River Walk Apartments, LLC v. Twigg, 49, Sept. Term, 2006.

• Decision Date: 10 January 2007
• Docket Number: No. 49, Sept. Term, 2006.,49, Sept. Term, 2006.
• Citation: 396 Md. 527,914 A.2d 770
• Parties: RIVER WALK APARTMENTS, LLC, et al. v. Roger TWIGG, et al.
• Court: Court of Special Appeals of Maryland

Page 770

914 A.2d 770

396 Md. 527

RIVER WALK APARTMENTS, LLC, et al. v. Roger TWIGG, et al.

No. 49, Sept. Term, 2006.

Court of Appeals of Maryland.

January 10, 2007.

Jeffrey H. Scherr (Philip M. Andrews, Thomas M. Nanni, Kramon & Graham, P.A., Baltimore, on brief), for petitioners.

Kurt J. Fischer (Marta D. Harting, DLA Piper US LLP, Baltimore, Saundra Nickols, City Atty., City of Frederick, on brief), for respondents.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

BATTAGLIA, J.

The Petitioners, River Walk Apartments, LLC, and Monocacy River Apartments, LLC, ("River Walk") seek review of the Court of Special Appeals's judgment which reversed summary judgment entered by the Circuit Court for Frederick County on behalf of River Walk, directing Respondent, Roger Twigg, in his official capacity as the Director of Permits and/or Building Department Manager of the City of Frederick, to issue certain shell construction permits for 144 units, a club house, two garage buildings, and twelve buildings, in connection with the development of the Riverside Corporate Park. We granted certiorari, River Walk v. Twigg, 394 Md. 307, 905 A.2d 842 (2006), to consider one question:

Was the City of Frederick free to exercise its executive discretion—pursuant to Article 23A of the Maryland Code, the City Charter, and its common law right to enter into and be bound by contracts pursuant to this Court's decisions—to purchase valuable rights-of-way necessary to complete a preexisting public project, without seeking legislative approval by ordinance?

We shall hold that two contracts, a November Agreement and a Deferral Agreement entered into by two different mayors of the City of Frederick, were not legislatively authorized and therefore, are unenforceable.

I. Facts

In November, 1999, J And R Limited Partnership contracted to sell to the Millennium Development Group, LLC, approximately 122 acres of property formerly known as the "South Rosenstock Farm," located in the City of Frederick and encompassing Gas House Pike from its intersection with Monocacy Boulevard and running to the City's eastern limits. This piece of property had been annexed by the City of Frederick by Resolution Number 6-85, passed by the Mayor and Board of Aldermen ("Aldermen") in 1985, and which required the following two conditions in exchange for becoming part of the municipality:

1. The owner of the land to be annexed shall pay the cost of any required advertising of this annexation matter.

2. Extension of water, sanitary sewer and storm drain lines, streets, curbs, lighting and all other public improvements to and into the area to be annexed shall be at the expense of the owner or owners or developers requesting same and shall not be at any cost to the City.

City of Frederick, Resolution No. 6-85.

One month after entering into the contract for the purchase of the property with J And

R Limited Partnership, Millennium assigned all of its rights in the South Rosenstock Farm property to Riverside Investment Group, LLC, which procured the property to incorporate it into the Riverside Corporate Park Project. The property was to constitute the "South Campus," as one of four campuses—the North, South, East and West—of the development plan for the Corporate Park in the City of Frederick.¹ The South Campus was to surround Gas House Pike, which was a vital part of the Extension of Monocacy Boulevard Project, a project which entailed the completion of Monocacy Boulevard from its intersection with Gas House Pike to its southern end point at Hughes Ford Road, as well as the upgrade of Gas House Pike from its intersection with Monocacy Boulevard to its terminus at the eastern corporate limits of the City.

On November 6, 2000, to "commence and complete" Phase III of the Monocacy Boulevard Project, its final phase, the Mayor of the City of Frederick entered into an agreement (the "November Agreement") with Riverside Investment Group, LLC, Riverside Industrial Properties, LLC, Riverside Technology Park I, LLC, Riverside Technology Park II, LLC, and Riverside Technology Park III, LLC ("Property Owners"). Pivotal to the contract was the Property Owners' agreement to dedicate to the City for no charge "any and all additional rights-of-way needed for the upgrade and widening of Gas House Pike along the frontage of the Property," which was to be made "free and clear of all liens and/or encumbrance s,"² for which the Property Owners agreed to record the plats to be dedicated and execute all documents necessary for its completion. The Property Owners also agreed to give their consent, and sign all necessary documents to subject the properties to a "Tax Increment Financing District" (TIF) to enable the City to finance the completion of Monocacy Boulevard, with the caveat that "Property Owner shall have no additional tax assessment or liability as a result of the creation of the [TIF]."

