1 STATE OF VERMONT

ENVIRONMENTAL COURT

} Town of Fairfax, } Plaintiff, } } v. } Docket No. 274-11-08 Vtec } Leon Beliveau, } Defendant. } }

} In re Beliveau Notice of Violation } Docket No. 193 -8-08 Vtec (Appeal of Beliveau) } }

Decision and Order

In Docket No. 274-11-08 Vtec, the Town of Fairfax br ought an enforcement action against Leon L. Beliveau, alleging that he had chan ged the use of his property at 1166 Main Street from a single-family residence to a roo ming and boarding house, without first obtaining a zoning permit for the rooming and boarding house use. In Docket No. 193-8-08 Vtec, concluded by this Court’s Decision an d Order on summary judgment issued on July 28, 2009 (July 2009 Decision), Mr. Bel iveau had appealed from a decision of the Development Review Board (DRB) upholding a N otice of Violation for the same

violation. 1 The Town is represented by John H. Klesch, Esq.; Defendant-Appellant Beliveau (Defendant) has appeared and represents hi mself.

1 While the July 2009 Decision concluded Docket No . 193-8-08 Vtec, in order to avoid “any issue of piecemeal appeals,” the court postpone d entering a final judgment order in the notice of violation appeal until a judgment order would be entered in the enforcement case (Docket No. 274-11-08 Vtec). July 2009 Decision, at 6, n.1.2

In entry orders issued on April 2, 2009, April 8, 2009 , and April 23, 2009, the Court discussed the scope of the violation alleged in these cases. The July 2009 Decision in the notice of violation appeal determined that t he violation existed. July 2009 Decision, at 4, 6. The July 2009 Decision further es tablished the periods of occupancy of rooms at the property and the amounts of payments f or that occupancy received by Defendant, through May 10, 2009. Id . at 4–6. That decision also established the amounts that had been expended by the Town regardin g attorney’s fees and costs of the litigation as of June 23, 2009, and granted summary j udgment in favor of the Town on the appropriate injunctive remedy: that Defendant i mmediately cease the use of the property as a boarding and rooming house, until and unless he obtains a zoning permit and any other necessary approvals required by the Z oning Bylaws to conduct such a use on the property. Id . at 6–7. After the summary judgment decision was issued, a pr eviously scheduled evidentiary hearing was held in this matter before Merideth Wright, Environmental Judge, to take evidence on any issues not resolved b y the July 2009 Decision, and in particular on the monetary factors that should be c onsidered by the Court in calculating an appropriate penalty for the time period of the v iolation. The parties were given the opportunity to submit written memoranda and request s for findings. Upon

consideration of the evidence and of the written me moranda and requests for findings filed by the parties, the Court finds and concludes as follows. Defendant owns a house and property at 1166 Main St reet in the growth center zoning district of the Town of Fairfax. 2 The 1166 Main Street house was Defendant’s primary residence from February 1999 through all pe riods at issue in the present litigation. Defendant received $44,106 in payments from boarders from January 1, 2007,

2 Facts and legal conclusions stated in the July 200 9 Decision will be restated in this decision only as necessary. Unless otherwise noted , the 2007 Town of Fairfax Zoning Bylaws (Zoning Bylaws) are applicable to these case s.3

through July 31, 2009. Of those revenues from the use of the house as a boarding house, Defendant received $17,804 during the 414-day period of the violation: from June 12, 2008 (7 days after the notice of violation) through July 31, 2009. Defendant ceased accepting payments from persons residing in rooms a t the house as of August 1, 2009. The Town has incurred $10,920.75 in attorney’s fees in this enforcement matter, including both the appeal of the notice of violatio n (Docket No. 193-8-08 Vtec) and the enforcement action (Docket No. 274-11-08 Vtec). In addition, the Town has incurred $283.93 in court costs and reimbursable attorney’s expenses in connection with the above-captioned litigation, for a total of $11,204.68

. As of August 20, 2009, persons unrelated to Defenda nt were residing in rooms at

the 1166 Main Street house, but Defendant was not re ceiving any money payments from those persons for their occupancy of rooms at the house. Defendant presented in evidence his 2008 tax return , including Schedule E for the 1166 Main St. Fairfax property. Based on that tax return, he paid $3775 for cleaning and maintenance, $5996 for repairs, $369 for supplies , $816 for insurance, $2712 in legal and other professional fees, $15,272 in mortgage inte rest, $4585 in taxes, and $8460 in

utilities. He also listed an amount of $3714 as de preciation of the property. No evidence was presented by Defendant or the Town as to the tax rules applicable to an owner-occupied residence.

