HOBART COMMON COUNCIL v. INSTITUTE OF IND.

• Decision Date: 17 March 2003
• Docket Number: No. 45A03-0201-CV-33.,45A03-0201-CV-33.
• Citation: 785 N.E.2d 238
• Parties: CITY OF HOBART COMMON COUNCIL, Appellant-Respondent, and School City of Hobart and Northwest Indiana Special Education Cooperative, Appellants-Intervenors, v. BEHAVIORAL INSTITUTE OF INDIANA, LLC, and 61st Avenue Building, LLC, Appellees-Petitioners.
• Court: Indiana Appellate Court

785 N.E.2d 238

CITY OF HOBART COMMON COUNCIL, Appellant-Respondent, and School City of Hobart and Northwest Indiana Special Education Cooperative, Appellants-Intervenors, v. BEHAVIORAL INSTITUTE OF INDIANA, LLC, and 61st Avenue Building, LLC, Appellees-Petitioners.

No. 45A03-0201-CV-33.

Court of Appeals of Indiana.

March 17, 2003.

George T. Patton, Jr., Monica J. Conrad, Adrian S. Allen, Bose McKinney & Evans LLP Indianapolis, Indiana, Attorney for Appellant, School City of Hobart & Northwest Indiana Special Education Cooperative.

John P. Bushemi, John P. Bushemi & Associates, Merrillville, Indiana, Attorney for Appellant, City of Hobart Common Council.

Kathleen Cekanski-Farrand, South Bend, Indiana, Attorney for Appellant, City of South Bend Common Council.

David C. Jensen, Eichhorn & Eichhorn, Hammond, Indiana, Attorney for Appellees.

OPINION

MATHIAS, Judge.

The Behavioral Institute of Indiana ("Institute") petitioned the City of Hobart ("Hobart") for a land use variance to operate a sixty-bed, for-profit, residential treatment facility in an area of Hobart zoned "R-2 single-family residential." The Hobart Board of Zoning Appeals ("HBZA") conducted a hearing on the Institute's proposed land use variance, and voted unanimously to send a favorable recommendation to the City of Hobart Common Council ("Council") pursuant to Indiana Code section 36-7-4-918.6.¹ Despite this positive recommendation from the HBZA, the Council conducted hearings and voted five-to-one to deny the proposed land use variance.

The Institute timely filed a petition for writ of certiorari seeking trial court review of the Council's denial of its requested land use variance. After reviewing the record and depositions submitted by the Institute, the trial court found that there was substantial evidence to meet the statutory requirements for a land use variance set forth in Indiana Code section 36-7-4-918.4,² and that the hearings conducted by the Council violated the Institute's constitutional rights of due process and equal protection of law. For this reason, the trial court reversed the Council's rejection of the Institute's requested land use variance and approved the HBZA recommendation of the land use variance.

Hobart and the School City of Hobart in conjunction with the Northwest Indiana Special Education Cooperative ("the Public Schools") now appeal the judgment of the trial court.³ These Appellants present the following consolidated and restated issues for review:

I. Whether the procedural protections of due process apply to land use variance proceedings before common councils taken pursuant to Indiana Code section 36-7-4-918.6;

II. Whether the Council conducted the Institute's land use variance hearing in accordance with the requirements of due process;

III. Whether the trial court applied the appropriate standard of review for land use variance proceedings; and

IV. Whether the trial court was within its discretion when it approved the HBZA recommendation of the Institute's proposed land use variance.

We find that the procedural protections of due process apply to land use variance proceedings under Indiana Code section 36-7-4-918.6, and that the Council's proceedings pursuant to Indiana Code section 36-7-4-918.6 did not satisfy the requirements of due process. But, we also hold that the trial court did not apply the correct standard of review and that the trial court should not have approved the HBZA recommendation of the Institute's proposed land use variance. We therefore affirm in part, reverse in part, and remand for proceedings consistent with this opinion.

Facts and Procedural History

On December 28, 2000, the Institute filed a petition for a land use variance with Hobart. This petition sought to operate a sixty-bed, for-profit, court-ordered, "level 3" child placement facility licensed by the State Division of Family and Children in an existing building located at 101 West Avenue, Hobart, Indiana ("Facility").⁴ This address is located in an "R-2 single-family residential" zone. An "R-2 single-family residential" zone's permitted uses include: single-family dwellings, community uses, parks, churches, schools, libraries, and uses incidental to the principal permitted uses. Hobart, Ind. Zoning Code 24-23.

