Shandaken’s funding problem for the Crossroads review is an unusual one.With most projects, a developer would be required under state law to pay all of its host town’s review costs. Under that law, SEQRA, the town as Lead Agency would be entitled to up to one-half of one percent of proposed construction costs, or about $1.5 million in the case of the Belleayre Resort review. However since Lead Agency status on the project has been retained by DEC, Shandaken has no access to those funds.

According to Crossroads’ lead counsel Dan Ruzow in his book Environmental Impact Review in New York, in most instances where a town, like Shandaken, is an Involved Agency but not the Lead Agency under SEQRA, the developer will voluntarily provide funding to pay the host community’s review costs. And the SEQRA law, according to Ruzow’s definitive treatise on it, further mandates that all Involved Agencies such as Shandaken consider and comment on a project’s impact as soon as possible in the process, so that a final determination can be made based on full and complete input from all Involved agencies, not just the Lead Agency. Crossroads did in fact sign an agreement to provide unlimited voluntary funding for the Townís review in 1999, although the company has since chosen not to honor that agreement, and the Town Board has not sought to enforce it through the courts.

To get around this problem, the Town Planning Board is in the process of updating its review fees as an alternate mechanism for funding part of its portion of the Crossroads review. Although tabled at Monday’s meeting pending Planning Board approval of changes to the schedule made since last month’s public hearing, the new fee schedule would generate about $70,000 for the resort’s Site Plan Review. That money however, would not be available any time soon, as those fees would only be due after Site Plan Review is applied for, something that could only happen if and after DEC issues a final SEQRA determination approving the resort project. Since the agency has yet to even accept the project’s Draft Environmental Impact Statement as “complete”, that determination if it comes, might be far in the future.

The proposed local law presented Monday night is intended to cover the cost of the Town’s SEQRA review that is not covered under the new Planning Board fees, and to cover the funding gap created when Lead Agency Status was denied the town. It would require a large project developer such as Crossroads to place in escrow and as needed, amounts up to one-half of those it could be required to provide if the town had Lead Agency designation under SEQRA. As
drafted, it could compel Crossroads to make available up to between $600,000
and $750,000, though Baker repeatedly indicated such figures were subject to
downward revision, as the town’s actual needs for the full review process are in
the $200,000 range.

Speaking for Crossroads Monday, Gary Gailes said that “if the Town Board does pass this, Crossroads will have no choice but to seek relief in the courts”, a comment on which he and Supervisor Di Modica disagreed on, as to whether it constituted a “threat”. "The question" said Di Modica on Tuesday, “is are we going to do what we’re we’re supposed to do, and what we have to do to protect the taxpayers, or are we going to roll over in the face of the threat of litigation?”

“There is no legitimate legal argument” said the law’s author Jeff Baker “as to the legality of this town law, or to the town’s right to require payment for its review costs.” Both the draft law and Baker’s Memorandum in explanation of it are available at Town Hall and online at www.phoeniciatimes.com

In a related development, the NYC Department of Environmental Protection -another Involved Agency like Shandaken in the project’s review - is now seeking to use some $600,000 in funding from the Mayor’s Office, not DEP funds, to hire consultants to help the agency in its review of the resort project. In a request-for-proposals circulated several weeks ago, DEP outlined a number of subjects it’s looking to study, four of which - Secondary Growth, Community Character, Traffic, and Air Pollution - don’t in any way pertain to DEP’s sphere of concern with water-quality.

The City’s action drew immediate fire from the resort’s developer, Crossroads’ Dean Gitter: “This unprecedented move by DEP is a complete breach of the MOA and represents DEP’s desire to control land use in the Catskills far beyond what is necessary to protect its interest in the watershed. From correspondence we have obtained, it is clear that radical environmentalists, orchestrated by the NRDC, are moving to further expand the regulatory incursions of the DEP in the towns of the watershed”. Clearly excluded from such characterization is Shandaken’s Town Board, which Monday night passed a resolution prepared by the Coalition of Watershed Towns, supporting the basic position articulated by Gitter, though without reference to “radical environmentalists”.

