Appellate Division Complicates the Rules for Municipalities Charging Consultants' Fees

While the antenna's cost was estimated to be less than $1,000, the Town's consulting attorneys, who represented the Zoning Board of Appeals on the matter, submitted invoices totaling more than $17,000. Petitioner objected to the invoices. Ultimately, the Town Board issued a determination reducing Petitioner's obligation to pay only $5,784. As part of that determination, the Town Board also required that Petitioner deposit an additional $1,000 in escrow, to be replenished as it was used up, to cover further invoices related to the application. This action challenged the Town Board's determination.

In reviewing the claims, the Second Department cited the leading case on this issue, Jewish Reconstructionist Synagogue of N. Shore v. Incorporated Vil. of Roslyn Harbor, 40 N.Y.2d 158 (2009), and concluded that the Town had failed to follow the standards established by the Court of Appeals. The court explained that "[t]he Court of Appeals held that, although Village Law §7–712(1) provided villages with the implied delegation of power to enact fees necessary to carry out the functions of ZBAs, the 'open-ended, indeed unlimited, nature of the fees" authorized by the Village ordinance "makes the ordinance vulnerable to attack on the ground that it overreaches the State statute's implied grant of power to the village'" Id. at 4, quoting, Jewish Reconstructionist Synagogue at 163. "The Court of Appeals stated that 'when the power to enact fees is to be implied,' there must be a limitation on this power in that the 'fees charged must be reasonably necessary to the accomplishment of the statutory command." Id.

The court then went on to determine that there was no reasonable basis for fixing the fees in the instant case and that the Town's ordinance had failed to establish a method for determining whether the fees were reasonable, based upon what might be charged for such services and what was needed by the boards as opposed to what may be convenient. The court ruled that the ordinance's language speaking to the need "to assist" the boards was too vague.

Further, the court held that the Town Board's requirement that Petitioner place $1,000 in escrow, to be replenished as charges are incurred, was likewise improper. The court compared the holding Twin Lakes Dev. Corp. v. Town of Monroe, 1 N.Y.3d 98 (2005), in which the Court of Appeals found that requiring escrow by an applicant was permissible because "the record established that the Planning Board audited vouchers submitted by consultants in the first instance and rejected any excessive or unnecessary charge, and where the plaintiff did not request an audit of the fees or allege that the fees were unreasonable." Id.

In contrast, in the instant case, the court found a lack of safeguards to ensure the escrow funds were being properly utilized: "[t]he escrow direction made by the Town would permit unfettered spending by consultants without regard to the nature of the application and the burden placed upon the applicant, the necessity for consultants in the first instance, and the reasonableness of consultant charges in the light of comparable charges for similar services in connection with similar applications." Id. While not the focus of this article, the court also ruled that the fees charged violated the FCC regulations.

Analysis

If taken broadly, it would seem that the Second Department is proposing that there be some analysis performed by the municipality as to not only what is charged by the municipality as a rate for consultants, but what tasks are charged back by other municipalities with regard to specific applications. This would appear to mean not only that if the attorneys' fees generally charged in a county for review by a municipal consulting attorney are $200 per hour that a particular town may not charge $500 per hour, but that the municipality must also analyze the specific task to be performed for each aspect of a specific land use application. Therefore, the implication is that before charging more for a 20-lot subdivision than a 2-lot subdivision, the municipality must analyze what tasks go into consulting on each type of subdivision and what other municipalities deem appropriate "assistance" in each case.

This appears to be an unwieldy and impractical approach. A 2-lot subdivision could have restrictive covenants, wetlands, no road frontage and steep slopes, while a 20-lot subdivision could be flat, have road access and no other significant issues. How does a municipality determine in advance what assistance it will need for a specific application? Until all of the variables are analyzed, and as every application is different, how can a municipality appropriately undertake an analysis of "… data or experience derived by this or comparable municipalities in similar cases …."? It is clear that a municipality cannot give its consultants free rein to charge whatever they like. Further, a municipality must have a process for both reviewing its consultants' fees and permitting an applicant to challenge fees that appear unreasonable. Yet, perhaps here the old saying applies that "bad facts make bad law." Surely charging in excess of $17,000 to provide legal assistance to review a ham radio antenna does raise issues, we are just not sure that analyzing data or experiences from unrelated applications, done in advance of hearing the actual land use application, is the solution. The cure may be worse than the disease.

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Steven M. Silverberg and Katherine Zalantis are the founding members of Silverberg Zalantis LLP. They concentrate their practice in areas of municipal, land use law and related litigation. Steve is also a member of this newsletter's Board of Editors and blogs on related topics at http://blog.szlawfirm.net/.