Petitioners, residents and nearby occupants (“Petitioners”), commenced a hybrid Article 78 proceeding and declaratory judgment action against the Planning Board of the Village of Tuckahoe (“Board”) and others in Murphy v. Planning Board of Tuckahoe (Sup. Ct. Westchester County 2017), to annul a negative declaration issued by the Board. The Board initially issued a conditional negative declaration (“CND“) for a project to construct a hotel, restaurant and parking lot (“Project”) at a former marble quarry and dump site (“Site”). Petitioners filed suit after the Board amended its CND to a negative declaration.

The Site had been a quarry from the late 1800s until the 1930s, after which private entities and municipalities used the Site for dumping. In 2014, the project’s developer, Bilwin Development Affiliates, LLC (“Developer”), conducted environmental testing which revealed concentrations of volatile organic compounds, semi-volatile organic compounds and inorganic compounds at the Site. The Developer applied for admission into the New York State Brownfield Cleanup Program (“BCP”), which the New York State Department of Environmental Conservation (“DEC”) accepted. During plan preparation for the BCP, the Developer submitted an application to the Board for site plan approval for the Project; and the Board declared itself lead agency for SEQRA review.

In July 2015, after its review, the Board issued a draft conditional negative declaration (“CND”) with time for notice and comment. The Board ultimately adopted the CND in September 2015, categorizing the Project as an unlisted action with the condition that the Developer meet all DEC and Department of Health requirements.

Before and after issuance of the CND, the Developer – in conjunction with the DEC and the Board – performed additional Site investigations and prepared plans for remediation and containment. The final plans for the Project included remediation specifications for the contaminated soil, a community air monitoring plan and construction of a hotel and parking lot as a Site cap. The DEC determined that the remediation plan would eliminate or mitigate all significant threats to public health and the environment presented by contamination.

In October 2016, after a number of public meetings and comments, the Board amended the CND to a negative declaration based upon the DEC’s determination, the remediation plans and other documents in the record. This amendment occurred over a year after the issuance of the draft CND (July 2015). Petitioners sued to annul this decision claiming, among other things, that: (1) SEQRA regulations do not allow the amendment or rescission of a CND unless the lead agency later determines a positive declaration is appropriate; and, (2) the lead agency failed to take a “hard look” at evaluating the environmental impact of the methods to be used in removing contaminated soil and monitoring contaminants. Petitioners also challenged the issuance of the CND.

First, although SEQRA regulations require rescission of a negative declaration or CND if new substantive information or changes cause the lead agency to determine a significant adverse environmental impact may result, the regulations do not prohibit amendments to a CND that remove conditions. 6 NYCRR § 617.7(d)(2), (f)(1). Moreover, SEQRA regulations permit a lead agency, at its discretion, to amend a negative declaration (a CND is a type of negative declaration) at any time prior to the decision to approve an action. 6 NYCRR § 617.7(e). Therefore, the Board was allowed to amend or rescind the CND.

Second, with respect to excavating the contaminants, Petitioners argued that the proposed methods to remediate and monitor were unsafe. Notably, Petitioners did not argue that the proposed methods would have an adverse environmental impact. Petitioners cited their experts’ methods and opinions, which the Board already reviewed during the comment period. The Court held that, at best, Petitioners merely indicated a disagreement between Petitioners’ experts and the Board as to the preferred methods to remediate and monitor – which is not grounds to overturn the Board’s decision to issue the negative declaration.

Lastly, the Court held that Petitioners’ challenge to the underlying CND was untimely. The draft CND was published on July 21, 2015, the period of limitations began to run thirty (30) days later on August 20, 2015, and expired four (4) months later on December 20, 2015. Petitioners could not attack the underlying CND eleven (11) months past the period of limitations by virtue of seeking to annul a later amendment to that CND.

Based upon the foregoing, and other reasons, the Court dismissed these challenges.

