In Re Appeal of S-S Corp./Rooney Housing Developments

2006 VT 8, 896 A.2d 67, 179 Vt. 302, 2006 Vt. LEXIS 15

• Court: Supreme Court of Vermont
• Decided: January 13, 2006
• Docket: 04-080
• Status: Published

Opinions

Skoglund, J.

¶ 1. S-S Corporation¹ appeals an Environmental Board declaratory ruling requiring it to obtain an Act 250 permit for two houses it constructed for use as residential care facilities. The Board concluded the construction of the houses was “development” under 10 V.S.A. § 6001(3)(A)(iv) and Environmental Board Rule 2(A)(1)(c) because together they consist of ten or more units and are “commercial dwellings” under Rule 2(M). S-S Corp. appeals both of these conclusions. We affirm the Board’s rulings.

¶ 2. Yvonne and Catherine Rooney operate residential care homes for physically and mentally disabled adults. Prior to the construction of the project at issue, they maintained a facility, known as the Washington Street home, in which they provided care and living quarters for thirteen adults. Faced with costly upgrades and residents who found it increasingly difficult to navigate the two-story home, the Rooneys sought and received funding from the United States Department of Housing and Urban Development (HUD) to build two new group homes, the Owen House and the Harvey House (the Houses).

¶ 3. The Houses are approximately three-and-a-half miles apart and are seven-bedroom, ranch-style homes intended to house eight residents who pay rent or fees. Staff members are on duty twenty-four hours a day, seven days a week; no staff or owners live in either House. Visiting nurses provide nursing care, and Catherine Rooney is authorized to distribute medications. The average length of stay for residents in the Rooneys’ homes is twenty years, and at the time of the Environmental Board decision in 2003, residents in the Rooneys’ homes had lived there for between two and thirty-two years.

¶ 4. After funding for the Houses was secured and construction of the Owen House had begun, the Assistant District Coordinator for District Environmental Commission #4 issued a jurisdictional opinion holding that the Houses were a housing project requiring Act 250 approval under 10 V.S.A. § 6001(3)(A)(iv). S-S Corp. appealed the opinion to the Environmental Board, which agreed with the jurisdictional opinion in a November 2003 decision. S-S Corp. sought reconsideration of the Board’s ruling, and the Board reaffirmed its decision in February 2004. Specifically, the Board ruled that the construction fell within the definition of “development” under 10 V.S.A. § 6001(3)(A)(iv) and Environmental Board Rule 2(A)(1)(c) because: (1) there were a combined fourteen rooms between the two Houses, thereby exceeding the ten-unit requirement; and (2) the construction met Rule 2(M)’s definition of a “commercial dwelling.” This appeal followed.

¶5. This Court reviews Environmental Board decisions with deference. Upon review of administrative decisions generally, this Court presumes a given administrative action is valid and correct absent clear and convincing evidence to the contrary. In re Devoid, 130 Vt. 141, 148, 287 A.2d 573, 577 (1972). The Court will sustain Environmental Board interpretations of Act 250 “ [ajbsent compelling indications of error,” and defers to the Board’s “interpretations of Act 250 and its own rules, and to the Board’s specialized knowledge in the environmental field.” In re Wal*Mart Stores, Inc., 167 Vt. 75, 79, 702 A.2d 397, 400 (1997). The decisions of the Environmental Board concerning questions of fact are conclusive if supported by “substantial evidence on the record as a whole.” 10 V.S.A. § 6089(c). In this context, “ ‘substantial evidence’... is evidence properly before the Board that is relevant and which a reasonable person might accept as adequate to support a conclusion.” In re Denio, 158 Vt. 230, 236, 608 A.2d 1166, 1170 (1992). We will affirm the Board’s legal conclusions if they are “rationally derived from a correct interpretation of the law and findings of fact based on substantial evidence.” In re BHL Corp., 161 Vt. 487, 490, 641 A.2d 771, 773 (1994).

