Laurel Racing Association, L.P. v. Anne Arundel County

Circuit Court for Anne Arundel County REPORTED
Case No. C-02-CV-15-000104
IN THE COURT OF SPECIAL APPEALS

OF MARYLAND

No. 2413

September Term, 2015

_________________________

LAUREL RACING ASSOCIATION, L.P.

v.

ANNE ARUNDEL COUNTY, MARYLAND

_________________________

Meredith,
Nazarian,
Moylan, Charles E., Jr.
(Senior Judge, Specially Assigned),

JJ.

_________________________

Opinion by Nazarian, J.

_________________________

Filed: July 25, 2017

* Judge Andrea M. Leahy did not participate, pursuant to Md. Rule 8-605.1, in the Court’s
decision to report this opinion.
 Back in the last decade, Laurel Racing Association (“Laurel Racing”) began

planning to redevelop the Laurel Park horse racing complex. As part of that process, Laurel

Racing reserved from Anne Arundel County (the “County”) the additional water and sewer

capacity its new facilities would require. After reviewing the proposed plans, the County’s

Office of Planning and Zoning (“OPZ”) approved, in 2008, the allocation Laurel Racing

requested, and Laurel Racing never appealed that decision.

Reserving water and sewer capacity isn’t free, and when a substantial fee came due

in 2013, Laurel Racing challenged the Department of Public Works’s (“DPW”) method of

calculating the capacity the project needed, arguing that the long-ago-approved figure had

overstated its incremental water and sewer needs by failing to credit the racetrack’s current

usage. The parties exchanged data and studies, and DPW sent Laurel Racing a letter on

February 25, 2014 offering to reduce the allocation. The question for us is whether this

letter was an appealable agency action. It wasn’t.

I. BACKGROUND

In 2006, Laurel Racing submitted to OPZ a Development Application that proposed

a wholesale renovation of the racing complex. The application included a sketch plan that

included demolition of the existing grandstand and renovations to the site that would reduce

the seating capacity for horse racing (which had become less popular) in favor of

commercial and retail space and space for the long-awaited arrival of “video lottery

terminals.” The sketch plan also included a required water and sewer capacity calculation

worksheet that concluded that the project would require 1,501 equivalent dwelling units

(“EDU”) of new water and sewer capacity. The EDU worksheet outlined future uses only
because “[a]t the time of submission, the project engineer was unaware of any County

policy or procedure where a developer could seek to offset proposed EDU usage with

existing usage.”

The Anne Arundel County Code (the “AACC” or the “Code”) provides that “[f]or

a property that is required to pass the test for adequate public water supply facilities or

adequate public sewerage facilities, [DPW] shall make an allocation on the date of approval

by [OPZ] for adequacy of public water supply facilities as provided in § 17-5-202 of this

Code.” AACC §13-5-402(b) (2005). An allocation, a “reservation, for use by a particular

property, of available capacity,” AACC § 13-5-401, is required if, “due to development

activity on the property, the property is required under Article 17 of th[e Code] to pass the

test for adequate public water supply facilities or adequate public sewerage facilities; or

the property is otherwise connecting to the County water or wastewater system,” AACC

§ 13-5-402(a). DPW does not analyze on its own whether a subdivision proposal adds to

or displaces existing water and sewer facilities—it relies on the developer’s engineer to

determine the project’s impact. In two letters dated November 21, 2008, OPZ approved

Laurel Racing’s sketch plan and allocated 1,501 EDUs of water and sewer for the project.

Laurel Racing did not appeal this decision.

Water and sewer capacity are finite resources, and the Code imposes charges on

developers to reserve EDUs for future development. “For property receiving an allocation

in conjunction with approval by [OPZ] for adequacy of public water supply facilities . . . ,

the owner of the property shall pay, for each equivalent dwelling unit: (1) an allocation

reservation charge . . . as computed by [DPW] . . . ; and (2) [a] capital facility connection

2
charge . . . .” AACC § 13-5-403(a). Allocation reservation charges were due immediately,

and Laurel Racing paid them. The capital facility connection charge (“CFCC”) and

deferral fees did not come due until the fifth anniversary of the allocation, and on

November 1, 2013, DPW sent Laurel Racing Allocation Billing Statements due on

November 30—one for water EDUs totaling $19,974,600 and one for sewer EDUs totaling

$4,328,640.

