DIV 35 CPD, LLC, Plaintiff, v. CONSTANTINE ALEXANDER, et al., as members of the City of Cambridge Board of Zoning Appeal, Defendants

This case tests the limits of the oft-cited proposition that, when reviewing pursuant to G.L. c. 40A, § 17, a local zoning board's decision, the courts must "accord deference to [the] local board's reasonable interpretation of its own zoning bylaw. . . ." Shirley Wayside Ltd. P'ship v. Board of Appeals of Shirley, 461 Mass. 469 , 474 (2012). See also Wendy's Old Fashioned Hamburgers of N.Y., Inc. v. Board of Appeal of Billerica, 454 Mass. 374 , 381 (2009) (same). This Court concludes, consistent with Miles-Matthias v. Zoning Bd. of Appeals of Seekonk, 84 Mass. App. Ct. 778 , 786-787 (2014), that when a mere majority of a local board fails (where a supermajority vote is needed) to articulate any interpretation of a zoning bylaw or ordinance, the majority's view (whatever it is) deserves no deference. The Court nevertheless holds in this case, without deferring to any of the views that the defendant members of the City of Cambridge Board of Zoning Appeal (the "Board") expressed in this matter, that the City's Commissioner of Inspectional Services (the "Commissioner") didn't apply the correct test under the City's Zoning and Inclusionary Housing Ordinance [Note 1] to a renovation project proposed by plaintiff DIV 35 CPD, LLC. The Court will thus remand this case to the Board for further proceedings consistent with this decision.

DIV brought this action against the five-member Board in November 2019. DIV had appealed to the Board the Commissioner's application of §§ 2.00 and 11.20 of the Ordinance to DIV's plans to renovate a building at 35 Cambridge Park Drive in Cambridge (the "Property"). In September 2019, three members of the Board sided with DIV and voted to reverse the Commissioner's determination. But under c. 40A, § 15, the Board couldn't overturn the Commissioner's action unless at least four Board members voted to do that. DIV's appeal to the Board thus failed. DIV then sought review in this Court, pursuant to c. 40A, § 17, of the Board's decision (filed with the City Clerk in November 2019), although DIV really is seeking to overturn the Commissioner's determination.

DIV and the Board have moved and cross-moved for summary judgment. The undisputed facts are these: The City first adopted the Ordinance in 1988. Its purpose is

to promote the public health, safety, and welfare by accommodating the expansion of commercial and residential opportunities throughout the city; by providing for a full range of housing choices throughout the City for households of all incomes, ages, and sizes in order to meet the City's goal of preserving diversity by mitigating the impacts of commercial and residential development on the availability and cost of housing and especially housing affordable to low and moderate income households; by increasing the production of affordable housing to meet anticipated housing and employment needs throughout the city; by providing a mechanism through which commercial and residential development can contribute in a direct way to increasing the supply of affordable housing in exchange for a greater density or intensity of development than that otherwise permitted as a matter of right; and by establishing standards for the use of such contributions from the application of incentive zoning and inclusionary housing provisions.

Ordinance at § 11.201.

The Ordinance anticipated that those developers who were subject to it would either "create or cause to be created affordable units for occupancy exclusively by eligible households, . . . donate land to be used exclusively for the development of affordable units," or contribute to the City's Affordable Housing Trust $4.58 per gross square foot (adjusted for inflation) of their "incentive projects," less a 2,500 square-foot exemption. The original Ordinance applied, however, only to projects that sought to host certain identified uses and that needed at least one of several particular special permits under the City's Zoning Ordinance.

By 2002, it appeared the Ordinance wasn't generating its anticipated revenue. The City commissioned a study of the Ordinance that year; the study recommended upping the Ordinance's housing contribution rate, but nothing came of that suggestion. Another decade elapsed. In the meantime, Cambridge experienced a development boom, but not a corresponding increase in affordable housing.

The City thus commissioned a second report, called the 2015 Nexus Study. That study chiefly recommended two changes to the Ordinance: first, that the City boost the Ordinance's contribution rate to between $10 and $12 per gross square foot of development; and second (and more importantly for this case), that the City expand the Ordinance's coverage to every non residential development over 30,000 gross square feet that included one or more targeted uses, regardless of whether the development needed special permits or not. The City's Community Development Department ("CDD") prepared the first draft of a proposed amended Ordinance in June 2015. CDD proposed to amend § 2.000 of the Ordinance to include a new term, "Incentive Project," defined as

any new or substantially rehabilitated development that consists of at least thirty thousand (30,000) square feet of Gross Floor Area devoted to one or more of [an expanded list of specific uses]. Incentive Project shall also include an existing development that consists of at least thirty thousand (30,000) square fee of Gross Floor Area whose use is changed from a use not included in the above list to a use included in the above list. . . .