In Miranda Holdings v. Town Board of Town of Orchard Park, ____ N.Y.S. 3d, ____, 2017 WL 2884633 (4th Dept. July 7, 2017), Petitioner, Miranda, proposed a commercial structure that included a restaurant with a drive-through window. The Town Board was not happy.  Not only did the Board improperly declare the proposed restaurant with a drive-through as a Type I action under SEQRA, but also it required a full-blown EIS.  Further,  the Town enacted a local law specifically declaring that, going forward, all restaurants with a drive-through would be categorized as Type I actions.

Although the Appellate Division upheld the trial court’s determination that that law does not allow the Town to reclassify actions in a manner that is contrary to the DEC classification, the Court, without any real explanation, remitted the matter back to the Town for further findings consistent with its opinion.

In Miranda’s favor, the Appellate Division upheld the trial court’s decision to invalidate the local law, which reclassified all restaurants with a drive-through as Type I actions wholly inconsistent with the DEC’s Type II designation.

The Town’s Actions

At first, the Town determined that the project was an Unlisted action under the State Environmental Quality Review Act (“SEQRA”) and SEQRA Regulations. See, 6 NYCRR Part 617. The Town issued a “positive declaration” requiring that Miranda prepare an Environmental Impact Statement (“EIS”). A full-blown EIS is difficult, time consuming and expensive. Unsurprisingly, Miranda claimed that the proposed project was a Type II action under the regulations and, therefore, was exempt from all environmental review and from preparing an EIS. In response, the Town passed a resolution making a drive-through restaurant project a Type I action, so that it was presumed to require an EIS. Miranda sued, arguing that the Town (1) was out of bounds, (2) was not allowed to make the project a Type I action because by its nature, it is a Type II action and (3) could not require that Miranda prepare an EIS.

What a mess! The Court’s decision does not add a lot of clarity.

The Trial Court Decision and SEQRA

Like ancient Gaul, all SEQRA actions are divided into three parts – Type I, Type II and Unlisted. A Type I action “carries with it the presumption that it is likely to have a significant adverse impact on the environment and may require an EIS. Type II actions are just the opposite – they are exempt from environmental review under SEQRA and thus not only is an EIS not required, but no review is technically required. “Unlisted” actions are everything that is neither Type I nor Type II, thus allowing latitude in what additional review is necessary.

Most Type I and Type II projects are defined in the NY Dept. of Environmental Conservation (“DEC”) Regulations. For example, all permits and variances regarding single-family homes are Type II actions. However, municipalities may also adopt their own lists of Type I and Type II actions, so long as they do not conflict with the DEC’s lists. In particular, a municipality “may not designate as Type I any action identified as a Type II” in the DEC Regulations.

One of the actions identified as a Type II under the DEC Regulations is a commercial facility (or extension) of up to 4,000 sq. ft., which otherwise meets zoning, such as use restrictions, setbacks or height limits. When the Town initially determined that the proposed drive-through restaurant was “Unlisted,” the developer argued that this 4000-sq. ft. commercial facility provision made the project a defacto Type II action exempt from SEQRA. The Town’s reaction in passing the local law was to make all drive-through facilities into Type I actions – spurring the developer’s lawsuit, claiming that the Town could not convert a Type II action into a Type I action.

The trial court decided in Miranda’s favor, holding that because a drive-through facility was a Type II action under SEQRA, the Town could not automatically make it a Type I action.

The Court acknowledged that the Regulations do not specifically list drive-through facilities as Type II actions. However, the SEQRA Handbook published by the DEC does mention fast food facilities as being within the contemplation of the 4,000 sq. ft. Type II and also gives as an example of a Type II, the expansion of a commercial restaurant where the project is less than 4,000 sq. ft. The Court also noted that the Final Generic Environmental Impact Study prepared by DEC in connection with the 1995 adoption of proposed amendments to the Regulations – including the 4,000 sq. ft. commercial project as a Type II – directly referenced a “drive-through window” as part of the commercial expansion that would be exempted if the 4,000 sq. ft. limitation were met. Therefore, the Court concluded that the DEC “contemplated restaurants with drive-through windows as Type II actions.”

The Appellate Division Determination

However – and here is the mystery – the Appellate Division held that the Supreme Court should not have found that the proposed restaurant was a “4,000 sq. ft.” Type II – without “a revised review” by the Town. What is there to review?

