Building Permit Caps

You asked us to summarize Maine’s law allowing towns to annually cap the number of building permits they issue.

It appears that some Maine towns were capping the number of building permits they issued each year before the legislature passed a law regarding this practice in 2001. In 2000, the Maine Supreme Court upheld a local ordinance imposing an annual cap on residential building permits, finding that it was a legitimate way for towns to address statutory land use planning goals.

The legislature subsequently acknowledged these ordinances in law, referring to them as “rate of growth ordinances.” In doing so, it required towns to make them consistent with their comprehensive land use plans and periodically to determine if they still needed the caps. It also allowed towns to set different caps for locally designated rural and growth areas.

The Maine Supreme Court upheld Elliot’s 1978 ordinance that annually caps the number of residential building permits it issues (Home Builders Association, Inc., et al. v. Town of Elliot, Me 750 A.2d 566 (2000), Attachment 1). It noted that the ordinance’s stated purpose was to “allow for development consistent with ‘orderly and gradual expansion of community services’ and to encourage residential development in compatible locations.”

The Maine Home Builders Association claimed that the ordinance constituted an illegal moratorium. The law allows towns to impose up to 180-day moratoria when it appeared that their existing schools, libraries, parks, and other facilities could not meet the anticipated demands of new homes, stores, and factories. They can also impose moratoria when their land use plans and regulations do not adequately address the public health and safety concerns posed by proposed new developments (30-A MRSA § 4301.11).

The court rejected the Home Builders argument since Elliot’s ordinance applied only to new homes, not other types of development. The ordinance allowed up to 48 new housing starts a year and still allowed developers to resubmit their permit applications in the subsequent year. The court then concluded that the state’s planning law tacitly authorized this practice as a way to manage growth:

Indeed the ordinance would appear to be the very kind of municipal planning tool that the Legislature had in mind when it set forth its goals for the Planning and Land Use Regulation Act. It signifies that the Town’s attempt to effectively plan for and manage future development, 30-A MRSA § 4312(2)(B) (1996), and satisfies the State’s goals for allowing ‘orderly growth and development,’ 30-A MRSA § 4312(3)(A) (1996). The stated goal of allowing municipalities flexibility in establishing comprehensive plans is intended to encompass growth limitation ordinances of this sort.

After the Supreme Court rendered its decision, the legislature tacitly sanctioned “rate of growth ordinances” that imposed building or development permit caps. It did this by requiring towns every three years to determine if these ordinances are still needed or need to be adjusted in light of current conditions (30-A MRSA § 4301.13-A and 30-A MRSA § 4360.1, Attachment 2). It also allowed towns to impose separate caps for designated rural and growth areas. The legislature also required towns to conform the ordinances to their plans of development (30-A MRSA § 4314.3, Attachment 3).


March 8, 2004		2004-R-0270
BUILDING PERMIT CAPS

By: John Rappa, Principal Analyst