United States District Court, D. Vermont
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART THE CITY OF WINOOSKI'S MOTION TO DISMISS THE FIRST
AMENDED COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION AND
FAILURE TO STATE A CLAIM (DOC. 15)
Christina Reiss, Judge
UMB Bank, N.A. brings this action under 42 U.S.C. § 1983
against Defendant City of Winooski (the "City"),
alleging that the City violated the Takings Clause of the
Fifth Amendment, procedural due process, and substantive due
process when it engaged in an unlawful taking of Spinner
Place Student Housing's right to park in an adjacent
parking garage. Pending before the court is the City's
motion to dismiss Plaintiffs claims for lack of subject
matter jurisdiction and for failure to state a claim upon
which relief can be granted. (Doc. 15.) On May 3, 2018, the
court took the pending motion under advisement.
is represented by Ronald A. Shems, Esq. The City is
represented by Catherine Dingle, Esq. and Daniel A. Seff,
facts are derived from Plaintiffs First Amended Complaint as
well as documents attached to the parties'
pleadings. The parties agree that the court may
consider these documents without converting the motion into
one for summary judgment. See Parada v. Banco Indus. De
Venez., C.A., 753 F.3d 62, 67-68 (2d Cir. 2014)
(affirming the district court's "discretion"
under Rule 12(d) to decide "to convert" a motion to
dismiss into a motion for summary judgment).
a nationally chartered bank based in Kansas City, Missouri,
is the bond trustee for the holders of the Vermont Housing
Finance Agency's ("VHFA") Student Housing
Facilities Revenue Bonds (the "Bonds"). Issued in
2004, the Bonds financed the development of Spinner Place
Student Housing ("Spinner Place"), located at Unit
2 of the West Block Condominium, 25 Winooski Falls Way,
Winooski, Vermont, and are secured by a leasehold mortgage on
the property. CHF-Winooski, LLC ("CHF-Winooski") is
a non-profit corporation that develops and operates student
housing. It borrowed the funds raised by the Bonds for the
development of Spinner Place which debt is secured by the
leasehold mortgage. HallKeen Management, Inc. manages Spinner
trustee for the bondholders, Plaintiff "may exercise all
rights under the leasehold mortgage and has full rights to
protect the value of [Spinner Place as] the collateral for
the Bonds[.]" (Doc. 14 at 2, ¶ 5.) Spinner Place is
the sole source of funds to make payments of interest and
principal on the Bonds. In its capacity as trustee, Plaintiff
is a third-party beneficiary of leases governing the
development and use of Spinner Place. Accordingly, Plaintiff
alleges it "has an active interest" in the
"management and operation" of Spinner Place in
order "to best preserve and increase the value of the
collateral for the Bonds, assure the financial viability of
Spinner Place . . ., and best meet [the] financial and other
obligations of the borrower of the Bond proceeds."
City is a municipal entity formed and operating under the
laws of the State of Vermont. At all relevant times, it is
alleged to have acted under the color of state law.
City owns the real property on which the West Block
Condominium, a seven-story building, is located. HKW, LLC
("HKW") developed the West Block Condominium.
1, 2004, the City entered into a Declaration of Condominium
for the West Block Condominium, creating two units. Unit 1,
on the ground floor, consists of retail and commercial space,
and is held by HKW Retail, LLC ("HKW Retail"). Unit
2 is Spinner Place, which occupies floors two through six and
is comprised of eighty-five apartment-style suites with 312
bedrooms for student housing. Unit 2 is sub-leased to
to and physically connected with Spinner Place is a
City-owned and operated municipal parking garage (the
"parking garage"). Plaintiff alleges that the City
is obligated to provide spaces in the parking garage for
Spinner Place and that "[u]se of the parking garage is a
property interest held by, and a benefit to[, ]
CHF-Winooski and is pledged to" Plaintiff, the
trustee, as collateral for the Bonds. Id. at 3,
¶ 15. Plaintiff claims that, effective January 1, 2017,
the City denied Spinner Place's right to park in the
parking garage notwithstanding Spinner Place's use of
spaces in it from February 8, 2010 to December 31, 2016 with
the City's alleged consent.
