Municipal Land Use Application Fees Pay for Technical Review The land use approval process often strikes a delicate balance between the interests of the municipality in assuring that the development proposal meets the applicable regulations and current engineering standards against the interest of the property owner in securing development approvals without incurring undue expense. Over twenty years ago, the Connecticut legislature tipped the balance by recognizing that municipalities should be able to obtain expert review of land use applications without passing on the expense of such review to the general taxpayers. As a result, Connecticut General Statutes § 8-1c, an enabling act that allows municipalities to impose fees on applicants necessary to cover the cost of processing applications before municipal land use boards, was adopted.
The legislation was intended to address the increasing complexity of land use applications and the frequent need to utilize the services of experts, whether municipal employees or outside consultants, to evaluate engineering and environmental issues associated with proposed development plans. Prior to this legislation, municipalities were forced to decide between incurring substantial outside expert consultant charges or relying on experts hired by the developer to determine if the plans complied with technical engineering, environmental, and legal standards. Although many towns have staff members, including engineers who could conduct reviews of such applications, time and budgetary constraints often prevent adequate and timely review of the applications.
In the years following the adoption of Conn. Gen. Stat. § 8-1c, municipalities across Connecticut have employed a wide variety of mechanisms in an effort to impose fees on developers to recoup the cost of technical review of land use applications. Application fees imposed by municipalities after the adoption of § 8-1c may range anywhere from ten dollars to tens of thousands of dollars. As such, the cost of the application may be a major factor in deciding whether to seek to develop land, especially when a significant risk exists that the application will be denied or multiple rounds of applications will be required to obtain approvals.
This article explores the various methods in which municipalities utilize §8-1c to impose such fees upon developers and the practical and legal pitfalls of some of these approaches.
I. THE STATUTE
Connecticut General Statutes § 8-1c provides that any municipality may, by ordinance, establish a schedule of reasonable fees for the processing of applications by a municipal zoning commission, planning commission, combined planning and zoning commission, zoning board of appeals, or inland wetlands commission. Such schedule shall supercede any specific fees set forth in the General Statutes, or any special act or [sic] established by a planning commission under § 8-26.
No guidance is provided by the statute or subsequent case law regarding the content of such an ordinance or the mechanism for collecting and assessing fees other than the caveat that they must be "reasonable." Perhaps for that reason, there are a significant number of municipalities that have not adopted ordinances pursuant to § 8-1c. Such municipalities that do not have a fee system to recoup costs of processing applications pursuant to § 8-1c simply require a modest flat fee to file a land use application. Alternatively, for those municipalities that seek to require a fee to recoup the cost of significant technical review, at least three general schemes are utilized.
A. Specific Pre-application Fee Schedule
Some municipalities have adopted an ordinance that clearly sets forth the pre-filing cost of a land use application intended to cover the expense of substantial technical review. The schedule of fees may base the fee on a calculus that includes an amount based on the number of feet of proposed road in the project, another amount based on the number of feet the property abuts existing state and municipal roads, and an amount for each proposed lot of a subdivision, often on a sliding scale. Such a mechanism undoubtedly involves a specific "schedule" of fees that informs a prospective applicant of the actual charges that will be incurred before an application is actually filed.
The question of whether such a schedule of fees imposed by a municipality was reasonable or related to the processing of application was the subject of a 1995 Supreme Court opinion that serves as the only published Connecticut opinion addressing municipal ordinances seeking to recoup expert costs of review. In that case, Pollio v. Planning Comm. of the Town of Somers1, 232 Conn. 44; 652 A.2d 1026 (1995), the Connecticut Supreme Court affirmed $36,030 in application fees paid by the developer in connection with an application for the approval of a 115-lot subdivision. In addition to imposing a fee for the review of the application, the town of Somers ordinance included fees "to cover engineering review of construction plans and inspection of improvements during construction." 2 These fees were deemed "reasonable" by the Court and were not reimbursed when the plaintiff's application was denied.
The Court explained that the fees charged under the town's ordinance are imposed for three purposes. First, a base application covers "processing and administrative handling. . .including consultant expenses in direct connection with the technical review." 3 Second, surcharges and supplemental fees are imposed by the ordinance to cover engineering review of construction plans. And third, a $50 fee for each proposed subdivision lot is imposed to cover a portion of the costs of the inspection of improvements during construction. 4
Although engineer review of construction plans are widely accepted as part of the application process, the applicant in that case maintained that § 8-1c was never intended to include post-approval inspection fees. The Supreme Court upheld that portion of the fee based on the presumptions of validity accorded to municipal ordinances and the legislative history and the apparent intent of the legislature to interpret the phrase "processing of applications" to include the "diversified procedures of the several commissions that could involve both pre-approval and post-approval costs associated with the application." 5 The Court held that the statute was meant to give municipalities the power to act in their best interests in order to cover the costs associated with land use regulation. 6 The Court determined that the phrase "processing of applications" included both pre-approval and post-approval costs. 7 Such costs are subject to challenge according to the standard of reasonableness. 8 The Court never expressly addressed how a regulation that does not reimburse applicant's post-approval monitoring fees could satisfy the test of reasonableness when that applicant's plans are denied and no post-approval review is required.
