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STATE OF MICHIGAN COURT OF APPEALS

ORCO INVESTMENTS, INC., Plaintiff-Appellant, v CITY OF ROMULUS, ROMULUS PLANNING COMMISSION, and ROMULUS CITY COUNCIL, Defendants-Appellees.

UNPUBLISHED June 26, 2012

No. 303744 Wayne Circuit Court LC No. 09-018235-CK

Before: K. F. KELLY, P.J., and SAWYER and RONAYNE KRAUSE, JJ. PER CURIAM. Plaintiff, Orco investments, Inc., appeals as of right from an order granting summary disposition in favor of defendants, the City of Romulus, the Romulus Planning Commission, and the Romulus City Council,1 in this regulatory taking claim. We affirm. I. BASIC FACTS AND PROCEDURAL HISTORY A. THE OVERLAY DISTRICT This case arises from Orco's intent to develop 18 single-family condominiums on a vacant, 7.35-acre piece of property located on Superior Road in Romulus. In September of 2003, Orco submitted a preliminary site plan for its project to the planning commission. The property was zoned RI-B, for single family residences, so Orco's plans were proper under the applicable zoning ordinances. Orco did not yet own the property, but intended to buy it. At a city council meeting on December 8, 2003, many individuals living near the property, including the mayor of Romulus, voiced their concern and dissatisfaction with Orco's development plan. These residents were worried that development would affect the rural character of the neighborhood. The city council then passed a six-month moratorium on issuing building permits for the area, which included the property that Orco planned to develop.

In a prior order, summary disposition was granted as to the Planning Commission and the City Council, but they continue to be named parties.

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At a planning commission meeting on December 15, 2003, the commission tabled approval of Orco's site plans and asked Orco to work with the city and make changes to address some of the concerns raised by citizens at the city council meeting. Orco met with the city's engineers and adapted its plans. The plan was brought up again at the planning commission's February 2004 meeting, when four members voted to approve Orco's preliminary site plan and four members voted to deny it (the ninth member of the commission was not present). This was interpreted as a denial of the plan. On March 26, 2004, Orco filed an action in Wayne Circuit Court and asked the court to order the city to approve Orco's preliminary site plan.2 The trial court ordered the city to include the issue on the Board of Zoning Appeals' (BZA) agenda. On July 7, 2004, the BZA reversed the decision of the planning commission and approved Orco's preliminary site plan. Orco finalized its purchase of the property on July 16, 2004. However, on June 15, 2004, before this approval and purchase, the city adopted the "Rural Characters Overlay District," which included the property that Orco sought to develop. The Overlay District increased the lot size requirement for the property, reduced the number of condominium units that Orco could develop, and required Orco to completely revise its development plans. Orco requested that the court relieve it from the requirements of the Overlay District. The court ordered Orco to appeal to the BZA for a use variance, but the BZA denied Orco's request. Orco then moved for summary disposition under MCR 2.116(C)(10) and argued that the Overlay District should not apply to its site plan because the city acted in bad faith and with unreasonable delay when it initially denied Orco's preliminary site plan in February of 2004. At a motion hearing held on November 19, 2004, the circuit court agreed and granted Orco a writ of mandamus. The court concluded that Orco's preliminary site plan should have been approved originally, so the subsequently adopted Overlay District did not apply. The court then explained that the City attempted "to block this preliminary site plan with every possible obstacle," and that the "adoption of the Overlay District on June 15, 2004 was for the sole purpose of stopping Plaintiff's development and manufacturing a defense to this suit." Orco proceeded with development of the property, but alleged that the city continued to purposefully delay approval of various permits required and Orco's final site plan by creating problems with: 1) the storm water drainage system; 2) the Soil Erosion and Sedimentation Control (SESC) permit; and, 3) the long-term maintenance agreement for the storm water drainage system. B. STORM WATER DRAINAGE SYSTEM In October of 2003, the city's engineer expressed his concern to Orco that the storm water drainage ditch parallel to Superior Road could not accommodate the additional storm water drainage from Orco's proposed condominium development. The city engineer suggested that Orco use adjacent property belonging to the Romulus School District because it could better accommodate the development's storm water drainage. The school district's superintendent, Joel Carr, and the school district's facilities director, Donald Morris, initially agreed to grant
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See Orco Investments, Inc v City of Romulus and City of Romulus Planning Comm, Wayne Circuit Court Case No. 04-409170-CH.

