Municipalities on Long Island are struggling to control rental properties. In Southampton, rental properties are governed by Chapter 270 of the Southampton Town Code (the “Code”). Section 270-3 of the Code establishes that an owner of a residential property shall not permit or allow its use or occupancy as a rental without first obtaining a permit. If an owner does rent without a permit, section 270-13(a) of the Code prohibits the owner’s collection of rent.

In Schwartz v. Torrenzano, 49 Misc.3d 943, 16 N.Y.S.3d 697, (Suffolk Co. 2015), the Supreme Court held that Southampton’s rental permit law creates a private cause of action allowing, in certain circumstances, a tenant to recoup rent paid to its landlord. The trial court’s holding in Schwartz was recently cited with approval by the Appellate Division, Second Department in Ader v. Guzman, 135 A.D.3d 671, 23 N.Y.S.3d 292 (2d Dept. 2016).

In Ader, tenants demanded the return of their rent after discovering that their summer rental lacked a permit. The Appellate Division, relying in part upon Schwartz, affirmed the Supreme Court’s holding that the Code affords tenants an implied private right of action and that the Ader lease was unenforceable. The Appellate Division held that because Southampton’s rental permit law is intended to protect the public health and prevent fraud, enforcing the illegal lease and permitting the landlord to keep the tenants’ rent violates public policy.

In a companion case, Ader v. Guzman & Corcoran Realty Group, LLC, et al., 135 A.D.3d 668, 22 N.Y.S.3d 576 (2d Dept. 2016), the Appellate Division held that Real Property Law §443(4)(b) does not impose a duty upon real estate brokers to investigate whether a rental property is properly permitted. Despite the Court’s holding, the New York State Department of State, in a guidance letter dated April 19, 2016, cautioned that “notwithstanding the decision in Guzman, a broker who fails to demonstrate a working knowledge of the property being marketed, fails to demonstrate the level of competency required to transact business as a licensee in violation of Real Property Law §§441 and 441-c.” The Department further warned that a broker’s commission “premised upon an unlawful agreement is ‘unearned’ in violation of Real Property Law §441-c.”

It is clear that from the Department’s perspective that brokers must make reasonable efforts to verify the legal status of the properties they offer and that, where a broker has actual knowledge that a property lacks a permit or is otherwise illegal, such information must be affirmatively disclosed.

 

hempDEREGULATING INDUSTRIAL HEMP

Plans to expand New York’s Industrial Hemp Agricultural Pilot Program were recently announced by Governor Andrew Cuomo at one of his State of the State addresses. The program, which commenced in 2016, was authorized pursuant to the federal government’s passage of its 2014 Farm Bill, which specifically allows universities and state departments of agriculture to grow or cultivate industrial hemp if:

“(1) the industrial hemp is grown or cultivated for purposes of research conducted under an agricultural pilot program or other agricultural or academic research; and

(2) the growing or cultivating of industrial hemp is allowed under the laws of the state in which such institution of higher education or state department of agriculture is located and such research occurs.”

The law also requires that the grow sites be certified by—and registered with—their state.

HEMP NO LONGER A CONTROLLED SUBSTANCE SO LONG AS IT CONTAINS LESS THAN 0.3 THC

In 2015, a bipartisan group of U.S. senators introduced the Industrial Hemp Farming Act of 2015 that would allow American farmers to produce and cultivate industrial hemp. The bill would remove hemp from the controlled substances list as long as it contained no more than 0.3 percent THC.

The U.S. Department of Agriculture, in consultation with the U.S. Drug Enforcement Agency (DEA) and the U.S. Food and Drug Administration, released a Statement of Principles on Industrial Hemp in the Federal Register on Aug 12, 2016, to inform the public on the applicable activities related to hemp in the 2014 Farm Bill.

Under the pilot program, New York caps the number of sites permitted to farm hemp to ten locations throughout the state. The current research projects are being conducted under the auspices of SUNY Morrisville College and Cornell University’s College of Agriculture and Life Sciences. Governor Cuomo’s proposed amendments will lift the cap and expand the program to private farmers in an effort to “position New York at the forefront of a growing agricultural sector.” In 2015, it is estimated that the industrial hemp industry generated some $573 million in sales in the U.S. alone. Governor Cuomo believes that it could soon be a billion dollar industry; and New York’s Southern Tier, because of its climate and soil, is uniquely suited to be a leader in the industry.

