RE: Fair Haven Housing Limited Partnership and McDonald's Corporation, Land Use Permit #1R0639-2-EB, Findings of Fact, Conclusions of Law, and Order, (April 16, 1996) VERMONT ENVIRONMENTAL BOARD 10 V.S.A. Chapter 151 Re: Fair Haven Housing Limited Partnership and McDonald's Corporation Land Use Permit #1R0639-2-EB FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER This decision pertains to an appeal of a permit issued pursuant to 10 V.S.A. Chapter 151 (Act 250) to Fair Haven Housing Limited Partnership for the construction of a twenty-two unit housing development. As is explained below, the Environmental Board concludes that the project, as conditioned by this decision, complies with the criteria on appeal. Accordingly, the Board issues an amended permit. I. PROCEDURAL SUMMARY AND STATEMENT OF JURISDICTION On September 11 and 15, 1995, the District #1 Environmental Commission ("District Commission") issued Land Use Permit #1R0639-2 and #1R0639-2 (Corrected) ("Permit Amendment") and supporting Findings of Fact, Conclusions of Law and Order ("Permit Amendment Decision") to Fair Haven Housing Limited Partnership ("Applicant") and McDonald's Corporation ("McDonald's"). In relevant part, the Permit Amendment authorizes the Applicant to construct a twenty-two unit housing development on a 6.2 acre lot ("Project"). The Permit Amendment also authorizes the September 21, 1990 conveyance of a 1.054 acre lot to McDonald's Corporation. The District Commission's authorization of this conveyance is not an issue in this proceeding. The Project requires an Act 250 permit pursuant to Environmental Board Rule ("EBR") 34 as a substantial change to the project authorized by Land Use Permit #1R0639. The Project constitutes construction for a commercial purpose pursuant to EBR 2(L). On October 9, 1995, the Town of Fair Haven ("Town") filed an appeal with the Board from the Permit Amendment relative to Criteria 6 (Educational Services), 9(L) (Rural Growth Areas), and 10 (Town and Regional Plan). On November 13, 1995, the Applicant requested that the prehearing conference originally scheduled for November 20, 1995 be postponed. The Town consented to the Applicant's request. On November 20, 1995, the Board issued a second Notice of Prehearing Conference. On December 4, 1995, Board Chair John T. Ewing convened a prehearing conference and, on December 6, 1995, Chair Ewing issued a Prehearing Conference Report and Order ("Prehearing Order"). The Prehearing Order is incorporated herein. The parties filed prefiled direct and rebuttal testimony, proposed findings of fact and conclusions of law, evidentiary objections, and cross-examination estimates during January and February, 1996. On February 21, 1996, the Board convened a hearing in Fair Haven, Vermont with the following parties participating: Fair Haven Housing Limited Partnership by Mary Ashcroft, Esq. Town of Fair Haven by William J. Bloomer, Esq. The Board deliberated on February 21 and March 27, 1996. On March 27, 1996, the Board declared the record complete and adjourned the hearing. This matter is now ready for decision. To the extent any proposed findings of fact and conclusions of law are included below, they are granted; otherwise, they have been considered and are denied. See Petition of Village of Hardwick Electric Department, 143 Vt. 437, 445 (1983). II. ISSUES 1. Whether, pursuant to 10 V.S.A. § 6086(a)(6), the Project will cause an unreasonable burden on the ability of the Town of Fair Haven to provide educational services. 2. Whether, pursuant to 10 V.S.A. § 6086(a)(9)(L), the Project makes provision, in accordance with 10 V.S.A. § 6086(a)(9)(A), (G), (H), and (J), for reasonable population densities, reasonable rates of growth, and the use of cluster planning and new community planning designed to economize on the cost of roads, utilities and land usage. 3. Whether, pursuant to 10 V.S.A. § 6086(a)(10), the Project is in conformance with the Town of Fair Haven Town Plan and the Rutland Regional Planning Commission Plan. III. FINDINGS OF FACT 1. The Project consists of the construction of a twenty- two unit housing development on a 6.2 acre lot in the Town of Fair Haven. 2. The Project is a federally subsidized housing project using below-market interest rate financing and rent payment assistance. The Project is serviced by municipal water and sewer services. 3. In part, the Project supersedes the project authorized by Land Use Permit #1R0639. 4. Land Use Permit #1R0639, issued by the District Commission on June 14, 1988, authorized the construction of a 60,000 square-foot shopping center on a 7.99 acre tract of involved land with a restaurant and bank. The permit also required that the conveyance of less than an undivided whole interest in the 7.99 acre tract obtain the District Commission's written approval. 5. Pursuant to Land Use Permit #1R0639, Vermont National Bank constructed a retail bank building on a 0.7 acre lot within the 7.99 acre tract of involved land. Land Use Permit #1R0639-1 authorized the conveyance of the 0.7 acre lot to Vermont National Bank. 6. McDonald's constructed a restaurant on a 1.054 acre lot within the 7.99 acre tract of land. The 1.054 acre lot was conveyed to McDonald's without the District Commission's written approval. The Permit Amendment authorizes the conveyance of the 1.054 acre lot to McDonald's. 7. The Applicant has been unable to develop the remaining 6.2 acre tract of land despite trying to induce various motel franchises, grocery stores, hardware stores, and other commercial ventures to the locate on the 6.2 acre tract. 