pandemic prevention, although for now that is unclear.

In determining that OSHA lacked authority to issue the ETS, the Court noted that COVID-19 is not exclusively an occupational hazard, but rather something that everyone faces in their daily lives. Given that OSHA is principally tasked with regulating workplace health and safety, the Court determined that the regulation was likely beyond OSHA's legitimate reach. And, in holding that the balance of equities favored a continuation of the Sixth Circuit’s injunction, the majority opined that employers stood to incur billions of dollars in compliance costs and the ETS would cause thousands of workers to quit their jobs. The Court found that the ETS operated outside of OSHA’s authority by regulating public health more broadly rather than within its authority, which is limited to occupational hazards. The Court found that, although mandatory vaccination requirement would likely save lives and prevent hospitalizations, it was not the Court's role to weigh such trade-offs, which instead, was a responsibility better left to the legislative branch.

Although the Supreme Court’s ruling might settle the question of whether a federal mandate will be imposed on the private sector, at least through agency rulemaking, in Maine, the public sector will be keeping a close eye on a meeting of the Board of Occupational Safety & Health (BOSH) scheduled for January 18, 2022. BOSH, which has jurisdiction over Maine public sector employers, had intended this meeting to adopt an emergency rule replicating the ETS rule. The question will be whether BOSH has any intention – or authority – to move forward with a state-based rule in the absence of the federal mandate.

The Court’s decision to uphold the vaccination mandate imposed by the Centers for Medicare and Medicaid Services (CMS) did not come as a big surprise given the trend of lower court decisions on the subject. While in states like Maine this ruling has no practical impact because a state mandate has already been imposed and upheld, in many other states the ruling lifts injunctions that had blocked the federal mandate from applying. New Hampshire is one such state. Nationwide employers in the healthcare sector are now mandated to impose vaccination mandates on all their workers, regardless of location. The general guidance provided by CMS should be followed by all subject to the rule. That guidance, dated December 28, 2021, sets certain compliance thresholds to be achieved within 30 and 60 days, with 100 percent vaccination compliance required within 90 days of that date. It is unclear whether CMS will allow additional time to covered employers in the states affected by the Court’s decision.

Where does all this leave employers below the 100-worker threshold and those which would have been obligated to implement the ETS had the Court upheld the Sixth Circuit’s stay?

Private sector employers have the flexibility to develop and implement their own strategies or do nothing, subject of course to existing state and local laws which were unaffected by the Court’s ruling on the ETS. To date, either through executive orders or legislative action, 20 states have enacted prohibitions on the imposition by businesses and localities of proof-of-vaccination requirements or so-called vaccine passport programs. By contrast, another 5 states have taken action to facilitate the creation of digital vaccination status applications or have passed laws exempting fully vaccinated individuals from some COVID-19 restrictions if they can provide proof of vaccination. For now, the only common denominator is this -- because OSHA cannot impose its ETS on employers any policy decisions with respect to workplace pandemic prevention are being left to individual states.

Private sector employers in Maine, New Hampshire and Massachusetts remain subject to whatever state and local regulations are in place concerning workplace pandemic prevention requirements. Beyond those, employers have a myriad of choices in crafting how to supplement those requirements if at all. Employers that wish to implement vaccination incentives for their employees, those who want to set up a periodic testing program, and even those who wish to implement some form of mandatory vaccination requirement, are in a position to develop and implement policies and procedures scaled to their operations.

Preti's Labor and Employment team can guide employers through these options and help determine which workplace pandemic prevention strategies achieves the best balance between worker safety, your operational demands and legal compliance.

Treasury Department Expands ARPA Funding Eligibility for Broadband Development

On January 6, 2022, the Treasury Department issued its final rule on the American Rescue Plan Act State and Local Fiscal Recovery Funds (“SLFRF”) program and it contained good news for municipalities considering broadband infrastructure investments. In response to concerns raised by broadband advocates and recipients, Treasury has significantly broadened the scope of eligible broadband infrastructure projects, granted recipients more discretion in the use of funds received, and acknowledged the importance of affordable broadband access.

