Bloomington Ordinance Found Unconstitutional

Gary Founds and Mike Allen, Mallor Grodner, LLP, gfounds@lawmg.com

An increasing number of municipalities across the country are using zoning ordinances to give universities the right to determine whether a given fraternity or sorority may occupy privately-owned property.  Typically, zoning ordinances accomplish this task by allowing the use of property as a “fraternity or sorority house” in a given zoning district, and then defining “fraternity or sorority house” by reference to the occupants of the house being recognized or sanctioned as a fraternity or sorority by a specified institution of higher education.  Such a scheme provides universities with the ability to allow private ownership of Greek houses (thereby alleviating the expense of maintenance and some of the potential liability risk that would otherwise derive from owning Greek houses directly), while still providing the ability to control the identity of the organizations that live in those houses.  The universities, to some extent, are able to have their cake and eat it too.

The municipal governments that adopt these ordinances also benefit since these ordinances provide municipalities an easy solution for dealing with the challenges that sometimes arise when Greek organizations violate other local ordinances, such as noise or nuisance ordinances.  For example, if the members of a Greek organization engage in problematic behavior, the university will likely withdraw recognition of that organization, which causes the organization to cease being a “fraternity or sorority” for purposes of the zoning ordinance, and which then gives the municipality an easy excuse for forcing the members of that organization to vacate the property.

Although these ordinances might seem acceptably symbiotic to the municipalities and institutions of higher education involved, they are legally problematic, as recently demonstrated by a case involving our client, UJ-Eighty Corporation.  UJ-Eighty owns, among other properties, a fraternity/sorority house in Bloomington, Indiana near the campus of Indiana University.   In 2002, when UJ-Eighty acquired this house, the house was considered a “Fraternity/Sorority House” under the local zoning ordinances, pursuant to the following definition:

A building or portion thereof used for sleeping accommodations, with or without accessory common rooms and cooking and eating facilities, for groups of unmarried students in attendance at an educational institution.  Shall also include any building or portion thereof in which individual rooms or apartments are leased to individuals, but occupancy is limited to members of a specific fraternity or sorority, regardless of the ownership of the building or the means by which occupancy is so limited.

In 2015, however, the City of Bloomington changed this definition to read as follows:

“Fraternity/Sorority House” means a building or portion thereof used for sleeping accommodations, with or without accessory common rooms and cooking and eating facilities, for groups of unmarried students who meet the following requirements: all students living in the building are enrolled at Indiana University, Bloomington Campus; and Indiana University has sanctioned or recognized the students living in the building as being members of a fraternity or sorority through whatever procedures Indiana University uses to render such a sanction or recognition. Shall also include a building or portion thereof in which individual rooms or apartments are leased to individuals, but occupancy is limited to members of a specific fraternity or sorority, regardless of the ownership of the building or the means by which occupancy is so limited, provided the two requirements noted in the first sentence of this definition are also met.

UJ-Eighty leased the house in 2016 to the Gamma-Kappa Chapter of Tau Kappa Epsilon, Inc. (“TKE Chapter”).  In February 2018, the University revoked the TKE chapter’s’s official recognition and informed its members that they could no longer reside in UJ-Eighty’s house.  Most of the members vacated the house and moved into university dorms, but two remained.

UJ-Eighty then received two notices of violation from the City of Bloomington, alleging that the property was being used by two individuals as a dwelling in an Institutional zoning district and that the Property no longer meets the definition of a “Fraternity/Sorority House.”  UJ-Eighty challenged the alleged violations and appealed to the City of Bloomington Board of Zoning Appeals (BZA).

At the hearing before the BZA, we argued that the definition of “Fraternity/Sorority House” (1) violated the Indiana State Constitution; (2) violated the Due Process Clause of the 14^th Amendment to the United States Constitution; (3) was interpreted incorrectly by Planning; and (4) constituted a taking of property without just compensation.  The BZA found in favor of the City, and UJ-Eighty appealed that decision to the Monroe County Circuit Court.  In our briefs and in oral argument before the court, we focused our efforts on the state and federal constitutional arguments.

First, we argued that granting Indiana University the unfettered right to determine whether a given organization is a fraternity or sorority for purposes of determining compliance with zoning ordinances is an unlawful delegation of governmental authority under the Indiana Constitution and the Indiana Code.  The Indiana Constitution vests legislative authority in the General Assembly.  Broadly speaking, the Indiana General Assembly, via the Indiana Code, has further delegated legislative authority in the realm of real property zoning to municipal governments and has instructed them to delegate enforcement and interpretation of local zoning ordinances to Boards of Zoning Appeal. 

