Rhode Island Property Law : Rhode Island Real Estate & Environmental Attorney & Lawyer John Boehnert for Development & Permits in RI

Some time ago I was walking a development project with the chief surveyor for a large engineering company, showing him the unit boundaries I wanted established for a client’s proposed land only condominium project.

After about a half hour of pointing out boundary and overhang issues to him and discussing the location of common elements, he asked: “So what’s a land only condominium anyway?”

And this was a surveyor and engineering firm that had done extensive condominiums projects!

I have had similar questions from lawyers, even experienced real estate lawyers.

The land only condominium is indeed neglected.

Defined

It is not surprising, as the Rhode Island Condominium Act makes little mention of land only condominiums, beyond their definition. R.I.Gen.Laws 34-36.1-1.03(17)

“Land only units shall mean units designated as land only units on the plats and plans which units may be comprised entirely or partially of unimproved real property and the air space above the real property. The boundaries of a land only unit are to be described pursuant to Section 34-36.1-2.05(a)(5). Land only units may, but need not, contains a physical structure. The declaration may provide for the conversion of land only units to other types of units and/or common elements provided the conversion shall be effective only upon the recording of an amendment to the declaration which amendment will include new plats and plans identifying any portion of the land only unit converted to another type of unit and/or common element.”

Essential Attributes

There you see the essential attributes of a land only unit:

•      It need not contain a physical structure, but it may
•      It may subsequently be converted to a conventional condominium or common elements
•      The air space above the land is included in the unit

Land only units are also mentioned in the section of the Condominium Act addressing the creation of condominiums, R.I. Gen. Laws 34-36.1-2.01( which will be discussed in more detail below) and they are mentioned sporadically elsewhere in the Act.

For all its obscurity, it is a powerful and versatile tool for real estate development.

Consider two representative projects where I have found land only units extremely useful.

Representative Project—Mill Site

A client purchased a large mill site it wanted to develop, but was unsure it had the interest in developing the entire project. The site consisted of numerous buildings, some connected but most stand-alone structures, and some open space for new building construction. The client was looking for a way to have the flexibility to develop the site in part and perhaps sell off the site in part for development. However, the local land use regulations prohibited subdivision of the property.

A land only condominium was the solution. 

First, under Rhode Island law a condominium is not a subdivision. McConnell v. Wilson, 543 A.2d 249 (RI 1988)

Secondly, each building and buildable parcel was designated as a land only unit. Unlike a conventional condominium, which cannot be declared until the buildings are substantially complete, the land only unit can be declared as it stands, and buildings either later constructed on the unit or rehabilitated on the unit become part of the unit. ) R.I. Gen Laws 34-36.1-2.01(b)  The owner could develop three or four units and sell off the remainder of the  units to other developers for development.

Representative Project—High Rise Urban Development

A client was interested in buying an unimproved parcel in a downtown condominium project and constructing a high rise office building. However, the condominium was designed as a conventional condominium, meaning the client could not “buy” the condominium until after it constructed the building and it was substantially complete. That’s a risky situation to structure, particularly given the vagaries of conventional financing for such an expensive project. Complicating the issue was the fact the condominium was a leasehold condominium—meaning it was subject to a long-term ground lease.

Again, the solution was restructuring the condominium regime to have the portion being purchased by my client  be a land only condominium, which can coexist in the same condominium regime with a conventional condominium. R.I. Gen Laws 34-36.1-2.01(b)

Under the new structure, financing was provided and the project successfully completed, with the client having ownership of the condominium pad site from day one.

A Little Respect Please

So, the next time you hear someone reference a land only condominium, please treat it with a little respect!

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In the best of times, it’s hard to find anyone saying anything good about cesspools.

And this is hardly the best of times for cesspools.

Not Much Good To Say

The Rhode Island General Assembly passed legislation in 2007, R.I. Gen. Laws 23-19.15 -1 et seq., ordering the phase out of thousands of cesspools, finding:

•  cesspools are substandard and inadequate for sewage treatment and disposal
•  many cesspools contribute directly to groundwater and surface water contamination
•  wastewater disposed from cesspools contains bacteria, viruses, and other pollutants

Ouch!

