Firm News

Conservation Easements – Buyer Beware

Posted on by Brigitte Flores

Think twice before entering into a conservation easement or buying property subject to one.

It is a noble premise for an individual property owner to consider restrictions upon the development of their land in perpetuity. Conservation easements are a method of doing this in which government (federal and state) facilitates such restrictions with tax incentives. Many landowners are encouraged by tax advisors to do this to offset income from other sources. And why not? If the landowner does not intend to develop their property and can benefit today financially from the restrictions, this guidance seems prudent. Land subject to such restrictions is theoretically less valuable than land without such restrictions and, if such restrictions are truly factored into the sales price, means that purchasers of such land can get much more for less.

BUT…… the reality is that these instruments are complicated and may contain pitfalls.

Once a conservation easement is placed on a property, depending on who the holder of the conservation easement is, either a not-for-profit organization or a governmental entity will generally have periodic (annual is the norm) inspection rights to ensure compliance with the terms of the conservation easement. This means that periodically an inspector will appear, walk over your property and file a report with the easement holder subjectively determining in their opinion whether or not you are in compliance with the easement.

Additionally, most conservation easements have restrictions on improvements or use a property owner can undertake on their property. Interpretation of these easements is very subjective and complicated and when a subsequent owner is involved there can be a significant disconnect between what is in the document and what that subsequent owner believes they can do and what permission is required and from whom to do so. Many conservation easements imply a reasonable process whereby the conservation easement holder has the discretion to approve improvements or uses, but in reality, that discretion defaults to being severely restrictive. Moreover, friendly lower-level employees of the conservation easement holder may imply approval, but higher-level review (if actually requested) will disapprove a use or improvement.

In Wetlands America Trust, Inc. v. White Cloud Nine Ventures, L.P., No. 78462 (20th Jud. Cir. Va. June 19, 2014), aff’d 782 S.E.2d 131 (Va. Feb. 12, 2016), this firm successfully defended a claim by a conservation easement holder against a property owner for violation of the easement wherein the trial court and the Virginia Supreme Court confirmed that conservation easements are restrictions against the free use of property and as such are narrowly interpreted and any ambiguity should be construed in favor of the free use of land. This was a major blow to the conservation easement holders who then subsequently lobbied the Virginia legislature and in 2021 were able to get Va. Code Section 10.1-1016.1 enacted, in an attempt to reverse the effect of the Wetlands America Trust decision. No case since has interpreted the applicability of this new code section, but serious questions of its effect exist. These include whether or not the section is applicable retroactively to easements that existed prior to enactment and what exactly is the conservation value that the court should favor. As an example, many of the easements purport to be in support of agricultural activities and list farming as a conservation value. However, farming comes with changes to the land and improvements to the property which most conservation easement holders resist.

If there is a dispute over interpretation, the cards are stacked against the property owner as most easements have a one-way fee-shifting provision in favor of the conservation easement holder. This provision is taken advantage of to exert maximum leverage against any property owner who dares challenge the holder’s interpretation. In our experience in these disputes, we have seen conservation easement holders hire large law firms who immediately incur hundreds of thousands of dollars of fees which then become scare tactics and actual charges in the resolution of the dispute.

When you see the slick marketing materials about the advantages of a conservation easement, you don’t see the negatives. When real estate agents play down the disadvantages of properties subject to a conservation easement (you can even see real estate listings spinning a conservation easement as a benefit), buyers need to be careful and know that the property should be selling at substantially less value than similarly situated property without such restrictions (not more).

If you are considering subjecting your property to a conservation easement or considering buying property subject to a conservation easement, it is important to hire a competent professional (one who is not part of the industry promoting them) to advise you of the impact on your future use or value of your property.

 

 

 

Fairfax County Reenacts zMOD; Files Va. Supreme Court Rehearing Petition

Posted on by Brigitte Flores

On Thursday, March 23rd, the Virginia Supreme Court decided Berry v. Fairfax County Board of Supervisors, which struck down the amended Fairfax Zoning Ordinance that had been in effect since March 23, 2021, known as “zMOD,” in large part because it was adopted during a virtual meeting in violation of the Virginia Freedom of Information Act (“FOIA”). A summary of this case and its potential implications was included in the firm’s March update, found here.