In July 2015, the Ordinance Committee of Cambridge's City Council held a public hearing on the proposed amendment. During that hearing, a city councilor questioned whether the phrase "substantial rehabilitation" would apply to projects aimed at "fixing up a building to make sure that it stays in good shape," but that wouldn't increase employment (or its associated demand for employee housing). The Committee ultimately voted in August 2015 to recommend adoption of the amended Ordinance, but the Committee also directed CDD to report on what the Ordinance should say about what the Committee called "large renovation projects."

CDD responded in September 2015. It stated the following concerning large renovation projects:

The Ordinance Committee discussed the inclusion of large renovation projects and how they might be covered by the proposed incentive changes. The intent of the [June 2015 draft] was to include substantial renovations that would effectively amount to the development of new employee-occupied space, such as a conversion of a former factory to a lab use. There were some questions about the applicability of this to renovations which did not result in a change of use.

It can be difficult to distinguish between renovation for the sake of upkeep to a property and rehabilitation for the sake of economic development. The Nexus Study examined the impact on housing needs from new employment associated with new commercial development. Renovations that are done for the sake of upkeep will not necessarily result in an increase in employment. Without an increase in employment, such an incentive contribution would not be consistent with the basis for the incentive requirements established in the Nexus Study. Further, including renovation projects may create a disincentive for needed rehabilitation and reinvestment in existing properties.

CDD thus recommended further revisions to the new definition of "Incentive Project." The changes were these (deletions from June 2015 draft in strikethrough, additions to June 2015 draft underlined):

any new or substantially rehabilitated development that consists of at least thirty thousand (30,000) square feet of Gross Floor Area devoted to one or more of [an expanded list of specific uses]. Incentive Project shall also include an existing development that consists of at least thirty thousand (30,000) square feet of For the purpose of this definition, new development shall mean (1) construction of new buildings or additions to existing buildings to accommodate uses in the above list, or (2) substantial rehabilitation of buildings to accommodate uses in the above list for which the buildings were not originally used or (3) Gross Floor Area whose use is changed from a use not included in the above list to a use included in the above list. . . .

CDD commented:

The revised [definition] specifies that "new development," in the context of the incentive zoning provisions [sic] would include rehabilitation projects which change the use of a building to one of the non-residential uses covered by the Incentive provisions under the following circumstances: either the building was originally built to accommodate a different use (e.g., the renovation of a former factory building to a lab use), or the prior use was a use that would not be subject to incentive zoning requirements (e.g., a former primary school building changes its use to a commercial office).

On September 28, 2015, the Cambridge City Council approved the current text of the Ordinance, which includes CDD's September 2015 recommendations. [Note 2]

In 2016, DIV applied for building permits to remodel an existing 137,635 square-foot office building on the Property and to build a 47,179 square-foot addition, also for use as an office. The existing building was constructed in 1947 for industrial use. That use continued until the 1980s, when the Property's then-owners converted the building to office space. The owners did so pursuant to a variance and a special permit that, among other things, allowed specific alterations to the building to accommodate the new office use.

It's undisputed that the Property's post-renovation office uses are among those that trigger the application of the amended Ordinance. It's also undisputed that in 2016, the housing contribution rate under the amended Ordinance was $13.50 per square foot of new development. The question for the Commissioner was whether DIV's entire project, or just its proposed addition to the Property's existing building, constituted an "incentive project" under § 2.00 of the Ordinance. The Commissioner concluded that the entire project was an "incentive project." He presented his reasoning in a July 10, 2019 letter to DIV:

[The remodeled office space] consists of substantially rehabilitating the existing building at the Property. Your client's proposed use of the Property is an office and laboratory use. The original use of the building was steel fabrication, which was an industrial use. Accordingly, the . . . substantial rehabilitation of the existing building at the Property . . . constitute[s] a new development, which is subject to the Housing Contribution.

By the Commissioner's calculation, DIV owed a housing contribution of $2,494,989 before it could proceed with its proposed work.

