The Second Department recently reversed a Suffolk County Supreme Court decision granting a use variance for a mother-daughter residence in the Village of Patchogue (the “Village”), in spite of statements made on the record by the Zoning Board of Appeals (“ZBA”) Chairman implying prior precedent approving such applications.

In June 2014, the petitioner applied to the Village seeking the conversion of her two-car garage into an apartment for her 81 year old mother of limited financial means.  Unfortunately, Patchogue’s zoning code does not define “mother-daughter” or permit an  “accessory apartment” in its single-family residential zone.  As a result, because such use is prohibited, the petitioner was required to appeal that decision to the ZBA for a use variance pursuant to Village Law 7-712-b(2).

At the public hearing before the ZBA, no one opposed the application, and one neighbor spoke in favor of it.  However, as an apparent precursor to denial, the Chairman stated on the record that “[n]ot many [such applications] have been granted at all.”  Not surprisingly, the ZBA denied petitioner’s application to convert her two-car garage into living space.

The petitioner subsequently commenced an Article 78 to annul the ZBA’s decision as arbitrary and capricious.  The Chairman’s statement later became the focal point for petitioner’s argument that prior alleged precedent effectively mandated the ZBA approve petitioner’s garage conversion.

Later that year, the Supreme Court annulled the ZBA’s denial as arbitrary and capricious for failing to follow its own precedent.  See Gray v Village of Patchogue Zoning Board of AppealsIn its decision, the Supreme Court incorrectly implemented the balancing test for an area variance instead of a use variance.  The court appeared to rest its decision heavily on an implied prior precedent based on the Chairman’s above quoted statement.  Based on that statement, the lower court constrained the ZBA to grant the garage conversion, holding that “administrative due process prohibits inconsistent treatment of similarly situated properties”.  Id.

In reversing the Supreme Court’s decision, the Second Department clarified that petitioner’s application was for a use variance.   See Gray v Village of Patchogue Zoning Board of Appeals, 164 AD3d 587 [2d Dept 2018].  The Appellate Division affirmed the ZBA’s denial because the petitioner had failed to satisfy the more onerous “unnecessary hardship” element required for a use variance.   More importantly, the Appellate Division determined that there was no evidence that the ZBA failed to adhere to prior precedent.  Contrary to the petitioner’s contention, the Board provided a rational explanation for reaching a different result.

Accordingly, this decision should serve as a cautionary tale for applicants and practitioners to not place too much stock on prior approvals by municipal boards.  Although precedent is important, each property is different and may yield a different result.

 

 

On October 17, 2018, the Supreme Court, Appellate Division, Second Department (“Second Department”) issued two (2) companion decisions arising out of three different attempts by Petitioners, Kleinknechts (“Petitioners”)  to construct a dock at their waterfront property.  Each of the attempts resulted in a Supreme Court litigation.  As we blog about these cases today, no dock has been constructed despite a directive in 2013 that a permit be issued upon submission of the proper application!

In the first matter, the Second Department upheld a decision of the Village of Lloyd Harbor’s Zoning Board of Appeals (“ZBA”) denying certain variances requested by Petitioners to construct a dock along their waterfront property finding that the ZBA properly applied the five-factor test set forth in Village Law 7-712-b(3).  Further,  Petitioners’ expert testified that he had prepared an alternative completely code compliant plan.  Since a code compliant dock plan provided a reasonable alternative for Petitioners to explore, the Second Department upheld the trial court’s dismissal of the underlying Article 78 proceeding stating that the “need” for the variances was self-created.  In light of the ZBA’s proper application of Village Law, the ZBA’s denial was not arbitrary or capricious.  See, Kleinknecht v. Brogan, 2018 WL 5020285 (Oct. 17, 2018)

In the second matter, and following denial of the above-mentioned variance application, the Appellate Division vacated a 2013 directive to the Building Inspector requiring the Building Inspector to issue a building permit to Petitioners for the alternative code compliant dock permit application.  The Second Department stated “[m]andamus . . . is an extraordinary remedy that, by definition, is available only in limited circumstances.”  “A party seeking mandamus must show a ‘clear legal right’ to [the] relief [requested]'”  Here, no clear legal right existed.  See, Kleinknecht v. Siino, 2018 WL 5020282 (2018).

Prior to 2013, Petitioners’ property was subject to an open space easement precluding construction of a dock at the property.  Petitioners commenced an action seeking to have the open space easement extinguished.  The trial court issued a judgment holding that the open space easement was no longer necessary and directed that the Building Inspector issue a building permit to Petitioners upon submission of the “required” application.  The Village did not appeal the judgment.