The Appellate Division may have had some empathy with the Town’s concerns and afforded it the opportunity to look more closely at the proposed project. More fundamentally, the “4,000 sq. ft.” Type II is very broad and can easily include projects that pose potential for significant impacts, like traffic and air quality. Despite the fact that the DEC determined that projects of this limited size “do not rise to the level of significance envisioned by [SEQRA] as requiring an EIS,” perhaps other aspects of the proposed development needed further review by the Town.

What the Appellate Division did unequivocally declare is that a municipality cannot reclassify a project from a Type II to a Type I, as this is prohibited under SEQRA.  Invalidation of the local law was upheld.

The bottom line lesson is that municipalities should address planning and zoning concerns for their ordinary development through zoning and planning; not by a short cut in trying to stretch environmental review beyond the DEC regulations specific to each project.

 

In People Theatres of N.Y. Inc. v. City of New York, 2017 N.Y. Slip Op. 04385, various owners of adult businesses (“Plaintiffs”) brought separate actions against the City of New York (“City”) based upon First Amendment challenges seeking relief against zoning ordinances that bar adult establishments from operating in, among other areas, all residential districts and most commercial and manufacturing districts (“Ordinance“). The cases were consolidated; and after the trial court’s initial determination, the cases experienced a complex procedural history, having been appealed to the Court of Appeals twice over the course of fifteen (15) years.  A comprehensive discussion of this case and its lengthy history can be found in this extended blog post.

Here, the Ordinance at issue sought to combat negative secondary impacts relating to sexually focused businesses, which impacts were  demonstrated in a 1994 study conducted by the City.  Whether and how the Ordinance applied to particular adult businesses was the impetus for prior litigation in 1995.  In 1998, the City created the so-called 60/40 rule.  Under this rule, any commercial establishment with at least 40% of its customer-accessible floor/cellar area or stock-in-trade used for adult purposes qualified as an “adult establishment” covered by the Ordinance.  Plaintiffs modified their businesses to comply with the 60/40 rule.   The City, however, believed that while many operators were achieving “technical compliance” with the rule, their compliance was a sham. According to the City, the businesses still primarily focused on sexually explicit activities or materials; and their non-explicit materials were an afterthought that did not generate sales.  To shore up enforcement, the City amended the Ordinance in 2001 to effectively eliminate the 60/40 rule (“2001 Amendments”).

The main issue in this case was the relationship between (1) the standard that applies to First Amendment challenges in the context of ordinances affecting adult uses, and (2) the burden of proof a municipality must meet in order to sustain such ordinances. The Court held that “intermediate scrutiny” applies in this type of First Amendment adult use zoning context, which requires that an ordinance be narrowly tailored to the municipality’s justified purpose and assure reasonable alternative avenues of communication.  When applying intermediate scrutiny, a court must balance the interests at stake while assessing a municipality’s factual judgments.  The burden of proof relative to the municipality’s factual judgments is “modest” (no pun intended) and akin to substantial evidence, which is accorded more deference than that given to administrative agencies.

As such, the standard of review in this case is intermediate scrutiny, while the burden of proof is similar to substantial evidence.

The governing legal precedent is set forth in Los Angeles v. Alameda Books, Inc., 535 U.S. 425 (2002), wherein the Supreme Court set forth the three-part burden shifting test, which describes a municipality’s burden of proof to sustain its laws in the face of a First Amendment challenge.   First, the municipality must “fairly support” its rationale for the ordinance. Second, a challenger must cast direct doubt upon the rationale – either by (I) demonstrating the municipality’s evidence does not support the rationale, or (ii) furnishing evidence disputing the municipality’s factual findings. If the challenger cannot cast doubt, then the municipality wins. If the challenger is able to cast doubt, then the third step comes into play; and the burden shifts back to the municipality to supplement the record with evidence renewing support to justify the ordinance.

