HOA - ALJDEC decisions

22F-H2221018-REL · Department of Real Estate - H/C · 2022-08-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Terry Marvin & Lori J. Lefferts,

Petitioners,

The Stone Canyon Community Association, Inc.,

Respondent.

No. 22F-H2221018-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 16, 2022 and June 6, 2022, with record held open for consideration of the hearing record from both hearing sessions in addition to the parties’ exhibits.

APPEARANCES: Petitioners Terry Marvin and Lori J. Lefferts represented themselves. Attorneys Nicholas C.S. Nogami and Parker C. Fox represented Respondent The Stone Canyon Community Association.

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn

_____________________________________________________________________

FINDINGS OF FACT

The Stone Canyon Community Association (“Association”) is a planned community association located in Tucson, Arizona. The Association governs the Stone Canyon subdivision which is located in Oro Valley, Arizona.

On October 11, 2021, Terry Marvin and Lori J. Lefferts (“Petitioners”) filed a single-issue petition (“Petition”) with the Arizona Department of Real Estate. The Petition alleged that the Association, through actions of its Design Review Committee (“Committee”), violated the Association’s adopted Development Design Guidelines (“Guidelines”), which had been adopted pursuant to the Association’s Covenants, Conditions & Restrictions (“CC&R”) Section 11.3, when the Committee granted a variance to Lot 19 Owners regarding the side-yard setback requirements in violation of Guidelines Section 1, Items 1 and 32 requirements and Section 5, Item 12 requirements. Petitioners noted that, having repeatedly objected to the variances granted, they sought the rescission of the grant of variances and a declaration that the variances granted had not been reasonable under the circumstances presented.

On November 8, 2021, Association filed with the Department its blanket response denying the allegations. Additionally, Association filed a Motion to Dismiss for failure to state a claim upon which relief may be granted or, alternatively, for failure to remit the proper filing fee for an alleged multiple issue petition.

The Department did not dismiss the Petition and the parties failed to resolve the matter informally.

On or about November 22, 2021, the Department issued its Notice of Hearing to the parties notifying them that an administrative hearing regarding the Petition would be conducted by the Office of Administrative Hearings (“Tribunal”).

On November 24, 2021, Association filed a Motion to Dismiss with the Tribunal, reiterating its earlier arguments to the Department.

The Tribunal’s authority is limited to rule on the Petition and its alleged violations. The issue for consideration is whether the Association, through actions of Committee, violated the Association’s adopted Guidelines when Committee granted a variance to Lot 19 Owners regarding the side-yard setback requirements in violation of the Guideline Section 1, Items 1 and 32 requirements and the Section 5, Item 12 requirements.

BACKGROUND

The Stone Canyon lots were drawn in various configurations. See Exhibit 26.

Petitioners own Lot 20, which abuts, in part, both Lot 19 and Lot 24. See Exhibits 3, 4, 12 and 14. The home on Lot 20 was built in 2002; Petitioners purchased the home in 2012.

The home on Lot 19 was built in 2003.

Lot 24 is currently vacant land.

The Guidelines were amended, effective November 5, 2019. Guideline Section 5, Item 32 now states as follows:

The Building Envelope and all improvements therein shall have a minimum 30-foot setback from the front property line and from any abutting streets, which shall remain in an undisturbed state except for access drives, mailbox installation and landscape enhancement as herein described. The side yard setback for the Building Envelope and all improvements shall be a minimum of 15 feet and 25 feet in the rear, which shall remain in undisturbed states. Variances must be approved first by the Town of Oro Valley and then by the DRC.

All building Structures shall comply with the above outlined setback distances. Modifications to the above outlined setback distances will be considered on a case-by-case basis for secondary improvements such as grading, landscaping, driveways, site walls, etc.

In 2021, the new Lot 19 Owners determined to remodel the existing home, proposing to add approximately 2,500 square feet of living space and to add an RV garage of approximately 1,200 square feet to the existing garage. The proposed location of the RV garage and its expanded driveway approach precipitated objections from Petitioners. See Exhibits 4 and 14.

Lot 19 Owners submitted a February 2021 Preliminary Design proposal to Association/Committee. See Exhibit 20. As a part of the proposal process, Lot 24 owner(s) had agreed to sell a portion of the lot to enable, for Lot 19, an ostensibly larger south/west side-yard setback area to accommodate the new garage addition. See Exhibit 3.

On May 6, 2021, through their Architect, Lot 19 Owners submitted a revised Preliminary Design proposal. See Exhibit 5.