Sometime in 2013, though, Laurel Racing had learned that the County had, as the

County’s Board of Appeals later put it in a Memorandum Opinion we discuss below, a

“policy or procedure in effect at the time of the 2006 submission to provide EDU credits

for existing facilities. That is, if a use had existing EDUs, the County requires that a

developer reserve only the number of additional EDUs that would be required to serve the

redevelopment.” (Emphasis in original.) The then-DPW Director explained to the Board

that these credits were meant to ensure “that an owner doesn’t pay the [facility connection

charge] for EDUs that they’ve paid to the County in the past,” and that DPW was

responsible for calculating the new EDUs required. Accordingly, Laurel Racing

“contacted the County about the concern that [it] w[as] being—flows were being double

counted, and they were not being adequately considered for what existing flows [it] already

had in the system, what existing capacity [it] had in the system.”

On December 12, 2013, Laurel Racing’s representatives met with DPW to discuss

the possible double-counting. Rather than requiring a new EDU worksheet, the County

asked “if [Laurel Racing’s] consultant could come up with a way to analytically compare

the existing use, dis-aggregate . . . what’s in the grandstand [a mix of retail and commercial

3
space], to an existing use number so that [DPW could] compare it to what’s proposed.”

DPW followed up on the meeting in a letter dated December 23, 2013:

As discussed during the meeting, [DPW] has agreed to
give your engineers through January 31, 2014, to provide
information regarding existing uses that may have been part of
the EDU calculation previously provided. [DPW] will
thereafter review the information and make a revised EDU
calculation, if appropriate.

If the number of EDUs is revised, the original allocation
date will still apply and all associated charges will be due in
accordance [with] the County Code based on the original
allocation date of November 21, 2008. Therefore, the [CFCCs]
and the capital facility deferral fee for the adjusted number of
EDUs will be due no later than April 30, 2014, or the allocation
will lapse. . . .

The County will stay the late interest on the outstanding
[CFCCs] until February 28, 2014. This time was determined to
be roughly 30 days for the new information to be provided to
DPW and 30 days for review and final agreement.

DPW explained that “[a]s th[e double counting issue] came to [its] attention after 2008, . . .

[DPW offered credits because it] was trying to reach a reasonable settlement of what the

existing capacity in the system associated with Laurel [Racing] was.”

On January 29, 2014, Laurel Racing’s engineer sent a letter to DPW detailing its

calculations: “the total existing flow equals 306,100 gallons, or 1,224 EDU’s” and the total

proposed flow in accordance with this calculation is 261,030 gallons per day or 1,044

EDU’s.” As such, the engineer concluded that Laurel Racing’s water flow would not

increase as a result of the redevelopment:

[W]e suggest that the Laurel [Racing] proposed plan, in fact,
will not generate an increase in flow, and therefore not require
additional EDU’s to be allocated and thereafter purchased.

4
 Had the existing uses been accounted for in the original
computation from 2007, we believe this would have come to
light, thereby avoiding the need to purchase additional
capacity, paying the allocation reservation charges, and saving
the owner significant expense.

In the engineer’s view, the numbers “basically show[ed] that there already is more capacity

vested than what [Laurel Racing] need[s].”

DPW and OPZ staff reviewed the analysis and found “a lot of inconsistencies with

how the comparison was done.” According to DPW staff, Laurel Racing’s EDU number

resulted “[f]rom a new proposed scheme development configuration that [it] couldn’t

corroborate.” So DPW responded, in a letter from its Director dated February 25, 2014,

that the EDU calculations in Laurel Racing’s original application and the 2008 allocation

of 1,501 EDUs did not account for Laurel Racing’s current water and sewer usage. The

Director acknowledged receipt of Laurel Racing’s engineer’s January 29, 2014 letter, but

expressed concern with the calculation of current usage, and concluded that the

redevelopment would increase capacity needs by 470 EDUs for water and 954 EDUs for

sewer. 1 The letter noted that although Laurel Racing may have modified the project, “the

recalculated EDUs discussed in this letter can only be based on the proposal that has been

approved by [OPZ]. If the project is to be revised again, the proposal would be considered

