By Miki Mullor

Analysis

On Monday, April 24, at 8:30, Judge Mabey will give an oral ruling on the building permits dispute between Mustang Development LLC, the developer of Golden Eagle, and the Town of Hideout.

The judge is expected, for the first time, to decide which of the reasons used by the Town to deny building permits in Golden Eagle, are valid, and which are not.

Indirectly, this decision may have significant impact on the Town’s finances (already projected to be in a $300,000 – 500,000 deficit), if the Town continues to spend hundreds of thousands of dollars on legal fees or possibly be liable for future damages to land owners.

Four infrastructure issues

The dispute is over four issues related to infrastructure in Golden Eagle. Mustang is responsible to complete the infrastructure in the development. The parties disagree on what has actually been completed so far and what is actually required in order to issue building permits in Golden Eagle. It’s important to note that the minimum infrastructure required to issue a building permit is different than the minimum infrastructure required to allows someone to move in (“certificate of occupancy”).

Mustang brought legal action to stop the Town from using alleged pretext reasons to deny building permits to private Golden Eagle owners. (Mustang is not building homes in Golden Eagle, only the infrastructure, but it is still the largest land owner there with 200 lots still not sold.)

The judge granted Mustang’s first motion for a temporary restraining order (TRO) and said the denials then were likely pretextual, however, the Court left the door open for the Town to deny permits without violating the TRO, as long as it was specific on the deficiencies.

One glaring infrastructure item that was incomplete at that time was the water system. The fire code requires a water system that can reliably deliver a minimum amount of water flow, at any time. Although at that time the water tank and the water lines were installed and functioning, the pump station responsible for refilling the water tank was not running automatically and didn’t have all the required power lines.

Since the judge’s last ruling, the water system has been completed and accepted by the state.

When the Town kept denying building permit, Mustang moved for a second TRO.

There are four issues in dispute:

• Water system pressure testing: even though the Town conceded that the system is now delivering water flow as required, it says a pressure test of the water lines is also needed. Mustang submitted a declaration under oath the pressure test was already completed by an engineer who used to work for the Town.

• Access road: a 700 feet of the road which connects Golden Eagle to SR 248 is not paved yet (see picture). The Town argues that the road must be covered with “all weather” surface, according to the fire code. Mustang argues the current surface is indeed all weather compliant and submitted an engineering report to the court which supports its claim and said it will pave the road at some point. That specific length of road goes through a third party parcel which Mustang claims to have a 60 feet easement on. Nevertheless, no explanation was ever given why all other roads in Golden Eagle are paved, except for this section.

• Shoulders: the Town argued the code requires 1 foot of shoulders on all roads, to meet a 26 feet width the fire code requires. Mustang argues the minimum width was 20 feet, before the Town adopted a different standard, changing it to 26 feet. There is no dispute the current pavement in Golden Eagle is 24 feet wide. There is a legal question which standard applies. Mustang did install shoulders on large portions of the roads already and said it will complete shoulders on all roads once the snow melts and power and gas lines are laid along the roads.

• Storm Drain Plan: storm drain are facilities that handle the water run off from rain and snow, ensuring the excess water is not flooding homes. The Town argues the code requires a storm drain plan to be submitted for its review, signed by an engineer. Mustang disagrees and argues that since the storm drain will be turned over to Hideout Local District 1 (HLD1), a separate government entity, it is only required to submit such plan to HLD1 – which it has. Mustang also said it submitted that same plan to the Town – informally.

The “Mustang Wins” scenario

To win, Mustang must first overcome a procedural argument the Town raised on the court’s jurisdiction. The Town argued that because this is a land use dispute, the Town code requires that Mustang had first appealed to an administrative judge, essentially a lawyer appointed by the Town to review the land use decisions, such as permitting. Judge Mabey commented on the issue during the hearing and seemed ready to overrule the Town.

If Mustang wins its motion on all the open issues, it leaves the Town without reasons to deny the pending permits. In its first TRO ruling, the judge prohibited the Town from adding any new reasons for denials, beyond the ones already stated.

The Town may still appeal the decision – which would keep the status quo and delay any resolution for likely another year. However, given that the Town is already projecting a $300,000 – 500,000 budget deficit next year due to legal expenses, and given that the risk for damage liability to land owners goes up, it’s likely the Town will agree to settle in return for commitments from Mustang to pave the missing road section and installing shoulders – giving the Town some return on its legal fees investment.

The “Town Wins” scenario

It’s hard to see how the Town wins on all issues, given that the it didn’t dispute that the water system is complete and it didn’t contest Mustang’s evidence that pressure testing was done.

If the Town wins on the access road, storm drain and the shoulders, Mustang will appeal but will also be in a tough spot to complete the missing items because the ruling essentially gives the Town subjective power to decide whether the work has been completed appropriately or not – a serious stick it can use over Mustang.

If this happens, it is likely the parties will settle all outstanding legal actions, including the action that started it all, a defamation lawsuit Mustang brought against Mayor Rubin personally and a more recently filed lawsuit for $300,000 of impact fees reimbursement.

The “Mixed Win” scenario

If the Town wins only on the access road or the shoulders, those are more objective items Mustang can rush to complete, now that the snow is melting. By doing so, Mustang takes away much of the leverage the Town now has, because a pavement is a pavement, and a shoulder is a shoulder – it will be hard for the Town to claim those are not done because those are easy for any layman to evaluate.

There is a fifth issue, which sewer standard applies, that is not in question in these proceedings, because it only applies to certificates of occupancy. The sewer is in question in the case of John Blamer, the single home that has been constructed in Golden Eagle by a private owner. The Town may use the Blamer case as a carrot to get Mustang to settle all pending lawsuits.

Conclusion

It is highly likely that Mustang will win on the water system and the storm drain issues, because the water system is essentially complete and the judge already commented that she changed her mind on the storm drain plan code requirement.

The access road pavement issue an interesting one. Mustang presented an engineering report that shows the surface is indeed all weather. In the pictures of the road the Town provided the road did not look non-passable but it is clearly unpaved. There is also the question of two building permits that were already given in Golden Eagle – if the Town is so concerned about fire access, how were two homes permitted?

However, if the judge believes it will be relatively easy for Mustang to pave the 700 feet road section, she could err on the side of caution for safety and rule the road is not fire code compliant.

The shoulders is a more nuanced question. The legal question here is which code applies: a more recently ado[ted code which seem to support eh Town’s position, or the code that was in place when Golden Eagle was platted. This could go either way and there is enough evidence to support each of the parties’ position.

Hearing schedule

The judge is scheduled to give the ruling verbally on Monday, April 24, at 8:30 am, virtually over webex.

The hearing is open to the public at: https://utcourts.webex.com/meet/Mabey

(DISCLOSURE: the author is a land owner in Golden Eagle, but has not applied for a building permit)