Petitioners reviewed the May Lot 19 proposal and, on May 23, 2021, filed a letter to the Committee outlining their objections to the “new driveway on the west side of the [proposed] structure which will provide access to the proposed new RV garage.” Petitioners noted that, currently, they could not see any portion of the existing driveway from their home/back patio. Petitioners posited that an owner’s right to improve their property does not allow that owner to, thereby, diminish the value of another lot within the community, arguing that the Lot 19 proposal would not result in a desirable view and would be an eyesore. Petitioners also argued that, with the resulting new elevation difference between the lots, neither a screening wall nor additional landscaping would remedy the situation.

On May 25, 2021, the Committee denied the May Lot 19 proposal and, by letter to the Architect, dated June 2, 2021, the Committee set forth its exceptions to several aspects of the May proposal. See Exhibit 9. The Committee stated that the new RV garage would maintain the applicable 15’ minimum side set back but that other proposed secondary improvements along the side of that RV garage would be located within the 15’ side set back. The Committee noted that the Guidelines, Section 1, Item 32 stated, as to the applicable 15’ side set back distance, that modifications “ ... will be considered on a case-by-case basis for secondary improvements such as grading, landscaping, driveways, site walls, etc.” Committee further noted that the proposal had not included a Guideline variance request for the proposed “secondary improvements, indicating that the Guidelines, Section 5, Item 12 stated that a deviation from the Guidelines could be considered “... if following the criteria or requirements would create an unreasonable hardship or burden for an Owner.”

On June 16, 2021, Architect appealed the Committee’s denial of the May Lot 19 proposal and requested a Section 5, Item 12 variance as follows:

We received the review comment letter dated June 2, 2021. We feel there is additional information that was not presented and variances needed for secondary improvements that were not requested in accordance with the design guidelines.

This property was purchased by Martin Coe and Lydia Roos with the understanding that a new garage and bedroom addition could be built on this property. The current house has a small two car garage with narrow doorways. The owners needed additional bedrooms and garage spaces for their family.

The west addition has been redesigned to fit within the existing property line and setbacks. The front corner of the existing garage is right on the 15’ building setback line. This requires the driveway to access the new garage to be built in the setback. There is no other area for a new a garage addition and no other way to provide access to the new garage. We request a variance to allow a portion of the driveway and grading in the setback area extending to the property line. There are several existing trees on lot 24 that will provide screening of the new driveway along the property line[.] Additional trees and vegetation will be provided. This driveway is in an area far back from the building area for lot 24 that will have minimal impact to any future development. An aerial photograph is attached to illustrate the proposed improvements.

There is a 5-foot high cmu and stone veneer screen wall for the mechanical equipment and garbage cans shown on the south wall of the garage in the setback approximately 8’ from the property line. We feel this is a best location for equipment yard. It will provide some visual relief to the south wall of the garage. We request a variance to allow the wall and grading in the setback.

The finished floor of the new garage is a few feet above grade with a stem wall to match the house wall. We propose a 2’ to 3’ boulder retaining wall in the setback around the garage to provide a “plant bench” next to the garage to reduce the exterior height of the garage wall. The remaining area to the property line will be restored and revegetated. We request a variance to allow this grading in the setback.

This addition is located adjacent to the far rear portion of lot 24, well away from the lot 24 building envelope and not visible from the street. The addition and the secondary improvements in the setback will not impact any future home on this lot. The views for this lot are to the east to the Catalina mountains and not toward lot 19. This area has been previously graded with a rip-rap slope, is unattractive and has minimal vegetation (see photos). We will provide mature vegetation along the south property line, on the plant bench next to the garage, and along the driveway. This will greatly increase the quality of the interface between the properties, enhance and improve the existing graded area, and provide additional screening of the existing house, the new addition and the driveway as viewed from the future homes on Lot 23, 24 and the existing home on lot 20. A landscape plan will be provided with the final construction plan submittal for review.

We respectfully request these variances be approved to allow some grading and driveway in the setback area and to improve the conditions along the south property line.

Emphasis added here.

At its June 29, 2021, meeting, the Committee approved the revised proposal on a preliminary design basis and moved the matter forward for final design stage. See Exhibit 17. In its meeting minutes, the Committee stated, in pertinent part:

Discussion ensued on the merit of the project and whether or not it was reasonable to grant a variance to allow secondary improvements to be located in the side setback.

