In Joy Builders, Inc. v. Town of Clarkstown, 2018 N.Y. Slip Op. 07110, 165 A.D.3d 1084 (2d Dept 2018), a developer (“Developer”), in connection with the development of two subdivisions, challenged a provision of the Town Code of the Town of Clarkstown (“Town”) which authorized the Town to withhold the issuance of building permits for a subdivision until the applicant/owner has completed the requisite infrastructure and improvements and dedicated the same to the Town.  The Supreme Court, Rockland County, denied the Developer’s motion for summary judgment and the Developer appealed.  The Appellate Division, Second Department, reversed and declared the Town Code provision null void and struck the subdivision conditions affected by that provision.

With respect to the Developer’s projects, the Town Planning Board had approved two subdivisions of 22-lots and 55-lots, respectively.  The approvals contained a condition requiring the Developer to build certain infrastructure and post performance bonds for each project.  Town Code Section 254-18B authorized the Town to withhold the issuance of building permits for 10% of the lots of each subdivision until the Developer completed and dedicated the infrastructure and improvements.  The basis of the “holdback” was to ensure that applicants/owners complete the requisite work.  During construction, the Town relied upon the holdback provision and withheld the issuance of buildings permits for three lots in one subdivision and six in the other.  The Developer, then, commenced this action challenging the Town’s withholding and seeking a declaration that Section 254-18B was null and void.

The Appellate Division noted that towns and municipalities lack the inherent power to enact zoning or land use regulations – rather, they are creatures of statute.  As such, towns may only engage the powers conferred by the State Legislature.  The pertinent statute, Town Law Section 277(9) authorizes the Town to obtain enumerated forms of security in order to ensure the full cost of infrastructure and improvements in the event a developer abandons a project.  However, withholding the issuance of building permits is not among these.  The Court determined that Town Law Section 277 does not expressly authorized the holdback and no such authority can be implied.  Therefore, Town Code Section 254-18B was inconsistent with the Town Law and the Town does not have the power to withhold building permits to provide financial security for the completion of work.

The Court declared Section 254-18B void and struck the conditions of withholding. The Court’s ruling reaffirms strict adherence to the enumerated powers for municipalities in the land use and zoning context.

New York State Town Law § 277(9) authorizes a town Planning Board to require a developer to provide a performance bond or other security covering the cost of installation of subdivision infrastructure and improvements in case the developer fails to finish the required work. Specifically, Town Law §277(9) states: “[a]s an alternative to the installation of infrastructure and improvements, as above . . . prior to planning board approval, a performance bond or other security sufficient to cover the full cost of the same, as estimated by the planning board or a town department designated by the planning board to make such estimate . . . shall be furnished to the town by the owner.”

On October 24, 2018, the Appellate Division, Second Department explored the extent of this enabling legislation in the case of Joy Builders Inc. v. Town of Clarkson.  In Joy Builders v. Town of Clarkson, Joy Builders was developing two subdivisions approved by the Planning Board; a 22 lot subdivision called Highland Vista Estates and a 55 lot subdivision called Little Tor Subdivision.  Both subdivisions were approved by the Planning Board with the condition that Joy Builders would build the infrastructure required for each one including roads, curbs, sidewalks, street signs, light poles and monuments. Joy Builders was required to post performance bonds for each subdivision pursuant to New York State Town Law §277(9).  Additionally, the Town of Clarkson had enacted Town Code §254-18B which authorized the Town to withhold the issuance of building permits for 10% of each subdivision until Joy Builders had completed the required infrastructure improvements. The enactment of this law was the Town’s effort to ensure that the required infrastructure work would be completed.

Specifically, Town Code §254-18B stated:  “Ten-percent restriction of building permits pending dedication of improvements in subdivisions.  Building permits shall be restricted, in accordance with the map note per §254-29B of this chapter, to footings, foundations and utilities only on 10% or one of the structures or dwelling units, whichever is greater, in each subdivision until all required improvements have been completed to the satisfaction of the Department of Environmental Control and shall have been dedicated to the town, unless waived by the Planning Board.”

In response to having Town Code §254-18B imposed, Joy Builders brought a declaratory judgement action against the Town seeking a judgment that the Town Code provision was null and void as ultra vires. The Supreme Court denied Joy Builder’s motion for summary judgement on the complaint, and Joy Builders appealed. The Appellate Division reviewed the enabling authority set forth in Town Law §277 and reversed the Supreme Court’s determination.