Here, after applying the Alameda three-prong test, the Court reversed the Appellate Division holding that  the lower court’s mechanical approach was improper and confused the ultimate standard of review (intermediate scrutiny) with the evidentiary burden (similar to substantial evidence) borne by the City. Because the third step of the Alameda analysis obliges a modest burden of proof akin to substantial evidence, it was an error for the lower courts to determine that the City failed to meet its burden.  In this instance, the City met its burden of showing continued focus on sexually explicit activities and materials by the Plaintiffs’ businesses – despite any 60/40 compliance. Therefore, the Appellate Division was reversed and the Ordinance was sustained.

The New York State Uniform Fire Prevention and Building Code (“Uniform Code”) sets forth uniform building and fire prevention standards for New York State.  Article 18 of the NYS Executive Law requires municipalities within the State to administer and enforce the Uniform Code within their boundaries. Executive Law §379(3) states, “…no municipality shall have the power to supersede, void, repeal or make more or less restrictive any provisions of this article or of rules or regulations made pursuant to [the Uniform Code].”

However, a municipality may adopt more stringent local standards provided it petitions the NYS Code Council for a determination of whether such local laws or ordinances are reasonably necessary because of special conditions prevailing within the local government and that such standards conform with accepted engineering and fire prevention practices and the purposes of the Uniform Code. Executive Law §383. The adoption of more stringent laws that have successfully petitioned the NYS Code Council are available at https://www.dos.ny.gov/dcea/mrls.html (the majority of which relate to sprinklers or fire prevention codes).

Whether a particular local law or regulation is superseded depends upon whether it is inconsistent or in conflict with provisions of the Uniform Code. Local laws enacted pursuant to other municipal powers for example, under zoning or wetlands protection, are recognized as legitimate areas for government regulation and may also regulate the construction and use of buildings in municipalities.

Not so subtle conflicts between zoning laws and the uniform code exist in many municipalities requiring that these laws be considered and applied together. For the most part, courts reject arguments claiming local laws are preempted by the Uniform Code or invalid based upon a failure of the municipality to appeal the local law to the NYS Code Council. Brockport Sweden Property Owners Ass’n v. Village of Brockport, 81 A.D.3d 1416, 917 N.Y.S.2d 481 (4th Dept. 2011)(rejecting that local law was preempted by Uniform Code); Catskill Regional Off-Track Betting Corp. v. Village of Suffern, 65 A.D.3d 1340, 886 N.Y.S.2d 214 (2d Dept. 2009)(finding OTB failed to establish that Village Code improperly superseded the Uniform Code); People v. Robles, 22 Misc.3d 140 (A), 881 N.Y.S.2d 366 (Sup.Ct. App. Term 2009)(rejecting claim that Uniform Code preempted the City of Glen Cove code on the merits, finding an expressed interest in statewide uniformity rather than an implied statement of preemption); People v. Oceanside Institutional Industries, Inc., 15 Misc. 3d 22, 833 N.Y.S.2d 350 (Sup. Ct. App Term 2007)(finding that Uniform Code and Nassau County Fire Prevention Ordinance can coexist and applying more stringent sections of codes in conflict).

With the advent of Airbnb and like services, short term rental regulation has become a hot topic on the East End. A review of the occupancy standards in local rental codes and the Uniform Code for single family residences provides a noteworthy example of the local municipality/state regulation inconsistency.

Municipalities use the definition of “family” to limit the number of occupants permitted in single family residences and thereby control the use of homes in residential zoning districts. On the East End, Southampton and East Hampton Towns have used the definition of family to limit the number of persons occupying a rental property under their rental codes. See Southampton Town Code Chapter 270 and East Hampton Town Code Chapter 199  limiting the definition of family to include five or less unrelated persons living together (Southampton) or four or less living together as a single housekeeping unit (East Hampton).   Alternatively, both codes allow an unlimited number of persons that are related by blood, marriage, or legal adoption to reside together provided they live as a single housekeeping unit.

In addition to Town regulations addressing and limiting single family residence occupancy, the New York State Property Maintenance Code regulates occupancy by limiting the number of occupants per square foot per bedroom. Specifically, Property Maintenance Code §404.4.1 requires that “every bedroom occupied by one person shall contain at least 70 square feet of floor area, and every bedroom occupied by more than one person shall contain at least 50 square feet of floor area for each occupant thereof.”