Defendant now argues, contrary to the summary judgme nt decision in Docket No. 193-3-08 Vtec, that the rooming and boarding hou se use of the property should be considered to be a preexisting, nonconforming use of the property, entitled to continue without a permit. Defendant’s argument is based on the fact that the 2000 and 2002 Zoning Bylaws, in effect when Defendant changed the use of the property, did not require owner-occupancy of the house as an element of the rooming and boarding house use category. However, owner-occupancy, or the lack of it, does not change the4

fact that a violation existed. Rather, the violatio n is Defendant’s supplying and charging for rooms (sleeping accommodations) withou t obtaining a permit for running a “rooming and boarding house.” In a zoning enforcement case, the Court assesses a d aily penalty for the period during which the defendant has the benefit of the z oning violation. See 24 V.S.A. § 4451(a) (authorizing the imposition of up to $100 per violation of a zoning bylaw, and establishing that each day that such a violation co ntinues is a separate offense); Town of Sherburne v. Carpente r, 155 Vt. 126, 133 (1990) (“As long as defendant has the benefit of the zoning ordinance violation, the statute requires that he pay a daily fine.”). The Court calculates a penalty “to remove the econo mic benefit and any avoided costs achieved by the defendant from the violation, as well as to compensate the enforcement entity generally for the legitimate cos ts of bringing the enforcement action.” Town of Calais v. Noordsij , No. 142-6-06 Vtec, slip op. at 7 (Vt. Envtl. Ct. Au g. 29, 2008) (Wright, J.) (citing City of St. Albans v. Hayford , 2008 VT 36, ¶¶ 15–18, 183 Vt. 596). The Court may also consider the factors enum erated in the state environmental enforcement statute. See 10 V.S.A. §§ 8010(b), (c)( 2); In re Jewell , 169 Vt. 604, 606–07 (1999) (stating that the “court has discretion . . . not only to balance [a defendant’s] continuing violation against its compliance costs b ut also to consider such factors as those specified in [10 V.S.A. §§ 8010(b) and (c)(2) ]”). These factors include deterrence,

whether a defendant had reason to know that the vio lation existed, and the duration of the violation. 10 V.S.A. §§ 8010(b)(3), (6), & (8). In the present case, Defendant had the benefit of th e zoning violation for twoand-a-half years, of which 414 days occurred after t he seven-day period offered in the

notice of violation to cure the violation. All tha t Defendant had to do to cure the violation was to apply for a zoning permit for the rooming and boarding use of the property. In the alternative, as discussed in the s ummary judgment decision, he could5

have reverted to a single-family use of the propert y. See July 2009 Decision, at 3. 3 If a zoning permit for the rooming and boarding use of t he property also required conditional use approval or site plan approval, § 2. 3 of the Zoning Bylaws requires the Zoning Administrator to refer the application to th e Development Review Board for that purpose. Of course, any decision by the DRB on such an application could be appealed to this Court. See 24 V.S.A. § 4471.

The economic benefit Defendant obtained from the vi olation was the $17,804 he received in payments for the sleeping accommodation s he supplied at the 1166 Main Street house during the 414-day period after the no tice of violation’s seven-day period to cure the violation. Defendant argues that this amount should be reduced by some or all of the expenses shown on Schedule E of his 2008 tax return for the 1166 Main Street property, and that he instead sustained a loss with regard to that property. It is not appropriate to reduce the economic benefi t obtained by Defendant from the violation by any of the amounts shown as expens es on his tax return, as he has not shown that any of those expenses are attributable o nly to the rental of sleeping

accommodations in the house. Rather, he would have had to pay the taxes, mortgage, utilities, repairs, supplies, cleaning, maintenance, and insurance on the house as his residence, regardless of whether he operated it as a boarding or rooming house. Similarly, Defendant has not shown whether or subjec t to what limitations a deduction for depreciation is applicable to a taxpayer’s own residence. With regard to the legal and other professional fee s, Defendant’s tax return

shows $2712 allocated to the 1166 Main Street house (separately from $1080 allocated to a property in Burlington not at issue in the presen t cases). Although the law firm