Only time will tell if the industrial hemp industry flourishes as hoped for by the Governor or it goes up in smoke.

mosqueOn December 31, 2016, U.S. District Judge Michael Shipp of the District of New Jersey authored a 57-page opinion granting partial summary judgment to plaintiffs, The Islamic Society of Basking Ridge (“Islamic Society”) holding that defendants, the Township of Bernards (“Bernards”), violated Islamic Society’s rights under the Religious Land Use and Institutionalized Persons Act (“RLUIPA”).  The Bernards Planning Board denied Islamic Society’s site plan application seeking to construct a mosque in a residential zone on the basis that (1) a mosque is not considered a church under Bernards’ zoning code and (2)  Bernards’ parking ordinance was not adhered to.

FACTS

In November 2011, Islamic Society purchased property in a residential section of Bernards with the intention of constructing a 4,252 square foot mosque on the property.  The site plan called for 50 parking spaces based on estimated occupancy of 150 people.  The parking spaces provided were in compliance with Bernards’ parking ordinance applicable to churches at a ratio of 3:1 .

Over the course of three and a half years, Islamic Society’s site plan application underwent 39 meetings and was subjected to intense neighborhood opposition and scrutiny.    According to the decision, competing expert testimony was provided by parking experts and asserted that although Bernards does not, and has never, relied on the Institute of Transportation Engineers (“ITE”)  Parking Generation data,  Bernards required Islamic Society to apply the ITE data applicable to mosques, which estimated required parking spaces between 36 and 110.  Bernards compromised at 107 parking spaces, when in fact, only 50 were required under Bernards accepted church parking ratio of 3:1.

The rationale for the increased parking requirement rested on Bernards’ determination that a mosque is not a church, despite the fact that Bernards’ zoning code does not state that a mosque is not considered a church.  Bernards did not stop there.  Bernards went on to say that only Christian places of worship are considered  churches, and as a result thereof, not only was the 3:1 parking ratio not applicable to Islamic Society’s site plan application, but also, Bernards maintained discretion in reviewing Islamic Society’s application and essentially had unfettered discretion in determining parking requirements.

At the conclusion of all hearings and testimony, Bernards’ planning board denied the site plan application.  Islamic Society commenced an action in federal court alleging violations under RLUIPA.

DECISION

In granting partial summary judgment, the Court rejected Bernards’ position that mosques are not considered churches.   In fact, the Court specifically stated that a mosque or any place of religious worship, whether a church or not, is protected under RLUIPA.  Bernards’ unsupported determination that mosques are not considered churches violated Islamic Society’s rights under the Nondiscrimination Provision of RLUIPA.

Additionally, with respect to the increased parking, and Bernards’ position that it maintained unfettered discretion to determine parking requirements, the Court relied upon its determination that a mosque is entitled to the same protections as a church;  as such, the Bernard parking ordinance ratio of 3:1 should have been applied equally to Islamic Society as it had historically been applied to Christian and Baptist churches and synagogues that were previously approved in Bernards.  Further, the Christian, Baptist and Jewish places of worship were typically granted in less than six months, and in most instances, with less then four public hearings.

CONCLUSION

The decision in this 57-page case cannot be justly analyzed in a short blog post.  Given the state of our country at this time, when it comes to freedom of religion and the consequences that we suffer as a result of our differing beliefs, it would be a worthwhile allocation of any land use attorney’s time to read this decision.  If nothing else, it reminds us all that one of the basic tenets of our American freedoms is the freedom to be different and be accepted.

pinwheel-wind-power-enerie-environmental-technology

Last Wednesday, LIPA unanimously approved Deepwater Wind’s proposal to build the nation’s largest offshore wind farm approximately 30-35 miles off the coast of Montauk, New York.  Construction will include fifteen turbines with a 90 megawatt capacity able to power 50,000 homes.  The turbines will be built out of sight to address vehement public comments against blighted ocean vistas.

