Utah Bar Journal

The development community and local governments are paying the price now. The bubble has burst. See generally, Actual And Estimated Economic Indicators Utah And The U.S.: February 2009, Utah Governors Office of Planning and Budget, February 11, 2009, available at http://www.governor.utah.gov/dea/forecasts/econind.pdf (tracking economic indicators in Utah from 2006 through 2010 projections. The report indicates, for example, that 26,300 Utah Dwelling Unit Permits were issued in Utah during 2006. During 2007, 20,500 permits were issued. During 2008, only 10,600 permits were issued, with only 9000 permits projected to be issued during 2009). The collapse of the credit market has left development crawling. See, e.g., James A. Wood, Single-Family Homebuilding Dives to Record Lows, Utah Construc tion Report, University of Utah Bureau of Economic and Business Research, Vol. 51, No.1 (January, February, March 2008). Overextended builders, hobbyist developers, and even some municipalities are in dire financial straits. Some developments remain incomplete. See Rebecca Palmer, Credit Crunch Leaves Trendy Mixed-Use Developments on Shaky Ground, Deseret News, April 11, 2009. Some are smarting from the gaps in the development process that have been exposed.

Stop. Take a breath. The good news about the bad economy is that it is providing an opportunity to pause and self assess. The advantage is time. The problems that were exposed when the bubble burst can now be addressed and solved.

The Office of the Property Rights Ombudsman (“OPRO”) benefits from the proverbial 30,000-foot view. Many government entities and developers consult with the OPRO about problems with real
estate development. The OPRO sees land use problems both one at a time and cumulatively. In assisting with these problems, the OPRO noted some patterns and is focusing on ongoing problems that can be solved. The purpose of this article is to begin a dialogue about some positive actions that attorneys representing property owners, developers, and government entities may take during this slow down, so that the development process in the future may avoid some of the problems of the past.

Review and Revise Outdated General Plans and Ordinances Recently the OPRO received a call from the planning staff in a small Utah community. A citizen had applied for a “special exception.” The city staff, however, was completely unprepared to handle a special exception hearing. Few knew what a special exception was.

The extensive 2005 revisions to the Land Use, Development, and Management Act (“LUDMA”), removed from Utah statutory law the special exception doctrine. The special exception previously provided a municipality with the opportunity to approve an exception to a zoning ordinance.

The city had never amended its ordinances to bring them into harmony with LUDMA, and the special exception remained a part of the local ordinance. The property owner expected, quite
justifiably, to take advantage of the special exception to serve his purposes. Although this was not an unmanageable situation, the city found itself in an awkward position.

The OPRO finds with surprising frequency that cities and counties throughout Utah have not revised their land use ordinances for some time. Since the revisions to LUDMA, the need to update local ordinances is especially acute. Consistency with the provisions of state law will reduce disputes with property owners, and assist staff in processing applications. Additionally, impact and development application fees should be examined and revised every few years in order to keep current with changing expenses and market conditions.

Right now is the time for local government attorneys to review those ordinances, and bring them into harmony with the revised state law and the local area’s needs. This is best done without
rushing or undue pressure, taking the time to consult with those who can provide assistance. The Utah Governor’s Office of Planning and Budget maintains many excellent resources to assist local governments in planning and preparing ordinances, such as the Land Use Ordinance Library – a searchable collection of sample land use ordinances from local governments throughout Utah – found at http://www.planning.utah.gov/library.htm. In addition,
local governments would be well served to invite developers and members of the real property bar into those discussions. They can provide insights into the weaknesses and strengths of the
local development process based on their experience.

Many general land use plans could also benefit from some tinkering. A good general plan encompasses a variety of land uses. During the recent boom many land use plans focused on accommodating large homes. In some areas, commercial development has been neglected and higher density uses have been suppressed. The time to review the general plan includes the time to understand what should be included, but has not been. Good planning is an ongoing process, not a one time shot. See The Planning Process And The General Plan, Governors Office of Planning and Budget, p.1-2, located on the internet at http://planning.utah.gov/super/Training/Citizen_Planner/General% 20Plan.pdf. It is best to address this problem when time permits.

Obtain Training In Land Use Law, Development Rules, And Property Rights
Property owners and municipalities regularly call the OPRO to ask about impact fees. Although the statutory law on impact fees is carefully crafted, it is often misunderstood. Municipalities ask the OPRO how to calculate impact fees, how to amend them, how to impose them, and how to collect them. Developers and property owners ask how to avoid paying them. More often,
developers feel that the impact fees are simply too high, and ask the OPRO to crunch the numbers to determine whether they have been overcharged.

