Hartshorne v. City of Whitefish

• Decision Date: 11 May 2021
• Docket Number: DA 20-0328
• Parties: James HARTSHORNE and Angelo Queirolo, Plaintiffs, Appellees, and Cross-Appellants, v. CITY OF WHITEFISH, Whitefish City Council, Defendants, and IO2.5, a series member of IO-3, LLC, a Montana Limited Liability Company, Defendant and Appellant.
• Court: Montana Supreme Court

486 P.3d 693

2021 MT 116

James HARTSHORNE and Angelo Queirolo, Plaintiffs, Appellees, and Cross-Appellants,

v.CITY OF WHITEFISH, Whitefish City Council, Defendants,andIO2.5, a series member of IO-3, LLC, a Montana Limited Liability Company, Defendant and Appellant.

DA 20-0328

Supreme Court of Montana.

Submitted on Briefs: February 24, 2021

Decided: May 11, 2021

For Appellant: Richard De Jana, Richard De Jana & Associates, PLLC, Kalispell, Montana

For Appellees James Hartshorne and Angelo Queirolo: Lindsey W. Hromadka, Michelle T. Weinberg, Weinberg & Hromadka, PLLC, Whitefish, Montana

For Appellees City of Whitefish and Whitefish City Council: Marcel A. Quinn, Tom A. Hollo, Hammer, Quinn & Shaw, PLLC, Kalispell, Montana, Angela K. Jacobs, Whitefish City Attorney, Whitefish, Montana

Justice Beth Baker delivered the Opinion of the Court.

¶1 IO2.5, a series member of IO-3, LLC ("IO2.5"), appeals an Eleventh Judicial District Court Order granting summary judgment to James Hartshorne and Angelo Queirolo (collectively, "Hartshorne") on their claim that Whitefish City Ordinance 18-23 violates the uniformity requirement found in § 76-2-302(2), MCA, and striking certain conditional commercial uses allowed by the ordinance. Hartshorne cross-appeals the District Court's order denying summary judgment on its claim of spot zoning. We affirm the District Court's ruling that the City did not engage in illegal spot zoning and reverse its conclusion that Ordinance 18-23 violates the statutory uniformity requirement.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 This case concerns an undeveloped 2.5-acre parcel in The Lakes neighborhood in Whitefish, Montana, known as Area 2(c) or Lot 3 of the Plat of Riverside Senior Living Center. The surrounding neighborhood is primarily residential. IO2.5's predecessor, Barnes Whitefish, LLC, purchased Area 2(c) on March 27, 2014. IO2.5, a developer, alleges that "[t]he existence of the commercial [Planned Unit Development] component in the neighborhood plan was important to the purchaser because it assured flexibility in determining the best use of the property ... [which] could not be changed without the growth policy and neighborhood plan first being amended ...." Hartshorne resides near Area 2(c).

¶3 The City of Whitefish adopted the Riverside at Whitefish Neighborhood Plan in 1993 as an amendment to the Whitefish City-County Master Plan. In 1999 it amended the Neighborhood Plan. The purpose of this amendment was to adjust the development focus of the area from a commercial component that would "attract an outside clientele" to a more community-based development that "still proposes commercial use but as a neighborhood center." The 1999 Neighborhood Plan "embodies the public policy for the area it addresses." It provides that "[a]ny land use ordinances or regulations, such as zoning or subdivision review, shall be based on this plan[.]"

¶4 The Neighborhood Plan covers approximately 230 acres, divided into five separate areas. Area 2, titled "Riverside Public Park Area, Neighborhood Center, and Future Development Site," is divided further into "three distinct segments." The Plan designated Area 2(a) as a ten-acre development site for assisted living and retirement housing; Area 2(b) as a twenty-acre public park; and Area 2(c) as follows:

A 2.5 acre neighborhood center to meet the demand for basic services created by the walking community and youth athletic facility. The site will be developed under the auspices of a mixed PUD¹ whereby 10% of the gross area of the site can be developed in commercial uses intended to be complimentary to the proposed development of the neighborhood.

¶5 The City adopted Ordinance 99-9 in 2000, which zoned all of Area 2 as WR-4 (High Density Multi-Family Residential)² with a PUD overlay. The ordinance required "that any future development must be submitted and reviewed as a PUD complete with public and City review," and it established that "[d]evelopment of Area 2 would further be subject to the terms of the Riverside at Whitefish Neighborhood Plan Amendment." This classification along with the Neighborhood Plan's specifications allowed Area 2(c) to be developed for both commercial and residential purposes.