In conclusion, the Committee determined it would grant the variance request to allow the proposed secondary improvements (grading, mechanical enclosure site walls, and driveway extension) to be located in the side setback. This variance is subject to the project including significant landscaping installed in the remaining side setback area. The specifics of such (quantities, types, sized, and locations of trees and shrubs) to be determined as part of the final design submittal review.

On August 4, 2021, Petitioners filed a document, noted to be “Legal Objections,” regarding the Committee’s June 29, 2021 approval. See Exhibit 18. Petitioners claimed that any variances must first be approved by the Town of Oro Valley (“Town”) pursuant to Guidelines, Section 1, Item 32. Petitioners argued that the Committee had not found there to be an “unreasonable hardship or burden” to Lot 19 Owners to support a deviation from the side-yard setback requirements pursuant to Guidelines, Section 5, Item 12. Petitioners acknowledged that Section 5, Item 12 provided no specific “criteria” for making such a determination. Petitioners further argued that the meeting minutes had not reflected anything suggesting that the Committee had considered whether the Section 5, Item 12 variance request had been supported by adequate evidence of an unreasonable hardship or burden. Overall, Petitioners argued that the Committee had failed to exercise its discretion reasonably and, thus, the granting of the variance(s) was invalid.

Within the objections, Petitioners further argued that that the granting of the variances by the Committee had created a “situation that is materially detrimental to our adjacent property ... namely a diminution in value and marketability due to the creation of unfavorable driveway and structure views from our house and back yard.” Finally, Petitioners state:

[A]dmittedly, our objection to the proposed Lot 19 plan is based on the adverse economic and aesthetic consequences to us, but the more altruistic objective is to ensure that the committee adheres to the guidelines and legal requirements. The Stone Canyon community relied on the DRC to exercise its discretion in a fair and just manner, in accordance with the established requirements that apply to all. ... Stone Canyon must maintain its high standards that prioritize wide-open spaces, and the quality of life of its residents.

By letter dated August 15, 2021, counsel for Association notified Petitioners that Association would not be rescinding the variances granted to Lot 19 Owners. See Exhibit 25. Therein, in “explaining” the Association’s position, Association noted, in part:

[T]he front corner of the proposed garage extends near the building setback, and, with respect to the placement of the proposed structure, there is no other way to provide access to it without granting the variance at issue. Accordingly, this evidence clearly indicates a hardship and/or burden upon the Owner of Lot 19 and DRC properly granted the variance request as a result, pursuant to Section 5.12 of the Design Guidelines. The DRC’s decision clearly met the requirements contained with the Design Guidelines and meets the “reasonableness test” prescribed by Arizona law.

Additionally, it should be noted that the recently approved plans for the Lot 19 garage (including the variance) are the result of a significant amount of discussion between the Association and the Owner of Lot 19. The Association has not simply “rubber stamped” any of the Owner’s submissions, but has rather considered the Association’s governing documents along with neighbor concerns at each step. Based on the DRC’s careful consideration of this matter, the Owner of Lot 19 was required to resubmit different plans and eventually agree to the compromise that currently exists. If this case were litigated, an Arizona court would likely agree that the DRC in this matter acted reasonably at every step and behaved in manner consistent with and expressly condoned by the Court in Tierra Ranchos.

On September 28, 2021, the Committee approved the Lot 19 addition and remodel project and authorized the project to move forward to pre-construction phase. See Association Exhibit 5.

By letter dated October 11, 2021, the Committee notified Architect of the pre-construction phase requirements.

___________________________

Petitioners’ submitted their hearing memorandum on March 13, 2022.

Association submitted its pre-hearing memorandum on March 15, 2022.

At hearing, Petitioners argued that the Association, through Committee, had acted in violation of Guidelines, Section 1, Items 1 and 32 and Guideline Section 5, Item 12 by granting a variance to Lot 19 Owners in the absence of sufficient evidence of an unreasonable hardship or burden and, thus, resulting in Lot 19 violating the community’s 15’ side-yard setback requirement and in diminution of Lot 20 value and marketability.

At hearing, Association reiterated its primary dismissal argument and requested that the hearing be limited to its urged issue regarding CC&R Section 11.3, the “creation” of Guidelines, which had been created, and, therefore, there could be no violation of CC&R Section 11.3.

Alternatively, Association next argued, that the Committee’s minutes did not reflect that a “variance” had been granted and, thus, a “variance” had not been granted.

The Association’s position is that the Guidelines Section 1, Item 32 setback “variance” statement applies only to possible changes in building structure setbacks within the building envelope similar to the Town’s variance provisions being applicable to structures. The Association’s position is that, while all building structures must comply with the minimum 15’ side-yard setback, the Committee and Association may permit “modifications” to setback distances for purposes of secondary improvements, described as “grading, landscaping, driveways, site walls, etc.” pursuant to Section 1, Item 32.

