Tuesday, May 7, 2024

Who Owns the City? - How David won Against Goliath in Downtown Columbia

The magic of water : An early town center model and an artificial lake
Waterfront development, outdated structures dating back to James Rouse's original vision now slated for demolition, and a dispute over development rights and community interests - who would not immediately think of Baltimore's HarborPlace? (See my article about HarborPlace here). But this is a different story in which the question of "who owns the city?" poses itself in a unique way

So there are similarities and stark differences: This story doesn't include an elected mayor making deals with developers, there is no city charter that needs to be amended, nor is there a public private-partnership.

In the alternative universe of this story, each of the familiar roles in city governance is played by a private entity: Instead of a city council there is a board of directors. Instead of a mayor or city administrator there are an association president and an executive director.

We are talking about a place which would be Maryland's second largest city if it were incorporated. But this city is not governed by a city charter but by the bylaws of a giant home-owners association (HOA).  The name of the place is Columbia and the HOA is the Columbia Association

Unlike Baltimore city, but like many other cities in the US, Columbia is part of a county, in this case Howard County. Thus there is some public governance with a County Executive, a council, a planning commission, and a full set of zoning regulations which create a sort of umbrella of rules and representation. 

In the beginning all land in Columbia was private and in one hand, that of James Rouse. He also enacted covenants which to this day present a set of tight private land use controls that come in the form of title restrictions which are part of private property law. Rouse also created the Howard Research and Development (HRD) entity as the "master developer". Covenants restrict what homeowners or commercial buyers who buy land from Rouse can do with the property. Today much much of the land remains in the hands of Rouse's successors, especially in the town center district.  

The extent of the the power of the "master developer" and the covenants was at the root of a recently decided lawsuit. It resulted in a jury verdict that was a big slap in the face of the present controlling entity, the Howard Hughes Corporation. The verdict presents an interesting case of limiting the power of covenants. 

Thus the story is about private control over an another private property via property law, almost like in feudal times. The protagonists are two private developers. On the one side the "master developer"  and on the other a smaller "regular" land owner.  

Rouse's vision of Columbia was suburban and urban, cosmopolitan and romantic, progressive and nostalgic, car friendly and walkable all at once. It had villages, village centers, pedestrian pathway systems, and greenway network tightly controlled by rules. Lake Kittamakundi is a rather smallish pond located in the town center area. It is testimony of Jim Rouse's conviction that water has "magic" and gave his renderings of  Columbia located in landlocked and then provincial Howard County its certain "je ne sais quoi". With sailboats gliding over blue water in a stiff breeze in front of white modern buildings Baltimore's Harbor once again comes to mind. (See my 2013 article What the New Town of Columbia Can teach Us 50 Years Later).

Eventually Rouse conferred the master role to General Growth and now the Howard Hughes Corporation, the name of the subsidiary HRD remained unchanged. Rouse liked to say about Columbia that it was “a garden for growing people”. The lofty aspirations have changed since then. Under Howard Hughes' reign, in the view of some who still knew Jim Rouse in person, HRD has acquired a reputation as a monopolist that "sticks it to everybody" (Columbia developer Kingdon Gould Jr). 

At the root of the covenant dispute sits the fact that Columbia did not remain static under the successive companies which assumed HRD's mantle. Over the last 10 years or so a hard fought consensus emerged in favor of a densified more urban town center based on a masterplan that was adopted by Howard County after years of contentious discussions. 
2035 town-center plan: Urbanization
When envisioning Columbia, James Rouse hoped to create a place that fostered growth, where residents could live and work, and that respected the land - a city in a garden. Through our Downtown Columbia Plan we aim to fulfill Rouse’s goals, while moving them forward into a new era. With his inspiration and the modern principles of a city, we hope to create an ecosystem brimming with fresh possibilities and a bright future. Calvin Ball, Howard County Executive

Still, even in today's Columbia HRD/Howard Hughes remains Goliath and everyone else is David. 

In the already noted lawsuit David is David Costello, a Columbia resident, contractor, and developer, who owns parcels in the commercial area, including Little Patuxent Square, a mixed use complex that first created tension with the master developer who forced Costello to build a massive, costly multi-story underground parking garage dug 45' deep into the rock.

