Municipality Successfully Invokes Safe Harbor Due to Late Payment

Ruling that a developer who files a comprehensive permit application without paying the full filing fee “does so at its peril,” the Court in Zoning Board of Appeals of Hanover v. Housing Appeals Committee, 90 Mass. App. Ct. 111 (2016), found that the local board of appeals properly considered the developer's application with the benefit of the “safe harbor” which the town had achieved in the interim period between the partial and full payment of the fee. As a result, the Court reversed the Housing Appeals Committee’s (HAC) order that the local board issue a comprehensive permit for a 200-unit rental project. In sum, the “safest procedure” for a developer is to concurrently pay the full fee and file a motion to reduce it.

Background

Hanover Woods, LLC (developer), filed an application with the Zoning Board of Appeals of Hanover (board) for a comprehensive permit to build a 152-unit mixed-income housing project. Under the board's fee schedule, the filing fee was $250 per housing unit or $38,000. The developer, however, submitted a check for $8,500 based on its claim that a $2,500 fee would be "imposed on a traditional project" and that a $6,000 payment for initial consultant review fees was reasonable. The developer did not simultaneously file a Motion to Reduce the application fee.

After the board informed the developer that its application was incomplete and would not be accepted for filing until the board received the required fee, the developer, only six weeks after filing its application, paid the fee in its entirety “under protest” and reserved its right to challenge the fee. During this same six week period, the board had approved another comprehensive permit project which resulted in the Department of Housing and Community Development’s (DHCD) certification that the town complied with its Housing Production Plan (HPP) as of the date of the project approval and lasting for a two-year period. This certification established a regulatory “safe harbor” enabling the board to deny or condition a comprehensive permit without fear of review by the HAC.

The board informed the developer of the certification and the resulting safe harbor and the developer filed an interlocutory appeal to the HAC challenging the filing fee and the applicability of the safe harbor protection. While the HAC found the $38,000 filing fee reasonable, it ruled that the board could not invoke the safe harbor protection because the developer's application should have been considered filed when the partial payment of the fee was made. On remand, the board granted the developer a comprehensive permit for the 152-unit, for-sale project, subject to conditions. After appealing certain conditions to the HAC, the

developer sought to increase the number of units from 152 to 200 and change the project from for-sale condominiums to rental units. The HAC found the requested changes were "substantial" and remanded the matter to the board which denied the proposed changes. The developer appealed to the HAC which ordered the board to issue a comprehensive permit for the 200-unit rental project. On appeal, the Superior Court affirmed the HAC's decision and the board appealed from the judgment.

Date of Payment of Full Filing Fee Determines Project Application Date

Chapter 40B allows municipalities to attain certain “safe harbors” for designated periods of time during which the HAC lacks authority to order the local board of appeals to grant a comprehensive permit or to modify or remove conditions. One safe harbor arises when DHCD certifies that the municipality has complied with the goals of its approved HPP including increasing the number of affordable units in an amount equal to or greater than its 0.50% production goal for that calendar year. Significantly, the HAC is charged with upholding a board’s decision on a comprehensive permit application if the municipality's HPP certification is in effect "as of the date of the Project's application." 760 CMR § 56.03(1).

The Hanover Court primarily relied on statutory construction to reach its conclusion. The Court first noted that the first paragraph of § 56.05(2) of 760 CMR requires the submission of unspecified application materials, and that “[w]ith respect to these items, the first paragraph further states, "Failure to submit a particular item shall not necessarily invalidate an application." 760 CMR § 56.05(2). On the other hand, the Court explained, the second paragraph of § 56.05(2) which governs the payment of a reasonable filing fee omits the savings clause that "[f]ailure to submit a particular item shall not necessarily invalidate the application." This distinction was fatal to the developer’s reading of the regulation. The Court conceded that, “While the language of the regulation admits some flexibility regarding the items that constitute a complete project description, this language does not spatially or logically encompass the filing fee, which appears in a separate paragraph.”

The Court did note that the regulations do allow for the reduction of the filing fee by a timely-filed motion: "Any motion for reduction of fees shall be filed with the initial pleading." However, the Court went on reject the notion that such a motion was sufficient to deem an application complete. A developer who elects to pay less than the full fee, the Court warned, “does so at its peril.”

Finally, the Court invoked public policy in support of its holding noting that the filing fee for a comprehensive permit application is not a minor detail. Rather, the fee is necessary to "defray the direct costs of processing applications," which can be substantial. “It is unreasonable, and frustrates the purpose of… [chapter 40B], to require a municipality to mobilize its resources to entertain a comprehensive permit petition without full payment of the applicable filing fee.”

Finding that the board correctly determined that the application was filed as of the date it received the full fee from the developer, the Court ruled that the board was entitled to consider the developer's application with the benefit of the HPP safe harbor thereby reversing the grant of a comprehensive permit for a 200-unit project.