Supreme Court decision could be obstacle to cities’ efforts to redo rental property law
By TED CARTER
The May 14 Mississippi Supreme Court ruling in a Richland mobile home park case reinforces the belief that state and constitutional law protects non-conforming land uses, says the lawyer who won the case and others who watched it closely.
The lawyers were not alone among those who watched closely.
Madison-Rankin Circuit Judge John Huey Emfinger is expected to rule soon on the rights of non-conforming properties in Pearl and Ridgeland. So he has been eager to review the high court’s ruling that upheld a decision of the Mississippi Court of Appeals. Until he heard what the high court had to say in Richland vs. Cleveland Mobile Home Park, Emfinger did not want to act on the Pearl and Ridgeland cases.
Emfinger has an additional interest: The Richland decision affirmed the Court of Appeals’ reversal of his own ruling in the case.
In this month’s ruling, the Supreme Court found Richland acted both arbitrarily and capriciously and violated the park owner’s constitutional rights by refusing to allow the park owners to fill vacated lots.
The refusals were “discriminatory beyond the authority” of Richland’s elected leaders, the court said in its 9-0 ruling.
Limits ahead for Pearl, Ridgeland?
How far Pearl and Ridgeland can go in remaking their cities through sweeping land-use changes is unclear. They have ventured beyond any land-use overhaul attempted elsewhere in Mississippi, lawyers say.
In light of the Richland ruling, Pearl and Ridgeland will have to work hard for each inch of progress in their efforts, say Michael Cory, the Jackson lawyer who won the Richland case, and a handful of other metro lawyers in the midst of similar court fights.
Drawn into the land-use battles is a growing number of metro-area law firms, from regional giants like Butler Snow to Cory’s four-partner firm Danks Cory Miller & Bridgers.
For officials of the cities, the land-use changes are a way to foster single-family home growth and limit multi-family enclaves the officials say bring unnecessarily high costs in both public safety and utilities infrastructure.
Power of a designation
The designation of “non-conforming” is key to the strategies of both cities.
Where Pearl and Ridgeland have gone wrong, owners of the rental complexes and manufactured home parks say, is in retroactively applying new land-use rules to non-conforming properties.
Pearl, among other land-use actions, has followed Richland’s lead in not letting mobile home parks fill vacant lots. It’s also under challenge for a new mandate that multi-family complexes and manufactured home parks install storm shelters and retrofit for fire safety.
Ridgeland is applying a different strategy, and could open up a whole new question of law once it begins deciding how long to give non-complying properties to comply. The question will be how to amortize a property right, one Jackson lawyer involved in the land-use cases said.
At the heart of Ridgeland’s strategy is a new classification system that applies retroactive density limits on apartment complexes, a policy that could force complexes to demolish or board up specific numbers of units.
The policy’s legal strength will get its first test before Circuit Judge Emfinger, who said at a late April hearing on the Ridgeland ordinance that he wanted to know how the Supreme Court would rule in the Richland case before going any further. He previously told the same thing to lawyers involved in the Pearl land-use fight.
The Circuit Court judge said he expected to get guidance in both cases from the high court’s Richland ruling.
Parallels to Cleveland ruling
One challenge in Pearl has come from the Homewood Co., owners of the more than 50-year-old Grove Acres Mobile Home Park.
Attorney Justin Peterson, representing the mobile home park, said in an interview after the Richland ruling that the legal issues in Grove Acres’ challenge match those of Richland vs. Cleveland Mobile Home Park suit. “The situation is exactly the same,” Peterson said.
“My hope,” he added, “is that the City is going to appreciate this decision and will act swiftly to take all appropriate measures to allow these non-conforming parks in Pearl to replace” mobile homes that are moved out.
James A. Bobo, Pearl city attorney, did not return a phone call or email seeking comment on the Richland ruling’s impact on the Grove Acres litigation.
Grove Acres has also sued Pearl in federal court over what it says is the City’s attempt to wrest away the vested rights the property has through its non-conforming zoning designation.