¶ 6. The dispute in this case centers on whether the Houses are “development” under § 6001(3)(A)(iv) and Rule 2(A)(1)(c). Section 6001(3)(A)(iv) defines development as “[t]he construction of housing projects such as cooperatives, condominiums, or dwellings ... with 10 or more units, constructed or maintained on a tract or tracts of land, owned or controlled by a person, within a radius of five miles ... within any continuous period of five years.” The definition of development in the Environmental Board Rules is nearly identical: “[t]he construction of a housing project or projects such as cooperatives, apartments, condominiums, detached residences,... or commercial dwellings with ten or more units constructed or maintained on a tract or tracts of land owned or controlled by a person within a radius of five miles.” Environmental Board Rule 2(A)(1)(c), 6 Code of Vermont Rules 12 003 001-6 (effective January 12,2004, and identical to version effective January 15, 2003). The rules define a commercial dwelling as “any building or structure ... including but not limited to ... rooming houses, nursing homes ... and other places for the accommodation of people, that is intended to be used and occupied for human habitation on a temporary or intermittent basis, in exchange for a payment of a fee.”² Environmental Board Rule 2(M), 6 Code of Vermont Rules 12 003-001-11 (effective January 12, 2004, and identical to version effective January 15,2003).

¶ 7. There is no dispute that the Houses were built within a five-year period, are located within five miles of one another, and were intended for human habitation in exchange for a fee. Therefore, at issue is whether: (1) the Board correctly defined the term “unit” such that the Houses together contain more than ten housing units; and (2) the Board properly determined that the Houses are commercial dwellings under Rule 2(M).

I.

¶ 8. First, we affirm the Board’s decision to define a “unit” as a bedroom in this case. S-S Corp. argues that defining “unit” as a bedroom defies the plain meaning of the word and is inconsistent with the application of the term to other types of projects. The State argues that the definition varies depending upon the space being rented or sold and that the space being rented in a residential care facility is the bedroom. Significantly, although the parties proffer different constructions of the word “unit,” they both acknowledge, correctly, that the meaning will vary according to the type of building under consideration.

¶ 9. It is unsurprising that the meaning of a term undefined by statute or rule will vary depending on the context in which the term is used, and that the Board’s discretion includes the ability to define a statutory term with reference to its context. This follows because where a term is not defined by rule or statute, we accept the interpretation of the Board, the administrative agency responsible for the implementation of Act 250, absent compelling error. In re Rusin, 162 Vt. 185, 189, 643 A.2d 1209, 1211 (1994). In addition, this Court has recognized that Act 250 decisions are “inherently fact-bound and difficult to reduce to a straightforward test,” Sec’y, Agency of Natural Res. v. Short, 165 Vt. 277, 281, 682 A.2d 484, 486 (1996), and that the outcome of such decisions often cannot be “preordained by an inflexible definition” of a term, In re Rusin, 162 Vt. at 190, 643 A.2d at 1211-12.

¶ 10. For example, in In re Rusin, the Board was required to determine whether an access roadway qualified as a “road” under Environmental Board Rule 2(A)(6), which extends Act 250 jurisdiction to “‘[t]he construction of improvements for a road or roads.’” 162 Vt. at 188, 643 A.2d at 1210 (quoting Rule 2(A)(6)). In affirming the Board’s interpretation, we recognized that because the terms “road” and “driveway” were undefined by rule or statute, “a reasonable measure of discretion inheres in the determination of what qualifies as a road” under Rule 2(A)(6). Id. at 190, 643 A.2d at 1212; see also Short, 165 Vt. at 281, 682 A.2d at 485-86 (reaffirming In re Rusin); In re Spring Brook Farm Found., Inc., 164 Vt. 282, 288-89, 671 A.2d 315, 319-20 (1995) (ruling that indirect exchange between the developer, who provided facilities to children, and contributors, who gave donations, constituted a “commercial purpose” in accordance with Rule 2(L), and stating that “[t]he term ‘commercial’ ... can have many different meanings depending on the context in which it is used.”).

¶ 11. Further, the Board’s determination that a bedroom was a housing unit in the current case is consistent with its previous rulings. See, e.g., In re Marlboro Coll., Dec. Rul. #24 (July 26, 1973) (ruling that six cottages intended to house four students each comprised more than ten units together and therefore required an Act 250 permit); In re Burke Acad., Dec. Rul. #6 (Apr. 23, 1973) (ruling that a housing facility intended to house sixteen students and one faculty family consisted of “more than ten dwelling units” and required an Act 250 permit). Similarly, in this case, the Board based its definition of the term “unit” on the space being rented by each resident — a bedroom. Thus, the Board properly exercised its discretion in defining the term “unit.”