IT IS NOT THE FIRST AND IT WILL NOT BE THE LAST

Long Island’s latest offshore wind farm approval is not the first of its kind in the United States.  America’s first offshore wind farm located three miles off the coast of Block Island, Rhode Island, began delivering energy to the Ocean State in December 2016.  Although our neighbor to the north took the inaugural step, New York leads the charge into the future of offshore renewable energy development.  Our coastline boasts some of the world’s strongest offshore winds, and New York State plans to take advantage of these endless oceanic gusts.

The Montauk project is part-and-parcel of a 250-plus square mile area to be developed, with upwards of 200 turbines generating an estimated 2.4 gigawatts to power 1.25 million homes.  New York is studying a 16,740 square-mile area (an area approximately twice the size of New Jersey) stretching from south of Manhattan eastward into the Atlantic, extending out to the break of the continental shelf.  In addition, last month the federal government leased 80,000 acres of land south of Queens County, New York, to international energy giant Statoil for development.  Statoil endeavors to build seventeen miles offshore and provide 800 megawatts of power.  The federal government recently awarded several other offshore leases for development up and down the east coast, from Rhode Island to Virginia.

NOTES FROM BLOCK ISLAND – THE LOCAL IMPACTS OF DEVELOPMENT

Deepwater Wind’s Block Island project boosted the local economy and showcases many benefits of clean, renewable energy development.  Five offshore turbines harness wind energy capable of powering 17,000 homes.  This wind energy meets 90% of Block Island’s power needs, and additional energy is sent back to the electricity grid.  The developer (Deepwater Wind) is a locally-based company and is an expanding business in the region.  During construction, the project employed more than 300 local workers over two years, including local contractors.  Many more workers will be employed to maintain, repair and update the farm.  Atlantic Pioneer, the vessel that transported the project’s crews, was built in Rhode Island and will service the Block Island farm for at least twenty years.  Lastly, and most importantly, the farm accomplished the overall goal of harnessing wind energy by producing upwards of 30 megawatts of clean, renewable energy.

WHAT’S ON THE HORIZON

New York City and Long Island consume almost half of New York’s annual electricity usage, and continued development of Long Island’s East End fuels electricity consumption.  In an effort to suffice 50% of the State’s electricity needs with renewable energy by 2030, public and private parties alike are investing tremendously to research and develop additional sites to harness nature’s invisible gift.  To provide for efficient and cost-effective paths to develop offshore wind farms, the State issued a Blue Print for the New York State Offshore Wind Master Plan in September 2016 and anticipates releasing an Offshore Wind Master Plan by the end of 2017.

shutterstock_527190727In an effort to generate revenue without raising taxes, many municipalities on Long Island, and elsewhere in New York State, are turning to the use of various forms of land development fees to meet their fiscal challenges. In many cases, these fees can be legally and morally justified, such as when they offset the actual administrative costs of processing a land use application, or when a municipality must incur costs to provide additional public infrastructure and services to accommodate a new development. However, in their zeal to raise revenue, some local governments have ignored statutory and judicial authority that establish a narrow framework for collecting and using these fees, which may leave them exposed to a legal challenge.

In this post, which will be presented in multiple segments, we will highlight the various ways that local governments are using impact, administrative review and recording fees as a revenue-generating measure. We will review the propriety of these fees and discuss the potential impact that these fees can have on development, which is typically a good barometer of a community’s economic prosperity.  We will also discuss who ultimately pays these fees that translate into higher housing and other costs.

Local Impact Fees

Impact fees are one-time payments required by local governments in connection with new developments for the purpose of defraying some of the cost of constructing or improving the public infrastructure needed to serve them. Where authorized, such fees are used to shift the financial burden for additional capital improvements and services from taxpayers to private developers who are the beneficiaries of those improvements and services.

To be valid, there must be a “rational nexus” between the impact fee imposed and the infrastructure needs created by the new development. To satisfy the nexus test, the development must create a need for the new infrastructure; and the fee amount must be based on the extent to which the development benefits from the infrastructure. In other words, an impact fee cannot exceed the pro rata or proportionate share of the anticipated costs of providing the new development with the necessary infrastructure.

