A Montana court has considered a challenge to a county’s conditioning its approval of a development on the developer’s rebuilding of a county road.

Jerry and Genevieve Christison (collectively, “Developer”) sought to build a twelve-lot subdivision in Lewis and Clark County, Montana (“County”). The Developer submitted a variance request to the Board of County Commissioners of Lewis and Clark County (“Board”). After considering the variance request, the Board denied the variance request and required the Developer to improve and pave a County road.

Originally, the road was designed to handle 400 vehicle trips per day, but currently the road had approximately 800 daily trips. The Board estimated that the Developer’s subdivision would add approximately 120 new trips per day to the road, or an estimated 12% increase in the daily road usage.

The cost for improving the road was $2 million. The Board suggested that the Developer could pay for the road by proposing the creation of a special tax district, or the County could create a rebate program where all future developers whose projects would benefit from the road would reimburse the Developer on pro rata basis. The court did not receive any evidence that any other development had used either of these methods to finance the construction of a road.

The Developer filed a lawsuit challenging the Board’s determinations. The Developer challenged the Board’s decision on a number of grounds, including a statute that allowed the Developer to recover damages from the government if the government’s decision is found to be “arbitrary and capricious”. In addition, the Developer argued that the Board’s actions constituted an unconstitutional taking. The Board argued that it had acted within its regulatory powers by requiring the Developer to build the road. Both parties filed motions with the trial court seeking a ruling in their favor.

The Montana First Judicial District Court for Lewis and Clark County ruled in favor of the Developer and declared the Board’s actions unconstitutional. The court first looked at whether the Developer could collect from the County through a statute that requires a governmental body to pay damages to any person who has suffered an “arbitrary and capricious” decision by a governmental body. Montana has defined “arbitrary and capricious” as a decision which appears “random, unreasonable, or seemingly unmotivated, based on the existing record.”

The court found that the County had acted in an “arbitrary and capricious” manner by requiring the Developer to pay the entire costs of the new road, and so the court ruled that the Developer was entitled to damages. First, the court found the evidence did not support the County’s actions in imposing the costs of the new road entirely upon the Developer. The road was already exceeding its intended capacity and the Developer was only increasing the traffic on the road by an estimated 12%. In addition to imposing an undue burden on the Developer, the evidence also showed that the County had not required other developers to build roads or do anything under similar circumstances. While a county can require a developer to reimburse the government for the impact its projects might have, there was no relation to the amount charged to the Developer and the estimated impact of their project.

Next, the court considered the Developer’s takings claim. The Takings Clause of the Fifth Amendment provides that the government "(nor) Shall private property be taken for public use, without compensation", and the Montana constitution contains a similar requirement. This case did not involve the County’s physical taking of land; instead, the court considered whether the County’s requirement that the Developer build a road in exchange for permit approval constituted a taking from the Developer of the new road costs.

The court ruled that the County’s actions constituted a taking because there was no relation between the Developer’s permit request and the County’s requirement that the Developer build a road. Constitutional law requires a “nexus” between the governmental approval request and the proposed action being taken by the individual. The government needs to show a “rough proportionality” between the individual’s actions and the government’s requirements on which approval is conditioned. In this case, there was no proportionality between the Developer’s estimated 12% increased traffic impact and the County’s requirement that the Developer build an entirely new road. Thus, the court declared the County’s requirement an unconstitutional taking.

Based on its rulings, the court ruled that the Developer could pursue damages from the County for its violation of the “arbitrary and capricious” statute. In addition, the court remanded the case back to the County’s Board for a reconsideration on what requirements, if any, the County will impose on the Developer in exchange for approval of its project.

Christison v. Board of County Commissioners, No. BDV-2006-348 (Mon. D. Ct. July 14, 2009). [Note: This opinion was not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.]

Editor's Note: NAR provided legal support to the Developer, per the recommendation of NAR's Legal Action Committee.

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