Semantics are at play in this matter, in that: (a) Guidelines Section 1, Item 32 discusses “variances” in the context of building structures within the building envelope, but also discusses “modifications” in the context of “secondary improvements” such as grading, landscaping, driveways (i.e. non structures); and, (b) Guidelines Section 5, Item 12 is entitled “Variances” and discusses the Committee’s discretion to deviate from the its own Guidelines in “extenuating” circumstances if following the Guidelines “would create an unreasonable hardship or burden for an owner.”

The hearing record demonstrates that, based on the minutes of the Committee’s June 29, 2021 meeting, Association supported the Committee’s determination that needing access to the new RV garage which itself was being built within the building envelope in compliance within the 15’ side-yard setback, met the criteria of “extenuating” circumstances pursuant to Guidelines, Section 5, Item 12 for purposes of granting a “variance” for the new driveway to be placed and necessary grading to occur within the 15’ side-yard setback. The hearing record further demonstrated that, on this case-by-case basis, the Committee determined that the secondary improvements of grading and a driveway were appropriate to be placed, i.e., occurring, within the 15’ side-yard setback.

CONCLUSIONS OF LAW

The Department has jurisdiction to receive petitions, to hear disputes between a property owner and a planned community association, and to take other actions pursuant to Arizona Revised Statutes (“A.R.S.”), Title 33, Chapter 16.

The Arizona Office of Administrative Hearings (Tribunal) is a separate state agency authorized by statute to hear and decide agency-referred contested matters through the conduct of an administrative hearing and issuance of a written decision.

In this proceeding, pursuant to Arizona Administrative Code (“A.A.C.”) R2-19-119, Petitioners bear the burden of proving by a preponderance of the evidence that, as alleged, Association through actions of Committee had violated Guidelines Section 1, Items 1 and 32 requirements and Section 5, Item 12 requirements when Committee granted a variance to Lot 19 for secondary improvements in the 15’ side-yard setback.

A preponderance of the evidence is “[e]vidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (6th ed. 1990).

Guidelines, Section 1, Item 1 provides:

All buildings and structures erected within Stone Canyon and the use and appearance of all land within Stone Canyon shall comply with all applicable local zoning and code requirements as well as the [CC&Rs] and these Design Guidelines.

Guidelines, Section 1, Item 32 provides:

Guideline, Section 5, Item 12 provides:

At its discretion, the [Committee] has the authority to deviate from the requirements in these Design Guidelines in extenuating circumstances if following the criteria or requirements would create an unreasonable hardship or burden for an Owner. An affirmative vote of a majority of the members of the [Committee] must be gained for a variance to be granted.

The Administrative Law Judge concludes that the hearing record demonstrates that Committee exercised reasonable discretion under its authority to grant, to the Lot 19 Owners, a Section 5, Item 12 deviation, i.e., a variance, to the Guidelines to allow the proposed/approved secondary improvements to be placed within the 15’ side-yard setback.

Therefore, based on the hearing record, the Administrative Law Judge concludes that Petitioners have not established, as alleged, any violation by Association of the alleged referenced provisions.

As a result, the Administrative Law Judge concludes that Petitioners’ Petition shall be dismissed.

ORDER

IT IS ORDERED that Petitioners’ Petition is dismissed.

IT IS FURTHER ORDERED that Petitioners bears their $500.00 filing fee.

NOTICE

Pursuant to A.R.S. §32-2199.02(B), this Order is binding on the parties unless a rehearing is granted pursuant to A.R.S. § 32-2199.04.

Pursuant to A.R.S. § 41-1092.09, a request for rehearing in this matter must be filed with the Commissioner of the Department of Real Estate within 30 days of the service of this Order upon the parties.

ORDERED this day, August 5, 2022.

/s/ Kay Abramsohn

Administrative Law Judge

Transmitted by e-mail August 5, 2022 to:

Terry Marvin

Lori J. Lefferts

[email redacted]

Nicholas C.S. Nogami, Esq.

Parker C. Fox, Esq.

CARPENTER, HAZLEWOOD, DELGADO & BOLEN, LLP

RE: The Stone Canyon Community Association, Inc.

[email redacted]

Louis Dettorre, Commissioner

Arizona Department of Real Estate

Attn:

[email redacted]

By Miranda Alvarez

Legal Secretary