The Property Maintenance Code does not define family but only references occupant which is defined as “an individual living or sleeping in a building.” Therefore, even if the group of persons renting a home in Southampton or East Hampton qualify as family and are not limited under the rental code definitions, compliance with the Property Maintenance Code is still required (notably, East Hampton and Southampton eventually codified the same restrictions). This section of the property maintenance code specifically addresses overcrowding issues. To that end, the Property Maintenance Code also prevents a bedroom from being used as the only means of access or egress to another bedroom; each bedroom must have access to a bathroom without passing through another bedroom; and bedrooms must comply with the requirements for light, ventilation, room area, ceiling height, room widths etc.

Other examples of perceived conflicts include occupancy standards set forth for commercial structures and restaurants in the County Health Department Codes, Uniform Code and local laws; third stories or mezzanine laws and restrictions; standards for bedrooms in basements; and new energy codes including LEED, Energy Star or other ratings systems embraced in local laws that could require higher standards than the Uniform Code. Upon adoption of such local laws, petitions to the NYS Code Council for approval are recommended. See 3 N.Y. Zoning Law and Practice §32A:35, State Preemption of Local Laws, Patricia E. Salkin, November 2016 update.

Ultimately, the Uniform Code and local municipal codes must be read and applied together to ensure compliance.

On June 28, 2017, the Appellate Division, Second Department, held that a tenant has standing to challenge the definition of “Family” as set forth in the Freeport Village Code.

In Tomasulo v. Village of Freeport, ___A.D.3d___, the Village commenced a criminal proceeding against non-party property owner, William Goodhue, Jr. (owner), alleging that the tenancy between Tomasulo (tenant) and the owner violated sections 171-1 and 210-3 of the Freeport Village Code. The tenant had resided in a single family home with the owner of the home and two other non-related persons. This arrangement violated the definition of “Family” in the Village Code. As a result of the criminal proceeding, the owner commenced an eviction proceeding against Tomasulo.

In response to the eviction proceeding, Tomasulo commenced an Article 78 proceeding against the Village challenging the constitutionality of the definition of “Family” contained in Village Code sections 171-1 and 210-3.  The trial court converted the Article 78 proceeding to a complaint and granted the Village’s motion for summary judgment holding that Tomasulo lacked standing to seek a declaration as to the “constitutionality of the disputed portions of the Village Code” because Tomasulo had “not been injured or threatened with injury as a result of those provisions . . . and [Tomasulo] failed to adequately allege the existence of a justiciable controversy.”

In reversing the trial court, the Second Department stated that Tomasulo “demonstrated a ‘threatened injury to [his] protected right’ to his tenancy in the owner’s house . . . such that he has adequately shown ‘an interest sufficient to constitute standing to maintain the action.'”

Finding that Tomasulo’s pending eviction proceeding demonstrated a “present, rather than hypothetical, contingent or remote, prejudice to [him] . . . [the Court declared that the] Village did not establish, prima facie, its entitlement to judgment as a matter of law.”

 

The State liquor law preempts  local municipalities from restricting hours of operation for businesses selling alcoholic beverages for on-premises consumption.   Accordingly, local municipalities should use caution when imposing conditions upon establishments regulated by the State Liquor Authority and would be wise to consider alternative ways to manage late hours accompanied by public imbibing.

shutterstock_542466670In February 2017, the United States District Court for the Western District of New York issued a decision in Obsession Sports Bar & Grill, Inc. v. City of Rochester  (“Obsession“) involving State law preemption of local laws limiting hours of operation for certain businesses such as bars and restaurants.  The federal Obsession case involved section 1983s  claims following successful litigation in State Court. Although the federal Obsession case addressed constitutional claims only,  the decision casted stark attention upon the legal precedent set forth in the underlying State Court case, wherein the Fourth Department upheld the trial court’s holding that the State’s liquor laws preempted the City of Rochester (“City“) from restricting Obsession’s hours of operation.  Id.