Costello develops under the name IMH, Columbia LLC. The area of dispute in the law suite is six acres large and located slightly off the beaten path on the north shore of Lake Kittamakundi. There Costello already redeveloped what used to be the Cross Keys Inn and later became the Sheraton, and is now the Merriweather Lakehouse Hotel under the Marriott Autograph hotel brand. Next to it Costello wanted to replace dilapidated and vacant one and two story lodges from the 1970s with an office building, a residential building, ball courts and parking until the master developer stopped him with a court injunction against which Costello filed suit in March 22.  Costello argues that his project is following the new town center plan the mixed use designation and is no violation of the covenants. 

The Goliath controls not only more than 50% of Columbia's commercial town center, but in a peculiar twist,  is also a major developer in the updated town center plan with its massive 30 year, $5 billion investment that at its unveiling encompassed 391 acres, 14 million square feet of new development, 6,250 residential units, 4.3 million square feet of of office space, 1.25 million square feet of retail space and 640 hotel rooms. Howard Hughes plays two roles, master developer and also petitioner, i.e. developer themselves. The dual role appears to be what tripped the company in court when it lost on all 10 counts a jury had to decide.

Can the "community/master developer" still dictate covenants after the same entity radically changed the vision for the town center through the new masterplan that Howard County adopted as the guiding land use plan complete with mixed use zoning? The jury verdict the answer is: No. They called the covenants "outdated" and determined that Hughes didn't have the right to stop Costello's development plan and furthermore determined that Costello had not even violated the covenants. The jury even awarded Costello $16,995,678 in damages. Goliath vowed that they will appeal.

Northlake redevelopment (Costello Plan)

How the dual role of the Hughes Company plays out in real life was on exhibit on April 20th of last year when one of Hughes' own projects located directly across from Costello's project was reviewed by the Howard County Planning Board.   Hughes wants to build over 700 apartments on what are today surface parking lots, some of which assigned via "shared parking" agreements to Costello. 

Aside from the parking issue, Hughes project also brings into play county "adequate public facilities" (APFO) ordinances which block projects that would overburden the capacity of schools, roads and the like. Under APFO, whoever comes first mops up whatever capacity reserves there are left in schools, roads etc. Later developers could be blocked from building additional apartments. Naturally, the April 30th Planning Board brought out Costello, his lawyer and various other property owners and residents such as Brad Canfield  who operates the Merriweather Post Pavilion and Kingdon Gould III, fellow developer and co-owner of the Lakefront Kincade Office Building who also have beef with Howard Hughes or HRD. All testifying at length how much Howard Hughes is abusing its power.  The Hughes representative tried many times to object to the testimony until Kindon Gould angrily responded "I object to you, too" which brought him a call to order by the bard chair. After listening to the two sides for nearly four hours the County board approved on June 23 Hughes' 701 residential units  project which includes 77 affordable units, 19,013 sqft of retail while Costello's plans were hung up in court at the time.

Costello's hotel (g=foreground) and planned residential project

The jury verdict is a sweet victory for Costello, but thanks to APFO, Howard Hughes may be the winner after all. 

The dispute and jury verdict didn't get as much publicity as a similar case in Baltimore would have received. A BBJ article and a comment in the Merryweather Post, a Columbia online news blog were first to report. The Banner picked up the story from the BBJ a few days later. 

Aside from APFO the HRD appeal should also become interesting, given that the covenants  and the intersection between covenants and zoning are at the root of the dispute. Generally, covenants as deed restrictions are very "sticky",  i. e. they are designed to be perpetual, everlasting and hard to change. The argument that covenants can become "outdated" is kind of novel, except where covenants have violated civil rights laws. 

For our question of "who controls the city" this excursion into the universe of a giant HOA that controls an entire city is illuminating when it comes to the conflict between public interest and private rights.  Zoning is a public control while covenants are private controls (except when public government uses them, which is possible as well). Covenants are property law, the entire set-up of "master developer" has a feudal overtone of exclusion and discrimination exacerbated by the fact that they are much harder to change than zoning or other public controls. However, APFO's as public regulations also tend to favor those who came first and have become the go to tool for NIMY's around the country.  

It will be interesting to see how the legal issue will play out and whether the jury's determination that Howard Hughes own downtown Columbia masterplan has rendered the covenants irrelevant will stand. If so, it will weaken the once unassailable legal construct covenants and surely will have repercussions all across the US

Klaus Philipsen, FAIA