The City's Act 250 Permit for its Downtown Development
April 26, 2000, the City and other unidentified entities
applied for an Act 250 master plan permit for the proposed
Winooski Downtown Development Project (the
"Project"). The Project involves the development of
approximately 20.4 acres of land located east of Main Street,
south of East Allen Street, and north of the Winooski River
in the City's downtown. The Project's Act 250
application purportedly calls for: approximately 250, 000
square feet of offices; 92, 000 square feet of retail or
restaurant space; 800 units of housing; 3, 100 parking
spaces, including the parking garage; and other uses and
amenities to be built in phases. The parking analysis
provided in support of the Act 250 application indicates that
the Project will require 4, 300 parking spaces, but because
the Project is "mixed use, parking spaces can be shared
by the different uses needing parking at differing times of
the day or night, [such that] the need for parking was set at
3, 100 spaces." Id. at 4, ¶ 21.
6, 2001, Act 250 Permit # 4C1065 (Revised) was issued,
granting the City's application for a master plan permit
and allowing commencement of construction of Phase I of the
Project. On February 19, 2002, the City and other applicants
filed an application to amend the master plan and begin
construction of Phase II of the Project. Phase II called for
a mixed-use commercial block, which later became known as the
West Block, with approximately 108, 000 square feet of
offices for Vermont Student Assistance Corporation
("VSAC") and commercial or retail space supported
by an approximately 1, 100 space parking garage. The parking
garage was intended to be "the core of this commercial
mixed-use block." Id. at 5, ¶ 24.
According to Plaintiff, "[t]he City and other applicants
represented to the District [Environmental] Commission that
the mixed-use block, including the Spinner Place[, ] . . .
would be served by the parking garage." Id. at
5, ¶ 26. "Plans for the Spinner Place . . .
submitted by the City and its co-applicants to the District
[Environmental] Commission show 22 doors and walkways,
providing multiple direct connections from each floor of the
Spinner Place ... to all but the underground level of the
parking garage." (Doc. 14 at 5, ¶ 27.)
September 25, 2002, Act 250 Permit # 4C1065-1 for Phase II
issued, allowing the City and others to begin construction of
Phase II. The District Environmental Commission found that:
The Mixed Use building[, known as the West Block, ] surrounds
the parking garage on three sides: East Canal on the south,
Barlow on the east and New Street on the west. The building
will have retail/commercial uses on the street front and 100
units of housing above.
The building is served by the
parking garage built into the grade of the
Id. at 5, ¶ 28 (emphasis supplied). Spinner
Place is in the West Block.
Commission further noted that "[t]he presently existing
development within the Project site is at its maximum
development potential because only surface parking is
utilized" and that "[t]he only way to generate
additional uses is to create multi-level parking."
Id. at 6, ¶ 29 (internal quotation marks
omitted). Plaintiff alleges that the Act 250 permit
recognized that the need for parking was commensurate with
the scope of development and granted permission for the
development because additional parking would be provided by
means of the parking garage.
further claims that the West Block was required to be
completed in accordance with the District Environmental
Commission's findings, including Condition 7 of Permit #
4C1065-1, which provides that "[n]o changes shall be
made to the design or use of [the] Project (Master Plan,
Phase I, and Phase II) without the written approval of the
District Coordinator or the Commission, whichever is
appropriate under the Environmental Board Rules."
Id. at 6, ¶ 31 (internal quotation marks
# 4C 1065-1 was not appealed and is thus final. No. permit
amendment regarding the West Block, its residential units,
including Spinner Place, or the parking garage was sought or
obtained. According to Plaintiff, because the Permit has an
indefinite term, it remains in effect.
The City's Agreements Regarding the Parking Garage and
The First Amended and Restated Development and Disposition
about May 24, 2004, the City and HKW entered into the First
Amended and Restated Development and Disposition Agreement
("DDA") in which the City agreed that HKW would
develop the residential and commercial elements of the
Project, including "West Block Housing[.]"