This building had previously been occupied by Charter Medical Corporation ("Charter") under a "conditional use" approved by the Council. Charter had used the building to operate a sixty-bed psychiatric hospital, which provided short-term inpatient psychiatric care. Charter ceased operations in the building in 1999, and by operation of law, the building's zoning classification reverted back to "R-2 single-family residential" twelve months after Charter's use ceased.

On January 11, 2001, the HBZA conducted a preliminary hearing on the Institute's land use variance petition and set the matter for public hearing. Prior to the public hearing, the Institute submitted various items in support of its proposed land use variance to the HBZA. Appellants' App. pp. 319, 332-38, 340-45, 355-56, 361-66. Parties opposing the land use variance also submitted documents. Documents from parties opposing the land use variance included information indicating that the Institute's opening of the Facility would have a substantial educational cost impact on the Public Schools because the Institute's residents would have behavioral and psychiatric needs that require special education treatment under the law. Appellants' App. pp. 321-30, 347, 349, 351-53, 358-59.

On February 8, 2001, the HBZA opened the public hearing, but only three of the five HBZA members were present. Near the beginning of the meeting, one of the three members received an emergency call and was forced to leave. As a result, a quorum was no longer present, and the meeting had to be rescheduled for February 20, 2001.

During this interim period, the Institute submitted additional supporting documentation to the HBZA. Appellants' App. pp. 377-78, 401-06. Parties opposing the use variance also submitted additional documents to the HBZA during this time. These documents included a letter from the Merrillville Community School Corporation, a letter from School City of Hobart, and a letter from Hobart City Engineer Stephan Truchan ("Engineer Truchan"). Appellants' App. pp. 374-75, 398-99, 416.

On February 20, 2001, with six-of-seven Council members present, the HBZA resumed the public hearing on the Institute's requested land use variance. The HBZA hearing included extensive presentations of information from those opposed to and those in favor of the petition. Two citizens testified in support of the land use variance, twelve documents were submitted in favor of the land use variance, twelve documents were submitted in opposition to the land use variance, and a six-page, seventy-five-signature petition opposing the land use variance was also presented. Appellants' App. pp. 540-43, 548-49.

Monica Conrad ("Conrad") testified on behalf of the Public Schools, indicating that the Public Schools would encounter substantial costs if the land use variance were granted because the Institute would house residents with behavioral and psychological disorders requiring the Public Schools to provide special educational entitlements to those residents. Appellants' App. pp. 396, 429, 531-38. Conrad also testified that the Hoosier Boys Town operates a "level 3" residential treatment facility with forty-three empty beds indicating there was no need for residential treatment bed space; Conrad argued that this excess capacity indicated that there would be a substantial likelihood of the Institute's financial failure. Id.

City Police Chief Taylor testified that the Institute's proposed use of the Facility posed no danger to the public. Appellants' App. 579-80. HBZA member Zimmerman presented a Hobart Police Department call listing, which he received from Councilman Clausen, showing that the Hobart Police responded to sixty-three calls from the Facility between April of 1998 and February of 2001. See id.

Finally, Engineer Truchan testified that he believed that three of the five statutory land use variance requirements under Indiana Code section 36-7-4-918.4 were not satisfied. Engineer Truchan's testimony concentrated on Indiana Code sections 36-7-4-918.4(1) and 36-7-4-918.4(3). He specifically testified that (1) the requested land use variance would be injurious to the public safety and the general welfare, based on previous police responses and the anticipated cost impact on the Public Schools, and (2) the need for the land use variance did not arise from a condition of the building itself because the building could easily be modified to office or medical uses. Appellants' App. pp. 575-77.

The HBZA concluded the public hearing and voted on the petition. A motion to deny the petition failed. The HBZA then added the requirement that the Institute obtain a $1,000,000 performance bond to provide education for the Institute's residents should the Institute's business fail or should the State order the Public Schools to provide the Institute's educational requirements. After the addition of this performance bond requirement, the HBZA voted unanimously to recommend the land use variance to the Council.

Following the HBZA meeting, but prior to the February 21, 2001 Council meeting, Engineer Truchan distributed a detailed memorandum titled "Hobart Advisory Board of Zoning Appeals Proposed Findings of Fact for Petition for a Use Variance" to members of the Council. Although this document contained elements of Engineer Truchan's previous oral and written testimony, it also included previously unstated factual assertions concerning the proposed land use variance's capacity to diminish the surrounding property value and pose a danger to the surrounding residents. In addition to this memorandum, Engineer Truchan distributed two photographs of holes in the fence of a juvenile facility...