Under the interim final rule issued by Treasury in May 2021, recipients could only use SLFRF funds for broadband infrastructure projects in unserved or underserved areas (those with broadband speeds of less than 25 Mbps download and 3 Mbps upload). Additionally, the interim rule discouraged investment in areas with existing broadband infrastructure projects. Though these requirements were based on reasonable evidence about broadband use and needs, they prevented municipalities from deploying SLFRF funds for many worthy projects. Treasury has loosened many of these restrictions in the final rule.

First and foremost, the final rule permits SLFRF-funded projects in any area with an “identified need” for broadband infrastructure investment. Recipients now have broad discretion to identify areas with need and the final rule indicates that areas without a wireline connection reliably delivering 100/20 Mbps speeds or without affordable or stable broadband service are considered to have an identified need. The increased minimum speed will allow municipalities to utilize SLFRF funds in much broader areas and to strengthen broadband infrastructure in those that already met the speed standard of the interim final rule. The updated speed standard in the final rule exceed those employed by ConnectME and other grant makers and may allow municipalities to further leverage SLFRF and other state funding for their broadband infrastructure projects.

Additionally, the final rule acknowledges that, for many people, affordability, rather than lack of service, is the primary obstacle to broadband access. In addition to making lack of affordable broadband service an identified need, Treasury will now require recipients to ensure that any service provider using SLFRF-funded broadband infrastructure offers affordable service and provides at least one low-cost option without data caps and with speeds that enable modern broadband usage.

Lastly, the Final Rule has loosened the prohibition on using SLFRF funds in areas that are already receiving federal funding for broadband infrastructure projects. Treasury will now permit recipients to use SLFRF funds in existing project areas, provided the SLFRF funds are addressing an identified need that will not be remedied by the other project.

Together, these changes have opened the door for municipal broadband infrastructure investments and development. Please contact us if you would like any additional information or guidance on the Final Rule’s impact on your planned or proposed project.

Broadband Funding Options: Show Me the Money!

The federal government’s recent largesse has made broadband infrastructure development a focus of discussion in many communities. The pleasing number of zeroes contained in the American Rescue Plan Act (ARPA) and more recent infrastructure bill may, however, distract from other available sources of broadband development funding. There are several existing state and federal loan and grant programs that may ultimately be better suited to certain projects or needs. It is critical for anyone exploring broadband expansion or improvements to understand the full spectrum of funding opportunities now available and whether you meet the qualifications.

Maine now has two primary grant-making agencies—the ConnectMaine Authority (ConnectME) and the Maine Connectivity Authority (MCA). ConnectME offers two types of grants to counties, municipalities, and community groups seeking to invest in broadband expansion. Community Broadband Planning Grants are made available to help communities plan for broadband service expansions. Those seeking a Planning Grant must first complete ConnectME’s Startup Grant program, which provides a small infusion of funds and support services to help the recipient build the community and legislative support necessary for a successful broadband project. ConnectME’s Infrastructure Grants are made to support investment in physical infrastructure through provider expansion or community-driven broadband projects. Infrastructure Grants are typically made to service providers that partner with community groups or municipalities to expand or improve broadband service within a given area. In addition to its grants, which range in size depending on the scope and nature of the proposed project, ConnectME provides a level of experience and expertise that makes it a valuable initial or supplemental funding source for anyone exploring local or regional broadband development projects.

The recently established MCA is charged with deploying $150 million Maine received through the American Rescue Plan Act (ARPA). The MCA was created to ensure that all Maine people have access to secure, affordable, and reliable broadband access. The Maine Legislature has given the MCA expansive powers to improve broadband infrastructure, to provide funding directly or through other State agencies to others for the same, and to operate its own broadband networks. The MCA is still developing its rules and funding process and will likely not begin distributing funds until mid-2022.It will surely, however, serve as an important source of funding for local and regional broadband initiatives moving forward and we are paying close attention to MCA’s activities.