In August 2011, Obsession obtained a liquor license from the State Liquor Authority authorizing the retail sale of alcoholic beverages for on-premises consumption of alcoholic beverages at its bar and grill.  Under the State Alcoholic Beverages Control Law (“ABC Law“), as amended by Monroe County local law, persons holding liquor licenses are permitted to sell alcohol, on-premises, Monday through Saturday from 8:00 a.m. until 2:00 a.m. and Sunday from 10:00 a.m. to 2:00 a.m.  In addition, these establishments may remain open an additional one-half hour to permit customers to consume their beverages, i.e. until 2:30 a.m.

Obsession’s business was located in the City’s C-1 zoning district, which permits small-scale commercial uses and restricts evening hours of operation for restaurants and bars to 11:00 p.m.  Although the City partially granted Obsession’s variance by permitting the establishment to remain open until 12:00 a.m. Monday through Thursday and until 2:00 a.m. on Friday and Saturday, the City’s local laws still forced Obsession  to close several hours earlier than required by the ABC Law, as well as earlier than similar businesses located in neighboring zoning districts.

In November 2012, Obsession commenced a state court Article 78 proceeding against the City alleging that the ABC Law preempted the local ordinance vis-à-vis hours of operations.   The City argued  that the State law did not preempt the ordinance because the ordinance did not directly address the sale or consumption of alcoholic beverages.  The trial court found in favor of Obsession holding that the City’s local ordinance was an impermissible exercise of municipal zoning power and null and void in the face of the ABC Law’s conflicting and preemptive provisions.  The Fourth Department unanimously affirmed; and in 2014, leave to appeal to the Court of Appeals was denied.

Although Obsession may have prevailed in the State court with respect to the pre-emption question,  the federal court ultimately concluded that the City did not violate Obsession’s constitutional rights because Obsession did not show that the City’s actions were arbitrary, conscience-shocking or oppressive in the constitutional sense.  Despite this holding, the Court did note that the City may have been negligent. The Court opined that municipalities could and should consider alternative means to address the potential adverse effects of bars and restaurants that operate in the later evening hours.  To placate opposition to development, redevelopment and applications of the like, municipalities should consider alternative regulations, including but not limited to outdoor seating restrictions, light pollution, kitchen hour limitations and parking limits.

images7PKZX7LEIn this post, which is the second segment of a three-part series, we will highlight the various ways that local governments facing fiscal challenges have turned to imposing fees related to the administration of their zoning, subdivision and other land development ordinances to generate additional revenue.  Such fees are authorized by law and can be justified on the basis that those who derive the benefit from a land use application should bear the cost to review that application, rather than the taxpayers.  However, many municipalities on Long Island are imposing new administrative review fees, or increasing the amount of existing fees, that require applicants to pay amounts that are not reasonably commensurate with the cost of the services performed.  Excessive administrative review fees are subject to legal challenge as an illegal “back-door tax.”

Administrative Review Fees

A local government, as part of its regulatory authority, may establish fees for the payment of the expenses to administer a regulatory program. Pursuant to such authority, governmental entities typically charge fees in connection with applications associated with land development to recoup the costs involved with the review of said applications and associated plans to insure that the proposed work complies with all applicable laws, ordinances and regulations. However, while municipalities are authorized to impose review fees, the courts have made clear that the fee amount that can be charged is limited to that which is “reasonably necessary” to undertake the regulatory review involved. In applying the “reasonably necessary” principle, courts do not require exact congruence between the fees charged and the government’s cost to review an application; but there must be some rational underpinning for the charges levied. In other words, the review fees charged must be commensurate with the actual expense of the application being processed and should not be exacted for revenue-generating purposes or to offset the cost of general governmental functions.

Nassau County’s GML § 239-f Review Fee

In 2015, the Nassau County Legislature adopted Ordinance No. 176-215, which pertains to fees charged by the Nassau County Department of Public Works (“NCDPW”). According to the ordinance, certain fees charged by Nassau County “no longer cover the costs required to administer and process the services for which they are charged.” Therefore, the ordinance states that it is “necessary to fix such fees so that they cover the administrative costs associated with the operation of services of the departments.”