In consideration for the Property Owners' dedications and agreement to the TIF, the contract provided that the Properties and Property Owners would be subject to a "deferred contribution special assessment" of $1.00 per square foot of each building to be constructed, to be paid once to the City "upon application to the City for the Shell Construction Permit for such building." The Agreement stated that "no additional fee for the special assessment shall be assessed or contribution required in conjunction with future permits for the same building," nor would the Property be subject to additional "impact fees"³ as "a condition of development of and/or construction of improvements on the Property."

The contract was signed by a representative of each of the Property Owners and by Mayor James Grimes for the City of Frederick, and was to be "binding upon, and inure[ ] to the benefit of, the parties hereto and their respective heirs, personal representatives, agents, employees, invitees, successors and assigns," and its enumerated obligations were to "run with the land ... and ... be binding upon all future owners."

In May of 2001, Riverside Investment Group assigned all of its rights in the contract to purchase the South Campus from J And R Limited Partnership to Riverside South, LLC, and J And R Limited Partnership subsequently sold and conveyed the deed to the property to Riverside South, LLC.

On October 3, 2002, the City of Frederick passed Ordinance G-02-19, § 1, which titled Chapter 11 of the City Code, a reserved chapter, "Fees," and levied impact fees for the first time in the City for the purpose of requiring:

that new residential, commercial, institutional and industrial development pay for its appropriate share of capital improvements to the city's water and sewer treatment and distribution systems through the imposition of water and sewer impact fees which will be used to finance, defray and reimburse the city for all or a portion of the costs of capital improvements to the city's water and sewer treatment and distribution systems.

City of Frederick Code, Chapter 11, Section 11-1(b). The ordinance cited for authority Article XI-E of the Maryland Constitution, Article 23A of the Annotated Code of Maryland, and the City of Frederick Charter. Section 11-1 of the new chapter, entitled "Water and sewer impact fees," provided in pertinent part:

(d) Applicability. Any person who, after the effective date of this section, undertakes residential, commercial, institutional or industrial development shall pay a water and sewer impact fee prior to receiving a permit from the department of permits and inspections. The impact fee also applies to any existing residential, commercial, institutional or industrial structure which is not presently connected to a city water and sewer system, when a new system is constructed or the extension of an existing system has been declared ready for service, and the property owner is required to connect to the new system.

City of Frederick Code, Chapter 11, Section 11-1(d). Another fee imposed by the new chapter was the "Park Facilities development impact fee" included in Section 2, which states in relevant part:

d. Applicability. Any person who undertakes a residential development project shall pay a park facilities development impact fee and shall not receive a building permit until such park facilities development impact fee is paid.

City of Frederick Code, Chapter 11, Section 11-2(d).

In June of 2004, then Mayor Jennifer Dougherty⁴ and the Property Owners entered into a second agreement entitled "Agreement To Defer Public Improvements" ("the Deferral Agreement"). The new Agreement granted the Property Owners an exception to Sections 2(g), 5.02, and 5.03 of the Subdivision Regulations of the City of Frederick, which required installation and acceptance of necessary public improvements prior to the final approval of subdivision plats.⁵ The Agreement also iterated that:

The City of Frederick and the Riverside Owners hereby agree that the present and/or future owners/developers of the Site Plan Lots shall, upon issuance of any permit issued by The City of Frederick with reference to any of the Site Plan Lots, pay unto the City of Frederick the Fee, based upon One Dollar ($1.00) per square foot of gross floor area of any proposed building to be constructed on any of the Site Plan Lots.... In no event shall any of the Lot Purchasers and/or owners/developers of the Site Plan Lots be required to pay any fees or assessments or otherwise be held responsible for payment of any fees or assessments related to off-site improvements beyond the $1.00 per square foot to be paid at time of building permit issuance.

On June 25, 2004, Riverside South LLC sold its property rights in the South Campus of the Riverside Corporate Park Project to Riverside Apartments ("Riverside"), a limited liability company consisting of two member companies, River Walk Apartments, LLC, and Monocacy River Apartments, LLC.

In October of 2004,...