Speaking for the Coalition, Jeff Baker, its counsel as well as Shandaken’s, characterized the city’s actions as “an improper intrusion into local concerns such as growth and land use issues, which should be considered by local communities and by the State, but not by the City.”

“Shandaken’s not weighing in on the environmental aspects of redeveloping the World Trade Center” said Baker. “The City has failed to recognize that as provided under the MOA, development - even large-scale development - is not inconsistent with water quality protection, so long as it meets DEPís regulations.”

“We agree with the Coalition that DEP should stay out of local affairs” said Di Modica, but its very troubling that the developer, especially under these circumstances, just won’t pay for our local review.” The resolution passed by Shandaken is expected to be passed by other towns in the watershed shortly.

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DOCUMENTS:

MEMORANDUM TO: Pete DiModica, Shandaken Town Supervisor
FROM: Jeffrey Baker, Esq.
Michael Moore, Esq.
RE: Town of Shandaken; Proposed Local Law to Require Project Developers to
Reimburse Town Engineering and Legal Fees, and so Facilitate Town ‘Involved Agency ‘
Participation in DEC SEQRA Hearings.
DATE: May 2, 2003

QUESTION: As we discussed, the Town is faced with the dilemma of identifying a source of fees to participate in the SEQRA review process for the Resort at Belleayre Project. The developer has repudiated its 1999 agreement with the Town. The developer has also made it clear that the site plan review fees will not be available for SEQRA purposes. Left without other sources of funds the question is may the Town of Shandaken enact a local law that requires developers of large, complex residential/commercial or industrial projects to reimburse Town zoning or planning bodies for reasonable engineering and legal fees incurred in Department of Environmental Conservation (DEC) hearings under the SEQRA where DEC or another agency , such as NYCDEP is the project lead agency under SEQRA and Town bodies are ìinvolvedî agencies, and thus will, at some point, have discretionary permit authority over the proposed project?
ANSWER: Yes. Case law clearly establishes that, pursuant to Municipal Home Rule Law ß 10, the Town is vested with the implied power to enact ordinances reasonably necessary to enable its zoning and planning bodies to carry out their statutory mandates. SEQRA imposes significant duties upon Town zoning bodies acting as ëinvolvedî agencies in a DEC-led coordinated review of large and complex projects. In order to carry out these statutory duties, as well as its police powers to protect the health, safety and welfare of its citizens in the exercise of its discretionary permit authority, Town zoning bodies may require applicants for large and complex projects to defray the Townís reasonable engineering and legal fees. I recommend, however, that the fees must be assessed by and
paid to the zoning bodies who have the permit authority, who are the actual involved agencies, and not by the Town or the Town Board. Otherwise the fee statute may be seen as an improper tax or revenue raising mechanism.
DISCUSSION: Municipal Home Rule Law (MHRL)ß 10 (1)(i) allows local governments to enact local laws related to its property, affairs and government. MHRL ß 10 (1) (a) further allows the passage of local laws related to the transaction of its business; the protection and enhancement of its physical and visual environment; and the protection [of the] safety, health and well-being of its citizens and their property (a codification of the police power). See, Home Builders Ass’n of Central New York v. Town of Onondaga, 267 A.D.2d 973 (4th Dept., 1999) (MHRL ß 10 grants towns implied powers to impose fees for engineering and legal costs associated with subdivision review).
The seminal case on this issue, cited by the Court in Home Builders, is the Court of Appeals decision in Jewish Reconstructionist Synagogue v. Inc. Village of Roslyn Harbor, 40 N.Y. 2d 158 (1976). The following points supporting the proposed law in Shandaken may be taken from this opinion:Reimbursement fee structures are justified as a “visitation of the costs of special services upon the one who derives a benefit from them.” 40 N.Y.2d at 162 (emphasis in original).