As such, upon submission of a code compliant building permit application (as noted above an application for variances was denied and upheld), Petitioners sought an approved building permit.  Although the Second Department held that the Building Inspector had no basis to deny issuing the permit based on the existence of the open space easement, the Second Department did vacate the 2013 trial court directive to issue a permit upon submission of the “required” application stating that the Village Code requires every Village building permit application be referred to the “Site and Building Permit Review Board” (“Review Board”).  Finding that the trial court’s directive to the Building Inspector bypassed a necessary referral step to the Review Board, the Second Department ordered the Building Inspector to refer Petitioners’ application to the Review Board.   The Second Department did not then direct the Building Inspector to issue a building permit to Petitioners if the Review Board approves that application..

Instead, the Second Department decision states “[t]he Building Inspector may issue a building permit only upon approval by the” Review Board.  As a litigation and land use attorney,  it has become painfully apparent that courts do not always weigh the import of the language used when crafting relief for the parties.   Maybe it is of little consequence that the Second Department said that the Building Inspector “may” approve the building permit if approved by the Review Board.  However, it would  provide the Petitioners, and their attorney(s), greater comfort and certainty if the chosen words were “must” approve the building permit, instead of “may” approve the building permit.

 


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.

 

Recently Farrell Fritz, P.C. represented a family held limited liability company in connection with an application to a East End zoning board of appeals to maintain an eight (8) foot fence and six (6) foot driveway gates around its property in Sagaponack.   See, 79 Parsonage LLC v. Zoning Board of Appeals of the Incorporated Village of Sagaponack.  Both the fence and a portion of the applicant’s gates violated the Village of Sagaponack’s six (6) foot height limitation.

On behalf of the applicant, Farrell Fritz argued that a fence was necessary to exclude a family of deer that had taken up residence on the property.  Exclusion of the deer was necessary as one member of the household had suffered through two bouts of Lyme’s Disease. In addition, the fence was constructed among mature vegetation and was not visible from the street.

Despite those and additional arguments offered at the hearing, the Sagaponack Zoning Board denied the application.

On behalf of the property owner, Farrell Fritz commenced an Article 78 proceeding in the New York State Supreme Court, Suffolk County, appealing the Zoning Board’s Decision.

On December 15, 2017, Justice Gerard W. Asher, J.S.C. overturned the Zoning Board’s denial and directed the Board to issue the requested variances finding that the applicant overcame the presumption afforded to Zoning Boards in deciding zoning cases. Through the Article 78, Farrell Fritz demonstrated that no evidence existed to support the Zoning Board’s decision; and its findings were conclusory, and therefore irrational and arbitrary and capricious. Judge Asher agreed with the application that the fence was hidden, and a grant would benefit the applicant because one of the two members already suffered from Lyme’s Disease. After making the findings, Judge Asher vacated and annulled the ZBA determination.

What Judge Asher makes clear in his Decision, and should be considered by all practitioners, is that zoning boards must balance all of the relevant considerations in a rational way.

It is well established that zoning codes and regulations are in derogation of property owners’ rights in and to the use of their property. Zoning restricts the use of land which was otherwise free of restrictions.  An owner’s rights in use of land are among the oldest and enjoy the most protection under common law and state and federal constitutions. Therefore, the courts of New York have regularly and consistently held that (1) any such codes and regulations must be strictly construed and (2) any ambiguity must be construed against the municipality and in favor of the property owner:

“Since zoning regulations are in derogation of the common law, they must be strictly construed against the municipality which has enacted and seeks to enforce them. Any ambiguity in the language used in such regulations must be resolved in favor of the property owner.”

Because of the heightened scrutiny of zoning regulations for ambiguity, they are difficult to draft and often subject to litigation – which can get deep into the weeds of statutory construction and even grammar. For example, where a zoning code required site plan review for “any new construction or any addition thereto in excess of 2000 sq. ft.,” the Zoning Board found that the limitation of 2,000 sq. ft. applied only to “any addition” and not to “any new construction.” The Third Department reversed, in part because there was no comma between “thereto” and “in excess of.” Your high school English (or Latin) teacher would rejoice at the deconstructive analysis.

Other examples: Does prohibition of car storage prohibit a parking garage, where there is no definition of “storage” in the code? (Answer = No; parking garage is OK) Is a code validly applied which does not allow an owner to “store” a boat in the front yard, where there is, again, no definition of how long a boat must be in the front yard to be deemed to be “stored” there? (Answer = Code not valid because of ambiguity.) Can a code require building permits for all construction “other than ordinary repairs that are not structural?” (Answer = No; code invalidly applied because there was no definition of what constitutes “ordinary” or “not structural” repairs.) Is a helicopter pad an “airport” which is defined as a landing area that is used “regularly?” (Answer = Yes; it was used frequently enough to be deemed “regular.”)