Targets

The legislation targets the following cesspools for oblivion:

•         cesspools which have failed
•         cesspools on property where a sewer stub is available
•         cesspools within 200 feet of a public drinking water well or surface water supply
•         cesspools within 200 feet of the inland edge of a shoreline feature bordering tidal water

While no one knows how many cesspools have failed, it has been estimated that of the over 50,000 cesspools in Rhode Island,  approximately 4,000 are estimated to be in the State’s coastal zone.

It is safe to say that this is an issue that will affect a good number of Rhode Islanders.

Phase Out Schedule

The current legislation provides the following schedule for removal of targeted cesspools:

•        failed cesspools-- within one year of discovery or sooner if  an imminent health hazard
•        cesspools on property with a sewer stub-- within one year of sale of the property
•        cesspools within 200 feet of tidal coastal features or a water supply -- January 1, 2013.

These deadlines can be extended for up to five years for undue hardship.

The Department of Environmental Management has promulgated draft regulations to begin the phase out of targeted cesspools, which will go for public hearing on May 27, 2010. (See in particular Rule 53)

Costly Consequences

The consequences of being required to abandon a cesspool are not inconsequential.

Perhaps the best scenario is where a sewer tie in is readily available. That may be relatively cost-effective.

However, if  sewers are not available,  the property owner must install a conventional individual sewage disposal system, the cost of which could run from $10,000 to $15,000. However, if the property is located in a sensitive environmental area, high tech denitrification systems may be required, and that could cost from $20,000 to $30,000.

Recognizing Hardships

The legislation authorized the Department to grant limited waivers, up to five years from statutory deadlines, if the homeowner demonstrates “undue hardship”. The draft regulations define undue hardship as

“having an annual income of less than or equal to eighty percent (80%) of the appropriate household size area median income determined by federal Housing and Urban Development standards for the community within which the cesspool is located.”

While people often think of waterfront property as where the wealthy live, in Rhode Island there are also a lot of people of average means who live within 200 feet of tidal water in cottages and modest homes, many of which may be serviced by cesspools.  

Many of these people may be unable to afford the cost of upgrading to new systems if sewers are not available. And while there are loan programs, these are not available in all communities or in all areas of those communities where the loan programs may exist.

Having talked with the top DEM professional responsible for administering the cesspool phase out program, I am confident the Department recognizes that cost of replacement may be an issue and that it is sensitive to the burden the legislation may impose.

Depending on the experience in implementing the program, it is possible that the definition of undue hardship may have to be revisted by the Department or that the General Assembly may have to reconsider the deadlines it has imposed  by statute. This may be particularly so where systems at issue have not failed.

While there may be few goods things to say about cesspools, there will be far fewer good things to say about politicians who try to force homeowners to close cesspools they can't afford to replace.

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The Cape Wind project to construct 130 wind turbines in Nantucket Sound was recently approved by U.S. Secretary of the Interior Salazar over the objections of two Native American Indian tribes, which claimed the project would disrupt spiritual rituals as well as ancestral grounds.

People of the First Light

The Mashpee Wampanoag of Cape Cod and the Wampanoag  of Gay Head (Aquinnah)  explained that “Wampanoag” means “People of the First Light” and the turbines would adversely impact their ability “to continue their ceremonies in a way that ancestors have done for thousands of years”, including their sunrise ceremony.

It was reported that the historic preservation officer for the Aquinnah Wampanoag of Martha’s Vineyard said in a letter to federal officials that the view of the project site in Nantucket Sound “is where we still arrive to greet the new day, watch for celestial observations in the night sky and follow the migration of the sun and stars in change with the seasons”. (See news report)

The tribes have also expressed strong concern that the area of Nantucket Sound where the project will be located, known as Horseshoe Shoal, may contain ancestral artifacts and remains that will be disturbed or destroyed by the construction of the project.

A Question of View

One may be forgiven, however, for wondering whether this is perhaps more about political expediency than religious and cultural rituals.

For example, supporters of Cape Wind have noted that the land of the Aquinnah Wampanoag is on the western part of Martha’s Vineyard in the area known as Gay Head (pictured above), and does not have direct views of Nantucket Sound.