¶ 12. In support of its contention that the Board erred in interpreting the term “unit,” S-S Corp. cites federal definitions from the Internal Revenue Code and the Cranston-Gonzalez National Affordable Housing Act (under which S-S Corp. received funding to construct the homes). We agree with the Board that federal definitions taken from statutes concerned with taxation and providing affordable housing for disabled persons are of little help in the current context. Act 250 was enacted “to protect and conserve the lands and the environment of the state and to insure that these lands and environment are devoted to uses which are not detrimental to the public welfare and interests,” and it gave the Environmental Board and district environmental commissions the authority “to regulate the use of lands.” 1969, No. 250 (Adj. Sess.), § 1. We have previously stated that terms in Act 250 rules must be viewed “within the context of a land use statute, not as a tax statute or trade regulation.” In re Spring Brook Farm Found., 164 Vt. at 289, 671 A.2d at 320. Thus, the Board was correct in declining S-S Corp.’s invitation to import a definition from federal income tax and housing laws because those laws do not share Act 250’s primary goal of land protection and conservation.

¶ 13. S-S Corp. argues that where there is ambiguity in the language of a property regulation, the Court must construe the language in favor of the property owner, citing Secretary, Vermont Agency of Natural Resources v. Handy Family Enterprises, 163 Vt. 476, 481-82, 660 A.2d 309, 312-13 (1995). The Legislature granted to the Board the authority to adopt and interpret rules concerning Act 250. 10 V.S.A. § 6025. As we have noted, some Board determinations are inherently fact-based and do not easily fall within “inflexible definitions.” In re Rusin, 162 Vt. at 190, 643 A.2d at 1212. We will not equate a grant of agency discretion with ambiguity, nor will we afford to appellant a presumption of ambiguity where the outcome of a determination depends to some extent upon agency discretion that has been conferred by statute.

¶ 14. We conclude that the Board’s interpretation of the term “unit” is reasonable and does not reflect any compelling error by the Board. Accordingly, we affirm its conclusion that the two Houses together, which have seven bedrooms each, contain greater than ten units.

II.

¶ 15. Next, we turn to the Board’s ruling that the Houses are “commercial dwellings.” Under Rule 2(M), a commercial dwelling is any building or structure that: (1) is for the accommodation of people; (2) is intended for habitation on a temporary/intermittent basis; and (3) provides facilities in exchange for a payment or fee. Rule 2(M) includes nursing homes and rooming houses in a nonexhaustive list of examples of commercial dwellings. Because it is undisputed that the Houses will be used for the accommodation of people and that the facilities will be provided in exchange for a fee or rent, the issue is whether the Board properly concluded that the Houses are intended for use on a temporary or intermittent basis. In light of the deferential standard of review this Court applies when reviewing the Board’s interpretation and application of its rules, In re Woodford Packers, Inc., 2003 VT 60, ¶ 4, 175 Vt. 579, 830 A.2d 100 (mem.), as well as this Court’s recognition that, in enforcing Act 250, the Board’s primary concern must be the environmental impact of the proposed development, In re Spring Brook Farm Found., 164 Vt. at 287, 671 A.2d at 318, we affirm the Board’s conclusion that the Houses are commercial dwellings.

¶ 16. Under the applicable standard of review, see supra, ¶ 5, we find no compelling indications of error warranting reversal of the Board’s decision. In applying Rule 2(M) here, the Board correctly recognized that Act 250 “requires a focus on the impact of the land use, not the nature of the institutional activity.” In re Spring Brook Farm Found., 164 Vt. at 287, 671 A.2d at 318. (Emphasis added.) To that end, “the proper starting point for determining Act 250 jurisdiction is the actual use of the land, not necessarily the overall purpose of a development scheme.” In re BHL Corp., 161 Vt. at 490, 641 A.2d at 773. Accordingly, the Board’s interpretation of Rule 2(M) must, first and foremost, effectuate Act 250’s goal of preventing “usages of the lands and the environment which may be destructive ... and which are not suitable to the demands and needs of the people of the state of Vermont.” 1969, No. 250 (Adj. Sess.), § 1.

