by Kevin O’Flaherty, Alana Rusin, and David Zucker
On November 13, 2017, the Supreme Judicial Court (“SJC”) held in 135 Wells Avenue, LLC v. Housing Appeals Committee, 478 Mass 346 (2017) (“135 Wells”), that, although a local zoning board of appeals (“ZBA”) has broad powers to grant “permits or approvals” under G.L. c. 40B, it does not have the authority to modify municipal property rights, including restrictive covenants.
Sections 20 to 23 of G.L. c. 40B (“Chapter 40B”), the Anti-Snob Zoning Act, were enacted in 1969 to “ensure that the local municipalities did not make use of their zoning powers to ‘exclude low and moderate income groups.’” 135 Wells, supra, at 351. Chapter 40B allows developers of projects that contain at least 25% “affordable housing” (defined as housing for those earning 80% or less of the area median income) to apply for all local approvals in a single “comprehensive permit,” and gives the ZBA the “authority to . . . override local requirements or regulations, and to issue ‘permits or approvals’” for all aspects of the development. Id. The override provision empowers ZBAs to approve projects that are higher, denser, or larger than otherwise allowable under existing regulations, and even to allow residential uses in non-residential zones. See, e.g., Eisai, Inc. et al. v. Housing Appeals Committee & Hanover R.S. LP, 89 Mass. App. Ct. 604 (2016). When a town is below certain Chapter 40B thresholds (e.g., less than 10% of the town’s housing stock is affordable), it is very challenging for a town to deny a comprehensive permit. See G.L. c. 40B, § 20; 760 C.M.R. § 56.03(1); DHCD Guidelines (rev. Dec. 2014). Finally, an applicant for a comprehensive permit aggrieved by a ZBA’s decision may appeal to the Housing Appeals Committee (“HAC”) in the Department of Housing and Community Development. G.L. c. 40B, § 22.
In May 2014, 135 Wells Avenue, LLC applied for a comprehensive permit to construct a 334-unit 40B development on land in Newton. The site was zoned for limited manufacturing use and also was subject to restrictive covenants granted to Newton that, among other things, prohibited residential use and required a portion of the site to remain open space. The developer concurrently filed with Newton’s legislative body (“Aldermen”) a petition to amend the restrictive covenants to allow residential use and to permit construction in the open space area. The petition was denied in November 2014. The ZBA also denied the developer’s comprehensive permit application on the grounds that Chapter 40B does not allow the ZBA to amend or waive restrictive covenants that constitute city-owned interests in land which can be amended or released only by the Aldermen.
In December 2014, the developer appealed the ZBA’s decision to the HAC; a year later, the HAC affirmed the ZBA’s decision, holding that the restriction and requested amendments are not within the sort of “conditions or regulations” or “permit or approvals” that are subject to Chapter 40B. The developer then sought judicial review by the Land Court. In August 2016, the Land Court determined that Chapter 40B does not allow either the ZBA or the HAC to require the city to amend the deed restriction to allow for residential use. The Land Court also held that the fact that the site was never used for limited manufacturing as envisioned when the property interests were granted did not change the validity of those interests. The developer sought direct appellate review. The SJC affirmed the Land Court’s rulings and reasoning in full.
The key to understanding 135 Wells is to recognize that, although Chapter 40B grants a ZBA broad authority to grant “permits or approvals,” it does not include “authority . . . to order the city to relinquish its property interest.” 135 Wells, supra, at 348. Also key is the fact that the SJC had previously decided that the deed restrictions at issue are property interests of Newton, id. at 353 (citing to Sylvania Elec. Prods. Inc. v. Newton, 344 Mass. 428, 430 (1962)), and that “both affirmative and negative easements [such as restrictive covenants] are to be treated equally” as property interests. Id. at 357.
In reaching this conclusion, the SJC rejected the developer-appellant’s attempt to distinguish this case from Zoning Bd. of Appeals of Groton v. Housing Appeals Committee, 451 Mass. 35 (2008) (“Groton”), in which the SJC reversed a decision that “order[ed Groton] to grant an easement over town land pursuant to the board’s power to grant permits or approvals under Chapter 40B” on the basis that there is a “fundamental distinction between the disposition or creation of a property right and the allowance of a permit or approval.” 135 Wells at 356 (citing Groton, supra, at 40-41). In 135 Wells, the SJC extended Groton’s logic, holding that the fundamental distinction between a property right and a permit or approval applies equally to affirmative easements (at issue in Groton) as it does to restrictive covenants (at issue in 135 Wells). In doing so, the SJC rejected the developer’s attempt to characterize the restrictive covenants at issue as the “functional equivalent of a ‘permit [ ] or approval[ ]’” that the ZBA or HAC could override under Chapter 40B. Id. at 353. The SJC distinguished the Aldermen’s allowance of prior amendments to the same restrictive covenant as acts of a legislative body instead of a local permit authority, and explained that Chapter 40B does not authorize a ZBA to modify restrictive covenants because these are interests in land, not land use permits or approvals. Id.