3 As discussed in the April 2, 2009, April 8, 2009, an d April 23, 2009 entry orders, the definition of the use category “rooming and boardin g house” requires both “supply[ing]” and “charg[ing] for meals or sleeping accommodations or both.” Zoning Bylaws, Appendix B (Definitions).6

invoices billed to Defendant 4 are all entitled “Beliveau v. Town of Fairfax,” in fact they show itemized legal services related to various pro ceedings in Environmental Court, Chittenden District Court, and the Vermont Supreme C ourt, as well as legal services regarding fire inspections, fire marshals, and tax as sessments, involving the City of Burlington as well as the Town of Fairfax. The ite mized legal bills do not reflect any expenses related to the Fairfax property other than those Defendant may have incurred in seeking advice regarding the present enforcement action and notice of violation appeal, in both of which he represented himself. Th ose expenses were only incurred by Defendant due to his contesting the violation at is sue in the present enforcement case, and therefore should not be used to reduce the pena lty amount for that same violation. In addition to removing the economic benefit obtain ed by Defendant due to the violation, the penalty amount should also generally compensate the Town for the costs of bringing the enforcement action. Town of Calais v. Noordsij , No. 142-6-06 Vtec, slip op. at 7. In the present case, an appropriate penal ty amount must also be sufficient to deter the knowing violation of the zoning ordinance , as Defendant continued to charge for providing sleeping accommodations for more than a year after the issuance of the notice of violation. The length of time the violat ion existed was within the control of Defendant, as was the duration of the litigation and the extensive number of motions or requests filed by Defendant. In the present case, a n appropriate penalty amount must go beyond simply the removal of economic benefit. The penalty must provide a measure of deterrence, recognizing that this was a k nowing violation of long duration, as well as compensating the Town for the expenses o f conducting the litigation. Accordingly, the appropriate penalty in this case is $22,770, representing the removal of the economic benefit achieved by Defenda nt due to the violation, reimbursement to the Town of its litigation costs o ver the 414-day period of the

4 Provided as an attachment to the Town’s Proposed Post-Hearing Findings and Conclusions of Law filed on September 4, 2009.7

violation, and in recognition of the need for deterr ence and the duration of the knowing violation in this case. This penalty, allocated ove r the period of the violation, amounts to a penalty of $55 per day, well within the availab le statutory penalty of $100 per day. See 24 V.S.A. § 4451(a). The Town argues for a penalty of the full $100 per day, on the basis that the violation has not ceased. That is, the Town argues that Defendant is still maintaining a

violation at the 1166 Main Street house, even if he has stopped receiving payment from

boarders, as non-household members continue to resid e at the property, and Defendant never applied for a zoning permit to change the use of the property. If persons are occupying rooms in the house, but those persons are not living as a household unit, it is possible that such a use may also be a violation of the Zoning Bylaws. However, even if

it is a violation, it is not the violation that was the subject of the notice of violation or the complaint in the above-captioned cases. 5 The violations that were the subject of the above-captioned cases have been concluded by this d ecision and the July 2009 Decision. Accordingly, based on the foregoing, it is hereby ORD ERED and ADJUDGED that based on the violation already determined in t he July 2009 Decision and Order, in Docket No. 274-11-08 the Court imposes a penalty of $22,770, payable to the municipality under 24 V.S.A. § 4451(a), calculated as $55 per day for 414 days.

Done at Berlin, Vermont, this 13 th day of January, 2010.

________________________________________________ _ Merideth Wright Environmental Judge

5 If the Town were to pursue any other alleged vio lations after the date on which Defendant ceased to collect rental or other payment s from persons occupying rooms in his house, such asserted violations may be the subje ct of future appeals of notices of violation or future enforcement actions, but they wo uld receive new docket numbers and be treated as new cases when and if they are fi led.