In addition to the well-publicized ARPA funds made available to counties and municipalities, the federal government has reinvigorated several existing programs that offer loans and grants for broadband development projects. These include the U.S. Department of Agriculture’s Rural Utility Service which administers the Community Connect Program (CCP) and Rural E-Connectivity Program (ReConnect). The CCP provides grants for broadband expansion within eligible rural communities. The RUS has recently reserved and solicited applications for 10% of its CCP funding, approximately $60 million, for multi-jurisdictional projects, while ReConnect has received an additional $100 million to provide loans to local governments within eligible service areas for the construction or improvement of broadband infrastructure and facilities. Though both programs are limited to certain rural communities, the CCP and ReConnect offer significantly more funding than ConnectME grants. As a result, the CCP and Reconnect programs have been important resources for larger broadband infrastructure developments, including those in Roque Bluffs, Cranberry Isles, Arrowsic, and Monhegan Island. And, well, as they say, with great financing comes onerous compliance. CCP and ReConnect recipients must be prepared to perform significantly more compliance and reporting work than they would under Maine programs.

As more funding becomes available for broadband infrastructure development, knowing which funding sources are appropriate and beneficial to any given project, and available to the applicant, will be more important than ever.

FOAA Changes Now in Effect

Several changes to Maine’s Freedom of Access Act quietly went into effect on October 18, 2021. Passed in the waning days of the Legislature’s special session, L.D. 1345 and 1346 expanded mandatory FOAA training requirement for municipal officials, modified the Right to Know Advisory Committee membership and responsibilities, and limited the fees that officials and agencies may charge for compiling FOAA responses.

Upcoming FOAA trainings will need added seating. Under L.D. 1345, an expanded list of municipal officers and officials must complete a mandatory FOAA training within 120 days of assuming their duties. The newly added officials include municipal clerks, managers, administrators, code enforcement officers, and their deputies; planning board members; and superintendents, assistant superintendents, and school board members of school administrative units. As a result, these officials must complete the training and file a certificate of completion as required under Title 1, section 412. The law isn’t clear about how it pertains to sitting officials; to be safe, we recommend that all officials receive this training within 120 days from the law’s effective date.

There are also changes to the FOAA’s permitted staff time and per-page copy fees. L.D. 1346 increased the maximum hourly charge for staff time spent compiling responsive records from $15 to $25. However, it also increased the “no charge” period for staff time from one hour to two hours. In addition, L.D. 1345 limited the per-page copy fee for black and white copies of records to $0.10 and entirely prohibits per-page copy fees for records provided electronically (note, we think it is defensible to charge where printing is required to fulfill a request, even if the ultimate production is sent electronically). While L.D. 1346 explicitly authorized agencies to retain any fees charged under the FOAA, these other changes are likely to reduce the total amount of fees municipalities and agencies receive for FOAA responses. For example, due to the increased “no charge” period for staff time, responses requiring less than three and a half hours of staff time to complete will incur a lower fee than under the previous system. These modifications may ultimately reduce the costs borne by individuals who request records under FOAA but will also reduce the ability of municipalities and agencies to defray staff and material costs incurred to produce those records.

These changes to the FOAA may require updates to employee manuals, trainings, and general practices. Please contact us for additional information or guidance on this topic.

Does the Delta Variant Vary the New Rules on Remote Meetings?

With the Delta variant has come new recommendations suggesting that individuals once again wear masks in indoor public settings. We are getting a lot of questions regarding whether this new guidance counts as “an emergency requiring the board to meet by remote means,” such that remote participation is allowed under the new law. Because the current guidance is simply that masks should be worn indoors, and not that public or larger indoor meetings should be avoided, we do not think that the current situation qualifies as an emergency that requires the board to meet by remote means (as prudent as that might be). It is our belief that if the Governor signs a new order limiting in-person gatherings, or even if the CDC guidance is amended to discourage public meetings entirely, this may be enough to constitute an emergency. Only at that time will public bodies and their attorneys be able to assess the situation and determine whether a remote meeting is required, not just prudent.