8. The Applicant originally proposed a twenty-six unit housing development on the 6.2 acre tract. Subsequent to the issuance of Land Use Permit #1R0639-2, the Applicant reduced the number of units to twenty-two. 9. In its final form, the twenty-two unit Project is comprised of two, two-story buildings, with a total of 6 one-bedroom units and 16 two-bedroom units. The Project is located between Airport Road and Washington Street, and access to the Project is by Airport Road. 10. The Town has two schools: Fair Haven Union High School and Fair Haven Grade School. 11. Fair Haven Union High School currently has an enrollment of 496 students and is near or at capacity. The Town has approved the construction of an addition to the high school. 12. Fair Haven Grade School has an enrollment of 470 students in grades Kindergarten through eight, and 19 additional students in pre-Kindergarten programs. 13. Any increase in the Fair Haven Grade School student population will cause overcrowding such that more classroom space is necessary. 14. The Fair Haven Grade School location is not suitable for expansion. The only solution is to construct a new middle school for grades six through eight. 15. A new middle school would need to be self-contained with its own classrooms, gymnasium, technology area, lunch room, and art and music classrooms. 16. The construction of a new middle school to accommodate 200 students requires a 19,000 square foot building at a cost of approximately $1.9 million. 17. The middle school's construction cost could be financed, in part, by the issuance of a bond at 5.4 percent interest for a term of 17 years. The construction and bonding cost resulting therefrom is not in dispute. 18. The Town estimates that, based on Vermont census data from 1990, the statewide average number of school age children in residences with one bedroom is 0.04 children per unit, and 0.23 children per unit in residences with two bedrooms. 19. The Town estimates that the averages based on the 1990 census should be adjusted upward since (i) the number of school children per household has risen between 1990 and 1996; and (ii) the number of school children per household in Fair Haven is 0.53 and is higher than the state average of 0.43. 20. Based on these two upward adjustment factors, the Town projects an upward adjustment factor of 1.23. 21. The Town applied the 1.23 adjustment factor to a New England wide, fiscal impact analysis average of 0.349 students per apartment thereby yielding 0.429 students per bedroom. 22. The Town estimates that since the New England wide average is based on data from before 1985, the figure should be adjusted upward even further to reflect the recent rise in the number of students per household. 23. Based on these adjustments, the Town estimates that the average of 0.53 students per household is a reliable figure which should be used to determine the cost effect of the Project's projected student population. 24. The Town estimates that the bulk of the residents of the Project are not likely to be elderly people, as the bedrooms in the two-bedroom units are on the second floor and can be reached only by stairs. 25. The Town estimates that the Project is not likely to attract a large number of people in the 50-69 age bracket. 26. The Town estimates that the two-bedroom units are capable of housing four people such as two adults in one bedroom and two children in the second bedroom. 27. The Town's projection of 0.53 students per household is based on using all types of housing within Fair Haven, including houses that have three or four bedrooms. 28. Because the 0.53 student per household figure suggests only one student in every other apartment, the Town has increased its projection of the number of students resulting from the Project by one-hundred-and-fifty percent to twenty-two units at 0.53 students per unit, plus an additional fifty percent, for a total of eighteen students. 29. After accounting for state construction and bond payment aid, the Town estimates that the local share of bond payments for the proposed middle school will be $57,469 per year for a total of $976,980 over 17 years. Divided by the number of students living in Fair Haven, 611, the average local cost per student to construct a new middle school is projected at $1,599 over 17 years. 30. The Town estimates that, based on $1,599 per student, the Project's share of the proposed middle school capital costs is $28,782 over 17 years based on 18 students attributable to the Project. 31. The present value of $28,782 at a rate of 5 percent over 17 years is $19,362, or $880 per unit. 32. The cost of the new middle school will result in an incremental increase in the Town's property tax rate. 33. The Town estimates that the cost of the middle school's construction will be incurred all at once, and that impact fees collected over time will reduce the incremental tax rate increase which would otherwise be necessary to pay for the borrowing costs attributable to the capital construction. The Project will be taxed at this reduced rate. 34. The Applicant has calculated the public school operating property tax impact likely to result from the Project. 