In August 2019, DIV appealed the Commissioner's decision to the Board. DIV sought a reversal of the Commissioner's interpretation of "new development" in the context of remodeled office space. After a public hearing, three members of the Board voted to overturn the Commissioner's decision. [Note 3] Two members of the Board sided with the Commissioner and adopted his reasoning. DIV's appeal to this Court followed.

The sole issue in this case is the proper interpretation of the second type of "new development" listed in the Ordinance's definition of "incentive project": "substantial rehabilitation of buildings to accommodate [certain] uses . . . for which the buildings were not originally used . . . ." (For ease of reference, this decision will refer to the phrase as "Clause 2.") The Ordinance doesn't define any of Clause 2's terms. Thus,

[i]n the absence of an express definition, the meaning of a word or phrase used in a local zoning enactment is a question of law, and is to be determined by the ordinary principles of statutory construction. Specific provisions of a zoning enactment are to be read in the context of the law as a whole, giving the language its common and approved meaning "without regard to . . . [the court's] own conceptions of expediency." "We derive the words' usual and accepted meanings from sources presumably known to the [by-law's] enactors, such as their use in other legal contexts and dictionary definitions."

Framingham Clinic, Inc. v. Zoning Bd. of Appeals of Framingham, 382 Mass. 283 , 290 (1981) (citations omitted; brackets in original), quoting Kurz v. Board of Appeals of N. Reading, 341 Mass. 110 , 112 (1960), and Commonwealth v. Zone Book, Inc., 372 Mass. 366 , 369 (1977).

MacLaurin v. Holyoke, 475 Mass. 231 (2016), provides something of a roadmap for interpreting Clause 2. The MacLaurin court had to interpret G.L. c. 148, § 26I, which mandates the installation of automatic sprinklers in existing residential buildings of four or more units when they are "substantially rehabilitated so as to constitute the equivalent of new construction." Over several years, plaintiff MacLaurin had renovated two abandoned apartment buildings, with the intent to return them to occupancy. When his work was essentially complete, the Holyoke fire department inspected the buildings. Following the inspection, and without holding a hearing, Holyoke's fire chief ordered MacLaurin to install automatic sprinklers in both buildings. The chief's decision stated that, following MacLaurin's work, his buildings had been "substantially renovated so as to constitute the equivalent of new construction," but the chief's decision "neither contain[ed] any explicit findings of fact nor set[] forth the test used to evaluate the nature of the work done." MacLaurin, 475 Mass. at 234. The chief also appeared to have believed that § 26I's "substantially rehabilitated" standard had essentially the same meaning as the phrase "major alterations," as that phrase appears in c. 148, § 28G. That statute imposes sprinkler requirements in connection with certain renovations of existing commercial buildings. See MacLaurin, 475 Mass. at 239.

While § 26I's phrase, "substantially rehabilitated so as to constitute the equivalent of new construction," embraces several concepts, the MacLaurin court began its interpretation of the phrase by looking at the plain meaning of the word "rehabilitate." "To 'rehabilitate' something generally means to return it from disuse or a poor condition to a useable condition. 'Alteration,' on the other hand, implies a less extensive change to something already in existence." MacLaurin, 475 Mass. at 240 (footnote omitted). The court continued: "'Substantial' is commonly understood as something '[t]hat is, constitutes, or involves an essential part, point or feature; essential, material'; 'of or relating to the main part of something'; 'to a large degree or in the main.'" Id., quoting 10 Oxford English Dictionary 54-55 (1978) and Webster's Third New International Dictionary 2280 (2002). The court then stated:

These differences in common meaning underscore that the Legislature did not intend "major alteration" and "substantially rehabilitated" to be functionally synonymous. Where "different words with different meaning" are used in different sections of a statute, "they cannot be construed interchangeably, but must be construed in relation to one another."

MacLaurin, 475 Mass. at 240-241, quoting Commonwealth v. Millican, 449 Mas. 298, 301 (2007). The court also observed that "[i]n the context of building construction, the phrase 'substantial rehabilitation' has been used since at least the late 1960s to describe a building that has been modified so extensively that it has been rendered essentially 'as good as new,' with a concomitant extension of its expected useful life." MacLaurin, 475 Mass. at 241 (footnote omitted).