The Court stated: “[h]ere, a plain reading of Town Law § 277 establishes that (1) it has no express provision authorizing the Lot Holdback Provision set forth in Town Code § 254-18B, (2) pursuant to the rules of statutory construction, the express provisions of Town Law § 277 must be construed to exclude provisions such as those in Town Code § 254-18B which are not contained in § 277 (see Walker v Town of Hempstead, 84 NY2d 360, 367), and (3) it has no provision from which the Lot Holdback Provision of Town Code § 254-18B can be implied (see Matter of Gruber [New York City Dept. Of Personnel—Sweeney], 89 NY2d 225, 234; Matter of Webster Cent. School Dist. v Public Empl. Relations Bd. of State of N.Y., 75 NY2d 619, 627). Thus, Town Code § 254-18B is inconsistent with the plain language of Town Law § 277(9), which expressly sets forth the manner in which a developer can be required to provide financial security to ensure the completion of the installation of required infrastructure and other mandatory improvements.”

Since the matter was a declaratory judgment action, the Court remitted the matter back to the Supreme Court for the entry of a judgment declaring that Town Code §254-18 was null and void as ultra vires and that the conditions imposed on Joy Builders arising out of that Town Code section were also null and void.

 

In 2000, Plaintiff Steven Sherman applied to the Town of Chester Planning Board for subdivision approval while in the process of purchasing nearly 400 acres for $2.7 million dollars. According to the Second Circuit Court of Appeals in its recent decision in Sherman v Town of Chester, 752 F3d 554 [2d Cir 2014], “[t]hat application marked the beginning of his journey through the Town’s ever-changing labyrinth of red tape.”

The short version of the more than a decade’s worth of red tape by the Town includes: a six-month moratorium on major subdivision approvals; extension of the moratorium by the Town which singularly affected the Plaintiff; litigation by the Plaintiff to end the moratorium; changes to the Town’s zoning regulations; amendments to Plaintiff’s application to satisfy the new requirements; additional changes to the Town’s zoning regulations; the Town Board’s refusal to entertain the application after Planning Board approval; and the Town amending its zoning regulations for a third, fourth and fifth time.

Additionally, because the application was originally filed in 2000, a Supplemental Draft Environmental Impact Statement (“DEIS”) was required with the resubmitted application.  Certain Town staff changed since the initial filing, including the Town Engineer.  The Plaintiff was charged the expense of having the new engineer review the entire project, although he had previously been charged to have the project reviewed by the earlier engineer.

Moreover, in September of 2009, and after the Plaintiff submitted two different versions of his earlier subdivision proposal, he learned that the Planning Board Chairman had been replaced with a new Chairman, who was known to be openly hostile to the project, and had, in fact, written letters to the Town in 2001 in opposition to the project.  The new Chairman requested $25,000.00 in consulting fees, required an additional “cluster plan” of the Plaintiff, and, lastly canceled the Plaintiff’s appearance at the Planning Board’s monthly meeting, demanding an additional $40,000 more in consultants’ fees.

In 2008, Sherman filed suit against the Town and other defendants in federal court, alleging, in part, a taking of his property by the Town.  Sherman voluntarily dismissed the first case, then filed another action seeking similar relief in state court.  The Town removed to federal court, and moved to dismiss on ripeness grounds.  The District Court for the Southern District in Sherman v Town of Chester, US Dist Ct, SD NY, 12 Civ 647, Ramos, J., 2013, dismissed some of his claims on the merits, and most because they were unripe.  The District Court concluded that Sherman had failed to show that seeking a final decision from the Town would be futile, applying the first prong of the two part test set forth in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 [1985], requiring that the state regulatory entity has rendered a “final decision” on the matter.

On May 16, 2014, the Second Circuit issued a decision that reversed the District Court’s holding and determined that Sherman’s takings claim was ripe.  The Court held that seeking a final decision from the Town would be futile because the Town had used unfair and repetitive procedures to avoid a final decision.

As set forth in the decision:

Every delay in zoning approval does not ripen into a federal claim.  Unfortunately, it is no simple task to distinguish procedures that are merely frustrating from those that are unfair or would be futile to pursue.  But when the government’s actions are so unreasonable, duplicative, or unjust as to make the conduct farcical, the high standard is met.

And it was met in this case.  Seeking a final decision would be futile because the Town used—and will in all likelihood continue to use—repetitive and unfair procedures, thereby avoiding a final decision.  Sherman is therefore not required to satisfy the first prong of Williamson County.  This conclusion is consistent with the principles behind Williamson County. The final decision requirement ensures that a court knows how far a regulation goes before it is asked to determine whether that regulation “goes too far.”  In this case, we are not dealing with any one regulation but the Town’s decade of obstruction. A final decision is not necessary to evaluate whether that obstruction was itself a taking.

Sherman v Town of Chester, 752 F3d at 563, emphasis added.  The Court thereafter considered a number of other issues, including the merits of the takings claim, and found that Sherman had stated a claim that the Town effected a taking.  The Court remanded the matter to the District Court for further proceedings consistent with its opinion.