On May 9, 2023, the Fairfax County Board of Supervisors readopted zMOD following a duly-advertised public hearing. zMOD is now the applicable zoning ordinance for Fairfax County.

Additionally, on April 19, 2023, Fairfax County filed a Petition for Rehearing in the Berry case, which may be found here.

Walsh Colucci lawyers have been active in supporting Fairfax County’s Petition. The firm was retained to draft two amicus briefs: one on behalf of the Home Builders of Virginia (HBAV) and the Virginia Association for Commercial Real Estate (VACRE), found here; and one on behalf of the Virginia Land Title Association (VTLA), found here.

The Court has received our amicus filings, as well as an amicus brief from the Virginia Association of Counties, the Virginia Municipal League, the Local Government Attorneys of Virginia, and the International Municipal Lawyers Association.

Pursuant to Va. Code § 8.01-675.2 and Rule 5:37 of the Rules of the Supreme Court, the Court will rehear and review the case if one of the justices who decided the case against the petitioner (in this case, any of them since the decision was unanimous) certifies that there is good cause for such rehearing.

We will advise our clients once more is known. In the interim, if you have any questions, please feel free to call your principal point of contact with the firm.

Arlington Approves Joyce Motors Redevelopment

Posted on by Brigitte Flores

On  February 18, 2023, the Arlington County Board approved Orr Partners’ 4.1 site plan providing for the redevelopment of the aging 0.74-acre Joyce Motors building and property in central Clarendon. The site contains a surface parking lot and the circa 1950 Joyce Motors building, which is considered a prime example of the “Streamline Moderne” architectural style popular in the 1940s and 1950s.

Following on the heels of the County Board’s adoption of the updated Clarendon Sector Plan, the proposed redevelopment includes a mixed-use residential building containing up to 241 residential units, a maximum of 186,254 square feet of residential GFA, and a maximum of 3,825 square feet of ground floor retail GFA.

A key component of the project is the incorporation of the most historic and salvageable portions of the Joyce Motors building façade into the new building’s architecture, in accordance with the Sector Plan’s recommendations.

For more than a year prior to the submission of the site plan application, the development team worked with the County’s Historic Preservation Program staff to determine the most pragmatic preservation approach, recognizing the reality of the condition of the building and its materials.

As a result, the building’s exterior enamel panels will be removed and sent to a historic preservation lab for restoration to their original condition. They will subsequently be reinstalled at the most visually-prominent corner of the site, where the reconstructed façade will serve as the architectural focus of the new building and provide the public direct access to this resource. The project also includes a $25,000 contribution towards tan onsite interpretive commemoration of the Joyce Motors building.

Another historic preservation aspect of the project includes the permanent preservation of the circa 1939 Clarendon Barbershop Building, located at 1407 N. Garfield Street through the use of the County’s Transfer of Development Rights program. Preservation of this resource is specifically recommended under the Sector Plan, and the transfer of density to the Joyce Motors site will require the recordation of a historic preservation easement over the Barbershop Building.

The proposed building will be designed at the LEED Gold level and, while the project is subject to the previous version of the County’s Green Building Incentive Policy, Orr Partners is committed to achieving many of the baseline prerequisites of the current Green Building policy to align with the goals and objectives of the Community Energy Plan. In response to SPRC and community comments, enhanced landscaping will also be provided at the street level along N. Irving Street, as well as in a second-level courtyard and on a 10th-floor terrace.

In terms of transportation, the project will provide significant sidewalk upgrades around the site, bicycle facilities, and curb extensions for safer pedestrian crossings. It will also provide segments of two new streets contemplated under the Sector Plan’s grid network, including a portion of the planned 10th Road North. The project will additionally make a $400,000 contribution towards offsite transportation improvements, which may be allocated towards enhanced bicycle facilities along 10th Street N.

Housing affordability figured prominently into the project, and the project will provide nine onsite Committed Affordable Units as well as an affordable housing contribution. Importantly, Orr Partners recognized the County’s need for large affordable units and has subsequently agreed to provide two three-bedroom apartments as part of their none onsite affordable units. The project will also provide a $557,143 contribution towards public open spaces in the vicinity of the project.