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Orco an easement for storm water drainage and the parties began negotiations. Randall C. Orley, the president of Orco, claims that in early 2005 he had a telephone conversation with Carr and Eric Garber, another Orco employee. During this conversation, Carr indicated that the mayor of Romulus and other city officials were pressuring Carr to deny the storm water drainage easement to Orco because areas of the city were "best kept separate by their existing racial makeup." These officials were concerned about African Americans moving into the planned condominium development. However, Carr testified that city officials never told him to deny Orco's easement. According to Carr, negotiations over the easement halted because of Orco's failure to respond. Orley claimed that Orco's time negotiating with the school district and developing engineering plans to use the district's property for storm water drainage were thus rendered useless. Orco returned to its original plan to use the Superior Street ditch, which it had abandoned at the city's suggestion and request. C. SESC PERMIT Before beginning construction, a SESC permit was required. On May 23, 2005, the city voted to relinquish jurisdiction of SESC permits to the Wayne County Soil Erosion Department (WCSED). The city did so after the Michigan Department of Environmental Quality (MDEQ) told the city that it needed more staff and additional training to maintain its SESC program. The soil erosion program did not take in enough revenue to justify paying for these changes, so the city turned jurisdiction of the program over to the WCSED. The WCSED's jurisdiction over the city's SESC permits began on June 1, 2005. When the city relinquished jurisdiction of soil erosion permits, it also lost control of approving engineering plans for storm water drainage and management. Orley claims that the city did not inform Orco that it no longer had authority to award SESC permits or approve engineering plans for storm water drainage systems. On November 16, 2005, while attending a meeting at the WCSED, Orco's engineer was informed that the city no longer had control over SESC permits and Orco thus had to apply for approval of its plan with the WCSED. Orco also had to apply to the Wayne County Department of Public Service (WCDPS) to find out if the WCDPS would have jurisdiction over all of the storm drainage issues related to Orco's development. This required the preparation of new engineering plans to be submitted to the city, the city's engineers, the WCSED, and the WCDPS. On May 11, 2006, Orco's plans were approved, as long as the city accepted jurisdiction and responsibility for long term maintenance of the storm water drainage system. D. LONG TERM MAINTENANCE AGREEMENT FOR STORM WATER DRAINAGE SYSTEM Orco then sent the city a proposed agreement, under which the city would assume jurisdiction and responsibility for the long term maintenance of the development's storm water drainage system, as required by the WCSED. The city responded on May 2, 2006, and said that Orco's proposed agreement lacked certain essential information, like a description of the project and who prepared the project's plans. The city also requested separate documents providing for

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an access easement. In addition, it appears that the city told Orco it would not sign a maintenance agreement unless Orco agreed to dismiss the 2004 case.3 Over the next several months, Orco and the city negotiated the terms of the agreement. In March of 2007, the parties executed a final agreement. E. PROCEDURAL HISTORY On August 30, 2006, Orco held a public auction for the property. The minimum bid price was $375,000. No one attended or bid at the auction. Orley claimed that if the city had approved its preliminary site plan in 2003, the property would have been developed and ready for sale in March of 2005. If the plan had been approved in 2003, Orco's soil erosion and storm water drainage plans would have been approved by the city before it relinquished jurisdiction. As a result, Orco would not have needed to develop new engineering plans to submit to the WCSED and the WCDPS, which pushed back development even further. Orley contended that "[w]hat should have been a nine month to one year project became a five and one-half year fiasco. . . ." On July 24, 2009, Orco filed a complaint in a new suit against defendants. In Count I, Orco alleged that the planning commission's denial of its site plan violated Orco's equal protection and substantive due process rights under the Michigan Constitution. Orco claimed that defendants "purposefully and willfully rezoned Orco's Property by an `Overlay District' in furtherance of its bad faith efforts to prevent development." In Count II, Orco contended that defendants' actions, including the denial of Orco's site plan and its attempt to rezone the property, resulted in an unlawful regulatory taking without just compensation under the Michigan Constitution, 1963 Art 10,

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