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Town May Not Withhold Building Permits to Ensure Completion of Infrastructure

The Appellate Division found that a local law providing that ten percent of building permits could be withheld pending completion of infrastructure required for a subdivision was ultra vires and void. In Joy Builders v. Town of Clarkstown, the Second Department reversed the lower court and granted summary judgment to the Plaintiff holding that ” Town of Clarkstown Code § 254-18B is null and void as ultra vires”.

The case arises out of two subdivision approvals obtained by the Plaintiff. In each instance, the Town utilized the provisions of §254-18B to require that, before building permits were issued for a portion of the lots, the Plaintiff was required to complete all construction of required infrastructure.  Here the builder was required to install roads, sidewalks, street lights and other infrastructure, which were to be completed and dedicated to the Town. While the Plaintiff was made to post bonds and letters of credit to ensure completion of the infrastructure work, the Town also used the provisions of §254-18B, which provided that up to ten percent of the building permits in each subdivision could be withheld pending completion and dedication of the infrastructure.  Plaintiff challenged that provision of the local law.

In voiding the local law the Court noted:

“Towns and municipal governments lack inherent power to enact zoning or land use regulations (see Matter of Kamhi v Planning Bd. of Town of Yorktown, 59 NY2d 385, 389). ‘They exercise such authority solely by legislative grant’ (Matter of Kamhi v Planning Bd. of Town of Yorktown, 59 NY2d at 389; see Town of Huntington v Beechwood Carmen Bldg. Corp., 82 AD3d 1203, 1206-1207)….Town Law § 277(9) is the enabling statute which authorizes the Town to obtain enumerated forms of security sufficient to cover the full cost of infrastructure and other required improvements in case a developer fails to finish work.”

The Court found that New York State Town Law §277 made no provision for a hold back of permits, in addition to the financial security imposed, as set forth in the Clarkstown local law. Therefore the Court concluded:

“[h]ere, a plain reading of Town Law § 277 establishes that (1) it has no express provision authorizing the Lot Holdback Provision set forth Town Code § 254-18B, (2) pursuant to the rules of statutory construction, the express provisions of Town Law § 277 must be construed to exclude provisions such as those in Town Code § 254-18B which are not contained in § 277 (see Walker v Town of Hempstead, 84 NY2d 360, 367), and (3) it has no provision from which the Lot Holdback Provision of Town Code § 254-18B can be implied (see Matter of Gruber [New York City Dept. Of Personnel—Sweeney], 89 NY2d 225, 234; Matter of Webster Cent. School Dist. v Public Empl. Relations Bd. of State of N.Y., 75 NY2d 619, 627). Thus, Town Code § 254-18B is inconsistent with the plain language of Town Law § 277(9), which expressly sets forth the manner in which a developer can be required to provide financial security to ensure the completion of the installation of required infrastructure and other mandatory improvements.

When a town or municipality acts without legislative delegation, its acts are ultra vires and void ab initio (see Matter of Golden v Planning Bd. of Town of Ramapo, 30 NY2d 359, 369). Since Town Law § 277 does not authorize the Town to impose the Lot Holdback Provision set forth in Town Code § 254-18B, the provision is ultra vires and void as a matter of law (see Town of Huntington v Beechwood Carmen Bldg. Corp., 82 AD3d at 1206; BLF Assoc., LLC v Town of Hempstead, 59 AD3d 51).”

-Steven Silverberg