The proposed project will honor the Joyce Motor’s building’s heritage, enhance Clarendon’s neighborhood character, and achieve the Clarendon Sector Plan’s land use, density, height, and housing diversity goals.

Walsh Colucci shareholders Andrew Painter and Nicholas Cumings assisted Orr Partners throughout the process, with Andrew providing the presentation at the County Board.

UPDATE: Virginia Supreme Court’s Decision to Invalidate the Amended Fairfax Zoning Ordinance

Posted on by Brigitte Flores

On Thursday, March 23rd, the Virginia Supreme Court decided Berry v. Fairfax County Board of Supervisors.  This case struck down the amended Fairfax Zoning Ordinance that has been in effect since March 23, 2021, known as “zMOD,” because it was adopted during a virtual meeting in violation of the Virginia Freedom of Information Act (“FOIA”). The Court concluded that the adoption of zMOD at a virtual meeting was not necessary to assure the continuation of the County’s essential functions and services, and therefore was not authorized by any of the exceptions to FOIA’s open meeting requirements.

This decision potentially impacts all actions of the Fairfax County Board of Supervisors on land use applications that were processed in accordance with zMOD. As of this notification, Fairfax County has acknowledged on its website that the effect of the decision is the reinstitution of the 1978 Zoning Ordinance (2021 Reprint).

The immediate consequences of the Court’s decision are being analyzed by our land use and litigation lawyers.  We are reviewing the potential impact of the Court’s decision on past and future rezonings, special permits, variances, appeals, building and occupancy permits, transactional questions, title issues, and more in order to advise our clients how to respond to this extraordinary development.

At a minimum, until zMOD is reenacted, it is likely that pending and new Fairfax County applications will need to conform to the prior (and, for the moment, current) Zoning Ordinance, or be placed on hold.  This means that all submission materials and zoning citations may need to be amended/reformatted in accordance with the prior Zoning Ordinance.

We are also reviewing potentially broader consequences of the Court’s decision because the FOIA provision upon which the case was decided has possible statewide implications. This includes whether actions taken by any public body in the Commonwealth during a virtual meeting between March 20, 2020, and July 1, 2021, that did not satisfy the technical requirements of FOIA could be challengeable.

We will advise our clients once more is known. In the interim, if you have any questions, please feel free to call your principal point of contact with the firm.

Update as of March 29, 2023

We understand the Fairfax Board of Supervisors is pursuing various parallel courses to change the Court’s decision or, at a minimum, mitigate its effects.

We anticipate that on April 11, 2023, the Board will vote to authorize public hearings on a proposed readoption of zMOD. The Planning Commission hearing would likely be on May 3rd, with the Board’s hearing scheduled for May 9th. In the meantime, County staff is reviewing pending applications under the prior 1978 Zoning Ordinance (2021 Reprint).

The County does not expect the Court’s decision to directly affect most previous approvals, including administratively approved site plans and permits that are not subject to change or revocation.

Anyone with questions about a pending application or a previous approval may contact Suzanne Wright, in the Department of Planning and Development (suzanne.wright@fairfaxcounty.gov) to be referred to the appropriate staff.

 

 

Changes in Virginia Statute Require Review of Form Construction and Vendor Contracts

Posted on by Brigitte Flores

Starting January 1, 2023, Virginia law mandates specific payment terms in agreements between owners and contractors, and agreements between contractors and subcontractors of any tier. New code provisions effective this year also eliminate the enforceability of “Pay-when-paid” or “Pay-if-paid” clauses frequently found in subcontract agreements. These changes in Virginia law, coupled with the general contractor wage guarantee provisions effective since 2020, require that all general contractors and home builders review their form agreements to confirm compliance. Non-compliance could result in interest assessments and penalties for what was, until this year, perfectly legal and standard contract administration.

The 2020 changes to Virginia Code Section 11-4.6 make general contractors jointly liable for the wages of their subcontractor’s employees and could result in the imposition of penalties and fines against general contractors if the subcontractor’s employees are not paid their contract or minimum wages. While the statute requires subcontractors to indemnify general contractors for their failure to pay these wages to their employees, that will serve little comfort to general contractors facing these claims from their subcontractors’ employees. General contractors should strongly consider requiring subcontractors to include in their applications for payment affidavits that the subcontractor has paid their employees their due wages through the date of submission.