1
In calculating these numbers, the Director used “the proposed EDUs [of] 1,501
because . . . that’s what matched the sketched plan submittal that [DPW] had received at
the time” and the highest actual peaked usage numbers because “it’s more representative
that [Laurel Racing] could have a peak use time . . . . It is high, but I thought it was
representative of their usage in the system.” Between 2009 and 2013, the highest water
systems reading was 1,031 EDUs and the highest sewer system reading was 547 EDU. The
incremental EDUs needed for the new project should equal the proposed 1,501 EDUs
minus the highest actual usage.
5
by [OPZ] during the course of the normal review process.” The Director concluded that

OPZ would issue a revised allocation letter and that the revised capital facility connection

and deferral fees would need to be paid by no later than May 5, 2014 to prevent the

allocation from lapsing.

Laurel Racing received a revised Allocation Billing Statement on March 5, 2014

that reduced the total fees to $12,674,800. The new statement said that interest would be

added to payments received after April 20, 2014, and that if the bill remained unpaid after

May 5, 2014, the new allocation of 954 units of sewer and 470 units of water would lapse.

Around this same time, Laurel Racing filed a Notice of Appeal with the Anne Arundel

County Board of Appeals (the “Board”) challenging DPW’s calculation of the EDUs

required for the project and the resulting charges and fees.

Then, in response to OPZ’s concern that its engineers had submitted the proposed

EDU worksheets with its sketch plan “and did not consider any flows/capacity of the

existing development at the site,” Laurel Racing sent a letter to OPZ on April 17, 2014 that

contained new EDU computations by different engineers. The new calculations included

both existing and proposed water and sewer usage, and determined that “the total existing

flow equated to . . . 1,225 EDU’s” and “the total proposed flow equates to . . . 1,044

EDU’s.” (Emphasis omitted.) Laurel Racing’s engineers also asked OPZ and DPW to “re-

evaluate the EDU worksheets for this project and issue a new revised corrected allocation

letter” because, they argued, “[b]ased on [their] analysis . . . the proposed Laurel Park

project will not generate an increase in flow, and therefore should not have required

additional EDU’s to be allocated and subsequently purchased/reserved. Had the existing

6
uses and flows been accounted for in the original Sketch Plan and Allocation approvals in

2007, the track owners would have avoided the need to purchase additional capacity and

pay for the reservation charges, saving the track a considerable unnecessary expense.”

The County responded by letter on May 2. The letter acknowledged that OPZ “ha[d]

reviewed the revised EDU worksheet, but a revised allocation based on that c[ould] not be

issued without a formal Final Plan being resubmitted.” It did, however, review archived

records of Laurel Racing’s actual usage back to 2001 that showed peak daily usage of 1,162

EDUs for water and 674 EDUs for sewer. As such, the County “offer[ed] to revise the

allocation set forth in the February 25, 2014 letter to 339 EDU’s for water (1501 minus

1162) and 827 EDU’s for sewer (1501 minus 674) based on the archived billing records.”

The letter cautioned as well that “[t]his letter does not constitute a final, appealable

decision; it is an offer to revise the EDU calculations.”

The County then moved in July 2014 to dismiss Laurel Racing’s appeal on the

grounds that the appeal of the February 25 letter was untimely and that the Board lacked

jurisdiction. After “meet[ing] in closed session to consult with counsel to obtain legal

advice,” the Board denied the motion, concluding that the February 25 letter constituted a

modification of a prior approval. In August 2014, the County submitted a Motion to

Reconsider its Motion to Dismiss and the Board denied that motion too.

After seven evenings of hearings, the Board issued its decision in a Memorandum

of Opinion on December 15, 2014. The Board found that the February 25 “letter

represent[ed] an approval (albeit not in the full amount) of [Laurel Racing]’s request for

EDU credits and contain[ed] an ‘operative event’ from which a proper appeal may be noted

7
to this Board,” (citing United Parcel Serv., Inc. v. People’s Counsel for Balt. Cty., Md.,

336 Md. 569, 583–84 (1994)), and thus that the appeal was timely. On the merits, the

Board granted Laurel Racing (1) a credit for 1,501 EDUs improperly reserved, (2) a credit

of $2,592,839.15 for improperly assessed Allocation Reservation Charges to be applied

towards future usage and facility charges at the Laurel Park location, (3) a waiver of all

pending Allocation Reservation Charges, (4) a credit for existing capacity of 1,225 EDUs,

and (5) a determination that the Laurel Park redevelopment will require only 1,044 EDUs.