Also, an attorney who was a former member of the Tribal Council of the Aquinnah Tribe, and whose father and grandfather were life-long tribal medicine men, sent a letter to Secretary Salazar, stating:

“I am stating to you with complete honesty and knowledge that I never participated in, witnessed, or even heard of a sacred spot on the horizon that is relevant to any Aquinnah Wampanoag culture, history or ceremony. Nor did I see, or hear, either my father or grandfather conduct such ceremony. I do know that offerings to the Creator are made at ‘first light’, but first light is a period of time not a place. The notion that locating wind turbines in Nantucket Sound will impose on, impact or harm any cultural tradition is just plain false.”

The writer acknowledged in his letter that he worked for a law firm that represented the developer of Cape Wind but said that “my employer has not influenced my decision to write this letter in any manner whatsoever”.

The letter included a petition reported to dispute the claimed cultural value of the Cape Wind site to the Aquinnah tribe, which was signed by eight members of the tribe, including a former chairman of the tribe who originally opposed the project but now supports it. (See Letter) (See News Report)

Protecting Artifacts and Remains

As for the claims that construction of the project will disturb ancestral artifacts and remains, Department of Interior approval came only after detailed studies finding that such disturbance was unlikely, and the approval carries significant restrictions to guard against this. These measures include

•  requiring a “Chance Finds Clause” in the federal lease to the developer, halting operations in the event of an unanticipated archeological find and allowing the tribes to participate in analyzing the finds
• requiring additional and detailed marine archaeological surveys and other protective measures in the project area
• requiring geotechnical coring and analyses to aid in the identification of intact landforms that might contain archaeological materials 

My Way or the Highway

The tribes have refused millions of dollars offered to mitigate any impact the project may have on the tribes, and are continuing their opposition.

According to Secretary Salazar, from the tribes’ perspective, “there are no acceptable mitigation measures for the impacts to their traditional cultural properties”. In other words, build it somewhere else.

When Everyone Has Rights

In land use and environmental permitting, when everyone has rights, no one has rights. 

The Department of the Interior’s decision effectively recognizes this.

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The Director of the Rhode Island Department of Environmental Management has statutory authority to review the decisions of DEM Administrative Adjudication hearing officers pertaining to violations or licenses. (See R.I.Gen. Laws 42-17.7-6.) 

Significant Review Authority

By statute, the Director “may in his or her discretion adopt, modify or reject such findings of fact and/or conclusions of law” by doing so in writing setting forth the rationale for the action.

That is significant authority, as the Director can not only accept or reject the hearing officer’s decision, but the Director may also modify it.

Empowering Hearing Officers

But legislation has been introduced in the House and Senate to remove this power from the Director. (See pending legislation.) This would appear to empower hearing officers, making them  the final decision maker at the Department level, subject to court review.

The legislation on its face gives no hint on the rationale for this change. And it is perhaps too early in the session to know if there is serious support for this pending legislation.

One may wonder if the Rhode Island Supreme Court’s decision in the Champlin’s Marina case influenced this proposed legislation. (Champlin’s Realty Associates v. Michael Tikoian et al.) 

In that decision, the Court limited the ability of administrative hearing decisions to be made on anything but evidence presented at a hearing and subject to cross-examination. As the Court said, quoting from its prior decision in Arnold v. Libel:

 “no litigious facts should reach the decision maker off the record in an administrative hearing” and if the decision maker “intends to consult any documentary source or person concerning facts or opinions about the merits of an appeal”, he or she must notify the parties so that they may “contest any such evidence” and “cross-examine any people consulted”.

The Long Arm of the Champlin’s Decision

Perhaps the Champlin’s decision had nothing to do with the pending legislation, but it seems clear that the Champlin’s decision would in any event impose some restrictions on the Director in reviewing hearing officer decisions.

Of course, by statute, the Director “shall have no communication, directly or indirectly, with a hearing officer relating to any issue of fact or of law on any matter then pending before said hearing officer”. (R.I.Gen.Laws 42-17.7-7)

The Champlin’s decision would appear to go further and say that any decision by the Director in reviewing a hearing officer’s decision must be based solely on the record of the hearing. Depending on the complexity of the matter and the length of the hearing, that could be a good bit of review and reading time.

And if the Director wanted to base his decision on anything outside the record, it would seem the Director would have to notify the parties and give them an opportunity to challenge any such evidence. That, of course, could result in more time-consuming review.

Who knows—perhaps a busy director would not find the proposed legislation so objectionable!

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