City of Portsmouth v. Richard Schlesinger and William Weinstein
46 F.3d 133 (1995)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A challenge to a conditional zoning fee, based on the grounds that the fee lacks a rational nexus to the burdens imposed by the development, must be raised within the short statutory period for appealing zoning decisions. Failure to do so constitutes a waiver of the right to raise that defense later in a contract dispute.
Facts:
- Richard Schlesinger and William Weinstein (the 'Developers') acquired real property known as Mariner's Village from the City of Portsmouth ('the City') in 1985.
- The Developers planned to convert apartment units to condominiums and build additional units, which required a zoning change from the City to increase housing density.
- After negotiations, the Developers and the City agreed that in exchange for the zoning change, the Developers would pay the City a flat sum of $2,500,000.
- The Developers executed a promissory note as individuals and partners, obligating them to pay the City the $2,500,000 in six lump-sum payments.
- On November 11, 1986, the City Council approved the zoning change, contingent on the execution of the promissory note.
- The Developers proceeded with the development and made the first two payments of $400,000 each on November 1, 1987, and November 1, 1988.
- The Developers subsequently defaulted by failing to make the payment due on November 1, 1989.
Procedural Posture:
- The City of Portsmouth filed a complaint against the Developers in the U.S. District Court of New Hampshire to recover the unpaid balance on the promissory note.
- On the eve of trial, the Developers successfully moved to amend their answer to include the defense that the consideration for the note was an illegal form of 'contract zoning'.
- The City argued this defense was waived as untimely under state statutes, but the district court rejected this argument.
- After a two-day bench trial, the district court found for the Developers, holding that the payment lacked a 'rational nexus' to any burden on the City and was therefore illegal.
- The City of Portsmouth appealed the judgment of the district court to the United States Court of Appeals for the First Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does New Hampshire law permit a developer to raise an 'illegality' defense, based on the lack of a rational nexus for a conditional zoning payment, years after the statutory deadline for challenging the underlying zoning ordinance has passed?
Opinions:
Majority - Young, District Judge
No. New Hampshire law does not permit a developer to raise an illegality defense to a conditional zoning payment after the statutory period for challenging the zoning ordinance has expired. The court reasoned that challenges to zoning decisions must be brought within the short time limits prescribed by statute (RSA 677:2 and :4). While a prior case, Blue Jay Realty, allowed an untimely challenge for issues involving pure questions of statutory and constitutional law, this case is different. The Developers' challenge—that the $2.5 million payment lacked a 'rational nexus' to the burdens created by the development—is a fact-specific, judgmental inquiry that is more akin to a question of administrative discretion than a pure question of law. Such fact-intensive determinations are precisely the type of issue that local legislative bodies, like the City Council, are competent to hear and should be given the first opportunity to address via the statutory rehearing process. By failing to seek a timely rehearing, the Developers deprived the City Council of the chance to address and correct any potential error, thereby waiving their right to assert the illegality defense years later.
Analysis:
This decision refines the exception established in Blue Jay Realty, creating a crucial distinction between different types of challenges to zoning ordinances. It establishes that fact-specific challenges, such as questioning the amount of a conditional use fee, are subject to strict statutory deadlines for administrative review. This holding strengthens the principle of finality in municipal land-use decisions and prevents sophisticated parties like developers from strategically accepting the benefits of a zoning change and later challenging their own obligations when they become inconvenient. The ruling effectively limits a party's ability to use a 'wait and see' approach, forcing them to raise fact-dependent objections promptly or waive them permanently.
Unlock the full brief for City of Portsmouth v. Richard Schlesinger and William Weinstein