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Court of Appeals Upholds Local Zoning Laws Restricting Hydrofracking

Yesterday, the New York Court of Appeals–New York’s highest court–decided an important land use case involving town-wide restrictions prohibiting hydraulic fracturing, also known as hydrofracking.  The case has been widely reported in the media, but I think it is worth reading the actual decision because it contains a good discussion of preemption in the context of a municipality’s home rule authority to regulate land uses.  You may read it here: Matter of Wallach v. Town of Dryden (2014 NY Slip Op 04875).

In upholding the home rule authority to prohibit hydrofracking, the Court held:

At the heart of these cases lies the relationship between the State and its local government subdivisions, and their respective exercise of legislative power. These appeals are not about whether hydrofracking is beneficial or detrimental to the economy, environment or energy needs of New York, and we pass no judgment on its merits. These are major policy questions for the coordinate branches of government to resolve. The discrete issue before us, and the only one we resolve today, is whether the State Legislature eliminated the home rule capacity of municipalities to pass zoning laws that exclude oil, gas and hydrofracking activities in order to preserve the existing character of their communities. There is no dispute that the State [*12]Legislature has this right if it chooses to exercise it. But in light of ECL 23-0303 (2)’s plain language, its place within the OGSML’s framework and the legislative background, we cannot say that the supersession clause — added long before the current debate over high-volume hydrofracking and horizontal drilling ignited — evinces a clear expression of preemptive intent. The zoning laws of Dryden and Middlefield are therefore valid.

Matter of Wallach, 2014 NY Slip Op 04875 at *11-12 (2014).

Court Rules That Cluster Subdivision’s Density and Open Space Restrictions Are Not Encumbrances

Ellison Heights Phase II

Last week, the Fourth Department issued the latest decision in the 17 year saga involving the development of the Ellison Heights Project–a multi-phased cluster subdivision within the Town of Penfield, New York.  As the court noted in the first round of litigation involving this project:

Cluster development. . . is a form of subdivision development which enables units to be located on a site in a manner that does not comply with the bulk requirements of the applicable zoning law. . . . Cluster development enables dwellings or other structures to be constructed on the most suitable portion of the property, thereby resulting in the preservation of tracts of land in their natural state.

In order to accomplish the clustering of development, a town board may authorize the planning board to approve an alternate development which deviates from minimum area, side and rear yard, depth, frontage, and similar requirements.  Matter of Penfield Panorama Area Community, Inc. v. Town of Penfield Planning Board, 253 A.D.2d 342, 345 (4th Dep’t 1999).

The most recent case involving this project, Ellison Heights Homeowners Ass’n, Inc. v. Ellison Heights LLC, 2013 N.Y. Slip Op. 08685 (4th Dep’t 2013), involved a dispute between the owners of the already developed Phase I of the project, and the developer, who was seeking modifications to Phase II.  Both properties were originally owned by the same developer, who obtained approval from the Penfield Planning Board to develop the parcel into apartment buildings and town home units as a cluster development.

After acquiring the project, the present developer obtained approval from the Planning Board in 2005, to amend the site plan, and develop it in phases, resulting in a reduction of the number of townhomes to be developed on Phase I, among other things.  The townhomes were ultimately constructed and the property on which they were located was transferred to a homeowners association (the “HOA”).

In 2011, the developer again applied to the Planning Board to further amend its site plan by changing the configuration of the apartment buildings and reducing the number of units from the 199 that were originally approved to 180.  In doing so, the developer sought to develop Phase II using the same density and open space restrictions established by the Planning Board when the project was originally approved in 1999, thereby incorporating the open space of the HOA’s property in its density calculation.

While the application was pending before the Planning Board, the HOA commenced an action against the developer and the Town of Penfield seeking, among other things, declarations regarding its property rights pursuant to Article 15 of the Real Property Actions and Proceedings Law (the “RPAPL Claims”).  The HOA alleged that the defendants had no right to restrict development on the HOA’s property by using the open space located on the HOA’s property in the developer’s calculation of the density of the development on its own property.

The trial court dismissed the RPAPL Claims against all defendants, and dismissed the remainder of the complaint against the Town (in the interest of full disclosure, my colleague, Joe Platania, represented the Town of Penfield in the 1999 case, and I represented the Town on this case, and continue to represent the Town in the Article 78 Proceeding which is still pending).  The trial court also denied the HOA’s motion to amend the complaint, and the HOA appealed both of those orders in the consolidated appeals that were just decided.

On appeal, the HOA argued that the trial court erred in determining that documents on file with the Town permanently encumber and restrict further development of its property.  According to the HOA, those documents, which reference the density and open space restrictions for the cluster development, are not within its chain of title and thus cannot form the basis for an encumbrance on its property.  This argument was rejected by the Appellate Division.

In affirming the trial court, the Appellate Division made three key rulings:

  1. The Court rejected the HOA’s arguments regarding the RPAPL Claims, because “the density and open space restrictions on further development of [the HOA’s] property are the result of zoning regulations and do not amount to encumbrances that must be recorded in [the HOA’s] chain of title.”  The Court held that “the density and open space conditions that restrict further development of plaintiff’s property are the result of the Town’s ‘ability to impose such conditions on the use of land through the zoning process,’ which conditions are ‘meaningless without the ability to enforce those conditions, even against a subsequent purchaser'” (quoting O’Mara v. Town of Wappinger, 9 N.Y.3d 303, 311 [2007]).  Therefore, because the density and open space restrictions were the result of the zoning process, and not property encumbrances that must be recorded in the HOA’s chain of title in order to be enforceable, the Court concluded that dismissal of the RPAPL Claims–rather than the issuance of declarations pursuant to RPAPL–was the proper remedy.
  2. Perhaps not surprisingly, the Court also held that “either party could apply to the Planning Board for modification of the density and open space restrictions on its property and, if [that party] disagreed with the Planning Board’s determination, [that party’s] remedy would be to commence a proceeding pursuant to CPLR article 78 after exhausting its administrative remedies.”  While this notion has been commonly understood to be true among land use practitioners, this may be the first time an appellate court explicitly expressed this principle.
  3. Finally, the Court held that the complaint was properly dismissed against the Town.  According to the Court, “The Town will not ‘be inequitably affected by a judgment in the action’ (CPLR 1001[a]), nor does the Town ‘have an estate or interest in the real property which may in any manner be affected by the judgment.'”  Thus, the Town is not a necessary party to the RPAPL Claims.

This may not be the last word on the Ellison Heights Project.  As noted above, there is an Article 78 Proceeding currently pending, and the HOA is expected to perfect its appeal in the coming weeks.

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