The County sought judicial review in the circuit court and Laurel Racing cross-

appealed. The parties submitted memoranda and the court held a hearing on May 11, 2015.

In an Order and Memorandum Opinion entered on January 8, 2016, the circuit court

reversed and remanded to the Board with directions to grant the County’s Motion to

Dismiss. The circuit court addressed sua sponte the need for a final administrative order

before a party may resort to judicial review, and determined that the February 25 letter was

not a final administrative decision:

[The February 25 letter wa]s at most a statement of intention
that the County will modify and recalculate the EDUs, but only
after pending actions such as, a “Final Plan” was submitted,
payments were made by Laurel Racing and an agreement was
executed between the parties. The Director of DPW in his
February 25, 2014, letter did not grant, deny, decide or approve
anything. The required plan had not yet been submitted. The
Director’s letter simply explained the County’s intention to
review and recalculate EDUs per the request of Laurel Racing.

Laurel Racing filed a timely notice of appeal.

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 II. DISCUSSION

Laurel Racing raises the single issue of whether DPW’s February 25, 2014 letter

constituted an appealable decision. 2 It argues that the February 25 letter was a final

approval and modification that left nothing further for OPZ to do beyond a “merely

ministerial” task, and that even if the February 25 letter was not final, it was still appealable

as an “interlocutory administrative decision ha[ving] immediate legal consequences

causing irreparable harm.” (quoting Dorsey v. Bethel A.M.E. Church, 375 Md. 59, 75

(2003)). Ultimately, though, there is no getting around the fact that the February 25 letter

was not a final administrative decision.

When reviewing appeals from circuit court orders reviewing administrative agency

actions, we review the decision of the agency, not the circuit court:

When we review the decision of an administrative
agency or tribunal, “we [assume] the same posture as the
circuit court . . . and limit our review to the agency’s decision.”
Anderson v. Gen. Cas. Ins. Co., 402 Md. 236, 244 [] (2007)
(internal citation omitted). The circuit court’s decision acts as
a lens for review of the agency’s decision, or in other words,
“we look not at the circuit court decision but through it.”
Emps. Ret. Sys. of Balt. Cnty. v. Brown, 186 Md. App. 293, 310
[] (2009) [] (emphasis in original) (internal citations omitted).

2
Laurel Racing phrased its sole Question Presented as follows:

Did the Circuit Court err in holding that a County
decision revising Laurel Racing’s water and sewer allotment,
and assessing almost $12 million in fees on Laurel Racing to
be paid on a date certain, was not final or otherwise
appealable—even though the County attempted to collect the
fees by selling Laurel Racing’s property at a tax sale, and the
Circuit Court itself enjoined that sale so that Laurel Racing
could appeal the decision?
9
 We “review the agency’s decision in the light most
favorable to the agency” because it is “prima facie correct” and
entitled to a “presumption of validity.” Anderson v. Dep’t of
Pub. Safety & Corr. Servs., 330 Md. 187, 213 [] (1993)
(internal citation omitted).

The overarching goal of judicial review of agency
decisions is to determine whether the agency’s decision was
made “in accordance with the law or whether it is arbitrary,
illegal, and capricious.” Long Green Valley Ass’n v. Prigel
Family Creamery, 206 Md. App. 264, 274 [] (2012) (internal
citation omitted). With regard to the agency’s factual findings,
we do not disturb the agency’s decision if those findings are
supported by substantial evidence. See id. (internal citations
omitted). Substantial evidence is defined as “such relevant
evidence as a reasonable mind might accept as adequate to
support a conclusion.” Catonsville Nursing Home, Inc. v.
Loveman, 349 Md. 560, 569 [] (1998) (internal citations
omitted) (internal quotation marks omitted). We are not
bound, however, to affirm those agency decisions based upon
errors of law and may reverse administrative decisions
containing such errors. Id.

