New Maine law vests the rights of residential developers


While many Maine cities seem to be working in every way to discourage the development of new residential units, the state of Maine has taken another step to curtail NIMBY-inspired local policy. A few years ago the Legislature passed LD 2003, a law which required single-family neighborhoods to allow 2-4 units per property, and this year the legislature passed LD 772. This new law stops local governments from creating and retroactively applying new building and zoning regulations to projects that are partway through being completed.

When a law applies retroactively, it regulates conduct that occurred before the law was on the books. While most of us might think that retroactively applying laws should never happen, local government land use regulations often do this. LD 772, however, has stopped the retroactive application of residential development ordinances, encouraging the building of new housing units in Maine by preventing municipalities from applying regulations passed halfway through a project’s completion.

Retroactive ordinance have been used before by NIMBY-type groups to regulate conduct that, while completely legal, they don’t want to occur. One example is Kittery Retail Ventures, LLC v. Town of Kittery where, in March 2000, a developer submitted an application to create a retail mall in Kittery. While the proposed mall was in a mixed-use district and met every local land-use requirement, a group of citizens who wanted to stop the project passed a retroactive ordinance to stop the project. The developer sued, and on appeal, the Supreme Court of Maine held that a proposed project’s rights to develop the project did not exist until they started building. 

While many examples of these retroactive ordinances affect businesses rather than residential properties, there are cases where residential development is impacted. One example is a retroactive moratorium being considered in Wells to pause the development of an already approved large-scale housing project. Similarly, Bar Harbor recently considered retroactive moratoriums, specifically on transient accommodations such as hotels. With LD 772 passed into law, housing moratoriums can no longer affect projects that have already been approved. 

State-level direct zoning mandates don’t work, and while LD 2003 was well-intended, its effects have been circumvented by several of Maine’s largest cities. Portland, for instance, technically allows single-family zoned units to have up to four units built, but to do so, one must comply with an unjustifiable and unnecessarily complex set of requirements. These requirements entirely exist to make it harder to convert single-family properties into multiple units. However, the point of LD 2003 was to encourage people to do that exact thing, and with Portland being the eye of the storm on Maine’s housing crisis, undermining the goal of LD 2003 in Portland of all places will have horrible consequences. 

LD 772 does not directly mandate any specific policy for towns to follow, though. It only requires them to apply the laws already on the books for new developments. This should, in effect, encourage towns to preemptively pass the laws they actually want to apply, which will increase legal transparency for locals, accountability for local regulators, and ease of navigating regulations for developers. 

While the effects of this new law are yet to be seen, the outlook is much less grim than that of LD 2003. Passing laws that merely encourage the creation of fair and light-handed local regulations instead of mandating housing policy is the most effective way for Maine to deal with its housing crisis. It is great to see that new legislation like LD 772 acknowledges this fact.