Why Getting Connected Matters More Than Ever – And How We Can Help

This is likely not the first post or article you’ve read about the great broadband rush that’s sweeping the country. Working and schooling from home during the pandemic have highlighted the need to ensure that every community – no matter how rural – has access to broadband internet. The pandemic has also created economic opportunity by encouraging workers to relocate and potentially expand the reach of their companies into Maine. At the same time, federal and state funding has been made widely available to help municipalities and internet providers expand into areas that were previously deemed economically infeasible. The newly formed Maine Connectivity Authority, with its broad but as yet unclear mandate to expand broadband development, will undoubtedly provide new opportunities.

This funding spurt will most likely be short-lived, while the efforts to get a broadband project off the ground can be daunting and drawn-out. Municipalities must carefully consider whether it is better to go it alone, or to join with others in the region to form an interlocal association or broadband utility district. These decisions involve often complex analysis of what funding method will best serve the project, whether the network will ultimately be publicly or privately managed, and whether there is true economy of scale and increased funding opportunity by banding together. When it comes time to write any agreements to memorialize a joint regional project, organizational matters are key. What financial contributions are expected of members? How will the organization be run? Who will own the network? And what happens if a member decides to leave once the network is up and running? Unlike the types of utility districts municipalities are used to running, there is usually an expectation that a broadband network will be managed by a private entity. These private contracts, too, can and should be complex, as a failed relationship could leave residents digitally stranded.

We are here to provide assistance navigating this series of challenges, from the early planning stages through funding and contracting for these projects. Our Municipal Broadband Practice Group has been helping municipalities and regional organizations pursue broadband funding, construction, and contracting projects from conception to completion. With substantial experience in coalition building, interlocal agreements, telecommunications, and public financing, our practice group members were specifically chosen to work as a team to assist clients through the whole project life cycle.

Please contact kcollins@preti.com for more information.

Municipalities to Resume In-Person Public Meetings

After nearly a year and a half of remote proceedings, Maine municipal, county, and school boards will soon be required to reconvene in-person public meetings. On June 21, Governor Mills signed into law L.D. 32, “An Act Regarding Remote Participation in Public Proceedings.” The new law finally authorizes some remote participation in meetings – an issue that was quite divisive in pre-COVID days – but it does put an end to the type of remote meetings we’ve all grown used to.

Because last year’s “omnibus bill” which authorized remote meetings will remain in effect for 30 days after the state of emergency ends on June 30, L.D. 32 (codified at 1 MRS § 403-B) will become the governing law as of July 30, 2021. Per this emergency amendment, members of a public body must be physically present for public proceedings, except when doing so is “not practicable.” The circumstances under which being physically present may not be practicable include: an emergency requiring the body to meet by remote means; illness; absence from the jurisdiction and significant difficulties traveling to attend in person. A body must adopt a written policy governing the conditions upon which its members and members the public may participate by remote means. This policy must provide the public an opportunity to attend by remote methods when members of the body participate in such a way. A body may not limit public attendance at a proceeding solely to remote methods, except in case of emergency.

During hybrid meetings, all votes taken must be taken by roll call vote. Additionally, notice must include information on how the public may access the proceeding using remote methods, as well as identify a location for members of the public to attend in person. The body must make all documents and other materials they consider during the meeting available to the members of the public who attend by remote methods to the same extent they are available to those who attend in person, as long as it does not incur additional costs.

Note that these requirements apply solely to members of the body and public. This does not limit municipal staff or counsel from continuing to participate remotely.

