Opinion 90-14

This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

ZONING AND PLANNING -- Subdivisions (validity of engineering and legal fees imposed upon developer); (direct payment by developer of subdivision review fees to engineer or lawyer)

TOWN LAW, §277(1): A town may impose a schedule of fees upon a developer to recover engineering, land surveying and legal expenses incurred in connection with subdivision review so long as they are reasonably necessary to accomplish the regulatory program and bear a reasonable relationship to the average costs incurred by the town planning board in reviewing subdivision applications.
TOWN LAW, §§20(2)(a), 27(1), 118, 277: When a town imposes engineering and legal fees upon a developer to cover subdivision review expenses, the town may not require the developer to pay such fees directly to independent contractors performing such services.

You inquire whether a town may be reimbursed by a developer for the costs of an engineer, attorney and land surveyor engaged by the town as independent contractors to perform services in connection with subdivision review and approval. In the alternative, you inquire whether the planning board may require a developer to pay these fees directly to the surveyor, engineer or attorney in lieu of reimbursing the town.

There is no express authority in the Town Law for a town to impose fees in connection with applications for variances, special use permits, or approvals of site plans or subdivision plats (see Town Law, §§267, 274-a, 276-278). Despite the absence of express statutory authority, however, the courts generally have held that there is implied authority to impose reasonable fees to carry out zoning and planning regulatory measures (see, e.g., Jewish Reconstructionist Synagogue of the North Shore, Inc. v Incorp. Village of Roslyn Harbor, 40 NY2d 158, 386 NYS2d 198 rearg den 40 NYS2d 846, 387 NYS2d 1033; Suffolk County Builders Assoc. v County of Suffolk, 46 NY2d 613, 415 NYS2d 821; see also Coates v Planning Board of Incorp. Village of Bayville, 58 NY2d 800, 459 NYS2d 259). This power to impose fees is, however, subject to "the limitation that the fees charged must be reasonably necessary to the accomplishment of the statutory command...." (Jewish Reconstructionist Synagogue, supra, 40 NY2d at 163, 386 NYS2d at 200).

In the Jewish Reconstructionist Synagogue case, supra, the Court of Appeals considered whether a village board of zoning appeals could require an applicant to pay certain costs actually incurred by the board in connection with reaching its decision on the application. The costs included legal, engineering, inspection and stenographic fees as well as the costs of renting an auditorium and publishing notices of the proceeding.

In holding that an applicant could be required to pay some of the costs actually incurred by the board, but not others, the Court of Appeals stated:

Put another way, the yardstick by which the reasonableness of charges made to an applicant in an individual case may be evaluated is the experience of the local government in cases of the same type. Without the safeguard of a requirement that fees bear a relation to average costs, a board would be free to incur, in the individual case, not only necessary costs but also any which it, in its untrammeled discretion, might think desirable or convenient, no matter how oppressive or discouraging they might in fact be for applicants.

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In light of these legal and governmental values, Special Term's finding that the charges for the cost of publishing the notice required by statute and for the cost of the necessary technical, information-supplying engineering and inspection reports were not in excess of what was necessary in order to carry out the statutory mandate can be supported. While the ordinance does not set out guidelines as to the fees for those items, the wide range of other cases in which such services are commonly employed, as a result of which such charges have come to be fairly uniform and predictable, provides assurance that the board's power to assess them on a case-by-case basis is not unlimited or unanticipatable (see 2 Rathkopf, Law of Zoning and Planning, §6, p. 55-15, and cases cited therein).

On the other hand, the charges for legal fees, those for transcribing the record of the proceedings and supplying copies of it to each board member, and those for the rental of a capacious auditorium in which large numbers of spectators could be accommodated at each of the board's sessions, stand on a different footing. They did not represent necessary expenditures but rather conveniences to the board for fulfillment of what in the end was its own decision-making responsibility (see 12 Opns. St. Comp., 1956, p. 374; 21 Opns. St. Comp., 1965, p.483). (40 NY2d at 163-165, 386 NYS2d at 201-202)

The Court further stated that, to ensure that the fees for which reimbursement is sought were actually necessary to the board's decision- making function and not merely a matter of convenience, the charges must be sufficiently grounded in data indicating the actual costs for similar applications.

At least one case decided subsequent to Jewish Reconstructionist Synagogue, supra., has indicated that if the fees charged are excessive, a landowner may obtain a refund of the excess fee paid to a town in connection with a subdivision application by bringing a proceeding pursuant to CPLR article 78 in the nature of mandamus to compel the town board to conduct an audit on the duly filed claim for a fee refund (Wildlife Associates v Town Bd. of Town of Southampton, 141 AD2d 651, 529 NYS2d 548). Citing Suffolk County Builders Ass'n and Jewish Reconstructionist Synagogue, supra, the Court in Wildlife Associates, supra, stated:

The audit is necessary to examine the petitioner's account to determine whether the fee the petitioner paid was reasonably necessary to defray the average costs sustained by the Planning Board in reviewing a subdivision application . . . . (emphasis added) (141 AD2d at 652, 529 NYS2d at 549).

The Court further stated:

The petitioner is not estopped from seeking a refund as to the engineering review fee. Contrary to the respondents' contention such a fee is not an agreed-to express condition on approval of the subdivision . . . .  (emphasis added) (141 AD2d at 652-653, 529 NYS2d at 549)

Thus, a petitioner is not estopped from recovering a refund because petitioner agreed to pay the fee as a condition for subdivision approval.

Consistent with the cases discussed above, we believe that a town may impose a schedule of fees upon developers to recover those engineering, legal and surveying expenses incurred in connection with subdivision review so long as they are "reasonably necessary" to accomplish the regulatory program. To ensure that the fees charged in any individual case are not so high or extensive as to discourage individuals from seeking relief or impair a citizen's right to have access to a government function, it is our opinion that such fees must bear a reasonable relationship to the average costs for applications of that type. One way to satisfy the foregoing requirements would be to impose a ceiling, based on reliable factual studies or statistics, on the amount of expenses that landowners are required to pay. Such ceilings could vary according to the category of the application so long as the categories are describable by rational, objective criteria, such as the size, value or proposed use of the property (see Jewish Reconstructionist Synagogue, supra, 40 NY2d 158, 164, 386 NYS2d 198, 201). Voluntary payment by a developer of fees to cover engineering and legal expenses as a condition of subdivision approval would not estop the developer later from seeking a refund for excess fees.

With respect to whether a town, instead of requiring a subdivider to pay engineering and legal fees to the town, may require payment of these fees directly to a land surveyor, engineer or a special planning board attorney employed as independent contractors by the town, we note that in 1977 Opns St Comp No. 77-940, unreported, we concluded that fees imposed upon a developer may not be paid directly by the developer to these independent contractors. We reasoned that an independent contractor is employed by the town to perform various services in connection with subdivision applications for agreed upon compensation. These independent contractors, therefore, must be paid directly by the town after audit and approval of itemized vouchers submitted by the contractor to detail the services they have performed for the town under the contract (see Town Law, §§118, 119). Payment of the fees by a subdivider to the independent contractor would circumvent the audit of claim procedures contained in article eight of the Town Law. Further, since the fees paid by the developers are town moneys, they must be paid directly to the town and held in the custody of the town supervisor (Town Law, §29[1]; see 1985 Opns St Comp No. 85-67, p 99).

In summary, it is our opinion that subject to the limitations discussed above, a town may require a developer to reimburse the planning board for certain expenses incurred in connection with an application before the board. The town cannot, however, require the developer to pay its independent contractors directly.

May 8, 1990
Ira J. Cohen, Esq., Town Attorney
Town of Mamakating