The suit also seeks to stop Pearl from enforcing a lengthy list of requirements for rental properties adopted as part of a Rental Housing Code in June 2014. In addition to mandating storm shelters and sprinkler retrofits, the Rental Housing Code sets new requirements for green space, storm water drainage and roadway widths, all of which Grove Acres says would require reconfiguring the park to far fewer dwellings.
Applying the measure to a pre-existing park “is irrational, arbitrary and capricious,” said attorney John Corlew in a suit filed Dec. 11 in the U.S. District court for the Southern District if Mississippi Northern Division.
Vested property rights
Attorney Michael Bentley, who represents Ridgeland’s Van Mark Apartments, said lawyers for Ridgeland do not view the court’s Richland ruling as entirely definitive.
But, added Bentley in an interview last week, “I see that case as pivotal in the Ridgeland case. I think the Cleveland case is a very strong pronouncement on property rights.”
The Van Mark suit is furthest along of the suits filed to counter the Ridgeland zoning ordinance and is the one Emfinger had delayed action on.
Both the Richland and Ridgeland cases address property rights Bentley says the owners have regardless of changes the respective cities make to their zoning laws. In the Van Mark’s case, Ridgeland is directing the complex to whittle its units from 316 to 260. The complex at 6811 Old Canton Road sits on 24.3 contiguous acres with a building density of 13.02 units an acre.
Kelly Simpkins, a Wells Marble & Hurst attorney hired by Ridgeland to defend the new zoning laws, said the firm is “carefully evaluating the Supreme Court decision in Cleveland Mobile Home Park for its impact, if any, on the pending cases.”
Ridgeland’s 2014 zoning ordinance set multi-family building densities of 10 units an acre and specified that apartment complexes that fail to comply must “cease” the non-conforming use within a specified time. In adopting the ordinance in February of last year, Ridgeland established a classification system that started at “A” and from there went to “B” and “C.”
A Class A would be designated as conforming, though lawyers for the apartment complexes say Ridgeland won’t be giving out any “A’s.” Complexes that receive a Class B must conform to the retroactively applied density limits. A Class C specifies removal.
One of the newest complexes in Ridgeland, The Gables on County Line Road, sought a Class A designation but ended up with a Class B. It would have to either remove or board up more than a dozen units to meet terms of the Class B designation.
Sixteen complexes are in court against the City, either individually or through class actions. Lawyers for one complex on Pine Knob Drive, the 260-unit Baymeadows Apartments, have sued in federal court with a claim that Ridgeland’s bid to phase-out current apartment complexes seeks to rid the city of affordable housing occupied primarily by blacks and Hispanics.
The most recent round of lawsuits against Ridgeland came May 19 on behalf of Park Place Ridgeland, the Trace Apartments and the Mark Apartments. Attorney Michael Cory of Danks Cory Miller & Bridgers asks for an injunction against Ridgeland’s enforcement of the new building density limits.
The injunction is necessary to save the rental complexes from “a substantial financial harm,” he said.
Cory and attorneys representing other multi-family complexes say investors in the rental properties face a significant revenue hit, especially from inabilities to gain refinancing and to ensure tenants they can remain in their units long term.
Owners of the properties “have suffered and will continue to suffer financial injury,” Cory’s suit says.
Cory added in an interview: “On one hand you can’t refinance when the balloon is due. Or if the income is impaired, you can’t service the debt.”
Either way, the lender is not happy, he noted.
Should Ridgeland prevail in the stream of lawsuits against the zoning law, the next step would be to set a time frame for demolishing or boarding up the number of units necessary to meet whatever classification a rental complex receives.
This will require setting an “amortization” schedule – something lawyers for the complexes say could be quite difficult, considering that such a step would require “amortizing a property right.”
“We don’t know if the City is thinking six months, five years, 25 years., 50 years or 100 years,” said one Jackson lawyer involved in the suits.
“There’s never been a case in Mississippi that has amortized the true use of a property,” the lawyer said.
It will be a whole new area to litigate, said Bentley, the Bradley Arant Boult Cummings’ attorney who represents the Van Mark Apartments.
The amortization period would have to be sufficient for the property owners to recoup their investment, including the profits they expect, according to Bentley.
Whatever timeframe Ridgeland selects for amortization, the period will be “unenforceable,” at least as it applies to the Van Mark Apartments, Bentley added.