35. The Applicant first estimates that five public school children are likely to be living in the Project. 36. The Applicant next projected a "high-end" and "low-end" estimate as to the Project's listed value after construction. 37. The Applicant estimates that the Project's high-end listed value after construction will be $1,190,000 based on the two-bedroom units being worth $55,000 per unit, and the one-bedroom units being worth $50,000 per unit. 38. The Applicant estimates that the Project's low-end listed value after construction will be $850,000 based on the two-bedroom units being worth $40,000 per unit, and the one-bedroom units being worth $35,000 per unit. 39. The Applicant estimates that the Town will receive an increase in state aid to education because of the presence of the children from the Project in the Town's public school system. 40. The presence of the children from the Project in the Town's public school system will cost the Town additional funds. The cost is measured as a "tax shift." 41. The Applicant has projected the tax shift effect on the owner of an average-value house in the Town. The Applicant estimates the tax shift based on six different scenarios. The scenarios' variables are the Project's listed value after construction and the number of students which may result from the Project. 42. The Applicant's tax shift projection is calculated by using the high-end and low-end estimates of the Project's projected listed value after construction, that is, $1,190,000 and $850,000, respectively. 43. The Applicant's tax shift projection is also calculated by using three different projections for the number of students which may result from the Project, that is, five, twelve, and eighteen. 44. The two estimates of the Project's projected listed value after construction, and the three estimates of the number of students which may result from the Project, results in a range of possible tax shift projections. 45. The Applicant estimates that, based on the six different scenarios, the effect of the Project on the Town's school operating costs will be minimal because the combination of state aid to education and the property taxes attributable to the Project will cover over 97% of the operational school costs attributable to the Project. 46. The Applicant estimates that state-aid will cover $76,622 of the projected $94,384 school cost increase where the Project's value is $1,190,000 and 18 students result from the Project. 47. The Applicant estimates that state-aid will cover $80,957 of the projected $94,384 school cost increase where the Project's value is $850,000 and 18 students result from the Project. 48. The Applicant estimates that state-aid will cover $46,026 of the projected $62,923 school cost increase where the Project's value is $1,190,000 and 12 students result from the Project. 49. The Applicant estimates that state-aid will cover $50,362 of the projected $62,923 school cost increase where the Project's value is $850,000 and 12 students result from the Project. 50. The Applicant estimates that state-aid will cover $10,323 of the projected $26,218 school cost increase where the Project's value is $1,190,000 and 5 students result from the Project. 51. The Applicant estimates that state-aid will cover $14,660 of the projected $26,218 school cost increase where the Project's value is $850,000 and 5 students result from the Project 52. The Applicant estimates that the Project will pay $6,000 in present value property taxes due to the incremental increase in the tax rate attributable to the middle school. 53. The Applicant then calculated an impact fee based on there being either five or twelve students attributable to the Project, and with the Project's assessed value at $1 million. 54. Based upon the Town's estimate of school construction costs, capacity, and bond terms, the present value of the adjusted cost per unit for five students would be $193, and the present value of the taxes paid toward bond retirement per unit would be $292 whereby the Town would receive a positive financial contribution of $99 per unit. 55. Where the number of students is twelve, the present value of the adjusted cost per unit would be $463 and the present value of the taxes paid toward bond retirement per unit would be $292 whereby the Town would incur an impact of $171 per unit, or a total of $3,756 for the Project. 56. The Project is proposed as two buildings without any construction phases. Regardless of the number of students attributable to the Project, such students could enroll in the Fair Haven school system shortly after the Project's completion. 57. Before the District Commission, the Town proposed that an impact fee be set for between 3.5 and 5.3 middle school students attributable to the Project. 58. An impact fee of $353 per unit would offset the capital costs attributable to 3.5 middle school students. An impact fee of $534 per unit would offset the capital costs attributable to 5.3 middle school students. The Applicant agreed to an impact fee of $422 per unit before the District Commission. 59. The Town of Fair Haven has not enacted an impact fee ordinance pursuant to 24 V.S.A. Chapter 131. 