It turns out, according to the Supreme Court, Orange County, that the standards for review of municipal contracts are noticeably less stringent for New York Village Boards than for Town Boards.  Village Boards may approve a contract in principal, allowing the Mayor some room for further negotiation and language changes.  Town Boards must review and approve the actual, final contract; and the Supervisor may not refine or sign any other contract.  That was the Court’s analysis in Guazzoni v. Village of Tuxedo Park, ____ N.Y.S.3d ____, 2018 N.Y. Slip Op. 28177, 2018 WL 2946114 (Sup. Ct., Orange Co. 6/12/2018).

 

The Trustees of the Village of Tuxedo Park passed a resolution that the Village enter into a consulting agreement with an outside Consultant.  (The Court’s opinion does not disclose the nature of the consulting.)  The Board’s resolution states that the contract was to be “substantially” in the form reviewed by the Trustees, “together with such changes as may be reviewed by counsel and approved by the Mayor” and one of the Trustees.  The Mayor then signed a contract under which the consultant was paid approximately $5,371 per month and an additional sum of $800 per month for costs or reasons not discussed in the opinion.

Plaintiffs were not happy with the contract – again, for unspecified reasons.  They brought an action claiming that the Mayor had not been authorized to enter into the contract as it was finally drafted and signed after review and modification by counsel (presumably the Village Attorney), the Mayor and the single Trustee specified by the Board.

The Court held that a Village Board did not have to approve the final contract.  The Court recognized that statutory restrictions on a municipality’s power to contract serve the purpose of protecting the public from “corrupt or ill-considered actions of municipal officials.”  However, it was sufficient that the Trustees had authorized the Mayor to sign a contract that was substantially like the terms the Trustees had reviewed.

The Court relied on NY Village Law §4-412(1)(a) which defines the general powers of Village Trustees as, broadly speaking, the “management of village property and finances.”  The Village Law does not specify the manner in which village contracts must be made, and there is “no express statutory provision requiring village boards to approve contracts in their entirety before their execution by the mayor.”

In contrast, NY Town Law §64 defines the powers and duties of Town Boards and states that a Town Board “may award contracts” to “be executed by the supervisor in the name of the town after approval by the town board.”  Therefore, says this opinion, a Town Board must approve the exact contract with all details before the Supervisor can sign it – but Village Boards may approve the substance of a deal with a municipal contractor; and the Mayor may sign any contract that does not change the substance approved by the Trustees.

It was not strictly necessary for the Court to construe Town Law §64 to decide the village case before it – although the analysis is certainly interesting.  The lack of any detail of how the final contract negotiated by the Mayor and one of the Trustees differed from the substance approved by the Trustees is also intriguing.  Without that information it is difficult to know why the plaintiffs were concerned enough to bring an action challenging the contract and, more importantly, how this recent case may affect future municipal contracts.

Since the Court ultimately did not dismiss the complaint because the record was insufficient, the case will continue; and there might be further lessons to learn.  The lesson for now is that it is crucial to review the procedure by which contracts are adopted if your client is the municipality or a citizen challenging the municipality’s contracts.

 

In Fichera, et al. v. New York State Dep’t of Envt’l Conserv., et al., decided last month, Petitioners commenced an Article 78 proceeding seeking to void actions taken and determinations made by the New York State Department of Environmental Conservation and the Zoning Board of Appeals of the Town of Sterling (“Sterling ZBA”) and to enjoin the advancement of a mine project (“Mine Project”). Below, the Supreme Court, County of Cayuga, denied the petition and granted various motions to dismiss. On appeal, the Appellate Division, Fourth Department, held that (1) the petition was timely and (2) the Supreme Court erred by dismissing the cause of action based upon a violation of  New York General Municipal Law section 239-m (“Section 239-m”) and by not granting the petition thereupon. The appeals court remitted the matter back to the Sterling ZBA.

As pertinent to the appeal, the Article 78 petition claimed that the Sterling ZBA violated Section 239-m when it granted the Mine Project owners’ original application for an area variance without referring the matter to the appropriate county planning agency or regional planning council. Therefore, petitioners argued, the Sterling ZBA’s action in granting the area variance application was deemed null and void. Petitioners further argued that the Sterling ZBA’s sua sponte decision to grant the Mine Project owners an amended area variance based upon its previous determination on the original application was also null and void.

In opposition to the petition, respondents argued that the challenge to the determination granting the initial area variance was time-barred because petitioners failed to commence their challenge within 30 days of the original determination, as required by New York Town Law section 267-c(1). In addition, respondents contended that the determination granting the subsequent amended area variance was made by the Sterling ZBA after it made the appropriate referrals required by Section 239-m.

The appeals court agreed with the petitioners and emphasized the jurisdictional importance of complying with Section 239-m in declaring the Sterling ZBA’s approvals null and void. In many instances, Section 239-m requires a municipal agency to refer an application to a county or regional planning board for its recommendation prior to the agency taking final action on an application for land use approval. The Sterling ZBA did not refer the initial application for an area variance to the Cayuga County Planning Board before taking final action with respect to that application. Failure to comply with Section 239-m is not a mere procedural irregularity; rather, it is a jurisdictional defect involving the validity of a legislative act. Accordingly, the Sterling ZBA’s failure to refer the initial application to the county planning board renders the approval null and void.