135 Wells addressed a heretofore unsettled question under Chapter 40B: if a project is on land subject to a deed restriction held by a municipality, may a local ZBA modify or eliminate the restrictive covenant? In 135 Wells, the SJC held that Chapter 40B does not give a ZBA this power. Accordingly, developers seeking relief from deed restrictions running in favor of a municipality must seek their removal or modification from the local municipal legislative body.
Kevin P. O’Flaherty is a Director at Goulston & Storrs PC and a member of the firm’s litigation group. The focus of his practice is real estate litigation of all types. Over the course of his 25-year career he has represented private developers, individuals, institutions and public agencies in zoning and permitting matters, eminent domain cases, commercial landlord/tenant disputes, purchase and sale cases and a wide array of other real estate related matters. Alana Rusin and David Zucker are Associates at Goulston & Storrs PC where they practice real estate litigation.
On November 6, 2012, Massachusetts voters overwhelmingly approved a ballot initiative legalizing the use of marijuana by qualifying patients who have been diagnosed with a debilitating medical condition. Effective January 1, 2013, the “Act for the Humanitarian Medical Use of Marijuana” presents a number of issues for cities and towns concerning the exercise of their zoning powers. The Act established a process whereby medical marijuana treatment centers, defined as not-for-profit entities that acquire, cultivate, possess, process, transfer, transport, sell, distribute, dispense, or administer marijuana or products containing marijuana for medical use, may apply to the Department of Public Health (DPH) for registration. The Act provides for the registration of up to 35 medical marijuana treatment centers initially, with at least one but not more than five centers per county.
Although no reference is made in the Act to municipal zoning control or its applicability to medical marijuana treatment facilities, the DPH regulations promulgated thereunder in mid-2013, see 105 CMR 725.000, address zoning for these facilities, referred to as registered marijuana dispensaries (RMDs): “The Department does not mandate any involvement by municipalities or local boards of health in the regulation of RMDs, qualifying patients with hardship cultivation requirements or any other aspects of marijuana for medical use. However, nothing in 105 CMR 725.000 shall be construed so as to prohibit lawful local oversight and regulation. . . that does not conflict or interfere with the operation of 105 CMR 725.000.” 105 CMR 725.600. Accordingly, per the Home Rule Amendment, Mass. Const., amend. LXXXIX, Massachusetts cities and towns may in their discretion adopt zoning ordinances and bylaws relative to the siting, development, and operation of medical marijuana treatment centers, as long as their provisions are not at odds with the Act or the DPH regulations.
To Zone or Not to Zone
A municipality is under no obligation to zone for RMDs, and many cities and towns either have yet to adopt such zoning or have elected not to do so. The DPH regulations mandate a buffer zone around certain facilities for children. Absent a more stringent local requirement, “a RMD shall not be sited within a radius of five hundred feet of a school, daycare center, or any facility in which children commonly congregate. The 500 foot distance. . . is measured in a straight line from the nearest point of the facility in question to the nearest point of the proposed RMD.” Municipalities may establish their own buffer zones from these or other facilities, provided they are mindful that, collectively, these zones may not effectively prohibit RMDs city- or town-wide.
The Office of the Attorney General has opined that an outright ban on medical marijuana treatment centers in a municipality frustrates the purposes of the Act and, consequently, is invalid. “The Act’s legislative purpose could not be served if a municipality could prohibit treatment centers within its borders, for if one municipality could do so, presumably all could do so.” Letter from the Att’y Gen. to the Town of Wakefield, Mar. 13, 2013, available at http://www.mlu.ago.state.ma.us/.
The Attorney General’s Office has also rejected bylaws prohibiting home cultivation as an accessory use, restricting home cultivation to a particular area of the community, imposing buffer zones around home cultivation sites, and requiring a special permit for home cultivation. Home cultivation of medical marijuana is authorized by the Act and the DPH regulations for qualifying patients whose access to a RMD is limited by verified financial hardship, a physical incapacity to access reasonable transportation, or the lack of a medical marijuana treatment center within a reasonable distance from the patient’s residence.
For municipalities that choose to zone for medical marijuana by adopting reasonable regulations, the choice is between incorporating RMDs into the zoning already in effect and establishing an overlay district within which RMDs may be sited.
