JEM LLC (JEM) owns two parking lots just east of downtown Billings that are located within the East Billings Urban Renewal District (EBURD).  The EBURD zoning code has specific landscaping requirements for commercial parking lots. In early 2013, JEM applied for two variances regarding certain parking lot construction and landscaping requirements, seeking exemptions from the landscaping requirements based on financial hardship. Variances are presented to and decided by the City Board of Adjustment (Board). In mid-2013, at a public hearing, the Board considered the variance requests on the two lots and granted the variance for the smaller of the two lots, but denied the variance request for the larger lot. 

The Billings Industrial Revitalization District (BIRD) and several of its members appealed the decision by the Board to grant a variance from the EBURD landscaping requirements on the smaller lot. JEM appealed the Board decision to deny a variance on its larger lot. These appeals were filed with the District Court, as required by State statute. The City is required to defend the actions of its Boards and Commissions and did so in this case through MMIA defense counsel.

After lengthy discovery, including interrogatories and depositions and various motions and oral argument on the motions, the District Court remanded, or returned, the two variance applications back to the Board for a new hearing; determining that the record from the Board was not complete enough to determine how and why the Board reached its decision on the two variances. The Court later issued a supplemental order indicating that improper ex parte communication had occurred between JEM and certain Board members prior to the Board’s hearing and decision. The City, in defense of the Board, argued that the brief ex parte contacts were unavoidable since they were initiated by JEM and they did not involve a discussion on the merits of the pending variance applications. The District Court also indicated in this supplemental order that it would consider an award of attorney’s fees to BIRD based on the Court’s determination that improper ex parte communication had occurred with the Board. After the Court’s supplemental ruling, BIRD and the City agreed to mediate the attorney’s fees issue. BIRD originally requested $157,000 in attorney’s fees. The mediation resulted in a tentative agreement for the City to pay $75,000 in attorney’s fees to the BIRD, subject to Mayor and City Council approval.

The MMIA has provided a defense of the Board, however under the MMIA insurance coverage for alleged ex parte communication errors, the City is responsible for the BIRD’s attorney’s fees amount reached in the mediation. The tentative mediation agreement is conditioned upon approval by the Mayor and City Council.  This administrative appeal of the Board's decision has been frequently reported to the Mayor and Council over the past three years as it progressed in District Court.

 
 
 

↵City Council may:

• Approve the mediation agreement and authorize payment of the $75,000 in attorney's fees to BIRD, or;
• Disapprove the mediation agreement and proceed to a hearing on the attorney's fees before the District Court presiding over the case.  There is a significant risk that the Court will award substantially higher attorney's fees.

If approved, the attorney's fees will be paid from the General Fund.

Staff recommends that the City Council approve the conditional mediation agreement, including the BIRD attorney's fees, and authorization for the Mayor to sign any necessary documents that will conclude and dismiss the case.