MacLaurin then created a test for when work constitutes "substantial rehabilitation" within the meaning of § 26I: "when rehabilitative work is so extensive that the building itself, considered as a whole, has been rendered 'the equivalent of new construction,' whether in terms of the materials and construction techniques used, the building's systems, its market value, its expected future useful life, or other comparable measures of equivalence to new construction." MacLaurin, 475 Mass. at 248. The court examined whether Holyoke's fire chief reached his decision using this standard (he didn't) or whether he made findings of fact (he hadn't) that would allow the court to determine whether it could uphold the chief's decision using the court's newly articulated standard. The court thus remanded the case with directions to the fire chief that, using the court's standard, the chief "should clearly determine and identify the particular facts on which he bases his conclusion whether the rehabilitative work undertaken on each building was so substantial as to be the equivalent of new construction." Id. at 251.

Back to this case. The Commissioner concluded that the work DIV proposed within its existing building amounted to "substantial rehabilitation" under Clause 2. DIV doesn't challenge that determination. But Clause 2 requires more than just an analysis of whether work is "substantial rehabilitation": it also mandates looking at whether the rehabilitation is occurring "to accommodate [certain] uses . . . for which the buildings were not originally used . . . ." MacLaurin holds that, by adding to c. 148, § 26I's phrase "substantial rehabilitation" the words "so as to constitute the equivalent of new construction," "the Legislature emphasized, for those unfamiliar with the term of art ['substantial rehabilitation,'] its intent that, to meet the statutory standard, an existing residential building must have been rendered 'as good as new.'" MacLaurin, 475 Mass. at 242.

By contrast, the words that follow "substantial rehabilitation" in Clause 2 don't merely reiterate "substantial rehabilitation's" plain meaning as set forth in MacLaurin. Instead, the additional words in Clause 2 modify and limit "substantial rehabilitation." That limitation shouldn't be ignored. See Connors v. Annino, 460 Mass. 790 , 796 (2011), quoting Wheatley v. Massachusetts Insurers Insolvency Fund, 456 Mass. 594 , 601 (2010) (zoning ordinance must be interpreted "to give effect 'to all its provisions, so that no part will be inoperative or superfluous'").

In the context of Clause 2, "accommodate" means "[t]o make suitable; adapt." The American Heritage Collegiate Dictionary, 8 (4th ed. 2004). So was DIV proposing to rehabilitate its building in order to make the area suitable for the Ordinance's targeted uses? Nothing that the Commissioner and the Board put in writing explores that issue. Recall that DIV's building already was being used for one of those uses, offices, before DIV asked for its building permit. The work to accommodate office uses occurred, with the City's permission, in the 1980s. Would DIV's rehabilitation intensify the use? Would the work introduce new targeted uses? Or were the changes merely cosmetic? The Commissioner and the Board haven't said. Instead, the Commissioner (and, later, a minority of the Board) ascertained only (1) the original use of DIV's building, (2) the proposed uses of the to-be-rehabilitated areas, and (3) that those proposed uses are among those that trigger housing contributions. MacLaurin suggests that the Commissioner and the Board needed to look more closely at DIV's work, to determine if it truly is "adapting" DIV's building for the targeted uses, given that work to the building was done previously (and lawfully) in order to accommodate those uses.

Two things buttress this Court's reading of Clause 2. The first is the legislative history of the amended Ordinance. In July 2015, concerns arose before the City Council's Ordinance Committee concerning projects aimed at "fixing up a building to make sure that it stays in good shape," but that wouldn't increase employment. In response to those concerns, CDD proposed the current definition of "incentive project." The CDD report that accompanied the revised definition distinguished between "renovation for the sake of upkeep to a property and rehabilitation for the sake of economic development." CDD observed that the former "will not necessarily result in an increase in employment," and thus requiring such projects to pay a housing contribution "would not be consistent with the basis for the incentive requirements established in the Nexus Study." These comments show that Clause 2 is intended to require an assessment of a rehabilitation project's impact on employment within the targeted industries.