¶ 17. Here, the Board concluded that the Houses fit Rule 2(M)’s definition of a commercial dwelling by focusing on “the character of such homes as a general group of dwellings,” not on the “subjective particulars that may result from their operation.” As the Board explained, it considered “the aspects of the Harvey House and the Owen House that are relevant to Act 250 and ask[ed] whether the type of construction and occupation at issue in this matter is typical of the sorts of housing described in Rule 2(M).” By doing so, the Board remained faithful to its duty to look to the actual use of the land as the touchstone of its Act 250 jurisdictional analysis. To conclude otherwise based on either the operators’ intent to maintain a stable group of residents or the desire of the residents to remain long-term would undercut Act 250’s mandate to assess any proposed development primarily in terms of its impact on the land. That the Rooneys have created an environment that nurtures familial feelings and long-term relationships among residents and between residents and caregivers is laudable. But “Act 250 speaks to land use and not to the particular institutional activity associated with that land use; to exclude [an organization] from the provisions of Act 250 simply because of [the nature of its services] could not be justified on environmental grounds.” In re Baptist Fellowship of Randolph, Inc., 144 Vt. 636, 639, 481 A.2d 1274, 1276 (1984).

¶ 18. Moreover, the Board’s conclusion that the Houses fit Rule 2(M)’s definition is supported by the record, and thus admits of no compelling indications of error. The Board reached its conclusion for two reasons: (1) “some residents occupy the Houses temporarily, leaving and returning intermittently, as their needs require”; and (2) the Houses resemble nursing homes for purposes of Act 250 review. Focusing on the first, the Board found that some residents do leave the Rooneys’ care for periods of time, and that, of those, some return and some do not. In addition, the Board found that some residents have other residences. As laid out in the Board’s ruling on S-S Corp.’s motion to alter, those findings both have support in the record — specifically, the deposition testimony of Yvonne Rooney. Thus, those findings are supported by “substantial evidence” within the meaning of 10 V.S.A. § 6089(c) because they rest on relevant evidence that was properly before the Board and that a reasonable person might accept as adequate support. In re Wal*Mart Stores, 167 Vt. at 80, 702 A.2d at 400-01. Those findings, in turn, support the Board’s conclusion that the Houses are commercial dwellings. Additionally, there is no dispute that S-S Corp. will accept new residents when vacancies occur.

¶ 19. In asserting that the Board’s and the majority’s reasoning concerning the “subjective particulars” of the Houses is inconsistent, the dissent argues that the facts that “some residents leave the care of the S-S Corp. homes for periods of time and some of those do not return” are “irrelevant because they describe any residency of any type.” Post, ¶33 & n.7. As the Board noted, however, Rule 2(M) specifically exempts “conventional residences” from its definition of a commercial dwelling, so it is unclear how the dissent’s comparison of the Houses to “any residency of any type” advances its analysis.

¶ 20. We recognize there is some tension in the Board’s decision between, on the one hand, the Board’s duty to focus on the impact that the proposed development will have on the land and not on the specifics of the services provided or the service providers and recipients and, on the other, the “temporary or intermittent” language in Rule 2(M). Given the discretion the Board enjoys in interpreting its own rules, it was within the Board’s purview to resolve that tension. And it did so appropriately in light of Act 250’s goals, by refusing to base its decision on the “identity or the specific characteristics or attributes” of the operators and users of the Houses. In other words, while we acknowledge that there is some surface appeal to the argument that the lengthy average tenure of the residents precludes the Houses from fitting Rule 2(M)’s definition of a commercial dwelling, the Board correctly looked beneath that surface to the land-use impact of the proposed development and the “character of such homes as a general group.” For example, the Houses, and other facilities like them, exist to provide an array of services to their residents, not merely to collect rents in exchange for living space. Accordingly, we affirm the Board’s conclusion that the Houses fit Rule 2(M)’s definition of a commercial dwelling.