Development Projects and the Limits of Moratoria

I am always struck at how vigorously some property owners oppose development projects, despite their having previously, and successfully, pursued identical projects. Do they not remember that they did the exact same thing? Is there some definition of fairness I am not aware of? Whatever the cause, it can be exasperating for the developer and detrimental to sound zoning and planning.

A recent case in my small town has really shined a light on just how absurd this can all be.

A landowner, in compliance with state law and as is her right, created a number of lots under the so-called 2 in 5 rule. Subject to a number of exemptions and exclusions, the general rule is that a landowner can create 2 lots in any 5-year period without needing municipal (i.e., planning board) approval. 30-A MRSA section 4401(4):

4. Subdivision. "Subdivision" means the division of a tract or parcel of land into 3 or more lots within any 5-year period that begins on or after September 23, 1971. This definition applies whether the division is accomplished by sale, lease, development, buildings or otherwise. The term "subdivision" also includes the division of a new structure or structures on a tract or parcel of land into 3 or more dwelling units within a 5-year period, the construction or placement of 3 or more dwelling units on a single tract or parcel of land and the division of an existing structure or structures previously used for commercial or industrial use into 3 or more dwelling units within a 5-year period.

For the landowner the benefits of this approach are numerous, but for the most part all revolve around not having to build infrastructure such as roads, sidewalks, electric utilities, water, sanitary sewer, and stormwater infrastructure, as well as not having to set aside or otherwise provide open or common space. For Maine’s relatively “cash poor, land rich” population, the 2 in 5 rule has been a way to monetize their land over time without a lot of upfront development costs or risks.

But back to my town where the land adjacent to this landowner’s 2 in 5 development was bought by a developer “from away,” who applied to the planning board for a residential subdivision approval. Almost a year later, the project is still languishing in front of planning board. The 2 in 5 landowner is now on the planning board and is circulating a citizens petition to enact a 24-month moratorium on any subdivision needing planning board approval. Putting aside the potential conflict of interest issues at play here, a 24-month moratorium is laughably illegal.

State law limits moratoria to a definite term of not more than 180 days. In certain circumstances, a moratoria may be extended for an additional term of not more than 180 days. Moratoria are not intended to simply stop development, but are instead intended to provide a municipality breathing room to thoughtfully look at issues and impacts around development and make evidenced-based policies to guide development.

In order to adopt a moratorium, the municipality must first have evidence that additional development is likely to overburden existing facilities or that there is a shortage of such facilities. What form this evidence takes is subject to some debate, ranging from mere statements from public facilities managers (e.g., school district, water district, sewer district, public works, and so on) to glossy consultant’s reports concluding that existing public facilities are or may be insufficient to adequately address additional development.

The second criteria is that the municipality’s comprehensive plan or ordinances are inadequate to protect resources from serious harm. I find this criteria sort of odd in that municipalities, if they have a zoning ordinance, must enact a zoning ordinance that is in compliance with a comprehensive plan, that, as its principal function is supposed to protect resources from serious harm and guide development in a responsibly and thoughtful way. It might be said that a moratorium allows a municipality to correct an otherwise deficient comprehensive plan.

Anytime a municipality considers a moratorium, it should do so carefully and thoughtfully.

Maine Governor Issues Executive Order Regarding the November Election

Governor Mills has issued a new executive order to facilitate the November 2020 general election. The stated purpose of the order is to ensure the integrity of the ballot and to protect the public health during the COVID-19 emergency. 

The order includes a limit of 50 or fewer people in each polling place and that the statutory minimum number of voting booths are not required if it would make it difficult to have them more than 6 feet apart. Voter lines must be marked to enforce a six-foot separation between voters. Voter registration is modified to allow voters to register 15 days before the election rather than 21 days. Municipalities may consolidate their polling places with a public hearing 30 days prior to election rather than the standard 90 and move polling places with a public hearing 20 days prior to the election rather than 60. The requirement that all polling workers reside in the municipality or county in which they serve is suspended. School budget elections are simplified. Absentee ballots may be processed 7 days before the election, rather than 4. Voters may vote in person by absentee ballot without giving a reason until 5:00 pm on the second business day before the election (Friday October 30). The Secretary of State will help Clerks have secure external boxes to drop off absentee ballots.

