USA – Response to Case 2012
Edward J. Sullivan*
The three questions posed in the Case may assume there is a national law to deal with the responses to those questions. The legal system in the United States is of a federal variety, with the national and state governments each allocated certain powers. By tradition, planning powers and urban infrastructure are matters for state and local governments. Although the federal government does have a role in these matters with regard to certain issues (the District of Columbia, territories, and federal facilities), the focus of this response will be state and local governments. Even given that focus, there is a variety of ways by which the three questions raised in the case are addressed. Moreover for variety sake, the responses to the questions will select from both everyday applications of the law in this area and from extraordinary applications, such as the long-term lease of public facilities in order to generate cash for municipal operating expenses.
The three questions, and an American response to each, are as follows:
1. Is there legislation concerning the initiative and/or the drafting of zoning plans and other equivalent documents by private entities? What is the procedure in that legislation and does it guarantee municipal control of planning powers? How is public participation organized in this procedure?
a. Process for Drafting of Plans and Regulatory Documents by Private Parties – Most American local governments are small entities and may not be able to afford full-time planners or lawyers. In such cases, these entities seek to have this work done by private firms that specialize in these fields, usually through a public contracting process. These public contracting laws differ from state to state. For purposes of discussion, the laws of Oregon are fairly typical. See Oregon Revised Statutes (“ORS”) Chapters 279, 279A, 279B, and 279C at www.leg.state.or.us/ors/279.html,www.leg.state.or.us/ors/279a.html, www.leg.state.or.us/ors/279b.html, andwww.leg.state.or.us/ors/279c.html respectively. Because the public contracting process aims to get the lowest price for the same product, that process is less effective when the product is professional services, such as the drafting of plans and regulatory provisions. Architectural, engineering, land surveying and ‘related services’1 are exempted from the normal requirements for low bidding.2 This exemption allows state and local governments to determine awards of professional services contracts without being limited to price considerations.
b. Public Participation – While exempt from strict price considerations, the Oregon public contracting process is subject to public records and public meetings requirements, so that the decision to award such a contract must be made in public and the traditional use of a scoring system provides for the transparency of the decision. The responsible state or local government agency is subject to public criticism if the basis for the decision appears flimsy.
2. Is there legislation concerning the involvement of private entities in the control and enforcement of public zoning and building regulations? Are private entities only allowed to perform assessment tasks or can they issue development permits and take follow-up enforcement measures?
a. The Role of Private Entities in Control and Enforcement of Public Zoning and Building Regulations – Though legally possible (see above), most American local governments (states usually do not administer or enforce zoning and building codes, but may provide inspection services under contract with the local government) either have their own staff for these matters or contract with another local government to do so.3
b. Assessment v. Issuance of Development Permits and Enforcement – The response is the same as in (a), except that, for enforcement purposes, the local government attorney is usually the person representing the local government in a court proceeding. Many local governments have found it easier to ‘decriminalize’ violations of planning, building and zoning codes and provide for an administrative mechanism (i.e., administrative law judge, hearings officer or hearings examiner) to hear and decide such cases, in which event a code enforcement officer, whether a local government employee or under contract, may represent the interests of the local government. It also should be noted that the local government attorney and the non-judicial adjudicator are frequently not local government employees, but rather under contract.
3. Is there legislation concerning the private management of urban infrastructures and public spaces? Is this legislation restricted to single infrastructures and spaces or does it provide a legal framework for the private management of entire neighborhoods and other urban areas? Is the management of those neighborhood and areas restricted to owners or neighbors associations or can concessionaires or other private commercial companies perform it? How does it guarantee municipal or public control of management decisions?
There are multiple questions for response. Before answering, it should again be noted that there are multiple possible responses to each of these sub-questions among the various states. No attempt has been made to survey these states on each sub-question.
Many states adhere to ‘Dillon’s Rule’” derived from the writings of Justice John Forrest Dillon of Iowa, stating:
‘[M]unicipal corporations owe their origin to, and derive their powers and rights wholly from, the legislature. It breathes into them the breath of life, without which they cannot exist. As it creates, so may it destroy. If it may destroy, it may abridge and control.’ 4
Where Dillon’s Rule prevails, local governments must be authorized to undertake a given activity by the state legislature. Many states may authorize local governments to manage urban infrastructure and public spaces.