Roughly half the states have enacted enabling legislation authorizing the imposition of impact fees. New York, however, is not among them. In fact, a number of decisions by New York Courts cast serious doubt on whether municipalities can enact local impact fee legislation pursuant to home rule powers, or otherwise impose such fees on developers.

In the only impact fee case to reach New York’s highest court, the Court of Appeals in 1989 invalidated the Town of Guilderland’s attempt to fund roadway and other transportation improvements under its Transportation Impact Fee Law (“TIFL”) in Albany Area Builder’s Association v. Town of Guilderland . While the Court did not actually rule on the validity of local impact fees, it concluded that the TIFL was impliedly preempted by the State Legislature’s uniform scheme to regulate highway funding set forth in the Town Law and Highway Law. This decision precludes the use of local impact fees to cover costs associated with roads, sewer, water hook-ups and other infrastructure for which State law already provides a comprehensive regulatory scheme for the financing of these improvements.

Notwithstanding the legal precedents, there are local governments on Long Island that continue to impose what amount to significant, but questionable, impact fees on developers. One such fee is the Town of Brookhaven’s Land Use Intensification Mitigation Fee.  The stated purpose is to mitigate any land use intensification associated with the approval of a change of zoning classification from a more restrictive to a less restrictive use through the acquisition of open space. Depending on the existing and proposed zoning classifications and the size of the site, the law has the potential for imposing significant fees on developers and other landowners within the Town.

While the stated goals of this fee law are undoubtedly laudable, the absence of specific enabling legislation authorizing this fee makes Brookhaven’s law susceptible to legal challenge. A Court could find that the fees charged are not commensurate with the potential demand for additional open space created by the less restrictive zoning and, therefore, fails the “rational nexus” test. A Court may also find that the Town Law provisions authorizing a municipality to require that a parkland be set aside, or impose a fee in lieu of parkland, in connection with site plan and subdivision applications impliedly preempts the Town’s fee law. Of course, it is also possible that a Court could uphold this fee, and Brookhaven’s law may become a model for future local impact fees in New York State.

To date, these fees have not been challenged by developers, who instead are simply paying the fees and capitalize them into the land value. However, depending on the nature of the development, these fees are being passed along by developers to new owners and renters of residential, commercial, industrial, office and retail space, and also to consumers who must ultimately pay more for retail goods and services. While these fees make it easier for a municipality to balance its budget, this short-term benefit pales in comparison to the significant negative impact that these fees can have by driving up the cost of living on Long Island and frustrating the market’s ability to deliver much-needed affordable housing.

In the next segment of this post, we will look at administrative review fees, which are another revenue-generating device used by local governments related to the processing of land use applications that are being assessed on developers, often without regard to the legal limitations on such fees.

Kadir van Lohuizen / NOOR for New York Times Climate change / sea-level rise in Fiji The shoreline of Vunidoloa is heavily eroded due to the rising waters. Vunidoloa is situated on the Natewa Bay on Viti Levu, Fiji's main island. Vunidoloa has 140 inhabitants and frequently floods due to the rising waters. The situ ation became so precarious that the government decided to relocate the village. Unfortunately the site was poorly designed and is eroding before anyone moved there.

Asharoken, N.Y. January 10, 2017 — Swayed by public opinion, the Incorporated Village of Asharoken (“Asharoken”) opted out of a federal beach nourishment plan implemented by the Army Corp of Engineers (“ACOE”) in order to prevent the general public from accessing the Villages’ private beaches.

Asharoken is a narrow isthmus connecting the Village of Northport on the ‘mainland’ of Long Island with the hamlet of Eatons Neck, which is part of an unincorporated area located in the Town of Huntington. Asharoken is bordered by Huntington Bay, Northport Bay, and Eatons Neck. The eastern coast of Asharoken fronts along the Long Island Sound.

Asharoken Avenue, the village’s main road, is the only land evacuation route for village residents and about 1,400 non-village residents of Eatons Neck.  Without this land bridge, Eaton’s Neck and Asharoken would both be cut off from the mainland.

Asharoken experiences moderate to severe beach erosion on the areas fronting the Long Island Sound. This erosion is caused by storm-induced waves and wave run-up from hurricanes and nor’easters. The village has experienced damages from multiple storm events, most recently Hurricane Sandy in October 2012.