It is for this reason that I recommend that the fees must be paid to the zoning body who will ultimately have discretionary permit authority over the project, ie., the body from whom the project applicant is seeking the “benefit” of site plan or special permit approval. See, also, New York Telephone Company v. City of Amsterdam, 200 A.D.2d 315, 317 (3d Dept., 1994); and Albany Area Builders Assín v. Town of Guilderland, 141 A.D.2d 293, 298 (3d Dept., 1988) (ìfeesî charged for revenue purposes or to offset the cost of general governmental functions may be invalid as an “unauthorized tax”). Project applicants in the situations covered by the proposed law will be deriving a benefit, in the form of discretionary permit approvals, from Town zoning bodies. It is therefore reasonable and lawful to require payment of the fees of these bodies incurred in the course of their regulatory and governmental functions as ëinvolvedí permitting agencies in DEC SEQRA proceedings. Fees imposed must be “reasonably necessary to the accomplishment of the statutory command.” 40 N.Y.2D at 163; and Margolis v. Tully, 89 Misc 2d 969, 971-972 (Sup.Ct., Nassau Co., 1977). In this matter, as discussed, below, the statutory command to the Town involved agencies arises under SEQRA.
Of most importance to our proposed law, it is clear that the size of the project matters a great deal. The law allows towns, when setting fee schedules, to recognize that there are different classes of applicants, based on the nature of the proposed development (residential, commercial or industrial), or the size or value of the property at issue. 40 N.Y.2d at 164: If a [town] can demonstrate that a class of applicants generally requires a board to incur costs greater than those usually attendant upon applications for those in another classification, it may establish such a class and may establish its fee schedule accordingly.
The same observation was made by the Court in Margolis, 89 Misc. 2d at 972, citing Jewish Synagogue (the fee schedule may bear a “direct relationship” to the magnitude of the owner’s economic interest in the development a greater economic expenditure by the project sponsor may justify a “higher fee” by town zoning bodies). Thus, there is legal authority for the proposal to establish a fee schedule for large-scale projects involving multiple State and local permits, where town zoning bodies will be required both to participate in DEC SEQRA proceedings as an “involved” agency, and later to conduct their own discretionary permit review (fees for which would be covered under a separate statute). Finally, the Court of Appeals requires that fee schedules not be open-ended or unlimited; but should be based upon ”reliable factual studies or statistics” and the local government’s experience in ìcases of the same type. 40 N.Y.2d at 163. We propose in our draft law to base the Town’s new fee schedule on the existing Statewide fee schedule found in the DEC SEQRA regulations at 6 N.Y.C.R.R ß 617.13 (b) and (c), by making the allowable town fees a fraction of the fees allowed to be charged by the SEQRA “lead agency” for its environmental impact statement review. These established statewide SEQRA fees should pass legal muster as being reliable.
The SEQRA statute, regulations (6 N.Y.C.R.R. Part 617) and the DEC’s “SEQR
Handbook” (1992) all make clear that ìinvolved agenciesî have significant duties and responsibilities in the SEQRA environmental impact and permit review process (coordination of permit review proceedings to promote expedited review; providing the ”lead agency” with relevant information related to their areas of expertise and jurisdiction; participation in DEC hearings; receiving copies of all SEQRA documents). See, Environmental Conservation Law (ECL) ßß 8-0107 and 8-0111(3); 6 N.Y.C.R.R. ßß 617.3 (d) and(e), 617.6 (3)(i)617.12 (b) (1), and 617.14 (c); “SEQR Handbook,” pp. 29-30. In order to carry out these duties, and fulfill the involved agency’s “statutory mandate” under SEQRA, the Town has the implied power to enact the contemplated fee schedule, to defray its zoning bodiesí costs of acting as ìinvolvedî agencies in the DEC proceedings. Attached hereto is a draft local law for the Town Board’s consideration.

