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Good Faith vs. Bad Faith Review

By Charles A. Rausch, Esquire (with assistance from Jayne Katherman, legal intern)

The recent case of Honey Brook Estates v. Board of Supervisors of Honey Brook Township, (Pa. Commonwealth Court, filed January 13, 2016), is an example of the race that can ensue when a municipality wants to change zoning and a developer wants to build.  In this case, the Township lost the race.

Honey Brook Estates (Developer) purchased a parcel of land located in Honey Brook Township’s residential district.  Approximately five months later, the Township planned to amend the zoning ordinance to rezone most of the Developer’s land from residential to agricultural.  The day before a public hearing on the proposed zoning amendment was scheduled, the Developer submitted a preliminary subdivision and land development plan to subdivide the property into 3 lots for single family and townhome style homes.  On the one hand, if a developer files a plan before a zoning amendment is adopted, the plan has to be reviewed under the old ordinance.  On the other hand, if a plan does not meet the filing requirements for a plan to be submitted, a municipality can reject the plan as improperly filed.  If the zoning amendment is adopted before the plan is “duly filed,” the zoning change stands.   As a result, the race is on.

One week after the preliminary plan was submitted by the Developer, the Township Engineer ruled that the plan was incomplete, and would not be forwarded to the Planning Commission.  The Township Engineer identified five omissions from the Developer’s preliminary plan.  Ten days later, the Developer submitted an amended preliminary plan that addressed each of the five items addressed by the Township Engineer.  Five days after that, the Township adopted the ordinance that implemented the preservation of open space and set a limitation on further development.  The amendment rezoned most of Developer’s property from residential to agricultural, and eliminated the Developer’s ability to build residential units.

Five days after the adoption of the zoning changes, the Township Manager rejected Developer’s amended preliminary plan setting forth three reasons for doing so.  The Developer objected to the denial of the amended preliminary plan stating that the Township was imposing requirements upon the Developer that had never been imposed on any other applicant.  Approximately one week later, the Township Solicitor stated that in the past the Township has been far less technical in its objections to completeness of plans than it was being toward Developer’s plan.

Shortly after the Township Solicitor’s comments, the Township forwarded Developer’s preliminary plan to the Planning Commission for review without informing the Developer.  The Developer never appeared at the Planning Commission meeting, and the Planning Commission disapproved the Developer’s amended preliminary plan.  Approximately six days after the Planning Commission’s vote to disapprove Developer’s plan, Developer responded to the Township Manager’s comments, and submitted additional supporting documents.  The Township Manager returned the supplemented materials stating that the Planning Commission already had recommended that the Township disapprove the Developer’s plan.  The Board of Supervisors then voted to reject the Developer’s amended preliminary plan.  Neither the Planning Commission nor the Board of Supervisors received any of the supplemental information.

The Developer filed a land use appeal challenging the Township’s rejection of the amended preliminary plan.  Developer asserted that irregularities in the Township’s review of Developer’s plan deprived it of the opportunity to have the plan reviewed objectively on its merits, and that the Township acted in bad faith.  The lower court rejected the Developer’s argument that its preliminary plan was rejected in bad faith, noting that denial of approval for a plan can stand if supported by any one of the reasons set forth in the denial.  The trial court further asserted that a wholesale modification of the preliminary plan would have been necessary in order to satisfy the ordinances in existence on the date upon which the Developer’s application was first presented to the Township.

The Commonwealth Court reversed the lower court’s decision, and remanded the matter to the Board of Supervisors with instructions to review the Developer’s amended preliminary plan, provide input on technical requirements and ordinance interpretation, identify objections and provide the Developer with the opportunity to respond to the objections.

The Commonwealth Court found that a municipality’s duty of a good faith review includes discussing matters involving technical requirements or ordinance interpretation with an applicant, and providing an applicant a reasonable opportunity either to respond to objections or to modify the plan where there has been a misunderstanding or difference of opinion. The record showed that the Township rejected the Developer’s preliminary plan in both its original and amended form without giving the Developer the opportunity to confer. Further, the Township sent the amended plan to the Planning Commission without informing the Developer, or giving the Developer an opportunity to present supplemental information. Since the evidence established that the plan was rejected without giving the Developer the opportunity to respond,  the Commonwealth Court held that this constituted bad faith on the part of the Township.  The Commonwealth Court also agreed with the Developer that each of the reasons cited for denial were easily correctable, and not worthy of deeming Developer’s preliminary plan defective on its face.