Union County officials passed ordinance knowing part was illegal

Posted October 2, 2012 at 5:00 am

by Julie Ann Madden


Hyperion Energy Center’s Planned Development
Land Zoning Reversion Clause
Section 1205 (3), page 34 of 2008 Revised Zoning Ordinance
“If construction of improvements is not begun and diligently prosecuted to completion within a reasonable time established by the Planning Commission at the time of approval of Detailed Plans, and if an extension of time is not given by the Planning Commission for good cause shown, the modifications or amendments of this Ordinance provided for in Section 1205 above shall become null and void, and the tract shall revert to all the requirements of its previous zoning. No certificate of zoning compliance shall be issued until a detailed report is submitted by the applicant to the Planning Commission showing the outcome of construction and the Planning Commission certifies that all requirements of this Article 12 relating to planned developments have been met.”

“I turn 70 tomorrow and I think Hyperion has given me the best birthday present I have ever had,” said Doug Maurstad of Alcester, S.D., at the Oct. 2 Union County Commission meeting about Hyperion’s Oct. 1 announcement that they hadn’t renewed land options in Union County.

Maurstad reminded the commissioners that since Hyperion lost its land options, the land is to revert back to agricultural zoning, according to the county’s 2008 Revised Zoning Ordinance.

He pointed out a statement Commissioner Ross Jordan made in the (Oct. 1 Argus Leader) newspaper contradicted Union County Zoning Ordinance Section 1205 Paragraph 3 in regards to Hyperion’s Planned Development zoning on its refinery footprint. Jordan was quoted as saying he wasn’t sure but thought the optioned lands will only revert back to its original zoning if the South Dakota Supreme Court rules against Hyperion’s air permit.

“I told them I wasn’t quite sure what it was and they needed to talk to Planning & Zoning Commission,” responded Jordan.

“In all the meetings that all of us attended on Hyperion and when they were allowed to write their own ordinance, it seemed to me in all the discussions it was very evident and eventually written in the language that if the project was not fulfilled and they did not begin, then the land would revert to agricultural zoning,” said Liz Merrigan of Burbank, S.D., agreeing with Maurstad. “I would just hope that is still a topic of discussion. I realize, according to the papers, there is still some discussion whether the project will go through or not but I think it was certainly in a fair sense understandable to everyone that if this project was not done, the land would revert to agricultural zoning.”

Later in the meeting, commissioners asked Union County Planning Director Dennis Henze what the next steps were for Hyperion.

“If the stories are true, they’re not going to come here to build a refinery,” said Henze.

However, the land doesn’t revert back to agricultural, he told commissioners.

“It has been rezoned as a Planned Development just as if it was rezoned to commercial, industrial, residential or whatever,” said Henze, explaining the land will remain Planned Development zoning unless the landowners themselves have the land rezoned back to agricultural zoning.

It was noted Union County land is taxed by its use so the taxes would not change to the Planned Development tax structure. Therefore, landowners can continue farming the land even though it is not zoned as agricultural.

This is similar to how Dakota Dunes and the Wynstone developments were done, explained Henze. The developers only plat the lots they sold so they can keep paying at the agricultural zoning tax rate.

Commissioner Milton Ustad asked if Hyperion officials came back later such as Nov. 1 and signed options with the landowners again what would happen.

Henze reported that would be fine because the land was already Planned Development zoning.

“What Dennis is saying is if it doesn’t read the way I understood it to read, (Hyperion) don’t have to do anything. They can come back whenever and buy the land and still build the center so the options don’t really matter at this point,” said Jordan, questioning Henze three times about the reversion clause.

Originally, Henze stated there was no zoning reversion clause in the county’s current zoning ordinance; it had been in the old ordinance. However, Jordan requested he go reread Section 1205 that Maurstad had quoted and return.