TOWN OF SHANDAKEN, ULSTER COUNTY Local Law No. of 2003
AN ACT TO ESTABLISH A SCHEDULE FOR PAYMENT OF PRIVATE
CONSULTANT FEES INCURRED BY AGENCIES OF THE TOWN OF
SHANDAKEN IN CONNECTION WITH LARGE PROJECTS INVOLVING
MULTIPLE GOVERNMENTAL PERMITS WHERE AGENCIES OF THE TOWN
WILL PARTICIPATE IN ìLEAD AGENCYî PROCEEDINGS AS AN ìINVOLVED
AGENCY, AND LATER CONDUCT THEIR OWN PERMIT REVIEW.
1. Definitions and Applicability.
A. This law uses terms defined in the New York State Environmental Quality Review Act SEQRA (Environmental Conservation Law Article 8) and its implementing regulations found at Title 6, New York Codes, Rules and Regulations 6 N.Y.C.R.R., Part 617, as they now exist or may hereafter be amended.
B. This law shall apply to the following classes of ìactions,î as that term is defined in 6 N.Y.C.R.R. ß 617.2(b):
All construction projects or physical activities:
- for which a positive declaration (6 N.Y.C.R.R. ß 617.2 [ac]) has been issued ;
- the lead agency (6 N.Y.C.R.R. ß 617.2 [u]) is an agency of the State of New York or the City of New York; and
- the Town Board of the Town of Shandaken and/or the Planning Board of the Town of Shandaken or the Zoning Board of Appeals of the Town of Shandaken are ìinvolved
agenciesî (6 N.Y.C.R.R. ß 617.2 [s]).
C. The provisions of this law shall cease to apply once the lead agency has issued its decision and findings on the action, pursuant to 6 N.Y.C.R.R. ß 617.11.
2. Fees.
In any action to which this law applies, the ìapplicantî or ìproject sponsorî (as those terms are defined in 6 N.Y.C.R.R.ßß 617.2[d] and 617.2 [ad], respectively) shall pay a fee to the Town of Shandaken to cover the reasonable costs incurred by Town involved agencies to participate in the lead agency’s SEQRA and/or permit proceedings. This fee shall be paid to enable the Town of Shandaken involved agencies to retain and pay for the services of private consultants, including but not limited to attorneys and engineers, who will assist the Town agencies in carrying out the following duties: a) their statutory and regulatory duties and responsibilities as involved agencies under SEQRA; b) to develop an administrative record which will promote the fair and efficient conduct of the their own regulatory and permit proceedings on the action; c) to protect and enhance the physical and visual environment of the Town of Shandaken; and d) to protect the safety, health and well-being of persons and property within the Town of Shandaken.
A. The fees to be paid under this local law shall not exceed, in total, the following amounts:
- for residential projects, one percent of the total project value, as that term is defined in 6 N.Y.C.R.R. ß 617.13 (b); or
- for nonresidential construction projects, one-quarter of one percent of the total project value, as that term is defined in 6 N.Y.C.R.R. ß 617.13(c).
B. As early as possible in the lead agency’s SEQRA and/or permit proceedings, the Town involved agency or agencies shall make a reasonable estimate of the amount of private consultant expenses they expect to incur during the course of these proceedings. The amount determined by the ìinvolvedî agencies, shall be deposited by the applicant in escrow with the Town Clerk no later than the date of Draft Environmental Impact Statement is submitted to the lead agency. If the amount so deposited is exhausted or diminished during the review process to the point that the involved agencies determine that the remaining amount will not be sufficient to enable them to complete their review of the application, they shall notify the applicant of the additional amount that must be deposited with the Town Clerk. If the applicant fails to replenish the escrow account or there are unpaid amounts for which the applicant is responsible at the conclusion of the lead agency’s proceedings (1.C., above), the involved agencies in their discretion may decline to review the project application under the applicable provisions of Town laws or ordinances until such amounts are paid.
At the conclusion of the lead agency’s review proceedings, all funds not expended by the Town involved agencies shall be returned to the applicant.
C. Where more than one Town agency is involved in the review of an action, the Town Board of the Town of Shandaken shall, in consultation with the other agencies, manage and audit the escrow account to ensure that: requests for payment by consultants are reasonable in amount; were incurred during lead agency proceedings; are necessary to the accomplishment of the involved agency’s duties, as set forth above; and do not duplicate work performed by or for the ìleadî agency. If only one Town agency is involved in the review of an action, that agency shall perform these management and auditing functions.
D. This law shall be applicable to any actions pending as of the effective date of the law.
3. This law shall take effect upon its filing with the Secretary of State.

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