In effect the City of Bloomington, in adopting its 2015 definition of “Fraternity/Sorority House,” had delegated its legislative authority and zoning enforcement and interpretive authority to Indiana University.  We argued that this definitional ordinance effectively gave Indiana University the ability to make zoning decisions and that this ordinance, therefore, violated the Indiana Code and the Indiana Constitution.

The City responded in a rather conclusory fashion and simply asserted that there is nothing in the Indiana Constitution or the Indiana Code that would suggest the definitional ordinance is impermissible and that no case law supported petitioner’s position.  The City also tried to shift focus away from the Indiana Constitution and Indiana Code by alleging that Bloomington was merely following a growing trend among its “sister university towns” in favor of requiring official sanction or recognition of fraternities or sororities by a university.

Next, we argued that the city’s delegation of authority to make zoning decisions was an unlawful delegation of governmental authority, in violation of the Due Process Clause of the 14^th Amendment.  We relied primarily upon the seminal case of State of Washington ex rel. Seattle Title Trust Co. v. Roberge, 278 U.S. 116 (1928).  At issue in Roberge was a local zoning ordinance that required the consent of at least two-thirds of certain real property owners in order to use property in a given manner.  In striking down the ordinance and holding that the delegation of power to adjacent landowners violated the Due Process Clause of the 14^th Amendment, the Supreme Court listed the following factors in support of its reasoning:

• The authority of the decision-making property owners was uncontrolled by any standard or rule prescribed by legislative action;
• The zoning authority was bound by the decision of the landowners;
• There was no provision for review under the ordinance, and the decision of the property owners was final;
• The decision-making property owners were not bound by any official duty; and
• The decision-making property owners were free to withhold consent for selfish reasons or arbitrarily and may subject a property owner to their own, self-interested caprice.

The ordinance at issue in our case also implicated each of these factors:

• The authority of the decision-making property owner, Indiana University, was not controlled by any standard or rule prescribed by legislative action.
• The BZA was bound by the decision of Indiana University and was bound to impose fines and to restrict land use based upon decisions made by the university.
• There was no provision for review of Indiana University’s decision with respect to a given tenant, and the decision of the university was final.
• Indiana University was not bound by any official duty to private landowners.
• Indiana University was free to withhold its consent to a particular tenant for selfish reasons or arbitrarily and was free to subject a property owner to its own, self-interested caprice.

The ordinance at issue in our case was particularly egregious in that it overtly invited the university to act arbitrarily.  The ordinance provided that the decision maker could use whatever procedures and whatever guidelines or standards it desires in determining whether a private landowner can use its property in a given manner.

Again, the city tried to shift focus from the specifics of the law by pointing to alleged bad behavior by the TKE Chapter and by suggesting that petitioner was paranoid for thinking that the university was trying to move students out of Greek houses and into university housing.  The city also returned to its theme that Bloomington’s definition is like many other definitions in other college towns and that the definition is merely descriptive.

Finally, we asserted a taking claim.  We argued that the 2015 change to the definition of “Fraternity/Sorority House” constituted a taking of property without compensation, by interfering with the “distinct investment-backed expectations” of UJ-Eighty.  We asserted that the definitional change, which occurred 13 years after UJ-Eighty had purchased the property dramatically decreased the fair market value of the property, since potential purchasers will not desire to acquire property if the ability to earn income from it is controlled unilaterally by a third party that may exercise its control with unchecked capriciousness.

Briefs were filed in October and November of 2018, and oral argument was held on December 12, 2018.  By an order issued on February 6, 2019, the Monroe County Circuit Court struck down the definitional ordinance, finding that the ordinance violated the Indiana Constitution and the Indiana Code, and that the ordinance violated the due process clause of the 14^th Amendment to the United States Constitution, reiterating much of the reasoning set forth in petitioner’s briefs.  The Court declined to rule on the taking claim.  Of course, a state trial court decision will not create binding precedent, but this decision does demonstrate that zoning ordinances designed to allow university control over private land use are vulnerable to constitutional attack.

The City of Bloomington filed a notice of appeal on February 27, 2019.  We hope to provide an update on UJ-Eighty’s success at the appellate level within the next few months.