What Is the Municipal Liquidity Facility?

There is no question that COVID-19 has had a major impact on state and local governments’ revenue and expenses. To what extent it will impact any particular governmental unit will vary depending on its mix of revenue sources. In an effort to address state and local cash flow pressures and tax revenue shortfalls, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and the U.S. Treasury established the Municipal Liquidity Facility (the “Facility”). The Facility’s purpose is to support credit and liquidity flow to state and local governments by providing short-term financing to certain governmental issuers. The Facility has the ability to purchase up to $500 billion of debt from impacted state and local governments. The Facility also monitors conditions in the primary and secondary markets for municipal securities in order to determine if any additional action will be necessary. 

Under the Facility, the Federal Reserve purchases short-term municipal notes issued by the states, the District of Columbia, eligible local governments, and Multi-State Entities. Eligible issuers must pay an origination fee of 10 basis points on the principal amount of notes purchased by the Facility. Notes purchased by the Facility may be called by the issuer at par any time before maturity. Unless extended, the Facility will cease buying notes after December 31, 2020. The Facility will be funded until its assets mature or are sold. Through this special purpose vehicle, the U.S. Department of the Treasury will provide $35 billion in initial equity to the program from its Exchange Stabilization Fund, as appropriated under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The remaining funding, up to $465 billion, will come from the twelve regional Federal Reserve Banks.

Eligible local governments include counties with populations of at least 500,000 people, and cities with populations of at least 250,000. In addition, smaller states were given the option to designate a certain number of cities and/or counties to be eligible for the program, even if that city and/or county did not otherwise meet the population requirement. The number of allowed designations depends on the state's size, but the maximum was two designations. As both Maine and New Hampshire were considered to be smaller states, both governors were given the ability to designate a total of two cities and/or counties. Governors that have the ability to designate two Designated Cities and Designated Counties (on a combined basis) may choose any of the following combinations: (i) the most populous city and most populous county; (ii) the most populous city and second-most populous city; or (iii) the most populous county and second-most populous county. Massachusetts was not given the ability to designate any cities or counties based on its size.

In addition, state governors also can designate two "Revenue Bond Issuers" whose revenues are generally derived from operating government activities, such as utilities or airports, that could also sell bonds to the Facility. The municipal debt instruments eligible for purchase by the facility include tax anticipation notes (TANs), revenue anticipation notes (RANs), and bond anticipation notes (BANs), as well as other similar notes. Additionally, eligible debt securities must have terms to maturity of no more than 36 months from their dates of issuance. A given state, county, or city may have multiple entities, authorities, or instrumentalities that issue debt on its behalf. However, the Facility will limit itself to purchasing notes issued by only one issuer per state, county, or city. The Facility also will limit its purchases of notes from a given state, county, or city to an amount equal to 20% of its general revenues during its 2017 fiscal year. However, states may apply for exceptions under which the facility will buy notes in excess of these limits. The Facility is limited to 20% of a Multi-State Entity or Revenue Bond Issuer's gross revenue for fiscal year 2019.

In order to reap the benefits of this program, your municipality must meet the above eligibility requirements or have been specifically designated by the governor of your state as a Designated City or County. While the Facility is limited in eligibility scope and only aimed at new issuance, not secondary market purchases, the establishment of this program generated a positive response in the municipal bond market almost immediately upon its creation.