Moreover, the appeals court held that the Sterling ZBA’s determination in granting the subsequent amended area variance was also null and void. “Inasmuch as the determination granting an amended area variance was based on the initial, void determination, we further conclude that the [Sterling] ZBA’s approval of the amended area variance is likewise null and void.”

Notably, if the county or regional planning board recommends modifications or disapproves an application, then the referring body cannot act otherwise – except by a vote of majority plus one of all members. Here, the Sterling ZBA unanimously approved the grant of the amended area variance and the respondents argued that the unanimous approval of the amended area variance was sufficient to override any recommendation by Cayuga County Planning Board to disapprove or modify (had the Sterling ZBA referred in the first place). “[T]he subsequent vote cannot retroactively cure the jurisdictional defect in granting the original area variance upon which the [Sterling] ZBA relied in granting the amended area variance.”

Lastly, the appeals court found that the Article 78 petition was timely, despite having been brought well-after the Sterling ZBA’s determination respecting the initial area variance application. The filing of a jurisdictionally defective document does not commence the statute of limitations. Therefore, the statute of limitations never ran and the petition was timely.

The Appellate Division modified the Supreme Court’s judgment in conformance with its opinion (discussed above) and remitted the matter to the Sterling ZBA for a new determination on the area variance application.

Yes, it’s true- the New York State Legislature has proposed legislation specifically designed to provide Towns, Villages and Cities with the authority to not only regulate, but to ban, all retail establishments which present a standardized branded marketing concept!

During the 2013-2014 Legislative Session, Legislative Bill S01771/A01216 was introduced for consideration by the New York State Legislature seeking to amend Town Law 261, Village Law 7-703 and General City Law 81 to specifically empower Towns, Villages and Cities to effectively “zone” out what the Legislature terms “Formula Retail Uses” on the basis that such retail establishments threaten communities across the state by eroding resources such as historic character, aesthetics, unique community character and commercial diversity by creating a sameness in design that destroys a communities identity.

“Formula Retail Uses” is defined in the pending legislation as a “retail sales establishment which, along with ten or more other retail sales establishments located in the United States, maintains two or more of the following features: “A standardized array of merchandise, a standardized façade, a standardized décor and color scheme, a uniform apparel, standardized signage, a trademark or a service mark.” Now, that’s comprehensive!  As I said, no more Prada, Kohl’s or Wal-Mart for sure.  But what about CVS, Walgreens, Stop-n-Shop, Hess Convenience Marts, AT & T stores, Verizon stores and dare I say, Apple stores?

I was immediately intrigued by this proposal because the term “Formula Retail Use” is not a land use term that is easily recognizable in the State of New York.  A comprehensive case law analysis of recent New York decisions confirms that the term “Formula Retail Use” is likewise not so popular.  Then why you might ask would the New York State Legislature offer this Bill for consideration?  Absent insider information, one can only surmise that a fairly recent Eleventh Circuit Florida Court of Appeals case, followed by a very recent 2012 Fourth Department New York State case are the source.

In Cachia v. Islamorada, 542 F.3d 839 consolidated with Island Silver & Spice, Inc. v. Islamorada, 542 F.3d 844 (11th Cir. Fla. 2008 en banc), the parties were engaged in hotly contested litigations arising from Islamorada Village’s adoption of local zoning ordinance 02-02 prohibiting formula restaurant[s] and limiting the size of formula retail establishments.  As a result of the Ordinance, plaintiff Cachia was unable to conclude the sale of his property to Starbucks despite a firm letter of intent to purchase and plaintiff Island Silver & Spice, Inc. was unable to conclude the negotiated sale of its property to Walgreens for $2,650,000.

In reversing the trial court, the Eleventh Circuit, en banc, held that not only did a violation of the dormant commerce clause exist, but also, that the Ordinance did not simply raise the costs of operating a formula restaurant or retail establishment in Islamorada, it entirely prohibited such businesses from opening.  As a result, a heightened level of scrutiny was applied and the Court concluded that the Ordinance served as an “explicit barrier” to the presence of national chain restaurants and retail establishments.  The Court further found that the Ordinance impermissibly prohibited establishments that operated “under the same name, trademark, menu, or style.”

In July 2012, the State of New York Appellate Division, Fourth Department, determined that a Village of Victor, Ontario County, local zoning ordinance prohibiting “formula fast food” restaurants in its Central Business District was constitutional.  In Mead Square Commons, LLC v. Village of Victor,  97 A.D.3d 1162 (4th Dept. 2012), the Fourth Department was precise in stating that the Ordinance was limited to a specific zoning district and that “plaintiff failed to preserve for our review any contention that there is no rational basis for distinguishing” between formula fast food restaurants and non-formula fast food restaurants in the Central Business District.  Id. at 1164.  The implication is clear that the Village of Victor ordinance survived only because the most favorable arguments were not advanced on appeal.

Given the clear pronouncement against severe restrictions or prohibitions against what has been termed “formula” retail establishments, why would the New York State Legislature seek to amend Town, Village and General City Law enabling the outright ban of these establishments?  Your guess is as good as mine.

The Bill is presently pending before the Local Government Section of the Legislature and is being advanced by a majority of downstate New York Members, including Senator LaValle and Assembly Members Thiele, Raia and Schimel  specifically representing Nassau and Suffolk Counties.