Loading...
HomeMy WebLinkAboutCorrespondence: HollibaughMay 3, 2012 Mr. Paul Estridge Jr. David Weekley Homes 12965 Old Meridian Street Carmel, IN 46032 Re: Westmont PUD Ordinance, Z- 507 -07 Dear Paul: JAMES BRAINARD, MAYOR The City of Carmel recently received an opinion from John Molitor, legal counsel to the Carmel Plan Commission, on the legality of Section 4.3 of the Westmont Planned Unit Development (PUD) ordinance which reads: Each Dwelling in the Westmont District shall be built by a builder which, during each of the five (5) calendar years prior to commencement of construction of such Dwelling in the Westmont District, has built fewer than one hundred (100) Dwellings per calendar year. It is Mr. Molitor's conclusion that the provision in 4.3, if enforced, would violate Indiana law, specifically IC 24- 1 -2 -3, and, possibly federal law regarding interstate commerce. Based upon the opinion of Mr. Molitor, and with the concurrence of Mayor Brainard, the Department will not be enforcing Section 4.3 of Z- 507 -07, the Westmont PUD. Attached to this letter, please find a copy of Mr. Molitor's opinion. If you wish to discuss further the attached or any of the above, please call me at 317 571 2422, or email, mhollibaugh @carmel.in.gv. Yours truly, e Michael Hollibaugh Director Copy: Mayor Jim Brainard Douglas Haney, Carmel City Attorney Westmont PUD file DEPARTMENT OF COMML!tITY SERVICES ONE CIVIC SQUARE, CARMEL, IN 46032 PHONE 317.571.2417, FAX 317.571.2 26 MICHAEL P. HOLLIBAL'GH, DIRECTOR John R. Molitor Attorney at Law (317) 843 -5511 9465 Counselors Row, Suite 200 Fax (317) 843 -1543 Indianapolis, IN 46240 -6150 e-mail jmolitor @prodigy.net MEMORANDUM To: Mike Hollibaugh, Director, Department of Community Services (DOCS) From: John Molitor, Counsel to the Carmel Plan Commission Date: May 2, 2012 Re: Legality of Westmont PUD Ordinance You have asked me for a legal opinion regarding the ongoing validity and constitutionality of Section 4.3 of the referenced planned unit development district ordinance, which reads as follows: Section 4.3 Each Dwelling in the Westmont District shall be built by a builder which, during each of the five (5) calendar years prior to the commencement of construction of such Dwelling in the Westmont District, has built fewer than one hundred (100) Dwellings per calendar year. This ordinance was adopted by the City Council in 2007 after receiving a favorable recommendation by the Plan Commission. When I inquired recently of DOCS staff about the impact that this section has had on builder activity, it was reported back to me that only two building permits had yet been issued for homes in the Westmont district. I was astonished; this is a planned, 143 -lot subdivision, but there have been only two permits taken down in five years. Apparently, Section 4.3 has dampened if not completely eliminated economic activity in this district since the ordinance was adopted. On its face, Section 4.3 discriminates against all larger companies engaged in homebuilding that is, those who are regularly building 100 or more homes every year. Moreover, it obviously has a disparate impact on homebuilders who are engaged in interstate commerce (doing business in more than one state). Most if not all regional and national companies build well over 100 homes per year, or they simply won't survive in a multistate market. Certainly, these factors indicate that the provisions of Section 4.3 are restraining or restricting trade and probably interfering with interstate commerce. Combinations in restraint of trade have been prohibited in virtually every state now for at least a century. Indiana's existing statutes on this topic date back to 1907, and they have remained essentially unchanged since that time; see, for example, Ind. Code 24 -1 -2 -3 (attached); cf. Harvest Insurance Agency v. Inter -Ocean Insurance Company, 492 N.E.2d 686, 688 (Ind. 1986) "Covenants not to compete are in restraint of trade and are not favored by the law. Thus, even where the PUD applicants and their representatives have drafted and agreed to include the restraint in their own PUD ordinance, there is a risk that the City as well as the PUD proponents could be charged with illegally engaging in a scheme to restrain trade. The notion that state and local governments may not unduly regulate interstate commerce is even more fully established. It dates back to the adoption of the U.S. Constitution and has been recognized in many decisions of the Supreme Court of the United States; see, for example, Pike v. Bruce Church, 397 U.S. 137, 142 (1970), where the Court's opinion stated: Where the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities. Memo to Mike Hollibaaugh May 2,2012 Page 2 of 2 In the case of Westmont, where a PUD ordinance has practically prohibited companies that are engaged in interstate commerce from ever building in the PUD district without any apparent, legitimate local purpose it seems unlikely that it could ever be upheld. In light of the above, then, it is my opinion that Section 4.3 violates Indiana law and may even violate the interstate commerce clause of the U.S. Constitution. Therefore, my recommendation is that the City should decline to enforce it, at least until such time as the Plan Commission and City Council may have an opportunity to consider repealing it or replacing it with ordinance provisions that comply with State and Federal Iaw. Attachment: Ind. Code 24 -1 -2 -3 ATTACHMENT IC 24 -1 -2 -3 Restraint of bidding for letting contracts; offense Sec. 3. A person who engages in any scheme, contract, or combination to restrain or restrict bidding for the letting of any contract for private or public work, or restricts free competition for the letting of any contract for private or public work, commits a Class A misdemeanor. [Formerly: Acts 1907, c.243, s.3; as amended by Acts 1978, P.L.2, Sec.2404.] Note: The 1978 legislative amendment merely classified the offense as a Class A misdemeanor, without changing its elements.