The Montgomery County Planning Board ruled yesterday that hundreds of houses in Clarksburg Town Center were constructed in violation of height and setback limits.

The ruling came after a 10-hour hearing, during which some county residents demanded the severest possible penalties for the developer and builders -- including demolishing some houses -- to send a message that arrogant or overzealous building practices will not be tolerated.

But attorneys for the developer, Newland Communities, and four other builders said the board's own staff and other county officials knew all along what was happening in Clarksburg.

Board members delayed issuing any fines until they could determine the exact height of the 433 townhouses and a condominium building found to be in violation. The board also ruled that 102 houses violate the 10-foot setback requirements.

The question of fines -- which could top $1 million -- will be taken up July 28.

Board members left to sort out the conflicting claims of residents and developers said serious questions have been raised about the county's ability to manage growth.

"It's a mess, and it's our responsibility to fix the mess," said board member Meredith K. Wellington. "This has been like a runaway train without any control on the process."

Board Chairman Derick Berlage said after the hearing that Montgomery's reputation for transparent and reliable planning practices may be tarnished.

"The complexity of our development approval process has gotten ahead of the administrative process," Berlage said. "Thirty years ago, development was more cut and dried. Today the rules are complex. . . . It's clear that the traditional process of enforcing development rules is not adequate."

Officials have said that an outside expert will be hired to investigate the review procedures for approving subdivision plans.

Yesterday's hearing is the latest contentious episode in the development of Clarksburg, which only a decade ago was a one-stoplight crossroads of 1,382 people but which Montgomery planners now envision as the last major town along the Interstate 270 corridor. Officials anticipate a population of 40,000 by 2025.

The town center was intended as a centerpiece of the new community, a mixed-use project of 1,300 single-family homes, townhouses and condominiums on 267 acres. Plans called for it to be an exemplar of pedestrian-friendly "new urbanism," with sidewalks, pathways and pocket parks anchored by an area of specialty shops, cafes and upscale grocery shopping.

A group of Clarksburg residents brought the allegations of height violations to county officials in the spring. Last month, the county stopped issuing occupancy permits for the structures in question, leaving in limbo several dozen people who signed contracts but had yet to move in. The board agreed yesterday to let those with signed contracts move in.

Neither the Clarksburg residents who initially uncovered the allegations nor attorneys for Newland appeared satisfied with the board's response.

"We do feel we did follow the rules," said Stephen Z. Kaufman, a Newland attorney.

Norman Knopf, representing the Clarksburg Town Center Advisory Committee, said, "I don't believe the Planning Board took the necessary steps to restore the integrity of the planning process."

The hearing featured testimony from two dozen county residents, one of whom said he plans to ask the Maryland attorney general's office to launch a criminal investigation of the case.

When the possible building height violations were brought to the board in April, a planning department staffer altered a site plan, which made it appear as though the developer was in compliance.

The staffer, Wynn Witthans, resigned two weeks ago. In a recent interview, she said she was merely trying to bring the site plan into compliance with her staff's opinion and with earlier board decisions.

The intent of the board vs. the legally binding site enforcement agreement was a focus of deliberations yesterday.

Although the board agreed in 1995 to allow developers to build townhouses as high as four stories or 45 feet, the data table on the official site plan said those units could be no higher than 35 feet.

Attorneys for Newland and the builders -- Craftstar Homes Inc., NVR Inc., Miller & Smith and Bozzuto Homes Inc. -- argued that the board's opinion, not the data table, should carry the most legal weight.

They also said they had received assurances from planning staffers and the county Department of Permitting Services, which issues building permits, that townhouses could be as tall as four stories.

Some Clarksburg residents said height and setback violations are part of a larger pattern of neglect and arrogance on the part of the developers. The residents contend that Newland ignored requirements to build a pedestrian walkway connecting the development to the town's historic district.

"The entire town center project has been decimated," said Amy Presley, one of those who reported height violations.

Many of the homes in Clarksburg Town Center were built higher than county limits.