Sugarloaf Citizens Ass’n v. Frederick Cty. Bd. of Appeals, 227 Md. App. 536, 546 (2016).

At the outset, we need to identify the final agency action before us. Holiday Spas

v. Montgomery Cty. Human Relations Comm’n, 315 Md. 390, 395–96 (1989) (“As a

general rule, an action for judicial review of an administrative order will lie only if the

administrative order is final.” (citing Md. Comm’n on Human Relations v. BG&E Co., 296

Md. 46 (1983))); see also Dorsey, 375 Md. at 74–75 (citing cases regarding judicial review

of a final administrative decision). “Generally, to be final, an administrative order must

also ‘leave nothing further for the agency to do.’” Holiday Spas, 315 Md. at 396 (quoting

BG&E Co., 296 Md. at 56). The Board found that the February 25 letter from DPW to

Laurel Racing qualified as an appealable decision of approval and that the resulting appeal

10
was timely. The circuit court disagreed, and Laurel Racing argues first that the court erred

by failing to recognize DPW’s February 25 letter as an “approval” and “modification” of

OPZ’s original allocation.

With all of the focus on the more recent administrative process, it can be easy to

lose sight of the project’s history. The starting point isn’t the current dispute, but rather is

the existing allocation, which was approved when OPZ approved Laurel Racing’s sketch

plan in 2008. Importantly, OPZ, not DPW, is the deciding agency: “[f]or a property that

is required to pass the test for adequate public water supply facilities or adequate public

sewerage facilities, [DPW] shall make an allocation on the date of approval by [OPZ] for

adequacy of public facilities as provided in § 17-5-202 of this Code.” AACC § 13-5-402(b)

(emphasis added). Although the DPW Director determines a property’s EDU calculation,

that calculation is not official until OPZ sends a letter approving the property’s “initial

application for approval of a sketch plan or preliminary plan, or during review of the

application for final plan or site development plan approval.” AACC §17-5-202(a); see

also AACC § 13-5-804(a) (“[W]henever a charge is set based on [EDUs], the property

owner shall provide all information required by the Director [of DPW] and the Director

shall reasonably determine, based on that information and any other information that the

Director deems appropriate, the number of [EDUs] for a property based on peak daily

usage.”); § 17-5-202(b) (“Approval for adequacy of public facilities . . . occurs on the date

of a letter from [OPZ] approving a sketch plan.”). Put another way, the ultimate decision

is embodied in OPZ’s approval of the sketch plan.

11
 Laurel Racing did not appeal any element of the approved sketch plan. The status

quo, then, is that five years after approval, November 1, 2013, Laurel Racing owed the

balance of the deferred allocation fee, i.e., $24,303,240, if it wished to maintain the

allocation. Since that allocation became final long ago, Laurel Racing needs to effect a

post hoc modification of that long-since-final decision in order to reduce the amount it

owes or otherwise to maintain the allocation without making the full payment. The

question for us is whether anything that has happened to date modified the status quo.

And to this point, there is no superseding decision from DPW. Laurel Racing argues

first, though, that the February 25 letter constituted an “approval” and “modification” of

OPZ’s original allocation. That letter stated the number of EDUs that “the project should

have been allocated,” that “[a]t this point, however, the recalculated EDUs discussed in

this letter can only be based on the proposal that has been approved by [OPZ],” and that

“[OPZ] will issue a revised allocation letter setting forth the change in EDU calculations

as described in this letter.” (Emphasis added.) But putting aside the fact that the letter

merely states an intention to act, only OPZ, the body that approved the development in the

first instance, can modify its earlier decision. DPW’s revised allocation numbers might

well ripen into the new allocation once OPZ approves a new final sketch plan. But that

hasn’t happened, and DPW’s calculation is not embodied in an appealable agency decision

until OPZ approves the final sketch plan.