60. The Project lies in a triangle of land bounded by U.S. Route 4, Route 22-A, and Airport Road. 61. Within the triangle there is a McDonald's restaurant; Vermont National Bank building; veterinarian's office; grocery store; apartments; gasoline filling station; mobile homes; and conventional residences. There is no farming use within the triangle. 62. Across Route 22-A from the Project there is a second gasoline filling station; pharmacy; large supermarket; and a restaurant. 63. East of Airport Road, and visible from the Project, are the Fair Haven Union High School, residences, and open land. North of U.S. Route 4 is the Fair Haven Airport and a mobile home park. 64. The resources identified in 10 V.S.A. §§ 6086(a)(1)(A)- (F), (8)(A), and 9(B), (C), (D), (E), and (K) are completely lacking from the 6.2 acre Project tract and the surrounding area. 65. The Town of Fair Haven Town Plan ("Town Plan") was adopted on September 3, 1991 and is currently in effect. 66. The Town Plan includes a land use district map. The area between Washington Street and Airport Road, including the 6.2 acre Project tract, is designated as "Commercial". The Town Plan also designates areas to the east and south as "Residential". 67. Section III, Housing, of the Town Plan reports on the housing demographics in Fair Haven, and then provides, in part, for goals and recommendations as follows: GOALS: 1) to support and provide affordable housing opportunities for our residents. 2) preserve the existing rural nature of Fair Haven while offering all townspeople an attractive and desirable place to live. 3) Support creative residential development with minimal burden on municipal services. RECOMMENDATIONS: * * * 2) Allow residential development which promotes efficient land use i.e. multi-family units. * * * 6) The Town's growth rate should be related to its impact on the cost of municipal and government services. Expansion of water and sewer systems should be financed by the areas that receive the service. 68. Section III, Housing, does not prohibit residential development in the Commercial district. 69. Section IV, Commerce, of the Town Plan provides, in part: The junction of Route 4 and 22-A has created a prime opportunity for commercial development. Commerce should center in the areas of Exit One and Exit Two. * * * GOAL: Promote commercial activity in specific areas of the town while retaining our historic center of trade. RECOMMENDATIONS: 1) Maintain the downtown areas as a focus for commercial and community activities; 2) Encourage historic preservation of appropriate commercial and residential structures in the downtown area; 3) Prevent strip development that infringes into residential and rural/agricultural district. 70. Section IV, Commerce, does not prohibit residential development in the Commercial district. 71. Section VIII, Land Use, refers to the various land use districts, including "Commercial" and "Residential," and provides, in part: SECTION VIII - LAND USE * * * RESIDENTIAL Within the boundaries of the residential area, single and multi-family dwellings are permitted. Professional and business offices of residents of these premises as well as incidental home occupations of the principal resident are conditional uses in this area. No building for commercial or industrial purposes may be erected within the residential area. Commercial and industrial uses within residential areas should be discouraged. COMMERCIAL Retail stores, restaurants, professional and business offices. Buildings suited to the manufacture of small and lightweight products or to the development of research facilities may be erected in the commercial areas providing that such buildings comply with the specifications outlined in the zoning ordinance except that area designated as the Fair Haven Green Historic District. The Town of Fair Haven has five commercial areas as follows: (a) The Downtown area; (b) The 22A area North; (c) the 22A area South; (d) the 4A area West; (e) the 4A area East. (Emphasis added.) 72. Both the Residential and the Commercial portions of Section VIII do not prohibit residential development in the Commercial district. 73. The Town of Fair Haven Zoning Ordinance ("Ordinance") was adopted on September 3, 1991 and is currently in effect. 74. The Ordinance, in Section 240, makes multifamily residences a permitted use in the Commercial district. Single-family residences are also a permitted use in the Commercial district. 75. The Rutland Regional Planning Commission Regional Plan ("Regional Plan") is applicable to the Town and the Project. The Regional Plan was adopted on November 15, 1994. 