Incorporation into Existing Zoning
Using a more traditional approach to zoning, a municipality may amend its existing zoning ordinance or bylaw to identify and define RMDs and to specify the zoning district or districts where they are permitted. In doing so, it subjects a RMD to the same dimensional and density requirements and performance standards applicable to other uses in the same district. Dimensional and density requirements might include area, frontage, and setback constraints, among others. Performance standards might regulate noise, traffic, or other aspects of a use for compatibility with its surroundings. If a city or town so chooses, it may zone cultivation and processing operations separately from retail facilities. Although both qualify as RMDs per the DPH regulations, these uses need not be co-located.
A city or town may elect to allow RMDs only by special permit, in some or all of the zoning districts in which they are an available use. The Attorney General has cautioned municipalities, however, that an ordinance or bylaw must provide adequate standards to guide a board in deciding whether to grant or deny the special permit. It may not be enough for a municipality to rely on the general requirement of the Zoning Act, at G.L. c. 40A, § 9, that the use be “in harmony with the general purpose and intent of the ordinance or by-law,” nor are a municipality’s special permit criteria for other uses always appropriate for application to RMDs. Municipalities have been advised “to list specific criteria for. . . consider[ation] when reviewing [an] application.” Letter from the Att’y Gen. to the Town of Westborough, July 11, 2013, available at http://www.mlu.ago.state.ma.us/.
In its regulation of medical marijuana treatment centers, a municipality must also be cautious not to run afoul of the zoning exemption available to agricultural uses, under G.L. c. 40A, § 3. To the extent that an RMD’s operations qualify as commercial agriculture thereunder, a municipality cannot require a special permit for, or unreasonably regulate or prohibit, the use.
Creation of an Overlay District
An alternative to incorporating RMDs into an existing zoning ordinance or bylaw is to create an overlay district for medical marijuana treatment centers. An overlay zone is a district superimposed on one or more established zoning districts which may apply supplemental restrictions on uses in these districts or permit uses otherwise disallowed. By adopting an overlay district, a municipality gains greater control over where RMDs may be sited. The limits of acceptable locations need not coincide with the boundaries of the municipality’s existing zoning districts, but may be determined by the city or town in its discretion upon consideration of existing and anticipated land uses and the compatibility of RMDs with these uses. A municipality may incorporate dimensional requirements and performance standards specific to the overlay district, and may even pair these regulations with buffer zones surrounding schools, daycare centers, or other uses potentially impacted by a RMD. A special permit may be required for the development and operation of a RMD within the overlay district; or the municipality may choose to permit these facilities as-of-right or subject only to site plan review.
Host Community Agreements
Several Massachusetts municipalities have opted to negotiate host community agreements with potential RMDs to eliminate or mitigate any possible adverse effects of RMDs. Neither the Act nor the DPH regulations prohibit these agreements. And while a municipality may not require a RMD to enter into a host community agreement, such an agreement may expedite a RMD’s receipt of a letter of support or non-opposition from the municipality, now a requirement of the DPH licensing process as updated in mid-2015. A municipality might otherwise choose to issue its letter of support or non-opposition only upon a RMD’s completion of the permitting process, once the city or town is satisfied that the project has been adequately vetted.
Among the most common subjects of host community agreements are financial compensation due the municipality, taxes, and charitable contributions. Financial assistance to a city or town may help offset community impacts, fund public health and safety initiatives, or otherwise aid the municipality. The payment of real estate taxes or the making of payments in-lieu-of taxes is also worthy of negotiation; otherwise, because RMDs are required by the Act to be not-for-profit entities, they may qualify as tax-exempt. Entering into a tax agreement helps to alleviate any questions about the payment of taxes to the municipality. Finally, a number of Massachusetts municipalities have negotiated charitable contributions by RMDs in exchange for the community’s support of, or non-opposition to, the development of a medical marijuana treatment center.
In summary, Massachusetts cities and towns have a choice about whether to zone for medical marijuana treatment centers and, if they do, of how to approach the rezoning process. Some municipalities have utilized traditional zoning practices, allowing RMDs in one or more existing zoning districts and often requiring a special permit. Other municipalities have developed overlay districts, within which RMDs may be sited subject to dimensional requirements, performance standards, and other regulations specific to the use. Regardless of which approach is chosen, a municipality would be wise to explore negotiation of a host community agreement with a potential RMD and avail itself of the financial incentives that may be offered in exchange for the municipality’s cooperation with the application process.
Lisa L. Mead and Adam J. Costa are partners at Blatman, Bobrowski, Mead & Talerman, LLC. They concentrate their practice in the areas of general municipal, land use and environmental law, representing both municipal and private clients throughout Massachusetts.