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Appellate Division Rules That Town’s Consulting Fees Are Unnecessary In Connection with Review of Special Use Permit and Area Variance Applications

November 19, 2018

The Appellate Division, Second Department, issued a decision on October 10, 2018, which rejected a town’s attempt to saddle an applicant with over $17,000 in consulting fees supposedly incurred by the town in reviewing special use permit and area variance applications for an antenna tower to be used by an amateur radio (a/k/a ham radio) hobbyist. The installation of the tower was expected to cost less than $1,000.

In Matter of Landstein v. Town of LaGrange, Myles Landstein, the owner of residential property located in the Town of LaGrange (“Town”) in Dutchess County, sought the special use permit and area variance to install a 100-foot antenna tower on his property for his personal use in connection with his ham radio station. The Town Code limits towers to 35 feet in height.

Mr. Landstein had already obtained a license for his ham radio station from the Federal Communications Commission (“FCC”). After receiving the FCC license, Mr. Landstein applied to the Town and paid the $250 filing fee. Although the applications clearly indicated that all costs incurred by the Town for the review of the applications were the sole responsibility of the applicant, Mr. Landstein added a comment to the application requesting that he be advised in advance of the review cost amount.

The applicant indicated that the 100-foot tower, which would be 18-inches by 18-inches in dimension, was needed to operate the ham radio station effectively and would be barely visible above the tree line. Town residents objected, contending the tower would be an eyesore and interfere with cellular and internet service.

The applications were discussed at 14 separate public meetings over the course of 2 years. The applicant even agreed to decrease the height of the tower to 70 feet. However, he would not agree to pay the ever-increasing legal fees that the Town sought to recover from him, which at one point exceeded $17,000. Mr. Landstein’s attorney wrote to the Town complaining that the fees were excessive in light of tower’s modest installation cost and violated an FCC regulation. Thereafter, the Town Board passed a resolution indicating that it would review and audit its consultant costs to determine if they were “reasonable and necessary.”

The audit revealed that the town attorney’s charges were not solely attributed to the specific area variance application before the Town Zoning Board of Appeals (“ZBA”) but were more generic. They included charges for: (1) attendance at the ZBA hearings, (2) travel time, (3) telephone calls with ZBA members, (4) internal conferences at the town attorney’s law firm, (5) drafting the ZBA agendas, (6) reviewing the applicant’s files, and (7) legal research. Upon completion of the audit, the Town Board passed a resolution reducing the legal fees from more than $17,000 to $5,874. The resolution also required the applicant to maintain a $1,000 minimum balance in an escrow fund for future costs incurred with the applications, which would need to be replenished as the balance fell below that amount. The resolution indicated that the applications would not be further reviewed absent the payment of the fees and the establishment of the escrow fund.

The applicant sued. The trial court denied the Article 78 proceeding, but the applicant prevailed at the Appellant Division. The appellate court found that the Town’s fee provision exceeded state statutory authority. The Appellate Division noted that such fees needed to be “reasonable and necessary.” The Court found that the definition of “reasonable” in the Town Code was appropriate as it required a reasonable relationship to customary charges of similar consultants in the region in connection with similar land use applications. The Town Code definition of “necessary,” however, was rejected by the Appellate Division as it was way too broad, and was out of step with established precedent. The Town Code defined necessary consulting fees as those required “to assist in the protection or promotion of the health, safety or welfare of the Town or its residents; to assist in the protection of public or private property or the environment from potential damage…to assure or assist in compliance with laws, regulations, standards or codes which govern land use and development; to assure or assist in the orderly development and sound planning of a land use or development;…or to promote such other interests that the Town may specify as relevant.” The Appellate Division found the “to assist” language particularly troubling. The Court was equally troubled by the actions of the Town, first insisting that it be paid in excess of $17,000 in legal consulting fees, and its later reduction to $5,874, which was achieved by the Town merely striking entries from the invoices, without regard to their content or connection to the applications. The Appellate Division noted that the Town imposed liability without making any attempt to determine if similar charges were imposed by other municipalities for similar applications.

The Appellate Division also took aim at the escrow fund with its minimum $1,000 balance. The Court found this perpetual replenishment fund to be an impermissible effort to avoid having the Town’s taxpayers shoulder their share of the cost of governmental functioning.

Municipalities would be wise to examine their own codes to make sure that they seek reimbursement of costs that are reasonable and necessary in light of the specific project at issue, and not use that provision to dissuade or discourage land use applicants or as a means of underwriting the cost of government.