The alternative theory of local government in the United States is ‘home rule,’ by which a state, either through a state constitutional provision or by legislation, authorizes a local government to undertake the management and structure of that local government under its own supervision, often by way of a local ‘charter,’ which acts like a mini-constitution.5 In that event, the local government may undertake decisions relating to local concerns without reference to state legislative authorization.
a. Private Management of Urban Infrastructure and Public Spaces – Assuming the local government is authorized under either Dillon’s Rule or Home Rule it is authorized to contract with private entities or other units of state or local government to manage these facilities under the terms of applicable state or local law. The scope of those management agreements is limited only by that authorization and by political considerations. It might cover a specific facility, given facilities in a particular area, or all such facilities under City ownership. While it may be possible for private neighborhood associations to manage such facilities, this is not the typical situation, as almost all such arrangements require a stable partner that is familiar with such management and can deal with such issues as liability insurance, losses, and the like.
b. Public Control over Management Decisions – State or local governments may place ‘sideboards’ or limitations on management decisions made while a private entity, neighborhood association, or other public entity manages one or more elements of urban infrastructure or public spaces. However, several considerations limit significant intervention in those management decisions.
First, because the management is done for monetary consideration, the possibility that government intervention would affect the amount of compensation due would make potential bidders more wary about participation.
Second, another reason for contracting for management of public infrastructure and open space is relief from liability (in that the public agency is no longer managing the facility and thus cannot be liable for damages). If the government were to be able to determine significant management decisions, this reason would not be met.
Thus, the norm is that local governments normally contract to divest their management of these facilities in return for money and, while limitations on that management may be imposed, significant intervention in that management is often precluded as a practical matter.
OTHER PRIVATIZATION CONSIDERATIONS
Two articles from the September issue of Planning and Environmental Law are appended (with the permission of the publisher, the American Planning Association) and give additional perspectives to the issue of privatization.
The first article by Ellen Dannin, Of Planning, Privatization and Accountability, deals with evaluating prospective and existing privatization efforts and questions the use of those efforts as contrary to the public interest.
The second article by Matti Siemiatycki, The Global Experience with Infrastructure Public-Private Partnerships, speaks to the experience of these partnerships with regard to public facilities around the world. This article concludes that such partnerships are neither inherently positive nor negative, but their success is dictated by how they are structured, planned and delivered and how risk is allocated. These conclusions are equally applicable to privatization efforts generally.
Footnotes:
*. B.A., St. John’s University (N.Y.), 1966; J.D., Willamette University, 1969; M.A. (History), Portland State University, 1973; Urban Studies Certificate, Portland State University, 1974; M.A. (Political Thought), University of Durham; Diploma in Law, University College, Oxford, 1984; LL.M., University College, London, 1978.
2. This term means:
* * * personal services, other than architectural, engineering and land surveying services, that are related to the planning, design, engineering or oversight of public improvement projects or components thereof, including but not limited to landscape architectural services, facilities planning services, energy planning services, space planning services, environmental impact studies, hazardous substances or hazardous waste or toxic substances testing services, wetland delineation studies, wetland mitigation studies, Native American studies, historical research services, endangered species studies, rare plant studies, biological services, archaeological services, cost estimating services, appraising services, material testing services, mechanical system balancing services, commissioning services, project management services, construction management services and owner’s representative services or land-use planning services. ORS 279C.100(6).
3. ORS 279C.100 and .115.
4. For example in Oregon, ORS 190.010 provides as follows: A unit of local government may enter into a written agreement with any other unit or units of local government for the performance of any or all functions and activities that a party to the agreement, its officers or agencies, have authority to perform. The agreement may provide for the performance of a function or activity:
(1) By a consolidated department;
(2) By jointly providing for administrative officers;
(3) By means of facilities or equipment jointly constructed, owned, leased or operated;
(4) By one of the parties for any other party;
(5) By an intergovernmental entity created by the agreement and governed by a board or commission appointed by, responsible to and acting on behalf of the units of local government that are parties to the agreement; or
(6) By a combination of the methods described in this section.
5. See the opinion of Justice Dillon in Clinton v. Cedar Rapids and the Missouri River Railroad, 24 Iowa 455, 1868).
6. Chester Antieau, Local Government Law (2nd ed., 2012).