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.

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.

Superior Court Ruling Supports Municipal Authority

Michaela Murphy of the Kennebec County Superior Court recently issued a decision in favor of the Town of Readfield. The case was brought by a property owner whose occupancy permit for a residential structure had been revoked by the Code Enforcement Officer because he had misrepresented its intended use.

 The permit was revoked because the property owner was openly using the site as a commercial concert and events center where it was not allowed per zoning map. The Town also refused to put a rezoning question out for town meeting vote despite receiving the required number of signatures on the petition because the rezoning would have violated the comprehensive plan. 

Justice Murphy ruled in favor of the town on all counts. She strongly reinforced a municipality’s right to revoke a permit when clear misrepresentations had been made regarding its use and the use was in violation of applicable land use restrictions. This is an alternative way to enforce a claim rather than going to District Court for an 80K action. The Court also upheld the Select Board’s right to make a determination that certain questions not be put to a Town meeting vote.

This case was handled by Kristin Collins and Stephen Langsdorf of Preti Flaherty.

Accessory Uses and Their Pitfalls

Municipalities put a lot of thought into comprehensive plans and zoning ordinances to make sure that no uses are allowed which will cause negative impacts on a given neighborhood. However, we often see ordinances that inexplicably allow any type of use in a district as long as it is an accessory use. “Accessory uses” are usually defined as being incidental and subordinate to the principal use of the property.

A municipality will often have a table of uses in its ordinances that allows only specific types of use in a particular zone, but allows accessory uses in all zones. Let’s think for a second about what this might mean. Consider a residential zone in which a nursing home is an allowed use, but a restaurant is not an allowed use. The nursing home has a cafeteria that is open to the general public. If “accessory uses” are allowed in all zones, the nursing home now has a back-door (yet perfectly legal) way to run a restaurant without violating the ordinance. Neighbors who thought they were living in a restaurant-free zone might complain, as might would-be restaurateurs who do not have the same opportunity.

Home occupations are also frequently given broader latitude than the same type of use conducted outside the home, even though the impacts on the neighborhood might be the same. Is that auto repair shop in someone’s home garage any less noisy than a principal use of the same type that might not be allowed in the same zone?  This matters because zoning restrictions are a limitation on property rights, and there has to be a rational basis supporting all such restrictions.

What can be done? Planning boards and staff should consider carefully their definitions and ordinance provisions pertaining to accessory uses. One simple solution is to include a provision that accessory uses are only permitted to the extent they would be permitted as a principal use in the given zone. Consider also the types of uses such as hospitals, civic centers, schools, churches and other campus-type facilities that may encompass several accessory uses. It often makes sense to include the more common elements of these facilities in the definition of the primary use, rather than trying to figure out which uses are subordinate and accessory. Generally speaking, planning officials should put the same degree of thought into the impacts of these accessory activities as they do into the impacts of their principal use counterparts.