¶ 21. In further support of its argument that the Houses should be treated as single-family residences, not commercial dwellings, S-S Corp. cites cases from other jurisdictions that address the status of group homes under zoning ordinances and restrictive covenants. For example, the Nebraska Supreme Court held that a group home for five mentally retarded women and their house parents complied with a restrictive covenant limiting lot use to “residential purposes” with only one “single family dwelling,” because the group home operated as “a permanent residence intended to allow [the] ... women to lead fuller and more normalized lives in the community than would be possible in an institution.” Knudtson v. Trainor, 345 N.W.2d 4, 5-6 (Neb. 1984) (quotations omitted); see also Linn County v. City of Hiawatha, 311 N.W.2d 95, 99-100 (Iowa 1981) (holding that foster home met municipal zoning code’s definition of a single-family home, where code defined “family” as “(o)ne or more persons occupying a dwelling and living as a single housekeeping unit” (quotations omitted)); Costley v. Caromin House, Inc., 313 N.W.2d 21, 24-26 (Minn. 1981) (ruling that a group home was a single-family residence in conformance with restrictive covenant allowing construction of “[o]nly one dwelling and one garage” and local zoning ordinance permitting “one and two-family dwelling groups” (quotations omitted)). At the heart of Knudtson and the other cases cited by S-S Corp. is the application of restrictive covenants and zoning ordinances that threaten to exclude group homes altogether. Yet, in the case at bar, no such issue exists. The Harvey and Owen Houses are not threatened by exclusionary zoning because the Board’s decision requires only that the Houses conform with land-use standards set forth by Act 250. And, as we have observed:

Act 250 is to be distinguished from the bulk of traditional zoning and subdivision legislation, which is merely state enabling legislation permitting regulation of land use on a local or regional level. See 24 V.S.A. §§ 4401-4493. Act 250 establishes a mechanism for review of certain land use activity at the state level. It supplements pre-existing legislation authorizing local zoning and subdivision control.

Comm. to Save the Bishop’s House, Inc. v. Med. Ctr. Hosp. of Vt., 137 Vt. 142, 145, 400 A.2d 1015, 1017 (1979).

¶22. S-S Corp. also argues that the Board misconstrued 24 V.S.A. § 4409(d) as prohibiting group homes larger than six persons from being considered single-family dwellings. Section 4409(d) provides that a “residential care home or group home, serving not more than six persons who are developmentally disabled or physically handicapped, shall be considered by right to constitute a permitted single-family residential use of property.”³ Thus, as S-S Corp. correctly notes, § 4409(d) does not deprive zoning boards of their discretion to treat group homes with more than six residents as single-family dwellings. Section 4409(d), however, is a zoning statute intended to protect residential care facilities from exclusionary zoning, In re Bennington Sch., Inc., 2004 VT 6, ¶ 17, 176 Vt. 584, 845 A.2d 332 (mem.); it does not govern Act 250 decisions.

¶23. Further, the Board appeared aware of this distinction, as it merely pointed to § 4409(d) for “further guidance,” and not as dispositive authority, in determining that the homes, which each house eight persons, were not “conventional residences” under Rule 2(M). While the three concurring Board members “reluctantly” joined in the decision because they were “persuaded” by the definition in § 4409(d), nothing in the concurrence suggests that they believed they lacked discretion under § 4409(d) to decide otherwise.

¶ 24. In sum, we see no reason to disturb the Board’s conclusions that the Houses qualify as “commercial dwellings” under Rule 2(M) and that together they contain more than ten units under Rule 2(A) and 10 V.S.A. § 6001(3)(a)(iv). Therefore, the Board correctly concluded the Houses were “development” subject to Act 250 review.

Affirmed.

1 S-S Corporation controls the nonprofit corporations the Owen House, Ltd. and the Harvey House, Ltd., which each received federal funding to develop residential care facilities to house disabled adults. The original request for a declaratory ruling from the Environmental Board was made by S-S Corp./Rooney Housing Developments; the Owen House, Ltd. and the Harvey House, Ltd. appealed the Board ruling to the Vermont Supreme Court. For consistency with the Environmental Board ruling and for ease of composition, we refer to appellant here as S-S Corp.

2 In 1985, the Legislature, in unambiguous terms, ratified all Board rules relating to the administration of Act 250. In re Barlow, 160 Vt. 513, 521, 631 A.2d 853, 858 (1993). Therefore, the Board’s Act 250 rules have “the same effect as ... any law passed by the Legislature in the first instance.” Id. (quotations omitted).

3 In May 2004, the Legislature repealed § 4409, effective September 1,2005.2003, No. 115 (Adj. Sess.), § 119(c). The Legislature replaced § 4409 with § 4412(G), which is similar to § 4409 but increases the size of a group home that shall be considered a single-family residence by right from six to eight residents.