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City of Missoula, Montana Item to be Referred to City Council Committee Committee: Plat, Annexation and Zoning Item: Settlement Agreement re: Stockyard Road Investments, LLC vs. City of Missoula, et. al. Date: April 2, 2010 Initiated by: Mayor John Engen Action Required: 1. Authorize the Mayor to sign the Settlement Agreement pertaining to the litigation Stockyard Road Investments LLC has filed against the City of Missoula et al. Motion for Approval: 1. THAT the City Council approves the Settlement Agreement, including the Planned Unit Development ordinance required to implement the agreement, and authorizes the Mayor to sign the Settlement Agreement pertaining to the litigation Stockyard Road Investments LLC vs. City of Missoula et. al., Cause No. DV-10-95, filed in the Montana Fourth Judicial District Court. Timeline: City Council’s Referral to Committee: April 2, 2010 PAZ Committee Action: April 7, 2010 – Action Item City Council Action: April 12, 2010 (Consent Agenda or Committee Report) Deadline: None Background: Stockyard Road Investments LLC (SRI) was granted conditional approval of the Ranch Subdivision and “B-Residential” zoning of the property on May 19, 2008. The plat has since been modified by plat adjustments approved by City Council on October 20, 2008; August 17, 2009; and November 2, 2009. Title 20 Missoula Zoning Ordinance was also adopted by the City Council since the approval of the subdivision and the “B-Residential” zoning is now “RM1-45-Residential 1–multi dwelling.” The current version of the subdivision plat as described in the last plat adjustment consists of a 4.97 acre Lot 1 intended for multi- dwelling development, Lots 2A through 15B intended for duplex townhouses, and Lots 16 through 41 intended for single dwelling detached homes. During the design phase of the structures to be built on the Ranch subdivision lots, SRI inquired about utilizing a setback exception under Title 19 to decrease the front yard setback from 20’ to 10’ and to also apply this exception to side loading garages. Staff correctly advised the client they could use this exception for the primary residential building front yard setback but the advice regarding use of the exception for side facing garages was in error. This error was not discovered before SRI proceeded to design the townhouses and detached homes per this interpretation. Consequently, when two duplex townhouse permits and one detached home permit were submitted under Title 19, staff was not able to approve zoning compliance for the permits. ---PAGE BREAK--- The Title 20 zoning ordinance clarified that the front yard setback exception that was incorrectly applied to the side loading garages was not available. Additionally, under Title 20 an exception that allowed for a smaller rear yard setback in the B-Residential zoning district and the “loophole” that allowed duplexes to be permitted without compliance with townhouse standards were eliminated. This made the building designs predicated on reliance with staff advice regarding Title 19 that were yet to be submitted out of conformance with Title 20. This series of events led SRI, represented by Terance P. Perry of Datsopoulos, MacDonald & Lind, P.C. to file a complaint in District Court. In response to this litigation counsel advised City Administration that a lawsuit settlement would be in the City’s best interest due to the plaintiff’s good faith detrimental reliance. A Planned Unit Development Overlay ordinance would bring the structures into compliance with zoning and is proposed to implement the agreement. The PUD contains minor adjustments to the underlying RM1-45 zoning so the building designs procured by SRI for the development under their detrimental reliance may still be utilized. Financial Implications: None, other than then the settlement will result in a savings to the City of litigation cost and reduce the City’s exposure to potential damages. Attachments: Proposed Settlement Agreement Settlement Agreement Exhibit A Settlement Agreement Exhibit B Settlement Agreement Exhibit C