76. The Regional Plan provides, in part, in Section 3, Housing: In the Rutland Region there are 23,525 households (demand). There are 24,641 year round units to accommodate the total number of households (supply). Even though there are more year round units than the number of households, all the units are not readily available for use. Some of the units are not safe or decent to live in. In reality there are only 18,313 housing units ideal for occupancy. There are approximately 2,576 low income households in the Region that earn less than $8,500. This group poses a need for subsidized rental housing. In the Region there are only 1,118 subsidized rental housing which indicates there is a shortage of nearly 1,458 subsidized housing. A housing model was used to determine future housing need for the Region by the year 2000. The housing need is estimated on the assumption that there is no drastic changeover in the regional economy which would cause a high degree of out-migration. Based on a decreasing trend of household size, the total number of households expected by the year 2000 is 26,944 (low) compared to 28,874 (high). A total of 27,991 (low projection) year round units or 29,996 (high projection) will be needed by the year 2000 to accommodate the growth in number of households. The low housing projections show a need for additional 1,874 year round units for ownership and 1,445 rental units in the Rutland Region by the year 2000. The high projections show a need of an additional 3,184 units for ownership and 2,136 rental units. Approximately one third of the projected rental units have to be targeted to fulfill the need placed by the low income households. 77. Housing Policy 5 of the Regional Plan "encourage[s] the use of public funds when these investments result in developments which are affordable on a permanent basis or at a minimum period of thirty years. 78. The Project is predicated on a low interest federal loan to provide a source of affordable housing with a renter's lease payment capped at 30% of his or her gross income. 79. Housing Policy 6 of the Regional Plan encourages the construction of housing units "in areas most suitable in terms of housing need, environmental impact, employment opportunities, public services and transportation." 80. The Project does not meet the Regional Plan's definition of "substantial regional impact." 81. The Regional Plan describes "Town Centers" as being "areas where central public utilities for water and sewer are available and where there exists a central location or locations for commercial activities, schools, and cultural and civic activities for the town and surrounding towns." 82. A policy of the Regional Plan relative to Town Centers which is to be supported is "[t]he creation and retention of a range of housing types at relatively high densities." IV. CONCLUSIONS OF LAW A. Criterion 6 - Educational Services 10 V.S.A. § 6086(a)(6) requires that, before issuing a permit, the Board must find that the proposed project "[w]ill not cause an unreasonable burden on the ability of a municipality to provide educational services." The burden of proof is on the opponents under this criterion, but the applicant must provide sufficient information for the Board to make affirmative findings. 10 V.S.A. § 6088(b); Re: St. Albans Group and Wal*Mart Stores, Inc., #6F0471-EB, Findings of Fact, Conclusions of Law, and Order (Altered) at 50 (June 27, 1995). A permit may not be denied under Criterion 6, but the Board may impose conditions to alleviate any burden created by the proposed project. 10 V.S.A. § 6087(b); Re: Horizon Development Corporation, #4C0841-EB, Findings of Fact, Conclusions of Law, and Order at 18 (Aug. 21, 1992). If the Applicant provides sufficient evidence to allow the Board to make a positive finding, the Town must prove (i) that the Project will impose a burden on the Town; (ii) that this burden is unreasonable; and (iii) that an impact fee is an appropriate remedy for this burden. Re: Clarence & Norma Hurteau, #6F0369-EB, Findings of Fact, Conclusions of Law, and Order at 9 (April 24, 1989). The burden on the Town can be ascertained by calculating what would be an appropriate impact fee. Id. i. Operating Costs The Applicant estimates that the effect of the Project on the Town's school operating costs will be minimal because the combination of state aid to education and the property taxes attributable to the Project will cover over 97% of the operational school costs attributable to the Project. While the six scenarios rely heavily on state aid, the Board concludes that the Project will not cause an unreasonable burden with regard to operating costs regardless of the number of students attributable to the Project. ii. Capital Costs The Town has two schools: Fair Haven Union High School and Fair Haven Grade School. Overcrowding is acute in the Fair Haven Grade School. The overcrowding only can be alleviated through the construction of a new middle school. The Board concludes that even a total of five new students from the Project will contribute to the need to construct the proposed middle school and, therefore, will exacerbate an existing adverse condition. In Pilgrim Partnership, 153 Vt. 594, 596 (1990); St. Albans Group at 51. The Board concludes that the Project will create an unreasonable burden with regard to the middle school's capital costs. The construction of a new middle school to accommodate 200 students requires a 19,000 square foot building at a cost of approximately $1.9 million. The middle school's construction cost can be financed, in part, by the issuance of a bond at 5.4 percent interest for a term of 17 years. The Town's estimate for the number of students attributable to the Project is eighteen students; the Applicant's is five. Based on these divergent figures, the estimated capital costs attributable to the Project vary from the Town's present value calculation of $880 per unit to the Applicant's contention that the Project will create