Id. at 6, ¶ 34 (internal quotation marks
omitted). Plaintiff alleges that the DDA recognizes that the
parking garage is required municipal infrastructure necessary
to serve all downtown uses, including residential uses, and
provides that the City "shall develop, own, and be
responsible for operating the parking garage." (Doc. 14
at 7, ¶ 35.) The DDA purportedly further states that
the City will lease 230 spaces in the parking garage to HKW
in accordance with a "Parking Agreement."
Id. at 7, ¶ 36.
Parking Agreement, which is attached to the DDA, allocates
parking spaces for HKW to serve Spinner Place and specifies
that a portion of the 230 spaces in the parking garage
"shall be assigned to the operator of the
student housing on floors 2-6 of [Spinner
Place]." Id. at 7, ¶ 37 (internal
quotation marks omitted and alteration in original) (emphasis
supplied). The Parking Agreement was amended and extended at
least three times. The First Amended Parking Agreement is
dated December 22, 2005 and allegedly provides Spinner Place
and the Unit 1 retail and commercial space with 146 parking
spaces in the parking garage. The amendments to the Parking
Agreement also acknowledge that "if is an
obligation of the City under the DDA to grant HKW the right
to use the Parking Garage upon certain terms and
conditions." Id. at 7, ¶ 38
(internal quotation marks omitted) (emphasis supplied). The
amendments further state that "the City's permanent
zoning bylaws require that the projects be constructed or
developed in the downtown core district [and] provide parking
according to the terms of such permanent zoning
bylaws[.]" Id. at 7, ¶ 39.
to the City's zoning bylaws in effect when the permitting
was issued for Spinner Place, "the developer and owner
of a project [must] provide 0.6 parking spaces per bedroom
for the Spinner Place ..., or 187 parking spaces (312 units X
0.6 = 187.2)." Id. at 7, ¶ 40. According
to Plaintiff, parking and marketing studies, including
studies submitted as part of the Act 250 permitting process,
are consistent with the City's zoning bylaws and conclude
that Spinner Place requires at least 187 parking spaces.
about February 7, 2005, the City amended its zoning bylaws.
In relevant part, those amendments state:
All parking spaces for use in the Downtown Core District
shall be located within the Downtown Core District, and shall
either be located on the land where the use is occurring or
the parking spaces shall be in a municipally owned or
controlled parking facility, in which event, the applicant
shall provide a written contract with the municipality which
guarantees the continuous use of the required parking spaces
for the particular use(s)... for the reasonable expected
duration of the use(s).
(Doc. 14 at 8, ¶ 42.)
The City's Declaration of Covenants, Easements,
Conditions and Restrictions for the Winooski Downtown
25, 2004, the City executed a Declaration of Covenants,
Easements, Conditions and Restrictions for the Winooski
Downtown Redevelopment Project (the "Declaration").
The Declaration provides that the property described therein,
which includes the parking garage, "shall inure to the
benefit of each and every owner of all or any portion of the
Lots depicted on the Lot Plan and Project Plans[, ]"
including Spinner Place. (Doc. 10-1 at 2, §
1.1.) The Declaration further states that the
City is responsible "for the construction of all Public
Infrastructure Improvements for the Project[, ]"
including "the public garage on Lot 4,"
id. at 6, § 3.1, and for the "maintenance
and repair" of the parking garage. Id. at 8,
The Ground Lease.
1, 2004 the City, as Landlord, entered into the "Ground
Lease" with the tenant, the University of Vermont and
State Agricultural College ("UVM"), in which the
City leased land for the development of Spinner
Place. Section 1(a) of the Ground Lease provides
Tenant acknowledges and agrees that the Premises
does not include any appurtenant rights to park vehicles in
the municipal parking facility to be constructed on Lot
Tenant represents to [the City] that it
intends to seek any such parking rights from HKW, and it
agrees not to seek any such rights from Landlord as an