¶6 The City later passed Ordinance 99-17, ordering the zoning map amended for Area 2(a) to allow it to retain a WR-4 zoning classification but with a residential PUD designation added. Area 2(b) was dedicated as a park in 2003, subjecting it to additional use regulations due to parks being covered by a separate title of the Whitefish City Code.

¶7 In 2018, the City proposed new PUD regulations that would preclude commercial development in residential areas. Specifically, the PUD regulations disallow Mixed-Use PUDs, Commercial PUDs, or Light Industrial or Industrial PUDs in primarily residential areas. The City and IO2.5 maintain that Area 2(c) was the only property within the City for which the new PUD regulations would prohibit development as called for in its Neighborhood Plan. Given this discrepancy for Area 2(c), IO2.5's representative attended the March 2018 hearing on these PUD regulations. Following discussion there with the Zoning Administrator, the Zoning Administrator proposed via e-mail a solution to IO2.5's representative:

I think the best solution for your client, short of applying before the new regulations go into effect, would be to apply for a PUD amendment asking to change that condition that requires a new PUD to something different like a CUP.³ I think the commercial use of that property would be vested with the prior approval.

The City passed Ordinance 18-09, containing the new PUD regulations, in April 2018.

¶8 As recommended by the Zoning Administrator, IO2.5 then filed a request with the City to amend Ordinance 99-9 to allow use of a CUP instead of a PUD to develop Area 2(c) and to further define the permitted uses. IO2.5 proposed the following amendment:

The remaining phases shall be reviewed under the provisions of Section 11-7-8: Conditional Use Permits. Uses permitted on Lot 2C (Lot 3 of the Plat of Riverside Senior Living Center) are as follows:

Any uses that are permitted or conditionally permitted in the underlying WR-4 district;

The following uses which are permitted or conditionally permitted in the City's WB-1 Limited Business District:

• Clubs

• Private and commercial recreational facilities

• Professional office

• Restaurant, excluding drive-ins, including on-premises beer/wine sales

• Retail sales and service (less than 4,000 square feet enclosed gross floor area per lot of record; no outside storage or display);

Any other uses for which justification can be derived on the basis that the use will be compatibly and harmoniously incorporated into the unitary design of the planned development.

A change of use within the Neighborhood Center to a use not specifically listed herein shall require an administrative Conditional Use Permit prior to occupancy.

¶9 In July 2018, City staff drafted a report ("Staff Report") regarding the application, describing the purpose of IO2.5's request as:

provid[ing] the property owner a clear path for development to maintain the property's vested rights for neighborhood commercial [use] while preserving the public process when development of the property does occur. The previously approved [PUD] approved a portion of the property to develop as neighborhood commercial but set a condition that a new PUD would be required prior to the development.

The Staff Report stated that the new PUD regulations "only offered uncertainty for the developer," and that "[u]sing the [CUP] continues to require a public process and a predictable development path for the property owner and the public." It found that IO2.5's proposed amendment conformed to the Neighborhood Plan, which "established the character of the neighborhood"; it further found that changing the discretionary review process to a CUP would "not change the overall goals for this neighborhood," nor would the amendment "in and of itself ... change the character of the neighborhood. Retaining the ability for public review during development ... will ensure neighborhood character through implementation of the Neighborhood Plan[.]" The Staff Report also indicated that it "directed the applicant to look at the City's WB-1 zoning district, as this is the City's neighborhood commercial district," "[b]ecause the language in the Neighborhood Plan was not specific." It recommended a standard CUP instead of an administrative CUP for any proposed development.⁴

¶10 The City Council notified the public and held two meetings on the issue on July 19 and August 6, 2018. The public, including Hartshorne and their counsel, submitted both written and oral comment, largely voicing lack of support for such an amendment; Hartshorne's summary judgment brief summarized the public's concerns as being "against specific commercial uses, such as clubs, bars, and/or restaurants contemplated for [Area 2(c)], as well as concerns about safety, traffic, wildlife and open space, and the conditional uses generally changing the quiet community feel of the development."

¶11 Following consideration of the application, the Staff Report, and the public's testimony, on August 6, 2018, the City Council approved IO2.5's request on the first reading of Ordinance 18-23. It then approved Ordinance 18-23 on August 20, 2018, directing the amendment of the official zoning map and permitting development of Area 2(c) through a CUP instead of a PUD. In addition to the uses permitted in the overlying WR-4 regulations, the ordinance included IO2.5's proposed permitted uses that would be subject to the CUP process: clubs; private and commercial recreational facilities; professional offices; restaurants, excluding drive-ins, including on-premises beer/wine sales; and retail sales and service (less than 4,000 square feet enclosed gross floor area per lot of record and no outside storage or display). It further permitted "[a]ny other uses...