a positive financial contribution of $99 per unit. The Board concludes that the Project will likely result in more than a total of five students, and that the Project will not have a positive financial contribution to the middle school's capital costs. On the other hand, the Board is not persuaded that an impact fee should be calculated based on eighteen students resulting from the Project. An impact fee must be fair and "spent within a reasonable time and only to remedy the impacts for which they are levied." Hurteau at 12. The cost of the middle school's construction will be incurred all at once. The new middle school will result in an incremental increase in the Town's property tax rate. Impact fees collected over time may reduce the incremental tax rate increase which would otherwise be necessary to pay for the borrowing costs attributable to the middle school's capital construction costs. The Town contends that the Applicant will share in this reduced tax rate such that the Applicant's impact fee, if assessed, cannot be discounted to account for the share of capital costs which the Project will pay in future years in the form of property taxes. The Applicant counters that to do otherwise means that it would pay "twice" for the middle school's capital costs. First, in the form of an impact fee, and second in the form of increased taxes attributable to the incremental tax rate increase associated with the middle school's capital construction costs. However, the Board concludes that the Project will not be paying twice because as impact fees are collected, and the tax rate is reduced to reflect the benefit conferred by the impact fees, the Project will share, along with the rest of the Town, in the incremental decrease of the tax rate attributable to the impact fees. The remaining increase is a burden which all property owners in the Town must share equally. The Town also urges the Board to consider the "lost" revenue attributable to the 6.2 acres being developed for residential and not commercial purposes. The Board considers such evidence to be speculative and unreliable. Therefore, the Board will not consider such evidence in determining what is the Project's impact with regard to school costs. FN1 Rather than accepting the parties estimates as to what the Project's total school population will be, the Board concludes that an impact fee must be based upon an estimate of the Project's middle school population since it is the Project's share of the middle school's capital construction cost which is the source of the unreasonable burden created by the Project. The Applicant agreed to pay, and the District Commission made as a permit condition, an impact fee of $422 per unit. The Board has before it evidence relative to the $422 impact fee. The Board so too finds this evidence to be the most credible evidence of the Project's impact relative to the capital cost of the new middle school. An impact fee of $353 per unit would offset the capital cost attributable to 3.5 middle school students. An impact fee of $534 per unit would offset the capital costs attributable to 5.3 middle school students. An impact fee of $442 per unit will offset the capital costs attributable to roughly four new middle school students. Ultimately, an impact fee permit condition must be reasonable. In re Denio, 158 Vt. 230, 240 (1992); Re: Taft Corners Associates, Inc., #4C0696-11-EB (Remand), Memorandum of Decision at 18 (May 5, 1995); Re: Crushed Rock, Inc. and Pike Industries, #1R0489-4-EB, Findings of Fact, Conclusions of Law, and Order at 25 (Feb. 18, 1994). Based on the evidence before the Board, the $442 impact fee is a credible and reasonable amount as compared to the less credible extremes put forth by the parties in this proceeding. The Board concludes that an impact fee of $422 per unit results in no unreasonable burden being created by the Project. B. Criterion 9(L) - Rural Growth Areas 10 V.S.A. § 6086(a)(9)(L) provides: A permit will be granted for the development or subdivision of rural growth areas when it is demonstrated by the applicant that in addition to all other applicable criteria provision will be made in accordance with subdivision (9)(A) "impact of growth," (G) "private utility service," (H) "costs of scattered development" and (J) "public utility services" of subsection (a) of this section for reasonable population densities, reasonable rates of growth, and the use of cluster planning and new community planning designed to economize on the cost of roads, utilities and land usage." Further, 10 V.S.A. § 6001(16) provides: "Rural growth areas" means lands which are not natural resources referred to in section 6086(a)(1)(A) through (F), section 6086(a)(8)(A) and section 6086(a)(9)(B), (C), (D), (E), and (K) of this title. The burden of proof is on the applicant with respect to Criterion 9(L). 