Owner's lack of right to appeal land use application denials

In a typical new construction situation, a property owner and a commercial purchaser, or tenant in a groundlease situation, negotiate which party will be responsible for securing development approvals from the municipality. One of two scenarios usually results: the property owner applies for and obtains all required approvals, which is a contingency to the purchase or lease contract, or the contract purchaser or contract lessee takes on the responsibility for permitting, which is a contingency to the deal. In either scenario, if the permitting process proceeds smoothly and all required approvals are obtained, both parties are pleased with the outcome, the contingency is satisfied, and the project is built. In those situations where necessary land use approvals are denied, the parties can agree to terminate their deal, or one of them can file an appeal. A court decision issued earlier this year provides some parameters concerning which party can appeal. Understanding which party can appeal in a given situation represents an important consideration as the parties negotiate their lease or purchase and sale agreement, so that both can ensure that the document properly reflects their mutual expectation concerning appeals of permitting decisions. In the matter of Rossi v. Town Board of town of Ballston, decided by the Appellate Division, Third Dept., the court was confronted with the third in a series of legal proceedings involving the proposed construction of a Wal-Mart Supercenter in the town of Ballston. Wal-Mart, which was in contract with the property owner, submitted an application to the Town Board, in accordance with a recently adopted zoning law, to establish a planned unit development district (PUDD). Local law required that a PUDD be created whenever a big box development was proposed. The Town Board, concluding that the proposed Wal-Mart was not consistent with the town's comprehensive plan, declined to forward the application to the Planning Board for review and recommendation. Wal-Mart did not appeal the Town Board's determination. The property owner, however, commenced an Article 78 proceeding, in which Wal-Mart was named as a necessary party, seeking among other things to annul the denial of Wal-Mart's application for the establishment of a PUDD. The Appellate Division concluded that the property owner lacked standing to contest the Town Board's denial of Wal-Mart's application. Recognizing that the property owner had a contract with Wal-Mart, the court determined that the application itself, although made with the owner's consent, was in fact Wal-Mart's application. As such, Wal-Mart, rather than the property owner, was the party aggrieved by the Town Board's action. The fact that the property owner consented to Wal-Mart making the application did not, in and of itself, make the property owner a party to that proceeding or confer standing. The property owner had not participated in the approval process. This decision, which is binding on trial courts only in the Third Dept. (i.e., not in the N.Y.C. area), suggests that the parties to a sale or lease contract would be well served to think about which party will be responsible for obtaining development approvals, and whether the party not responsible may have an interest in appealing an adverse determination. Where that is the case, the parties may wish to provide for an assignment of the right of appeal in their contract (the decision does not discuss whether such an assignment would validly transfer standing), or may wish to provide for both the owner and the contract purchaser or contract lessee to be co-applicants. Howard Geneslaw, Esq. is a director at Gibbons P.C. in New York, N.Y.