UPDATE: Builder, trade groups sue Greenwood over new design standards

An Indianapolis-based home builder and two trade associations have filed a lawsuit against Greenwood, claiming the city has adopted architectural standards on new houses that will drive up prices so significantly that the costs would preclude home ownership for thousands of residents.

Arbor Homes LLC, the Builders Association of Greater Indianapolis and the Indiana Builders Association filed the suit last week in Johnson County Superior Court.

At issue is an ordinance the Greenwood Common Council adopted Sept. 9, 2015, that beefed up architectural design standards for all new local residential construction.

The plaintiffs say the standards are completely aesthetic and will add between $15,000 and $30,000 to the sales price of a new home.

The ordinance "violates Indiana state law by taking property rights without due process or compensation," and "exceeds the scope of authority granted by Indiana code," the lawsuit says.

Mark Richards, city engineer and director of the Greenwood Department of Community Development Services, said in an email that "Greenwood intends to vigorously dispute the allegations."

"The local ordinance enacting residential architectural standards was a valid use of the city’s zoning authority and is being properly applied by the Community Development Services Department," he said. "Ordinances containing residential architectural standards are commonplace in Indiana communities and throughout the country. Greenwood is committed to requiring builders to construct high-quality housing at all price points so that residents are protected in what is oftentimes their biggest investment—their homes." 

The builders say they are being required to follow the new standards even if they received permit approval and began development of a subdivision prior to the approval of the ordinance.

Arbor Homes said it received approval from Greenwood in 2013 to build a six-section subdivision called Briarstone with 275 lots on the west side of South Emerson Avenue between Pushville Road and Worthsville Road.

Homes in the subdivision were designed to be affordably priced for the area, from about $130,000 to $175,000 depending on the floor plans, the builder said.

Arbor said it developed the first three sections of the subdivision under previous architectural guidelines, but after it sought permits to begin working on Section 4 in January, it received a memo from the Greenwood Planning Department that said new design standards would apply to the remaining three sections.

Arbor said the new rules would force it to build homes that are incompatibly priced with the existing neighborhood.

"Arbor will lose customers and have difficulty selling homes in Briarstone as they will be too expensive for the homebuyers who are in the market to buy affordable homes from Arbor," the lawsuit says. "To the extent Arbor is able to find buyers for these higher-priced homes, the homes are unlikely to appraise at full value because existing homes in Briarstone were sold at a lower price."

In addition to higher costs for new building materials, Arbor will have to produce new floor plans, option packages and marketing materials to comply with the new standards.

"The ordinance disregards the magnitude of the investments that these builders and developers have incurred before even filing a permit application for a primary or secondary plat, and disregards their substantial investment in subdivisions that are in the process of development and construction," the suit says.

Greenwood officials contend the ordinance is being applied properly.

"Greenwood is not retroactively applying a new ordinance to Arbor Homes, nor is the city applying the new ordinance to the subject matter of the company’s primary or secondary plats, which have been filed and approved," Richards said in his email. "These plats remain valid.  Rather, Greenwood is applying the new ordinance to any future requests for building permits made by Arbor Homes in sections of the subdivision where construction of homes has not yet started. Building and architectural standards undergo a separate permitting process and are not addressed in primary or secondary plats."

The plaintiffs are seeking an injunction that prohibits the city from enforcing the new ordinance.

“Government overreach in our communities can become a devastating problem for homeowners, limiting their choices if not immediately addressed,” said Steve Lains, CEO of BAGI, in a written statement. "National data shows that nearly 25 percent of the final price of a new home is the result of government regulation. The end result is that important members of our community—police, firemen, military personnel, teachers, and even our own adult children—are priced out of home ownership in the cities and towns where they work and live.”