10 V.S.A. § 6088. The Board's leading case with regard to Criterion 9(L) is Re: New England Ventures, #6F0433-EB, Memorandum of Decision (Dec. 6, 1991). In New England Ventures, the Board concluded, in part, that to be a rural growth area, the area must not only be one in which the 10 V.S.A. § 6001(16) resources are absent, but also must be predominantly rural in character, and that the word "rural" describes areas which are not densely settled and which may consist of small villages surrounded by mostly open, farmed, or undeveloped country. The Project lies in the U.S. Route 4, Route 22-A, and Airport Road triangle. The area surrounding the Project is densely settled along these roadways. The uses existing on these roadways dominate the area. Also visible from the Project is the Fair Haven Union High School and residences. Even if the area where the Project is to be built were to remain an open field, the character of the area would not be altered with respect to Criterion 9(L). In sum, the Project is located in a highly developed, commercial and residential area, and is literally surrounded by commercial and residential uses. Further, the resources identified in 10 V.S.A. §§ 6086(a)(1)(A)-(F), (8)(A), and 9(B), (C), (D), (E), and (K) are completely lacking from the area. Because the evidence is overwhelming that the area is not predominantly rural in character, the Board shall not address the remaining elements of Criterion 9(L) as they pertain to reasonable population densities, reasonable rates of growth, and the use of cluster planning and new community planning. Based on the preceding findings of fact, the Board concludes that the Project is not located in a rural growth area and, therefore, complies with Criterion 9(L). C. Criterion 10 - Town and Regional Plan Prior to issuing a permit, the Board must find that a proposed project "[i]s in conformance with any duly adopted local or regional plan or capital program under chapter 117 of Title 24." 10 V.S.A. § 6086(a)(10). The burden of proof is on the applicant with respect to Criterion 10. 10 V.S.A. § 6088. The Board independently reviews the applicable provisions of the town and regional plans and bases its conclusions under Criterion 10 on the contents of the plans. Parties and witnesses, however, may highlight for the benefit of the Board those provisions which they believe are relevant to the Board's inquiry. Re: Robert B. & Deborah J. McShinsky, #3W0530-EB, Findings of Fact, Conclusions of Law, and Order at 11 (April 21, 1988). i. Town Plan The Board's Town Plan analysis under Criterion 10 is conducted subject to the Vermont Supreme Court's decision In re Frank A. Molgano, Jr., 5 Vt. Law Week 314 (Nov. 10, 1994). The Molgano decision concerns the relationship of municipal plans and zoning by-laws under Criterion 10. Under Molgano, zoning by-laws are germane to interpreting ambiguous provisions of a town plan. Therefore, the Board first determines whether the town plan provisions at issue are specific or ambiguous policies or prohibitions. If the town plan provisions are specific, they are applied to the proposed project without any reference to the zoning by-laws. However, if the provisions are ambiguous, the Board next examines the relevant zoning by-laws for provisions which resolve the ambiguity. This does not mean a general review of a project for its compliance with the zoning ordinance, but rather an examination to see if there are provisions in the zoning ordinance which address the same subject matter at issue under the town plan. Thus, even after Molgano, the issue remains whether a project is in conformance with the town plan, with the zoning by-law available only as a tool for resolving ambiguities in the plan. Re: Manchester Commons Associates, #8B0500-EB, Findings of Fact, Conclusions of Law, and Order at 29 (Sept. 29, 1995). The pertinent Town Plan provisions are Section III, Housing, Section IV, Commerce, and Section VIII, Land Use. The Board will consider whether these provisions are specific or ambiguous with regard to whether the Town Plan prohibits new residential development such as the Project in the Commercial district. The goals of Section III, Housing, can be summarized as calling for affordable housing; housing which preserves Fair Haven's existing rural character; and housing which imposes only a minimal burden on municipal services. Likewise, the relevant Section III recommendations pertain to efficient land use by means of multi-family units, and development which does not cause a burden on municipal services. The Project is an affordable housing project, will be located in a highly developed, commercial and residential area, and will be served by municipal water and sewer services. The Applicant is also obligated to pay an impact fee for educational services. Clearly, the Project is consistent with the goals and recommendations contained in Section III. Moreover, Section III does not bar new residential construction in areas other than the designated residential areas. In the preamble to the statement of goals and recommendations, Section IV, Commerce, identifies the junction of Route 4 and 22-A as a prime opportunity for commercial development, and states that commerce should center in the Project's proposed location. The Town Plan land use map specifically designates areas of the Town as Commercial or Residential districts. This could suggest that the Commercial district is reserved for non-residential commercial development. However, the preceding is not a specific prohibition which bars residential development in the Commercial district, nor is any such prohibition contained in Section IV's statement of goals or recommendations. Section IV's goal is to promote commercial activity in specific areas of