In spite of the known safety risks of their precarious evacuation route, the Asharoken Board of Trustees passed a resolution last Tuesday, effectively opposing a $20 million dune restoration project because of the federal government’s mandate for public access to the beaches when taxpayer dollars are utilized. In order to receive funds for the beach nourishment project, Asharoken would be required to add five public walkways to access the beach and five public parking areas at half-mile intervals along the project’s 2.4-mile stretch along Asharoken Avenue.

Despite a history of rising sea levels, the Asharoken Trustees capitulated to resident outcry over the potential loss of their private beach rights rather than balance their decision on the public health, safety and welfare of the Village and Town residents.

Only time will tell if this game of Russian roulette ends well.

At its January 10, 2017 meeting, the Town Board of the Town of Huntington held a public hearing to discuss its proposed ban on short-term rentals.  Several residents testified at the public hearing in opposition to the ban, explaining why short-term rentals are important to the Town.  A few residents explained that these short-term rentals helped them pay their bills and promoted tourism. Other residents explained that they would be homeless without access to short-term rentals as they allow these residents to remain in the area while house-hunting.  Other residents questioned the basis for the ban, asking the Town for evidence of “quality of life” issues allegedly raised by short-term rentals.  The Town reserved decision on the proposal.  Stay tuned for further developments.

Last April, my colleague Anthony Guardino blogged about the Town of Southold’s local law banning “transient rental properties”, which Southold defined as dwellings that are rented out for less than fourteen nights at a time.   Now the Town of Huntington, New York is considering enacting a similar local law.

Huntington’s Proposed Ban

house for rent shutterstock_84704473The Town of Huntington proposes to ban short-term rentals a/k/a “transient rental property” of less than 30 days. The proposal also would prohibit the issuance of rental permits to transient rental properties.    If you are interested in commenting on this proposal, you should attend the public hearing, which is scheduled for Tuesday evening, January 10, 2017 at 7:00 p.m. in Town Hall, located at 100 Main Street in Huntington.

According to the sponsors of the proposal, council members Mark Cuthbertson and Tracey Edwards, complaints have been received over the past year from neighbors of residences who rent out rooms on a short-term basis, raising quality of life issues. The rooms are often advertised on Airbnb, Home Away and VRBO websites. Town rental permits typically are not obtained for these units, meaning they are not certified as meeting Town Code requirements. The Town permits bed-and-breakfast facilities, (referred to as Bed-and-Breakfast Homestays in the Town Code), but these facilities require approval from the Town Board to lawfully operate.

Town of Islip’s Short-Term Rental Law

The Town of Islip enacted a local law on December 15, 2015 concerning transient rental property.  Under the Islip Town Code, a dwelling unit is presumed to be transient rental property if it is advertised on short-term rental websites and is offered for less than fourteen nights. Interestingly, and not surprisingly, the definition excludes dwelling units located on Fire Island. (Islip Town Code § 68-649).  Islip requires a rental occupancy permit to lawfully rent out a dwelling unit and prohibits a rental occupancy permit being granted to transient rental property. (Islip Town Code § 68-650).

Village of Great Neck Estates Short-Term Rental Law

The Village of Great Neck Estates enacted a local law on October 10, 2016 that prohibits transient dwelling units in all zoning districts unless a transient dwelling unit permit is obtained from the Village.  Such permits only can be issued twice a year for any particular dwelling unit, must specify the proposed occupant on the application and are not transferrable to other occupants. (Village of Great Neck Estates Code § 230-22).  A transient dwelling unit covers a rental that lasts less than eight consecutive days, and a unit that is advertised on short-term rental websites is presumed to be a transient dwelling unit.

Stay tuned for an update after Tuesday’s public hearing.

logo-colorBefore we blog our way into 2017, we wanted to take a moment to review the topics that we blogged about in 2016 and to remind our readers that the land use practice group at Farrell Fritz is a diverse group of attorneys, which is why the topics that we blog about are quite diverse.

