Village of Westhampton Beach

My partner, Anthony Guardino, recently posted a three-part series about land use fees on this blog. This post concerns a decision by the Appellate Division upholding a $776,307 “Park Fee” imposed by the Village of Westhampton Beach in connection with the development of a 6.59 acre tract of land.

Westhampton Beach Associates, LLC v Incorporated Village of Westhampton Beach, 151 AD3d 793 [2d Dept 2017] involves a 39-unit condominium development. The Village Planning Board approved the site plan in 2008 on the condition that the developer pay a recreation or park fee (“Park Fee”) to be set by the Village Board of Trustees pursuant to Village Law § 7-725-a(6) and § 197-63(Q)(2) of the Village Code. The Park Fee was imposed because the reserved area required by the Village Code could not be located within the site plan. The Village determined that 63,684 square feet of reserved area was otherwise required based on the site plan.

The Village Code contains a formula to calculate the Park Fee based on the fair market value of the land at the time of the application, the total area shown on the site plan in square feet, 2,178 square feet of reserved area per dwelling unit and the number of dwelling units.   Using the formula, in 2011, the Village calculated the Park Fee to be $776,307.

The developer sold the parcel to a third-party in 2012 before the developer paid the Park Fee. The deal included a provision that the purchase price was reduced by the amount of the Park Fee that the purchaser would pay to the Village. It also provided that if any portion of the Park Fee was waived by the Village or was disallowed for any reason, the buyer would pay that amount to the developer. Two years later, the developer sued the Village, contending that the Park Fee was unconstitutionally vague, as a way to recoup that money from the purchaser.

The Appellate Division first discussed two defenses raised by the Village – standing and statute of limitations. The Court ruled in favor of the developer on these impediments. The Court held that even though the developer sold the parcel before it paid the Park Fee, it still had standing to challenge the constitutionality of the Park Fee. The Court reasoned that the Park Fee was applied to the parcel at the time the developer owned the site and the subsequent sale and price reduction was an actual harm to the developer.   The Court then determined that the claim was not time-barred, as it was not subject to the four-mouth statute of limitations for Article 78 proceedings, since that type of proceeding could not be used to challenge the constitutionality of a Village code provision. Rather, it was governed by the six-year statute of limitations.

Unfortunately for the developer, the Court then ruled against the developer on the merits, finding that the Village Code provision was not constitutionally vague. Thus, the developer is unable to recoup the amount of the reduction in the purchase price attributable to the Park Fee, and the Village is able to continue imposing this significant fee on other applicants.