As indicated above, the 2023 changes to Section 11-4.6 dictate that project owners include in their construction agreements with their general contractors “a provision that requires the owner to pay the general contractor within 60 days of receipt of an invoice following satisfactory completion of the portion of work for which the general contractor has invoiced.” In turn, general contractors must pay their subs (and subcontractors must pay sub-subs, etc.) within 60 days of the receipt of an invoice for completed portions of work, or within seven days after the general contractor has been paid by the owner, whichever is sooner. Though the code includes some exceptions, contract provisions requiring payment by the higher tier as a condition of payment to the lower tier are no longer enforceable. Failure to make payment in the time period required could result in interest penalties applied to the payor.

Again, the 2023 amendments to Section 11-4.6 mandate that contracts made after January 1, 2023, contain the 60-day payment provisions. If your organization utilizes a form construction agreement, either as a property or project owner, general contractor, or higher-tier subcontractor, it is critical that it be reviewed for compliance on all new contracts. Well-advised general contractors and higher-tier subcontractors very likely are utilizing form agreements with pay-when-paid provisions that are no longer enforceable and should have those forms reviewed for compliance with these changes. Contractors of all tiers should also modify agreements to include new “wage payment confirmations” when receiving applications for payment from lower tiers to avoid wage claims from non-employees.

Finally, the effect of these statutory changes could result in an increased likelihood of a general contractor having to pay a subcontractor for work performed, despite non-payment by the owner. General contractors must be wary of this possibility and ensure that their agreements enable them to terminate for cause in these situations.

Using a Land Condominium to Broaden Development Options

Posted on by Brigitte Flores

If a typical subdivision does not fit your development goals or creates more problems than it solves, then a land condominium may be the right fit.

Many clients have reached out to us with a desire to create a separate parcel of property so it can be sold or financed separately. However, sometimes the locality’s subdivision ordinance does not allow the subdivision because of setbacks or other restrictions, or timing requirements make processing a subdivision by ordinance problematic. Other clients have sought advice on creating conveyable space within a building that can be sold as a separate unit, such as for a grocery store anchor in a mixed-use building, but the applicable jurisdiction does not have a subdivision ordinance for this type of airspace subdivision. In these and other situations, creating a Land Condominium may be the right fit for the desired goal.

Land Condominiums can be used as a vehicle to effectively subdivide property into separate legal parcels or land units. This achieves essentially the same result as if you were to conventionally subdivide the property under a locality’s subdivision ordinance, only without having to comply with the subdivision ordinance requirements and restrictions. The land units created are assigned their own tax map parcel number and are freely conveyable and financeable. The shape and size of each land unit are not subject to any restrictions. For instance, the land unit boundaries can trace building footprints or you can create larger land units which you can then further subdivide as the development of the property progresses.

The Land Condominium established does not need to be registered with the Virginia Common Interest Community Board, like typical residential condominiums, and the Land Condominium instruments do not need to be submitted to any jurisdiction for approval. This means that the division of your parcel into separate land units can be accomplished very quickly. The Land Condominium is set up as a vehicle for dividing property, rather than for governing the use of the divided property and common elements between various land unit owners. Although there are certain statutory requirements that need to be met under the Virginia Condominium Act, the Land Condominium instruments can be kept bare-boned, containing only what is needed to comply with the Condominium Act to establish the Land Condominium.

Frequently we still need to address shared spaces, utilities, shared expenses, maintenance responsibilities, or necessary easements between different land unit owners. For example, in a building where one land unit contains a grocery store anchor while the remainder of the building is a separate land unit containing a residential building condominium, the foregoing issues may need to be addressed. To handle these scenarios, a reciprocal easement agreement is often used. Because the reciprocal easement agreement is a private agreement between the parties, it can be tailored to address the specific operational concerns and agreements between the parties. Alternatively, we can set up a property owners association to address the various matters on which the land unit owners will need to cooperate, or we can establish a traditional residential or commercial condominium regime over one or more land units (as in the example below).

