The following is an article published by Jesse Fox Mayshark for Compass.

A controversial Tooles Bend plan is rebuffed by a second court ruling, on the basis of a sewage plant that developers say they don’t intend to build.

It has been more than two and a half years since what was then called the Metropolitan Planning Commission gave its unanimous approval to a controversial residential development on Tooles Bend Road in West Knox County.

But the site remains undeveloped because of legal challenges from surrounding neighbors. Last week, despite support from Knox County government, a Tennessee Court of Appeals panel handed the would-be developers another setback.

Writing for the three-judge panel, Judge Thomas Frierson II upheld a 2019 ruling by a Knox County trial court, which found that a sewage treatment plant included in the plans violates the county zoning ordinance.

“Upon careful review, we agree with the trial court,” Frierson wrote in the 28-page ruling. It also grants court costs for the appeal to the Northshore Corridor Association, the local residents group that brought the lawsuit against the county’s Board of Zoning Appeals.

Because Knox County government and the county’s Board of Zoning Appeals joined the appeal alongside the developers, taxpayers could end up footing some of those costs.

“Our attorneys are very pleased with the thorough, very detailed opinion which does much to clarify the points of law we raised throughout,” the Northshore Corridor Association posted on its Facebook page. “While it is still possible for the defendants to request the opportunity to appeal to the State of TN Supreme Court, we feel this strong appellate ruling greatly diminishes their likelihood of success.”

The ruling means that for now, the proposal by Post Oak LLC to build more than 600 units of housing on 260 acres of land along the Tennessee River south of Northshore Drive remains stalled.

The developers appear to have a few options. They could appeal further, to the State Supreme Court, risking the accumulation of more legal fees along the way. They could also seek to refile their proposal and remove the sewage plant, which they have said they don’t need anyway.

Benjamin Mullins, the local land-use attorney who represents the developers, did not respond to a request for comment on Monday.

“We assume there will be future efforts to develop the property,” Diane Montgomery of the Northshore Corridor Association said in an email Monday. “NCA has never been opposed to a development proposal that was sensitive to the neighboring homes and that did not require numerous variances to Knox County zoning ordinances and sector plans.”

The property lies along the eastern side of Tooles Bend, between Pellissippi Parkway and the river. Its long and so far fruitless path to development goes back to 1993, when its then-owners successfully rezoned the land from agricultural to “planned residential.” That would have originally permitted construction of one to three dwelling units per acre, allowing an estimated 270 homes.

In 2018, the current owners sought approval for a much denser development — 198 detached homes, 184 attached ones, and 240 condominium units, for a total of 622 dwellings. The scale alarmed local residents, who worried that traffic from the project would overwhelm two-lane Tooles Bend Road, the primary access to the peninsula from Northshore Drive.

But MPC approved the plan, and when the Northshore Corridor Association appealed to the BZA, that board also supported the development. The association filed suit, raising a range of claims, most of which were not upheld by Circuit Court Judge Kristi Davis. (Davis now sits on the state Court of Appeals herself, though she did not hear this appeal.)

But Davis did side with the local residents on one key claim: that a wastewater treatment plant included in the plans to serve the development’s residents was not allowed in planned residential (PR) areas. Davis noted that other zoning categories in the county’s ordinance did specifically allow for utility infrastructure, but the PR zone did not include it as an approved use.

After Davis’ ruling, Post Oak tried to get her to amend her decision by filing a letter from an engineer with First Utility District of Knox County stating that the company would provide sewer lines to the development, eliminating the need for the sewage treatment plant.

But Davis refused to consider the amendment on the grounds that it would amount to a significant change to the plans that had already been approved through a public process, without allowing for further public comment and input.

The appeals court agreed with Davis on that point, with Frierson writing, “Respondents’ effort to revise the Development Plan after the BZA review provided no due process for the revised method in which the development’s wastewater would be handled to be presented in a public forum.”

The appeals court also refused to consider an argument from the defendants that the county doesn’t have the authority to regulate utilities in the first place, since they have their own defined statutory powers.

Frierson noted that because of the county’s participation in the case, “we are presented with the unusual situation of Knox County’s having apparently joined in Post Oak’s argument against the county’s regulation authority.” But he said the question of the county’s ability to control utility construction wasn’t raised by the county or the developer at either the BZA or in the original trial, and therefore could not be raised on appeal.

Neither Davis nor the appeals court found merit in the local residents’ other stated concerns, which included the sufficiency of the development’s traffic safety plan and the increased density from that originally discussed in 1993.

But Montgomery said the area needs infrastructure improvements before residents will feel comfortable with more development.

“As is our view for all of West Knox County, we believe that improvements in infrastructure to ensure public safety and the long range quality of life for the area should precede development,” she said. “The property’s historic significance as a very early Indian burial ground, as a land grant to Revolutionary War soldier John Toole and as the original site of Lakeshore Insane Asylum make it likely that any development proposal there will draw significant public scrutiny. NCA would almost certainly be a part of those community discussions.”