A recent code amendment in an East End municipality requires that driveway gates must have a “setback to the street” of no less than 20 feet or 40 feet (depending on lot size). What is the “street?” The paved roadway? The lot line dividing the private property from the municipality’s right-of-way for the road? The difference could be 10 or 15 feet or more of unpaved verge or shoulder between the pavement and the lot line.

The difficulty in drafting is highlighted by these cases which pit the purportedly “obvious” reading of the code against the rule of strict construction – resolving any ambiguity in favor of the property owner. The burden on the municipality is especially acute where municipal officials come up with different interpretations. The statute is certainly vague and ambiguous when reasonable municipal minds differ – when “reasonable enforcement officers could come to different conclusions” – and they actually did.

Moreover, the New York courts have rejected the argument that Zoning Boards have the authority to remove the ambiguity by choosing the interpretation that the Board prefers. Rather, the courts recognize that while a board’s interpretation is entitled to deference in most situations, where the statute is ambiguous the question becomes a matter of law and the usual deference does not apply.

In a recent Zoning Board case, the same beneficial owners had a residence on one lot and a tennis court, without a home, on another immediately adjacent lot. There was no dispute that the tennis court was a valid subordinate use to the adjacent residence. However, the municipality would not approve a certificate of occupancy for the tennis court because there was no residence on the court property. There was no direct prohibition in the zoning code of an accessory use on a lot without a principal use. The municipality relied solely and entirely on the code’s definition of accessory use as:

“A subordinate use, building or structure customarily incidental to and located on the same lot occupied by the main use, building or structure. The term . . .”accessory structure” may include a . . . tennis court. . . .” (Emphasis added)

The owners sought relief in two separate ways. First, they argued for an interpretation that the code did not require that the tennis court and the dwelling be on the same lot because the word “customarily” modified both “incidental to” and “located on the same lot.” Therefore, an accessory structure is defined as only customarily located on the same lot as the main use. “Customarily” does not mean “always” or “required.” At the very least, the code was ambiguous on this point and, they argued, could not be used by the municipality to deny the owners the right to maintain the tennis court on the lot by itself.

The owners also sought a variance to allow the stand-alone tennis court in the event that the Zoning Board rejected their ambiguity argument. The Zoning Board rejected the argument that the ambiguity of the code section made it unenforceable, finding that they had regularly interpreted the code against the owners’ position. However, the Zoning Board granted the variance allowing the tennis court to exist without a main use on the same lot. A court might have overturned the Board’s contention that it had the right to interpret the ambiguous language in favor of the municipality, since that issue is a matter of law and the interpretation must be in favor of the property owner. But the bottom line is that the applicants got their tennis court and probably don’t care that it was by variance and not by voiding or interpreting an ambiguous code provision – and an Article 78 was averted.

And therein lies the point of this blog: The “ambiguity” rule can be difficult for applicants because courts can, and do, find that the code is not so ambiguous after all. On the other hand, zoning and planning Boards – and, especially, their counsel – know that the “ambiguity” rule is deep-rooted in New York law and that the courts do not hesitate to apply the rule as a matter of law, without deference to the boards. The bottom line is that making a legitimate “ambiguity rule” argument at the municipal board level can be successful in itself, but it is perhaps most important as a prod to the board to grant a variance or site plan or other municipal approval.

A not-so-clear code provision can be very helpful in obtaining a municipal approval!

 

 

 

 

Week to week we blog about recent developments in the land use arena, which typically arise in the civil context.  This week, we thought a recent “criminal” case decided by the Supreme Court, Appellate Term, Second Department, was not only particularly interesting, but also, the topic of illegal rental permits is one that many land use practitioners grapple with multiple times during their legal careers.

On October 26, 2017, the Appellate Term decided People v Makrides, 2017 NY Slip Op 51442 (U).  In Makrides, the Village Code Enforcement Officer alleged that on August 20, 2014, he visited property located on Beach Street.  The door was answered by an individual who identified himself as a renter and of no relation to the owner, Marie Makrides, with Beach Street Properties.   Based on a further review of rental permit records, and the lack thereof, the Code Enforcement Officer issued an Information alleging that Makrides was in violation of Village Code Section 205-4, failure to obtain a rental occupancy permit.