Parties Close to Settlement of Voting Rights Case

A lawsuit was filed in U.S. District Court on July 17, 2020, against the State of Maine and the Cities of Augusta, Portland, and Bangor and the Town of Winslow, alleging violations of the Americans with Disabilities Act on behalf of four visually impaired voters. The aim of the case is to cause the State and municipalities to implement a system which would allow blind voters to vote absentee without help from their personal computers. A system like this is available in a few other states, including Maryland. The plaintiffs allege that because of COVID, accommodations are necessary to avoid vulnerable citizens having to go to the poll or vote absentee and lose their privacy by having a trusted friend help them vote. A conference was held on July 23 with Judge Woodcock and the parties were given two weeks to work out a deal. The State is willing to implement a remote system for blind people to vote by computer based on a system already in place which allows active duty military to vote remotely anywhere in the world. The more complicated part will be figuring out how to make such a system work for local elections. The problem is that each municipality would have its own unique ballot, which would have to be provided to the vendor early enough to be included. There is expected to be a cost to the municipalities, which is unknown at this time. Preti Flaherty attorneys Laura Rideout and Steve Langsdorf are representing Augusta in this case.

Superior Court Supports Portland’s Home Rule Argument

Justice Kennedy of the Cumberland County Superior Court recently ruled in favor of the City of Portland, giving significant deference to a municipality’s interpretation of its own charter. In the case of Fair Elections Portland v. City of Portland, the Court held that in a disputed factual context the judiciary would defer to the City’s determination that a petition that had been circulated for signatures and presented to the Council to put to the people for a vote, was a charter revision, not an amendment. A revision requires a charter commission and a more extensive process, whereas an amendment may simply be voted on at a municipal election if petitions are properly submitted. The Court implied that she was not convinced that was the proper result but felt constrained due to the deferential standard of review and separation of powers. The continuing lesson is that a municipality is not always compelled to put questions out to vote even if all other standards are met to call for an initiative or referendum. The question may be illegal, inconsistent with the existing charter, or otherwise improper, as here where it purported to be an amendment but was determined to be a revision.

State Issues COVID-19 Guidance Document for Reopening Public and Community Buildings

As part of Phase 2 of the Restarting Maine's Economy initiative, the State yesterday released guidance on safe reopening of municipal and other government buildings. Read the full COVID-19 Prevention Checklist here.

State Ceases Enforcement of Marijuana Business Residency Requirement

The Office of Marijuana Policy issued a letter on May 11, stating that, “Following the advice of the Office of the Attorney General, DAFS and OMP will cease enforcement of the residency requirement included in the Marijuana Legalization Act and the Adult Use Program Rule.” This decision is issued in response to a lawsuit filed against DAFS, which challenged the constitutionality of the requirement under the “dormant Commerce Clause” of the U.S. Constitution.

Many Maine municipalities have adopted marijuana licensing and zoning ordinances which require business owners or applicants to be Maine residents. These were largely considered to be supportive of the existing residency requirements under state law. With OMP and DAFS having concluded that their requirements are void, similar ordinance provisions would also likely be considered unenforceable. Municipalities should work with legal counsel and consider repealing those portions of their marijuana ordinances that require residency. Such requirements will clearly be subject to challenge as local businesses learn of the state’s decision.

NH Governor's Emergency Order Re: Excess Expenditures

Under RSA 32:10, the governing body of a municipality may transfer an unexpended balance in one appropriation to another appropriation, provided that the total amount spent for the year shall not exceed the total amount appropriated at Town Meeting. However, RSA 32:11 provides that when "an unusual circumstance arises during the year which makes it necessary to expend money in excess of an appropriation which may result in an overexpenditure of the total amount appropriated for all purposes at the [town] meeting or when no appropriation has been made," the selectmen may apply to the Commissioner of the Department of Revenue Administration (DRA) to make such expenditure.

Section 4 of Governor Sununu's Emergency Order Number 23 relaxes a number of the requirements of RSA 32:11 which must be met prior to the actual expenditure of monies in excess of an appropriation or of the total amount appropriated at Town Meeting. Specifically:

1. RSA 32:11, I requires that before application to DRA may be made, a majority of the budget committee (or if no budget committee, the governing body) must hold a public hearing. The Governor's order waives the public hearing requirement "during the current health emergency."
2. Under the Governor’s Order, DRA must review the overexpenditure application and notify the governing body of its decision within two business days of DRA's receipt of the application. (RSA 32:11 contains no timeframe within which DRA must notify the governing body of its decision.)
3. Applications to DRA may now be submitted by email to the DRA’s Director of the Municipal and Property Division. 

