Last week, a Texas appellate court in Noell v. City of Carrollton (opinion available here) invalidated a Carrollton ordinance and order closing Air Park Dallas—putting the kibosh, at least for now, on efforts to re-develop the Air Park into a mixed use development.  The case addresses the limits of a municipality’s nuisance abatement power and the crafting of real property related ordinances.  Perhaps most importantly though, it is a cautionary tale about being too creative with one’s development efforts.

In the 1960s, David Noell and his father Milton developed Air Park Dallas in Collin County, Texas—a residential community with its own FAA-approved airport.  Title to the land on which the airport was located was held by Airpark Associates, and it along with a “Zoning Committee” were charged with operating the airport.  The Zoning Committee was comprised of Airpark Associates’ owners and homeowners in the development.  By 2003, Crow-Billingsley Air Park, Ltd. (“CBA”) had acquired title to the land on which the airport was located and assumed Airpark Associates’ obligation to operate the airport.  CBA’s majority owner, Henry Billingsley, had also acquired sufficient lots to take control of Air Park Dallas’s Zoning Committee.  In 2007, Billingsley began taking steps to re-develop a portion of the Air Park property into “Willow Park Village,” a proposed residential, retail, and mixed use development district.

His strategy, at least according to the court’s opinion, was—shall we say—“creative.”  First, Billingsley had the property de-annexed from the City of Hebron and then annexed by the City of Carrollton.  After the annexation and as a result of Billingsley’s lobbing, the City passed an ordinance as an amendment to its nuisance provisions that would govern the Air Park’s operation.  The ordinance imposed several requirements on the “owner of the airport.” Although the City did not define the term “owner,” it intended the ordinance to only apply to CBA—the record fee-simple owner of the airport.  The ordinance further provided that any violation would be considered  a “nuisance” that could result in the City’s Property Standards Board (“CPSB”) ordering the closure of the airport.

This is where things get interesting.  After passing the ordinance, the City sent Billingsley notices that CBA was in violation of the ordinance, including violations only the “owner of the airport” could abate and warned that CBA’s compliance failure could result in closure.  CBA made no attempt to cure the violations.  Noell and other homeowners did, however, take steps to ensure compliance, including filing suit seeking to compel action by the Zoning Committee and the CBA.  The trial court granted a temporary injunction requiring the Zoning Committee to take reasonable steps to bring the airport into compliance, but “[t]hese efforts were also ignored by the City because the Zoning Committee was not the ‘owner of the airport’”—at least according to the City’s interpretation.  The CPSB then voted to order the airport’s closure.  Not surprisingly, after the CPSB issued the closure order, Noell and other homeowners added the City and CPSB as parties to their lawsuit.  At the trial court level, the homeowners were successful in invalidating the closure order and received a jury verdict awarding damages against Billingsley and CBA.

On appeal, the Dallas Court of Appeals affirmed the trial court’s judgment that the order closing the airport was invalid.  The court noted that “[n]on-compliance with an ordinance does not automatically divest an owner of his property rights or relieve a government entity of the constitutional requirements to provide due process.”  The court concluded that the ordinance violated the homeowners’ due process rights because it gave them no right to notice of violations or any right to abate any violations, even though they had easement rights allowing their use of the airport.  The court also ruled that the order was not valid based on the City’s power to abate nuisance because “although it has the power to abate nuisances, it does not have the power to declare or define them, at least to the extent it seeks to utilize a nuisance determination to destroy property rights.”  The court further held that because the ordinance authorized the CPSD to issue the closure order, the ordinance itself also violated the property owners’ due process rights.

In addition, the court held that the ordinance was unconstitutionally vague.  The ordinance failed to define the term owner,  and “the term ‘owner’ means different things in different circumstances.”  In the court’s opinion, the context in which the term “owner” was used here—“owner of the airport”—did not enable one to ascertain its meaning.  It was unclear whether owner was meant to include simply the record title owner or persons with other interests in the property, such as “a person that operates the airport, a person with the right to control the airport, [or] a person that owns physical structures or leaseholds on the airport . . . .”  This conclusion was supported by the fact that in other sections of the City’s own code and in various Texas statutes, the term “owner” was used to refer to persons with these types of other interests in real property.  As a result, the ordinance “fails to give sufficient guidance as to whose conduct it is to regulate, who is legally responsible to comply with its provisions, and who could be criminally liable for its violations,” making it unconstitutionally vague.

This case demonstrates the potential pitfalls in being too creative in one’s development efforts.  To be sure, creative and aggressive developers are essential in bringing high-value projects to the Texas market.  And it is essential that cities work closely with these developers to bring these high-value projects to their communities.  With that being said, this case is a reminder that developers and cities need to consider the interests of all stakeholders and evaluate whether a particular plan might have crossed the line from being “creative” to being unlawful.