A Land Condominium, together with a reciprocal easement agreement or separate property owners association, allows for flexibility in subdividing property and creating governance structures between the land units that may not otherwise be available under a traditional building condominium regime or under the subdivision ordinance. A good situation where the use of a Land Condominium benefitted the development of a project is when one of our clients reached out to us and sought our counsel as to the best way to structure their planned development of an approximately 650,000 square foot building to be constructed on a 3 acre site, which building would include, among various amenities and a below grade parking garage, approximately 400 residential dwelling units and 3 separate commercial spaces ranging in size from approximately 55,000 square feet to 6,000 square feet. We recommended subjecting the site to a Land Condominium regime whereby the residential dwelling units and garage would be one land unit and each of the commercial spaces would be separate land units, allowing for each land unit to be separately conveyed, financed, and taxed. It also allowed the residential land unit to be subjected to a conventional building condominium so that the client could sell individual residential condominium units. We then subjected the Land Condominium to a reciprocal easement agreement which addressed easements, maintenance, and cost sharing between the land units.

If you think that a Land Condominium may be a good solution for your development needs, or if you would like to learn more about how land condominiums can be used in your development projects, please do not hesitate to reach out to one of our transactional attorneys for more information.

Do You Have More Time to Bring your Claim?

Posted on by Brigitte Flores

Virginia Court of Appeals confirms that the time to file claims was extended by the Supreme Court of Virginia’s Emergency COVID-19 Orders

 

On November 29, 2022, the Court of Appeals of Virginia (the “Court of Appeals”) issued its opinion in George English v. Thomas William Quinn, which held that the Supreme Court of Virginia’s (the “Supreme Court’s”) emergency orders entered between March 16, 2020 and July 8, 2020, in response to the COVID-19 pandemic, tolled and extended all statutes of limitations for all claims, and not just those whose time for filing expired prior to August 2020.

The case arises out of a dispute pending before the Circuit Court of the City of Roanoke, Virginia (the “Circuit Court”). There, the Circuit Court dismissed a personal injury claim earlier this year that was originally filed in November 2020 related to an automobile accident that occurred on July 28, 2018. Ordinarily, the time for filing this personal injury claim would have expired two years later on July 28, 2020.   However, on March 16, 2020 the Supreme Court of Virginia issued an order declaring a judicial emergency in response to the COVID-19 pandemic. The first judicial order “tolled and extended” “all deadlines” in all Virginia courts for twenty-one days.  As COVID-19 raged one, the Supreme Court then entered several more similar orders. The last of the seven emergency orders limited the tolling period to the 126 days between March 16, 2020 and July 19, 2020.

In the case before the Circuit Court, the Defendant, Mr. Quinn, argued that the Supreme Court’s emergency orders only paused the statute of limitations period for claims, which expired during the 126-day time-frame. The Plaintiff, Mr. George, argued that the effect of the Court’s emergency orders was to pause all statute of limitations for all actions pending before the courts of Virginia, and not just expiring during the 126-day period. The Circuit Court agreed with the Defendant and dismissed the Plaintiff’s case. The Plaintiff appealed to the Court of Appeals.

The Virginia Court of Appeals reviewed and rejected the Circuit Court’s ruling and agreed with the Plaintiff, that the effect of the Supreme Court’s emergency orders was a pause on all statute of limitations during the 126-day window.  The Court of Appeals determined that the Circuit Court erroneously concluded that the emergency orders tolled only the statutes of limitations and deadlines “that would expire during the (126 day) tolling period.” Therefore, the Plaintiff’s claim was not time-barred. The Court of Appeals reversed the decision of the Circuit Court and sent the case back to the Circuit Court for trial.

This Court of Appeals decision is important, because, if you have a cause of action, which was pending during the 126-day suspension period, you may have more time than you anticipated to bring your claim. If you have any questions on how this decision may apply to a case which you are involved, please contact our office.

 

Employee Spotlight: Melissa Mahan

Posted on by The Land Lawyers

Melissa Mahan joined the firm in April 2022, as an associate for the Arlington office where she supports the Land Use & Zoning practice group. Melissa graduated cum laude from Ohio State University with a Bachelor of Arts degree in Anthropology and Sociology. She earned her law degree from William & Mary Law School where she was the symposium editor for the William & Mary Environmental Law and Policy Review.