The second thing that supports the Court's reading of Clause 2 is what might happen if the Commissioner's interpretation were right: not only would the developer who was responsible for the first substantial rehabilitation that changed an industrial building to one of the Ordinance's targeted uses have to pay a housing contribution, but so would anyone responsible for any later substantial rehabilitation, even if later work had no effect whatsoever on employment within that building (and its related housing impacts). While the legislative history of the amended Ordinance demonstrates that the City was interested in increasing revenue for its Affordable Housing Trust, there's nothing in the Ordinance or its legislative history that suggests that the City intended to create a system of recurring charges. Like statutes, zoning ordinances should be construed to avoid absurd results, see Bellalta v. Zoning Bd. of Appeals of Brookline, 481 Mass. 372 , 378 (2019); the Court's interpretation does just that. At this juncture the Board argues that this Court must defer to the Board's interpretation of the Ordinance. The Board relies on chestnuts such as Wendy's, 454 Mass. at 382, but Wendy's doesn't serve the Board well here: Wendy's affirmed a trial court's decision to set aside a local board's interpretation of its bylaw. Another of the Board's cases, Shirley Wayside, 461 Mass. at 478 n. 8, cautions: "While we accord deference to the board's reasonable interpretation of its own bylaw, we comfortably reject the board's interpretation when it contradicts both long-standing precedent and the bylaw's own definitions." See also Doherty v. Planning Bd. of Scituate, 467 Mass. 560 , 566 (2014) (no deference is owed to a local board's incorrect interpretation of a zoning bylaw).

The most helpful discussion of the deference a reviewing court owes under c. 40A, § 17 to a local board's interpretation of a zoning ordinance or bylaw is found in Britton v. Zoning Bd. of Appeals of Gloucester 59 Mass. App. Ct. 68 (2003). There the court pointed out that merely describing

the scope of judicial review does not, by itself, always provide guidance regarding the kind and degree of discretion the board possesses in a given case and the consequent deference the court must give to the board's . . . decision. The difficulty can be reduced by recognizing that judicial review typically requires two principal inquiries, one of which involves an almost purely legal analysis and the other of which involves a highly deferential bow to local control over community planning.

As for the first inquiry, an essentially legal analysis is required to decide whether the board's decision was based on "a legally untenable ground," or, stated in a less conclusory form, on a standard, criterion, or consideration not permitted by the applicable statutes or by-laws. Here, the approach is deferential only to the extent that the court gives "some measure of deference" to the local board's interpretation of its own zoning by-law. In the main, though, the court determines the content and meaning of statutes and by-laws and then decides whether the board has chosen from those sources the proper criteria and standards to use . . . .

The second inquiry is different. Assuming that the board has drawn on proper criteria and standards, the court then must determine, on the basis of the facts it has found for itself, whether the board has denied the application by applying those criteria and standards in an "unreasonable, whimsical, capricious or arbitrary" manner. . . .

As is evident, this second element of review, unlike the first, is highly deferential, and gives the board discretion to deny a permit application even if the facts found by the court would support its issuance.

Id. at 73-74 (citations omitted), quoting MacGibbon v. Board of Appeals of Duxbury, 356 Mass. 635 , 639 (1970); and APT Asset Mgmt., Inc. v. Board of Appeals of Melrose, 50 Mass. App. Ct. 133 , 138 (2000).

In its current posture, this case involves solely the first type of inquiry: whether the Commissioner and the Board properly interpreted the elements of Clause 2's test for "incentive projects." According to Britton, this Court would owe the Board's interpretation only some deference. But there's a more fundamental problem in this case: what, exactly, is the Board's interpretation of the Ordinance? The Board's November 2019 decision doesn't describe how the three Board members who voted to grant DIV's appeal interpreted the Ordinance. Even if they had, Miles-Matthias, 84 Mass. App. Ct. at 786-787, is clear that a reviewing court may not defer to a less-than-supermajority decision if the appeal requires a supermajority. So the majority view in this case, whatever it may be, doesn't deserve deference. As for the Commissioner and the minority members' reasoning (the only reasoning presented in the "Board's" November 2019 decision), an Appeals Court Rule 1:28 decision, Lamar Whiteco Outdoor Corp. v. Zoning Bd. of Appeals, 87 Mass. App. Ct. 1133 , n. 5 (2015), sensibly observes that an interpretation that's received not even a majority vote mightn't necessarily be a reasonable one. [Note 4]

Having examined the plain language of Clause 2, having reviewed the legislative history of the amended Ordinance, and having considered the potential consequences of the Commissioner's interpretation of Clause 2, the Court deems the Commissioner's interpretation of Clause 2 to be unreasonable and not deserving of deference. And as there is no evidence that the Commissioner analyzed DIV's rehabilitation of its existing office space to see if DIV was doing it to accommodate office or lab uses not already existing at its Property, the Court holds that the Commissioner didn't interpret the Ordinance correctly. The Court will thus remand this case to the Board for further proceedings consistent with this decision. Judgment to issue accordingly.