Commission on Local Government Estimate of Local Fiscal Impact 2014 General Assembly Session Bill: HB 1219 Patron: Marshall

Date: January 28, 2014

In accordance with the provisions of 30-19.03 of the Code of Virginia, the staff of the Commission on Local Government offers the following analysis of the abovereferenced legislation: I. Bill Summary

HB 1219 provides that any zoning ordinance of a locality that violates or unreasonably restricts the free exercise of rights guaranteed under the United States Constitution or the Constitution of Virginia shall be null and void and shall constitute a violation. Any enforcement by a locality of such ordinance shall be deemed a violation. In any litigation in which the constitutionality of a zoning ordinance or its enforcement is at issue, the ordinance shall not be given a presumption of constitutionality or presumption of validity. In any litigation involving a challenge under this statute, the burden of establishing compliance with the statute shall be on the locality. Any locality that violates the statute shall be liable to aggrieved persons in amounts equal to the fines and penalties that the locality seeks to impose on such aggrieved persons, plus actual damages including reasonable attorney fees. Any locality that willfully violates this statute, or whose interpretation or enforcement of ordinances willfully operates in violation of this statute, shall be liable to the aggrieved person for treble damages, plus reasonable attorney fees. Any official or employee of a locality that willfully violates this statute, or whose interpretation or enforcement of duties willfully operates in violation of the statute, may be personally liable to aggrieved persons in the amount equal to the fines and penalties that such official or employee seeks or sought to impose on such aggrieved persons plus actual damages and attorney fees. The Attorney General of Virginia shall establish a procedure whereby persons, including officials and employees of localities, may report violations. No locality may take disciplinary action against any official or employee for reporting such violations. The Attorney General (i) shall have authority to institute legal proceedings in the courts of the respective locality and (ii) may intervene in any proceeding to enforce this statute against any locality. II. Fiscal Impact Analysis

The Commission on Local Government (CLG) received fiscal impact statements from 15 localities the Counties of Campbell, Henrico, Pulaski, Rappahannock, Richmond, Rockingham, and Spotsylvania; the Cities of Alexandria, Chesapeake, Lynchburg, Norfolk, Poquoson, Roanoke, and Virginia Beach; and the Town of Strasburg.

Three of the responding localities the Counties of Campbell, Henrico, and Pulaski reported that they would not experience a net increase in expenditures. One of the responding localities the City of Alexandria indicated that they would experience an expenditure increase of less than $5,000. The remaining eleven respondents the Counties of Rappahannock, Richmond, Rockingham, and Spotsylvania; the Cities of Chesapeake, Lynchburg, Norfolk, Poquoson, Roanoke, and Virginia Beach; and the Town of Strasburg reported that they would experience an expenditure increase of over $5,000. The estimates ranged from $11,000 per year in Rockingham County to $100,000 per year in Rockingham County. Due to the nature of HB 1219, most localities were unable to generate a local fiscal estimate. Listed below are the expenditure estimates: Rappahannock County: Richmond County: Rockingham County: Spotsylvania County: Chesapeake City: Lynchburg City: Norfolk City: Poquoson City: Roanoke City: Virginia Beach City: Strasburg Town: $11,000-26,000 unknown 100,000 unknown unknown unknown unknown unknown unknown unknown unknown

Rappahannock County generated its fiscal estimate from expected defense costs. The noted that the provision related to the personal liability of employees could reduce staffs willingness to enforce legally valid and compliant law due to fear. Rockingham County provided an estimate, but also noted that damages are inestimable. If damages are not covered by insurance, the financial impact could be much higher than $100,000. Spotsylvania County indicated that HB 1219 could cost hundreds of thousands of dollars if a locality loses a single case. They also note that local zoning administrators or planning directors could be personally bankrupted. The City of Chesapeake noted that they would expect an increase in lawsuits filed against the City if the provisions of HB 1219 are enacted by noting the number of issues that could be related to the statute. They also expressed concern over the loss of the presumption of validity of an ordinance passed by a local government, which could decrease the Citys ability to defend itself. Additionally, they note that HB 1219 adds personal liability to employees and officers.

The City of Lynchburg expressed concern that HB 1219 will encourage lawsuits to be brought against local governments. They also noted that HB 1219 does not thoroughly describe an unreasonable restriction of free exercise of rights. The City of Norfolk noted a concern that the broad nature of HB 1219 will expose localities to increased liability. They also noted the exposure of local employees and officers. The City also highlighted that the burden of proof of a challenged ordinance is placed on a locality and that will make it more difficult for localities to defend themselves in court. The City of Poquoson noted that they would not knowingly pass an ordinance that could later be declared unconstitutional, which makes an estimate difficult to compute. The City of Roanoke indicated that HB 1219 will increase the exposure of liability to localities. If the bill passes, they could envision an increase in suits filed against the City that challenge the constitutionality of an ordinance.

III.

Conclusion

The impact of HB 1219 can be difficult to estimate. To generate such an impact, one must assume that local governments within the Commonwealth have been using unconstitutional means when adopting a zoning ordinance or making a land use decision. It is understandable why respondents have been unable to quantify the local fiscal impact of the legislation. HB 1219 seeks to penalize a locality if it passes a zoning ordinance or makes a land use decision that restricts the free exercise of rights guaranteed by the United States Constitution or the Constitution of Virginia by making it liable for the attorney fees and court fees of aggrieved parties. Any employee or official that is in willful violation can be found personally liable under this section. The bill language exposes local governments of the Commonwealth to a new liability. Financial hardship from awards of damages could be crippling. HB 1219 could have a heavy impact on localities that manage more zoning or land use issues than others. Insurance premiums for localities could rise to protect themselves from new liabilities. Local government attorneys may also need time spend more time reviewing land use decisions in order to avoid future litigation.