B. Qualitative Fee Schedule
A majority of towns in Connecticut that seek to impose a fee to enable technical review of land use applications use a two-step process that involves an initial modest filing fee followed by a preliminary review to determine an estimate for the cost of technical review. In these towns, the agency retains the discretion to determine whether technical review is necessary. Before the fee is imposed, the agency makes a determination that technical review of the application cannot be completed in a timely manner by the agency's staff or that the project requires expertise not available from staff. Subsequently, the agency or a designated official estimates the cost of services to be performed based upon information received from a qualified technical expert. Once the estimate is received, the ordinances typically require the applicant to deposit the full estimated amount of the technical review, plus a buffer established by an additional percentage of the estimated amount with, the agency or designated agent, before the technical review of the application begins. The ordinances contain language that shield the applicant from any costs incurred for technical assistance that exceed the deposited amount. In addition, excess funds are returned to the applicant.
This qualitative fee method has the potential to impose heavy costs on the developer, but also protects the developer from unforeseen costs. The developer knows the costs associated with third-party review before the work begins. Moreover, this fee schedule provides the developer with an opportunity to evaluate the project from an objective standpoint, taking into account all applicable variables including the risks of denial or multiple applications, before continuing with the development approval process.
C. Minimalist approach
Rather than adopt a specific schedule of fees or a mechanism where fees are estimated and established before agency review commences, at least one Connecticut municipality amended its schedule of filing fees to provide that the developer is responsible for any cost incurred by the municipality in processing fees that exceed the modest initial filing fee. As such, when the municipality incurs substantial costs from outside consultants to conduct technical review of the land use application, it simply forwards an invoice for those amounts to the developer. Under that scheme, the developer has no way to know if the town will employ outside consultants to conduct technical reviews and no way to know the estimate of the ultimate cost of the review. Furthermore, since the fees are not in any way capped, the municipality has no incentive to guard against unnecessary charges by the outside consultant and the developer has no controls over the outside consultants.
II. Legal Considerations
The first, and so far untested, legal issue involving the adoption and enforcement of ordinances pursuant to § 8-1c arises from the plain language of the statute. The statute authorizes the adoption of a "fee schedule" imposing reasonable fees to cover the cost of processing land use applications. Notwithstanding that language, the majority of Connecticut municipalities seeking to charge fees for technical review have not adopted a specific schedule of fees such as the schedule at issue in the Pollio decision. Instead, the fees are either estimated on an application-by-application basis or simply passed on to the developer after they are incurred.
The imposition of substantial fees after the application is filed and without any advance notice or input by the developer may also raise due process concerns. Although Connecticut Courts do not recognize a cognizable property interest in the issuance of a zoning permit if the agency has discretion to decide whether to approve the application, they have recognized a common-law right to fundamental fairness in all administrative proceedings. 9
The right to fundamental fairness encompasses a variety of procedural protections to assure that the proceedings comport with the rules of natural justice, including the right to adequate notice and the right to an opportunity to know the facts on which the commission is asked to act. In fact, the Connecticut Supreme Court has even characterized these procedural protections as "due process" rights. 10 These administrative law cases reflect the development, in Connecticut, of a common-law right to due process applicable to all parties to an administrative proceeding.
Other than cases involving the right to be heard and notice of hearing, very little law is developed on other procedural rights required by principles of natural justice. For that reason, it is impossible to know whether courts will look favorably on a system in which a land use applicant has absolutely no way to know what the actual costs of a land use application would be until it receives the invoices from the town. Furthermore, it is also unclear how courts will view a system in which every land use application may be viewed differently and is subject to a different fee.
The need for municipalities to obtain technical review in complex land use applications is obvious. In instances where neighboring property owners to a proposed development plan do not organize and hire independent consultants, municipalities should not be forced to rely on the experts for the developers or on a staff that either does not have the expertise or the time to adequately review the plan in a timely fashion. The question remains whether the current systems employed by municipalities in Connecticut adhere to the statutory enabling act and whether these systems meet the basic requirements of due process that assures a balance between the interests of the municipality and the interests of the land use applicant.
1. Pollio v. Planning Comm. of the Town of Somers, 232 Conn. 44, 652 A.2d 1026 (1995).
2. Id. at 48
3. Id. at 49.
4. Id. at 49-50.
5. Id. at 52.
6. Id.
7. Id.
8. Id.
9. See Grimes v. Conservation Commission of the Town of Litchfield, 243 Conn. 266; 703 A.2d 101 (1997).
10. See, e.g., Huck v. Inland Wetlands & Watercourses Agency, 203 Conn. 525, 536; 525 A.2d 940 (1987); Connecticut Fund for the Environment, Inc. v. Stamford, 192 Conn. 247, 249; 470 A.2d 1214 (1984); Pizzola v. Planning & Zoning Commission, 167 Conn. 202, 207; 355 A.2d 21 (1974).
This article originally appeared in the Connecticut Lawyer, December 2002/January 2003, Volume 13, Number 4. It is reprinted here with permission.