Among the fees imposed by Ordinance No. 176-215 are those charged to review applications for building permits, pursuant to General Municipal Law (“GML”) § 239-f, that are forwarded from the various town, cities and villages. GML § 239-f grants the NCDPW the authority to review applications for building permits for developments having frontage on a Nassau County road, but only insofar as the proposed building, including curb cuts or other means of access, may be related to the County road. Where the application is for a development with an anticipated construction cost of $25,000 or more, the initial review fee is $1,500. However, if the anticipated cost of construction is greater than $250,000, the developer is required to pay a fee equal to .75% of the estimated construction value in addition to the initial review fee.

While there clearly is authority for the NCDPW to charge reasonable administrative review fees to process building permit applications for developments that front on a County road, these fees are vulnerable to legal challenge because the amount of the fees charged, at least for developments costing $250,000 or more, is not commensurate with the cost of the services performed. Nor do they bear any relationship to the development’s impact on County roads or other facilities. To illustrate this point, the fee charged to review a building permit for a 150,000 square foot membership warehouse store (such as a Sam’s Club, Costco, or BJ’s), which is typically a simple concrete block building with inexpensive fixtures and finishes, is likely to be significantly less than the fee charged for a building of the same size and constructed on the same site for use by a retailer that elects to construct its building with better and more expensive materials, fixtures and finishes. Presumably, both retailers’ uses would have the same impact on the adjacent County roads and facilities, but the retailer whose building will cost more to construct will be required to pay more to have its plans reviewed by NCDPW. Aside from being patently unfair (and perhaps illegal), the NCDPW’s review fee structure encourages developers to construct buildings using inferior, less expensive materials.

NCDPW’s building permit review fees, at least when they are based on the cost of construction, appear to be vulnerable to attack because they are not calculated based on the NCDPW’s cost to review an application, or the impact that a proposed development may have on County facilities. Instead, they are based on the amount of the investment that a developer chooses to make in the site. Moreover, according to the Nassau County Legislature’s Review of the Fiscal Year 2017 Budget & Multi-Year Plan, these fees also appear to be imposed for revenue generating purposes and to offset the cost to operate the NCDPW. Indeed, while the NCDPW revenues have generally decreased since 2015, the County’s current budget projects nearly a 300% increase in revenue from GML § 239-f building permit review in 2017.

To date, the NCDPW’s building permit review fees have not been challenged by developers, who instead simply pay the fees and capitalize them into the land value. However, these increased costs are being passed on to consumers who ultimately pay more for housing, goods and services. While these fees are helping Nassau County balance its budget, they are also contributing to the high cost of living that is driving people away at an alarming rate.

In the next and final segment of this series, we will look at real property recording fees, which have increased significantly in Nassau and Suffolk Counties in recent years. These fees are being used as yet another revenue-generating device that some consider to be nothing more than an illegal tax.

 

shutterstock_1842816On April 27, 2017, the Town Board of the Town of Brookhaven approved a change of zone for Rock Hill Golf and Country Club from a one-acre residential lot zone to the Golf Course District.  Manorville’s Rock Hill is the first private course to join the Town’s newly created Golf Course District.

The district is designed to protect and preserve Long Island’s golf courses amidst rapid redevelopment.  The open spaces, vistas, greenery and outdoor recreation have recently experienced a surge of transition into multi-family dwellings and housing complexes.  The new zone removes some of the allure for such transitions and provides golf course owners and operators with more tools to be successful, including added permitted uses and on-site functionality.

Rock Hill joins Mill Pond and Rolling Oaks in the Golf Course District.

shutterstock_637510813On April 25, 2017, the Southold Town Board adopted Local Law No. 5 of 2017, which amends the Town’s Zoning Code as it relates to agricultural uses. Specifically, the local law amends and adds certain definitions to the Code in recognition of the changes in modern farm operations. The changes are also consistent with the expanded definitions of agriculture found in New York State’s Agriculture and Markets Law.