The Code Enforcement Officer visited the property again on November 5, 2014; except for the testimony of the alleged renter, the Code Enforcement Officer found the property to again be in violation of  the rental occupancy permit ordinance.

Makrides’ attorney moved to dismiss the accusatory instruments for facial insufficiency (CPL 100.15; 100.40).  Specifically, it was argued that the accusatory instruments “failed to contain facts of an evidentiary nature . . . and that they” were improperly based upon hearsay allegations. The Justice Court denied the motion.

After a non-jury trial, the Court found Makrides to be in violation of the rental permit ordinance and fined her $5,000.00 for each charge.  Makrides appealed.

The Appellate Term reversed both convictions, finding that facial insufficiency is a nonwaivable jurisdictional prerequisite to a criminal prosecution (CPL 100.40).  Finding that the statement made by the renter to be hearsay, and not supported by a deposition, it was an error for the Justice Court to rely on said testimony.  The testimony of the renter is clearly an out of court statement introduced in court for the truth of the matter at hand, to wit; classic hearsay testimony.

Consequently, the Appellate Term held that without said hearsay testimony, the Informations alleging that the defendant failed to obtain a rental occupancy permit –  without saying why it was necessary for her to obtain one – failed to contain “factual allegations . . .  through nonhearsay allegations . . . of the offense charged and defendant’s commission thereof.”

Abiding by principles of judicial restraint, the Court declined to make a further finding that the Port Jefferson Village Rental Permit Ordinance was unconstitutional.  It did, however, require the Village to remit, if paid, the combined $10,000.00 fine to the defendant.

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.

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.”

 

According to the American Planning Association, a “floating zone” is a zoning district that “delineates conditions” rather than the more traditional use classifications that are typically found on zoning maps. While a floating zone is contained in a zoning code, it is only added to the zoning map after a project seeking that designation is approved. Thus, it “floats” in the zoning code until it is used for a particular project.

floating

Lindenhurst’s Downtown Redevelopment District Floating Zone

The Village of Lindenhurst Board of Trustees approved a new local law at its June 6, 2017 meeting that creates a Downtown Redevelopment District Floating Zone. The purpose of this Floating Zone is to use Smart Growth principles to encourage development of the downtown area. The Village Trustees believe this new zone will foster mixed-use redevelopment, including pleasant and attractive residential developments within walking distance of the Lindenhurst Long Island Rail Road station and the central business district.

The Process

The local law contains a two-step process for changing a site to the Floating Zone designation. First, a conceptual development plan and reclassification of specific parcels will need to be approved by the Board of Trustees. The second step will entail an approval of a detailed site development plan, and subdivision plat, if applicable, by the Board of Trustees.

The change of zone application to a Floating Zone needs to include a statement describing the nature of the project and how it advances the purpose of the Floating Zone. It also needs to describe adjoining and surrounding properties, the availability of community facilities and utilities, and anticipated traffic generation. The applicant also has to discuss open spaces proposed for the development.

The conceptual development plan needs to be drawn to scale and indicate the approximate location and conceptual design of all buildings, parking areas and access drives. It also needs to show the neighboring streets and properties and include the names of the owners of property located within 200 feet of the site. A traffic study can be requested by the Board of Trustees.

The local law provides that if the Board of Trustees entertains an application to change zoning to the Floating Zone, it will hold a public hearing. The local law also provides that if the Board of Trustees decides not to entertain such an application, it can do so with or without a public hearing and with or without SEQRA review.

The Criteria 

The local law provides criteria for the Board of Trustees to consider for Floating Zone applications. These include: (1) the location of the proposed development and its proximity to the railroad station and central business district; (2) minimum site size, dimensions and topography; (3) ownership of the parcels; (4) permitted uses; (5) height of structures, which is limited to 53 feet; (6) maximum density, which is limited to 37 units per acre; (7) maximum occupancy for residential units, which is set at two for studio units and the number of bedrooms plus two for all other units; (8) minimum floor area of any residential unit, which is set at 580 square feet; (9) minimum building setbacks, which are set at  ten feet for front and rear yards, side yard setbacks are ten feet for one side yard and twenty feet total for side yards; (10) parking minimums for retail and office use is one space per 250 square feet; multi-family residential use is based on the types of units – studios require 1.15 parking spots per unit, one-bedroom units require 1.30 spots per unit, two-bedroom units require 1.75 spots per unit and three or more bedroom units require 2.0 spots per unit; (11) basements and cellars are not allowed to be used for living, sleeping or habitable space; and (12) each building must have security and fire alarms.

It will be interesting to see if this new zoning classification helps Lindenhurst revitalize its downtown.

 

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.