Legal Fees Charged to Developer by Town Prohibited Under Anti-Snob Zoning Act

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Legal Fees Charged to Developer by Town Prohibited Under Anti-Snob Zoning Act: Zoning Board of Appeals of Sunderland v. Sugarbush Meadow, LLC, 464 Mass. 166 (2013)

Following the Sunderland ZBA’s denial of its application under M.G.L. c. 40B, §§ 20-23 (commonly referred to as the “Anti-Snob Zoning Act”), to build five three-story buildings with a total of 150 rental apartments, the developer, Sugarbush Meadow, LLC, successfully appealed to the Housing Appeals Committee (HAC) of the Department of Housing and Community Development. The HAC overturned the ZBA’s denial and directed the board to issue the comprehensive permit. In an administrative appeal taken under M.G.L. c. 30A, § 14, the Franklin Superior Court affirmed the HAC decision. The Supreme Judicial Court subsequently granted the ZBA’s application for direct appellate review and, in an opinion written by Judge Gants, affirmed the HAC order directing Sunderland to issue the comprehensive permit to Sugarbush.

In its lengthy opinion, the SJC touches on a variety of issues, including the need for low-to-moderate income housing, fire safety, application of the Massachusetts State Building Code, the fiscal impact of large-scale housing projects on local communities, and town counsel fees. On appeal, the ZBA contended that (1) the height of the proposed three-story structures would hinder the Sunderland Fire Department from adequately responding to a fire; (2) the Town maintained an unusually high percentage of affordable housing; (3) the proposed project would be financially burdensome to the community; and (4) the proposed project violated local wetlands protection bylaws. In according great deference to the HAC’s experience, competence and specialized knowledge, the Franklin Superior Court and the SJC rejected all arguments advanced by the Town.

Of particular note was the Court’s affirmation of the HAC’s determination that the Town’s comprehensive permit rule, which required submission of an additional $5,000 to $10,000 application fee for “legal services,” was prohibited under state regulations codified at 760 CMR §§ 56.00, et seq., as well as under Chapter 40B. Rule 3.02 of the Comprehensive Rules of the Sunderland ZBA required that, in addition to the standard application filing fee, an applicant shall submit $5,000 to $10,000 (depending on the size of the project) “to pay for the services of legal counsel.” The Rule further stated: “[t]his cost is a reasonable estimate of the administrative costs for counsel retained to assist the Board with the multitude of legal issues that must be explored.”

The HAC recognized that state regulations authorize local boards to assess certain fees during the comprehensive permit review process, such as a “reasonable filing fee to defray the direct costs of processing applications…,” and “review fees” to hire consultants to review technical aspects of a proposal. 760 CMR §§ 56.05(2), 56.05(5). However, as the HAC further pointed out, the regulations explicitly prohibit the assessment of “[l]egal fees for general representation of the Board.” 760 CMR § 56.05(5)(a). The Town admitted the Rule 3.02 charge was not a permissible consultant’s fee under Section 56.05(5), but nonetheless argued that it was reasonably assessed for “administrative costs for counsel” necessitated by the “novelty and complexity” of the proposal. As such, the charge was permissible (the Town insisted) under Section 56.05(2) “to defray the direct costs of processing applications.” The HAC rejected the Town’s argument and found the Rule 3.02 assessment constituted a fee charged for “general representation of the Board” as prohibited under 760 CMR § 56.05(5)(a). While recognizing that a board may assess a consultant’s fee under Section 56.05(5) where an attorney’s specialized legal expertise is needed to review technical aspects of a proposal, the Sunderland charge was nothing more than an inappropriate assessment designed to defray the legal fees for general representation of the ZBA during the local hearings and on appeal to the HAC.

In light of this decision, municipalities should ensure that their rules governing the comprehensive permit application process, as established pursuant to state mandate, are consistent with the purposes of M.G.L. c. 40B, §§ 20-23 – i.e., to provide a streamlined permitting process that overcomes regulatory barriers to the development of low-to-moderate income housing. Any fee deemed inconsistent with state regulations will be considered such a barrier and shall be struck down as a frustration to the Anti-Snob Zoning Act.

Published in Developments in Municipal Law Spring 2013 Newsletter.