Paul Peck, MEREDA

“The power to delay is the power to destroy,” was the mantra of the coalition that opposed Portland, Maine’s Midtown development, which has been in the works for half a decade. The years-long Midtown delay is due, in large part, to the tactics employed by the anti-growth group Keep Portland Livable (KPL). Despite a lengthy and comprehensive approval from Portland’s Planning Board for both the master plan and the site plan for the Midtown project, KPL filed a lawsuit against the Federated Companies, the Midtown developer, arguing that the project did not conform to Portland’s zoning ordinances. Widely regarded as a backhanded effort to kill the project through delay, rather than a viable suit, KPL’s tactic worked. According to the Portland Press Herald:

“[T]he [suit] was put on hold … after Federated Cos. agreed to reduce the size of the buildings to six stories and build out the whole project in one phase. The project also was scaled back to include one structured parking lot for 850 vehicles. And the amount of housing was cut roughly in half to include 440 units, while the retail space was scaled back slightly to about 92,000 s/f.”

“What was once a $105 million project had now been scaled back to about $75 million … [and the] Planning Board approved the new design … despite concerns about the changes.”

“Federated was outraged that it had invested more than $2 million into a project that had been in the pipeline for five years and still didn’t have its building permits. While its project was on hold, a boom in market-rate housing development for the first time in decades was threatening the viability of the plan.”

Rather than endure delays that could have continued for years, Federated decided to scale down its project and reach an agreement with KPL, so that it would not risk missing the market or having other incentives lapse.

“Every party is entitled to an appeal, but the appeals process should not be utilized principally for delay, which happens too frequently, discouraging development and economic growth that Maine vitally needs. Appeals for the sake of delay have become an unfortunate and troubling part of the opponent’s playbook,” said Gary Vogel, a real estate attorney and chair of the public policy committee for the Maine Real Estate & Development Association (MEREDA).

Now projects in the State of Maine have a strategy for avoiding such delays. Enter LD 775, “An Act to Streamline Judicial Review of Certain Land Use Decisions,” Maine legislation submitted {W5828510.1} and championed by MEREDA which successfully passed into law with bipartisan support, becoming effective on July 29, 2016.

MEREDA worked closely with Maine’s judicial branch and the legislature to craft this new law, ensuring that it will be an effective and coordinated approach to expediting land use appeals in Maine. During testimony, eight groups spoke in favor of the bill, including the Maine Municipal Association, Maine Realtors Association, and Maine’s chapter of the Associated General Contractors. This broad coalition of interest groups coalesced around the concept of eliminating some of the uncertainty in the process. Developers and municipal leaders, alike, are heralding its passage.

Now, when a municipal land use decision on a significant project is appealed to Superior Court, any party will have the option of removing the case to the business court (Business and Consumer Docket (BCD), and the BCD must accept the case. Unlike the regular docket of the Superior Court, which has been known to take two years or longer to resolve these types of appeals, the BCD aims to resolve its cases within 10 months.

The new law improves predictability and efficiency in the local permitting process – and helps to ensure that projects live and die due to their legitimacy and legality, and not at the hands of mere delay tactics, which can kill a project if the market changes or a key tenant is lost during the period of delay. The law is applicable only to “significant decisions,” which are defined as:

1. One or more buildings that occupy a total ground area in excess of 10,000 s/f or contain a total floor area in excess of 40,000 s/f; or

2. A total ground area in excess of 3 acres occupied by buildings, parking lots, roads, paved areas, wharves and other areas to be stripped or graded and not revegetated; or

3. A subdivision of 10 or more lots. “There are many recent projects that would have likely benefited from this law, had it been on the books sooner,” said MEREDA public policy counsel Andrea Cianchette Maker. “These include a grocery store in Western Maine, a quarry in Bangor, and a hotel on the coast. With all three, after at least a two year delay in each case, the original municipal approval was ultimately upheld in court. MEREDA is thrilled to have lead the effort to help avoid that situation in the future.”

“I think we were getting to a point where developers were wondering whether it was worthwhile to develop in Maine,” said Maker. “Some cases were taking four or five years to resolve. We are optimistic that the BCD will be very effective in this arena, and that LD 775 will encourage investors and developers to pursue new projects in Maine.”

Paul Peck is president of the board at MEREDA. An attorney and real estate developer, he practices business and real estate law at Drummond & Drummond, Portland, and serves as president of LWS Development.