Melissa is originally from Dayton, Ohio (go, Bucks!). In her spare time, she enjoys gardening, crafting, and making treats for both dogs and humans.

This month, the spotlight is on Melissa. 

Tell us a little about yourself — where did you grow up?

I grew up in Miamisburg, Ohio, in a house full of animals, art supplies, and activities.

What did you want to be when you were younger?

I wanted to be a writer like Mary Pope Osborne or find the real Magic Tree House. I still love a good story!

What aspect of your role do you enjoy the most? 

I enjoy puzzles and problem-solving. In every case, there is a bit of detective work to find what options are available for a property. I enjoy the challenge of navigating a path between what is desirable for localities and developers to find a solution that everyone is happy with.

Words of advice for aspiring land lawyers?

Making land useful involves knowing how people interact with each other and their environment – be ready to use interdisciplinary tools. And always keep asking questions!

Aside from a very busy schedule, what do you like to do for fun outside of work?

I keep a garden full of fruits and veggies, make dog treats, and try too many DIY projects with mixed success.

What is one thing about you that few people know? 

In college, I was part of the production team for an amateur movie about cupcakes that turn people into zombies.

Favorite place(s) to travel to?

Madrid. Specifically, a little bakery just off the Embajadores train stop.

Favorite book?

Inkheart by Cornelia Funke. I don’t think anything can top the magic of being a kid who loves to read and finds out that books can be real.

Do you have any pets? 

Cinder, my 13-year-old lovebug cat, and Nala the puppy. They alternate between snuggling together on the couch and competing for attention (loudly).

What do you think makes Walsh, Colucci, Lubeley & Walsh a great place to work?

I come into an office full of people excited to see each other and solve problems – it’s a great atmosphere.

Thank you, Melissa!

Will Your Development Rights Change if the Zoning Ordinance Changes?

Posted on by Brigitte Flores

When a locality changes its zoning ordinance, landowners can be left wondering what effect those updates have on their ability to pursue the future development of their property. Generally, under Virginia law, landowners do not have a property interest in anticipated uses of their land or their current zoning classification. As a result, if a locality updates its zoning ordinance, the amendments will generally control. However, in some limited circumstances, a landowner may have an enforceable right to the future development of its property for a particular use. These rights are called vested rights, and protect a landowner against future zoning ordinance updates. Virginia recognizes two main types of vested rights.

The first way a landowner may protect its future development rights is by obtaining a significant affirmative governmental act (a “SAGA”) of approval allowing for the desired uses. SAGAs can include, among other things, the approval of a proffered rezoning, special use permit, preliminary or final subdivision plats, or site plan for a particular use. The landowner must also show that it relied in good faith on the SAGA and incurred extensive obligations or substantial expenses as part of its diligent pursuit of the project. Examples of such acts could include hiring consultants or engineers to develop necessary plans for the approved project. If a landowner can meet this burden, the development rights granted by the SAGA are protected against future amendments or changes to the zoning ordinance for so long as the approval is valid. Generally speaking, subdivision plats and site plans are valid for five years, and development rights granted as a result would be protected for that period of time. However, the General Assembly, on several occasions, has extended the validity of certain approved subdivision plats and site plans beyond the typical five-year period.

Landowners may also be able to claim vested rights if they have relied in good faith on certain written decisions, orders, requirements, or determinations of a zoning administrator or other administrative officer. Such decisions or determinations must be in writing, final and effective for at least 60 days, and the landowner must have materially changed his position in good faith reliance on that decision or determination. If a landowner can make this showing, the use will be protected from future changes to the zoning ordinance, future changes to the interpretation of an ordinance provision, and from approvals that were erroneously made. It is important to note, however, that not all correspondence from the zoning administrator will qualify as a “decision” or “determination.”

Vested rights provide powerful protection for landowners, but successfully establishing such claims is often more difficult than they appear at first glance. If you would like more information about vested rights or would like to discuss your options to protect your development interests, please contact Erin Swisshelm.