The Governor’s Executive Order Number 23 may be found at https://www.governor.nh.gov/news-media/emergency-orders/index.htm.

Crazy Times, Even in the Municipal Bond Market

The last few weeks have seen the municipal bond markets feeling the effects of the COVID-19 pandemic. Today, however, the Bond Buyer reported in its “Daily Briefing” that there was some stabilization last week in the municipal bond market.

During the weeks of the worsening of the pandemic, the municipal bond markets saw less investments in municipal bonds and increased sales by holders of existing municipal bonds. With investors in mutual funds holding municipal bonds withdrawing their investments in those funds, those mutual funds in turn were selling the municipal bonds in which they were invested. Compounding this sell-off, mutual funds were not purchasing, at their historical pace, other municipal bonds. This outflow of cash from the municipal bond market, together with a reduced inflow of cash, resulted in lower prices being paid for municipal bonds, leading to increased interest rates being paid by issuers and increased yields to investors. 

Various reasons have been suggested for this change: for example, investor risk assessments associated with municipal bonds may have changed; potential increase in the cost to municipal bond issuers for public support systems; holders seeking to move into cash positions; and general uncertainty. 

Not all issuers and municipal bonds are of equal risk in the current economic environment. Consider, by way of example, that some issuers have sufficient rainy day funds to see them through the crisis; some municipal bonds are supported by a revenue stream that may be less impacted by the pandemic. 

This is all part of the new economic world we are living in and what is written here at this point in time could change by the time you read it.

Maine State Primary Postponed – What to Do About Municipal Meetings and Budgets?

With the news that Governor Mills has ordered Maine’s primary election to be postponed until July 14, many towns are facing a dilemma about whether to postpone their own town meetings and elections. For those towns that like to coincide their local secret ballot meetings with the June primary, on top of the already existing health concerns, this is more reason to push local meetings off until July 14. But what to do about the budget? The Omnibus COVID Bill (LD 2167), provides that if the annual meeting is delayed beyond the date the annual budget is customarily approved, the prior year’s approved budget is deemed the budget for the ensuing year until a final budget is approved. The municipality may even commit taxes based upon last year’s budget, if needed. Schools are also authorized to operate according to the past year’s budget until subsidy numbers are finalized and the state of the emergency is over.

We take this budget extension provision to mean that the town may make operational and administrative expenses in the same amounts, in the same categories, as approved in the prior year. It may also allocate revenues as spelled out in the prior year’s budget. If capital improvement accounts were funded within the last year’s budget and the purpose remains, the town could choose to fund them on a month-to-month basis per the last budget. Alternatively, a cash-strapped town might wait to fund capital improvement accounts and eventually ask the budget meeting to reduce or eliminate the total allocation for the year.

While the COVID bill helps alleviate the pressure to hold budget meetings, it still leaves concerns about how to bridge the gap where the spending authorization remains unchanged from the prior year but revenues may have plummeted due to extended tax deadlines or other economic pressures. Many of our clients are using tax-anticipation notes, which can be borrowed on authority of the municipal officers without the need for town meeting. Others are relying on provisions in the last approved budget which allow the municipal officers to either spend from reserve accounts or appropriate from surplus to fund emergency expenses. In this economic environment, expenditures that previously would not have counted as emergencies probably do now meet that criteria. For towns that don’t have this type of spending authority or enough funding in place, there does remain the possibility of holding a small, special town meeting to make any approvals necessary. Anticipating low turnout, such a meeting still may legally be held, although the town will obviously have to take careful precautions to ensure that attendees are adequately spaced and protected.