the town while retaining the historic center of trade. No mention is made of whether residential construction hinders (or promotes) the attainment of this goal, nor is there any bar against residential development in the Commercial district. With regard to the relevant recommendations, Section IV calls for maintaining the downtown areas as a focus for commercial and community activities; encouraging historic preservation of appropriate commercial and residential structures in the downtown area; and preventing strip development that infringes into residential and rural/agricultural districts. Thus, Section IV functions as a bar against commercial development in the Residential district, but not as a bar against residential development in the Commercial district. Section VIII, Land Use, contains descriptions for each of the land use districts in Fair Haven, including Residential and Commercial. Section VIII's Residential description specifically prohibits new construction for commercial or industrial purposes within the "residential area." Although adopted long before the Molgano decision, this prohibition is specific, clear, and unambiguous, and it functions as a bar against commercial development in the Residential district. In sharp contrast to the clarity of the Residential description is the Commercial description. The Commercial description lacks any clear or unambiguous statement with regard to what type of new construction is permitted (or prohibited) in the Commercial district. While "[r]etail stores, restaurants, professional and business offices" are listed, it is not clear whether this is an exclusive list of either new construction or allowed uses in the Commercial district. Based on the preceding, the Board concludes that the Town Plan is ambiguous as to whether the Project conforms to the Town Plan, specifically, whether the Town Plan prohibits new residential construction such as the Project in the Commercial district. Therefore, the Board will examine the Ordinance to determine whether it contains any provisions which resolve the ambiguity. Under Molgano, zoning bylaws "are the specific implementation of the [town] plan," and the zoning bylaws "must conform to the [town] plan that guides their creation." Molgano, at 315. The Ordinance and the Town Plan were both adopted on September 3, 1991. The Ordinance specifically makes multifamily residences a permitted use in the Commercial district. In this respect, the Ordinance resolves the Town Plan's ambiguous treatment of new residential construction such as the Project in the Commercial district. Clearly, such construction is permitted under the Town Plan based on the Ordinance's specific implementation of the Town Plan. The Board concludes that the Town Plan does not prohibit new residential construction such as the Project within the Commercial district and, therefore, the Project is in conformance with the Town Plan. ii. Regional Plan The Vermont Supreme Court, in In re Green Peak Estates, 154 Vt. 363, 368 (1990), upheld the Board's denial of a permit under Criterion 10 regional plan where the regional plan provision at issue specifically prohibited the proposed development. The Regional Plan specifically states that there is a shortage of subsidized rental housing. The Project will provide 22 subsidized units and will help reduce the Regional Plan's estimated current shortfall of 1,458 subsidized housing units. Moreover, the Regional Plan predicts a need for 1,455 additional rental units, and that one third of those units need to be targeted to fulfill the need placed by the low income households. The Project's location is best described under the Regional Plan's description of a town center. The Project is serviced by municipal water and sewer, is in a central location for commercial activities and schools, and is a multi-unit high density facility. The Board concludes that the Regional Plan specifically endorses the Project and contains no prohibitions which are applicable to the Project. The Board concludes that the Project conforms to the Regional Plan. V. ORDER 1. Land Use Permit #1R0639-2-EB is hereby issued. 2. Jurisdiction is hereby returned to the District #1 Environmental Commission Dated at Montpelier, Vermont, this 16th day of April, 1996. ENVIRONMENTAL BOARD s\s John T. Ewing John T. Ewing, Chair Arthur Gibb Samuel Lloyd Rebecca Nawrath Dr. Robert Page -------------------------------------------------------------------------- DISSENTING William Martinez and Steve Wright: We dissent from the majority's conclusion that the Project conforms with the Town Plan. The list of uses in the Commercial description in Section VIII is an exclusive list of the allowed uses in the Commercial district. Since multi-family residential housing is not listed, such a use is prohibited from the Commercial district. Therefore, the Project is not in conformance with the Town Plan and we would order that the Project be denied an Act 250 permit. FN1 Even if the Board were to consider the merits of the Town's argument, the Board has found that the Applicant has been unable to develop the remaining 6.2 acre tract of land despite trying to induce various motel franchises, grocery stores, hardware stores, and other commercial ventures to the 6.2 acre tract of land. c:\decision\1r0639.dec (dp1)