“When we were trying to get the 2008 Zoning Ordinance passed, there was a lot of opposition to several different things,” said Henze upon his return to the meeting. In our existing ordinance it did say it would revert back to the old (zoning).”

“Several of the people on the committee at that time thought, ‘yes, we want that in there’ because they knew Hyperion was coming,” he said. “It does say that in our (current) ordinance.”

“It does revert back but it’s not legal,” said Henze. “State law would not just allow it to revert back.”

“How did we get this through with (South East Council of Governments) who was supposed to keep us on the straight and narrow?” asked Jordan.

“Basically, (SECOG) said just leave it in there, make them happy and we’ll pass it as is,” said Henze.

“I don’t recall that discussion at all — that this was not a valid clause,” said Jordan. “That was never discussed in front of me.”

“It was discussed in (Planning & Zoning) a couple of times,” said Henze.

“That was never presented to this board that this was not a valid clause,” said Jordan. “We voted based on what was presented, believing this was a valid clause.”

“That was an important part of our vote — that that was in there,” he said. “So why was that not presented to this board — that that was not a valid clause?”

“I can’t answer that, Ross,” said Henze.

“I’d have to take a look and see at this point in time what the state would feel about an automatic reversion,” said Union County States Attorney Jerry Miller when asked if he concurred that this was an invalid clause. “But, I think we could interpret that to mean is that we’d initiate the reversion ourselves automatically.”

“Right now, we need to figure out where Hyperion is at,” he said.

“We’d have the right to rezone that property ourselves?” asked Jordan. “Obviously without an objection from the landowners.”

“I think we go through the process, give everybody notice and start the process ourselves automatically, by us,” said Miller. “We’re keeping to the intent of the document and we think there would be little to no opposition unless some landowner actually wants to keep it (as Planned Development zoning) and gives us notice they want to keep that status. It’s already there.”

“So if (Hyperion) let the leases lapse, nothing happens,” restated Jordan. “Then according to this invalid clause, (Hyperion) can come back in February and buy the land. Once the (Supreme Court) rules, then they can flat out buy the land from these landowners and everything’s status quo.”

“How do they release the land as far as saying we (county officials) want to revert it back,” asked Jordan.

Ustad said if the options had already run out, then the land was released but Jordan disagreed, “Not according to what this ordinance says. It’s already Planned Development…until somebody releases it back and says we’re okay to rezone it, we can’t.”

Ustad and Jordan agreed the landowners would have to tell the commission it was okay to do that.

Jordan asked Miller to check on the standing of that clause.

Chairman Doyle Karpen reported there was a discrepancy in whether Hyperion didn’t renew all of their land options or just some.

“If they kept a quarter section or 320 acres, I’ve been by probably seven or eight refineries since the beginning of this, they don’t need 3,000 acres,” said Karpen. “About 320 acres is going to be more than enough if that’s what (Hyperion) wants to do but I don’t have any idea. I would kind of hope (Hyperion) would kind of talk to us a little bit, give us a little heads up.”

“I thought it was kind of interesting none of us got any call that they’d released this land or anything else,” said Jordan.

“I’m not going to do anything until I have the facts,” said Karpen.

“It’s too premature,” said Miller, adding he and Henze will contact Hyperion Vice-President Preston Phillips and “see if we can get a straight answer.”

“I want to be clear,” said Jordan. “I never want to see another document put in front of this board that we knew was not valid and not be told about that and be asked to vote on it.”

“I never want to be put in that position again by anybody,” he said. “It’s not fair to this board to be in that spot. If we didn’t know it wasn’t valid, that’s a different story but to tell us that it’s not a valid clause and we weren’t informed of that really (pause) we should never have been put in that position.”

“I never want to see this board in that position again,” said Jordan.

Editor’s Notes: After the Commission meeting, Hyperion spokesperson Eric Williams emailed: “We did not extend any options in Union County.”

SECOG Community Planner Toby Brown, who helped write the ordinance, could not be reached for comment.

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