For example, it is not uncommon for our practice group to be involved in a large-scale transactional development project, while at the same time, we are drafting or answering an order to show cause; drafting easement agreements; exploring an adverse possession claim; resolving environmental issues; preparing, presenting and defending applications; and litigating our way through a criminal zoning code violation.   Our diverse legal talents are reflected in the topics that we chose to blog about in 2016.

We started the 2016 blogging year, for example, discussing riparian rights, climate change,  e-waste regulationsPine Barrens credits and renewable energy.  As the spring and summer approached, we tackled summer rental laws and the controversial role that Air BnB plays in short-term rentals.  During this time, we also blogged about the increasing presence of Vape stores on Long Island and how municipalities are tackling Vape store land use regulations.

One very popular 2016 topic in the land use community focused on the use of Drones and Drone regulation.   We will, of course, follow this developing topic in 2017, so be on the lookout for our Drone updates.favicon

Likewise, and always a controversial land use topic, is the use of moratoriums. Last year we blogged about the Village of Patchogue’s and the Village of Sag Harbor’s use of moratoriums to slow Village development.   We also addressed the hot topic of “zombie houses” by discussing not only what a “zombie house” is, but also blogged about legislation at the state, county and local levels aimed at combating the increasing number of zombie homes and decreasing the negative impact that these homes have on our communities.

 And, always relevant topics in the land use arena, we blogged about easements, SEQRA, farmland preservation, special permits and variances, the Hamptons helicopter route, rezoning the East End in Moriches and Eastport, General Municipal Law 239-m referrals, and non-conforming uses.

Finally, no year in review would be complete without mention of Facebook and the pitfalls that all litigants face when they take to social media during the pendency of a  land use lawsuit.  Check out our post on the monetary and other sanctions that the Village of Pomona suffered.

The above is just a quick snapshot of the topics that we blogged about in 2016.   We will kick off 2017 next Monday, January 9, 2016 with our new year’s post by Charlotte A. Biblow, Esq.   We hope you enjoyed our year in review and that in the coming year, you will help us increase our readership by forwarding our posts to your colleagues and friends and inviting them to subscribe to our weekly blog by email.

Happy New Year to all.

Monopole-TowerB1On December 21, 2016, the Appellate Division, Second Department, rendered yet another decision whereby an appeal was dismissed “as academic” on the grounds that during the pendency of the appeal, the land use development project that was the subject of the lawsuit/appeal was completed.

In Bruenn v. Town Board of the Town of Kent, 2014-07666 (2d Dept., December 21, 2016), petitioners/appellants Bruenn commenced a hybrid proceeding pursuant to CPLR Article 78 seeking a declaration that two (2) 2013 resolutions adopted by the Kent Town Board authorizing construction and operation of a 150-foot monopole wireless communications tower were null and void.    The trial court dismissed the hybrid proceeding holding that the resolutions were not null and void.  Bruenn appealed.

During the pendency of the appeal, construction of the monopole was completed by defendant, Homeland Towers, LLC (“Homeland”).  As a result thereof, in or around September 2015, Homeland made a motion to dismiss the appeal on the grounds that Bruenn’s claims were rendered moot by construction and completion of the monopole.   Although the Appellate Division initially held the motion in abeyance and referred it to the three panel of justices charged with determining the underlying appeal, the panel ultimately determined that a decision on the merits of Bruenn’s claims was academic, as Bruenn failed to seek preliminary injunctive relief, and as a result, Homeland’s motion to dismiss the appeal on mootness grounds was granted.

This decision reminds practitioners of the important role that preliminary injunctions play in land use development disputes.  Failure to seek injunctive relief at the outset will, in most cases, preclude review of the merits of the appeal.   In Bruenn, the Court stated that Bruenn’s explanation that monetary constraints precluded Bruenn from moving for injunctive relief was unavailing.  It is well established law that failure to seek an injunction stopping a project at its earliest stages will result in a mootness defense so long as the continued construction is not performed in bad faith or without authority.  Id.   Moreover, it was established that the work performed by Homeland could not readily be undone without substantial hardship.  Since construction of the monopole was an isolated event, not subject to “recurring novel or substantial issues that are sufficiently evanescent to evade review otherwise,” the Appellate Division granted Homeland’s motion to dismiss and as a result, rendered any determination on the merits “academic.”  Id.