The process here is distinguishable from a confirmatory statement, like the one in

United Parcel Service, Inc., 336 Md. at 584, or a reconsideration, like that in National

Institutes of Health Federal Credit Union v. Hawk, 47 Md. App. 189, 196 (1980). In United

12
Parcel Service, Inc., the Court of Appeals held that a confirmatory statement regarding a

license or permit that was issued in the past was not an appealable event, and that the

appealable event is “the issuance, renewal, revocation, etc. of the license or permit.” 336

Md. at 584. Similarly, in Hawk, we held that “an administrative decision concerning

reconsideration of zoning is not an appealable final order.” 47 Md. App. at 196. In

Montgomery County v. Longo, in which a decision “based on new factual information

presented and submission of a revised building permit application” was “not merely a

reaffirmation of the prior issuance of a building permit,” and thus was appealable. 187 Md.

App. 25, 54–55 (2009). But again, there’s a step missing here: the actual decision by OPZ

to modify Laurel Racing’s sketch plan with a new EDU allocation.

And that step awaits submission by Laurel Racing of a revised sketch plan. See

AACC § 17-3-303 (stating the need for an applicant to submit a new application for sketch

plan approval after receiving a report from OPZ providing the “findings, comments, and

recommendations of the County through its reviewing agencies”). According to the Board,

a final sketch plan had not been approved as of December 2014, and Laurel Racing’s most

recent submission was made in May 2014. The February 25 letter from DPW is not an

administrative action that “leave[s] nothing further for the agency to do.” Dorsey, 375 Md.

at 75 (quoting BG&E Co., 296 Md. at 56). By its own terms, the letter details additional

steps required by the AACC, and we agree with the circuit court’s conclusion that there

was no appealable agency action. 3

3
For that reason, we need not consider the timeliness of Laurel Racing’s appeal, which is
governed by Rule 2-101(a) in Appendix B of the Code (“All appeals from orders or
13
 Laurel Racing argues next that even if we determine that the February 25 letter was

not final, as we have, it was appealable under an exception to the finality requirement in

which “parties need not ‘await a final administrative decision before resorting to the courts’

if the ‘interlocutory administrative decision has immediate legal consequences causing

irreparable harm.”’ (quoting Dorsey, 375 Md. at 75). We see no such irreparable harm

here.

It’s true that an order may be deemed final if it inflicts “sufficient irreparable injury”

by affecting a party’s business in ways that could not be remedied at a later date. Holiday

Spas, 315 Md. at 399. Laurel Racing conflates its efforts to reduce its EDU obligation with

circumstances that led the Laurel Park property to be advertised for a tax sale, 4 but even if

money owed in error qualified as irreparable harm, these developments are only indirectly

related. The tax sale proceeding flowed from Laurel Racing’s failure to pay the deferred

decisions from which an appeal is authorized by law shall be taken within 30 days of the
date of such order or decision, except where a different period is proscribed by law or rule,
by the filing of a notice of appeal with the County Board of Appeals.”). Whether or not
the appeal was timely, the Board should have granted the County’s Motion to Dismiss
because the letter appealed here was not a final appealable decision.
4
See AACC § 1-9-101 (“When an owner of property is responsible to the County for the
payment of money, the amount shall be levied, collected, and enforced in the same manner
as County real property taxes and have the same priority rights, bear the same interest and
penalties, constitute a lien on the real property so assessed, and be treated the same as
County real property taxes.”). The County initiated the process of selling the property at a
tax sale while the Board was conducting hearings. Laurel Racing brought an emergency
action in the circuit court for a temporary restraining order (“TRO”) to stop the tax sale.
At the TRO hearing, the circuit court dismissed all defendants except the County, granted
Laurel Racing’s TRO, and stayed the tax sale because it found that “immediate and
irrepairable [sic] harm will occur.” This immediate and irreparable harm, however, is
separate from the calculation of EDUs at issue in this appeal.
14
allocation fees due on anniversary of the allocation. The amount due had been determined

in 2008 and was never appealed, and Laurel Racing didn’t attempt to reduce the EDU

allocation until after the fees came due. Had Laurel Racing paid the amount due, it would

have received a credit for any amount it paid above any revised amount. And as we have

already determined, Laurel Racing has not established, in the administrative arena or here,

any right to relief from the original allocation fees.

JUDGMENT OF THE CIRCUIT COURT
FOR ANNE ARUNDEL COUNTY
AFFIRMED. APPELLANT TO PAY
COSTS.

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