Several aspects of land use law generate repeated questions. The OPRO is eager to assist local government and land owners in finding answers to these questions. Nevertheless it helps to note that numerous resources exist for both government and private citizens to learn about impact fees, exactions, and nearly any other aspect of land use law. While development is slow, attorneys, developers, and government entities should take the time to obtain training in land use law, development rules, and property rights.

This type of training is readily available. The Utah League of Cities and Towns (the League) has published numerous materials explaining land use laws, and provides on its website(http://www.ulct.org/ulct/land/) several resources for training governments in many aspects
of development. As of this writing, these materials include several pamphlets, presentations, and podcasts, including an excellent audio discussion regarding impact fees. The League also provides on-site training to local municipal officials throughout the state.

Other affordable training resources abound. The Utah Land Use Institute (ULUI), www.utahlanduse.org, whose executive director is Craig Call, prepares and conducts several excellent training events throughout the year. Recently the ULUI and the Utah State Bar provided excellent one-day CLE seminars on impact fees. Another series of ULUI seminars will be launched this July at the Law & Justice Center featuring a six-hour comprehensive review of land use regulation and a handbook on Utah land use law. The Governors’ Office of Planning and Budget also has many excellent training resources at http://www.planning.utah.gov/. Finally, the OPRO frequently provides training in many aspects of land use law to government entities, developers, attorneys, and other groups. The OPRO can visit nearly any location throughout the state and provides these services for no charge. The need exists. The time is right. The cost is right. Training is vital to an understanding of land use law.

Build Relationships
Recently, the Mayor of a smaller Utah city called the OPRO to complain about the antics of a “greedy developer.” This developer was seeking approval of an unpopular project. The Mayor decried the developer’s unwillingness to consider more community friendly uses for the land.

Naturally, within a few days, the OPRO received a call from a developer who decried a city’s unwillingness to approve his project. The developer stated that he had gone to great effort
and expense to ensure that his project complied with all of the applicable local ordinances and regulations. The developer further indicated a desire to include in his project elements that
would contribute much to the beauty and value of the community. Nevertheless, the “draconian government” would not listen.

Of course, both of these callers were speaking about the same project. The stereotypes of the greedy developer and the draconian government had dominated their interaction and prevented healthy communication. In working to resolve this matter, the OPRO again noted, as it often has, that the developer and the City wanted exactly the same thing in almost every respect. Both parties wanted a beautiful project that contributed to the value of the community.

Attorneys could be the catalyst to help developers and local governments build a collaborative relationship. Both need the other, and are vital to community progress. Responsible developers
and responsible governments both want healthy growth. If the parties involved in the development process could keep their common goals in mind, and work toward workable and profitable development, there would be little remaining to fight about. Certainly, disagreement cannot be avoided, but where a collaborative relationship exists, disagreement can be part of a healthy dialogue rather than waste of resources. Effort should be made to break down
stereotypes and strengthen those relationships now.

The ULUI recently brought a program to Utah that has proven very successful in building these relationships in other areas of the country. Developed at Pace University in New York, The Land Use Leadership Alliance provides local leaders and developers with the tools to effectuate a positive and collaborative land use process. The Utah Land Use Institute website (http://www.utahlanduse.org/pages/LULA.html) can provide more information. Short of this, expressing a willingness to simply communicate frequently works wonders.

Learn and Use the Resources Available For Resolving Land Use Disputes
Real estate development in the state of Utah has slowed but not stopped. It cannot stop, because Utah’s population continues to grow, and people need places to live, work, and shop. Despite the slow down in the development market, the OPRO has seen a steady inflow of business from government entities and developers who desire assistance with land use disputes. Where development happens, disputes arise. The OPRO provides some special resources for resolving land use disputes before litigation becomes necessary.

Despite the fact that the OPRO has been operating since 1997, many attorneys are unaware of the Office’s role. The OPRO is charged with helping citizens and government understand the law. The OPRO assists parties with negotiation, mediation and arbitration. The OPRO provides Advisory Opinions in land use disputes. All of these tools are employed in the cause of dispute resolution. The attorneys at the OPRO are committed to help. The economic slow-down presents a good opportunity to become familiar with the resolution services available, in advance of the actual dispute.

Until recently, the rush to file and process land use permits left little time for either developers or government to “sharpen the saw.” One major benefit of the slow-down in real property development is time. Developers, government, and their attorneys can use this time to consider and prepare for future development. Putting forth a little effort, now that the bubble has burst and the rate of development slowed, can result in better communities, a better development
process, and better relationships tomorrow. If nothing is done, then when development again knocks on our door, nothing will improve, and we will find ourselves among the unfortunate who refuse to learn from the past.