The new law broadens the scope of agricultural practices by adding several definitions, including those for agriculture, agricultural production, agricultural processing, farm operations, farmhouses, processed agricultural product and on-farm operation direct marketing.  These changes expand agricultural practices beyond the growing of crops and raising of livestock and will allow farmers to process their crops and other agricultural products onsite and market them for sale, much like vineyards that make wine on their properties. Such processed agricultural products include jams, jellies, cheeses, potato chips, jerkies, meats, fowl, fish, breads and baked goods, beer, wine and distilled alcoholic and non-alcoholic beverages.

Farmers will also be allowed to sell their processed agricultural products directly to consumers from within buildings constructed on the farm for the purpose of marketing their products.  The law even allows non-farmers to sell home grown fruits, vegetables or plants to the general public from a “roadside stand,” which is defined as a display area that is less than 100 square feet in size located on the same parcel where the products are grown.

According to Chris Baiz, the chairman of the Southold Agricultural Advisory Committee and a fourth-generation farmer, the high cost of land requires farmers to achieve greater cash flows in order to operate successfully.  These new changes should help local farmers realize more income from their lands by allowing them to process and market value-added products from within their operations.

voidable-contractsAlso known as negative easements, restrictive covenants can wreak havoc on the ability to develop property. Recently, in our real estate practice at Farrell Fritz, we have seen two alarming examples.

In both cases, the restrictive covenant combined with applying municipal zoning requirements precluded the development of the property. Fortunately, we had inserted language into the contracts that allowed the client to cancel the contract with no negative financial consequences.

Restrictive Covenants and Land Use Regulations

One such instance involved a waterfront parcel on Shinnecock Bay in the Town of Southampton. This property was subject to the Town’s wetland law, which regulates the setback of structures in relation to the location of the wetlands on site. Through a title search, we found out that the property was also burdened by a private covenant that also restricted the location of structures.

This covenant contained specific language which required that a structure constructed on the site be setback at least 85 feet from the street. From the opposite side of the property, the Town’s wetland regulations required that a principal structure be at least 125 feet from the wetlands.

Applying both the wetland setback and covenant setback resulted in a negative building envelope.

Since this covenant was included as part of the subdivision process, all 26 owners of lots in the subdivision had to sign off on a waiver of the covenant requirements.

Another similar circumstance occurred where a covenant in a deed for a lakefront property required that any structure constructed on the premises be situated 60 feet from the street. This property was also subject to the same 125-foot wetland setback as the previous example. Again, application of both setbacks rendered the lot unbuildable.

In this instance, the covenant was unusual. It only benefitted the sellers of the lot, who also owned other properties in the area. The sellers specifically retained the right to modify the restrictions imposed by the covenant.

If applied to their fullest extent, both restrictions result in a lot that cannot be developed.

Relief From Restrictive Covenants

Obviously, a property owner could apply for relief to the municipal agency having authority over wetland regulations. However, these municipal boards are under increasing pressure to preserve wetlands which protect water bodies, so relief from these restrictions is difficult to obtain. Extinguishment of the covenant is the only other option. There are three ways to extinguish a covenant:  (1) an agreement between the interested parties to the covenants; (2) a merger of ownership or (3) a final decision by a court of law.

All three paths are challenging.

To obtain an agreement to extinguish the covenant in my first example would require consent from the other 25 property owners in the subdivision.

Because of the vague nature of the language that created the covenant in the lakefront example, extinguishment involves a difficult title challenge. There, a prospective developer must research title ownership of the nearby properties to determine those owned by the persons that created the covenant. After that research, a perspective purchaser must then obtain an agreement of all current property owners in the chain of title of the affected properties to amend the covenant.

Second, to merge ownership would require the purchase of the properties that benefit from the covenant. A purchase of the necessary lots in both examples above would be cost prohibitive.

Finally, a party looking to extinguish a covenant can commence a litigation under §1500 of the Real Property Actions and Proceedings Law. There are too many causes of action under §1500 to list here; but extinguishing a well written covenant through the court system would be a difficult, time consuming, and expensive task.

The obvious advice here is to authorize a title company to provide any covenants and easements that could affect the development of a property under consideration for purchase prior to entering into contract of sale.