Section 10503(1) of the Pennsylvania Municipal Planning Code (“MPC”) requires that all fees charged by a municipality for review of a land development plan must be reasonable and necessary. Section 10503(1) states that review fees shall be based upon a schedule established by ordinance or resolution and that they must be set in accordance with ordinary and customary charges for similar services in the community, but “in no such event shall the fees exceed the rate or cost charged by the professional consultant for comparable services to the municipality for services which are not reimbursed or otherwise imposed on applicants.”
Review fees are typically paid at the discretion of the municipality, at the commencement of the land development plan application, or over time. Whether the municipality requires the review fees to be paid at the commencement of the land development plan application or over time, the municipality must inform the developer of each payment it makes for professional services, so that the developer can object to a particular invoice that it believes is unreasonable. Section 10503(1)(i) of the MPC requires the municipality to submit to the developer, an itemized bill showing the work performed, identifying the person performing the services, and the time and date spent for each task.
In the event the developer disputes the amount of review fees charged by the municipality, the developer is required, no later than 45 days after the transmittal of the bill by the municipality to the developer, to notify the municipality and the municipality’s professional service provider that such fees are disputed and the developer must explain the basis of the objection to the fees charged. Failure of a developer to dispute a bill within 45 days waives the developer’s right to arbitration of that bill as set forth in Section 10510(g)(2) of the MPC. However, if the objection is timely filed and an agreement cannot be reached with the municipality’s professional service provider regarding the review fees charges, the developer may request that the dispute be arbitrated.
Section 10510(g)(2) of the MPC requires that the arbitrator chosen to arbitrate the dispute between the developer and the municipality’s professional service provider must be of the same profession or discipline as the professional service provider whose fees are disputed. In the event that the municipality’s professional service provider and the developer cannot agree upon the arbitrator within 20 days of request for appointment of an arbitrator, then, the President Judge of the Court of Common Pleas of the judicial district in which the municipality is located shall appoint such arbitrator. Section 10510(g)(2) of the MPC also requires that the arbitrator move swiftly in attempting to resolve the matter. The arbitrator is required to hear such evidence and review such documentation as the arbitrator in his or her sole opinion deems necessary and must render a decision no later than 50 days after the date of appointment. Based upon the decision of the arbitrator, the developer or the professional service provider whose fees were challenged is required to pay any amounts necessary to implement the decision within 60 days. The developer must pay the fee of the arbitrator if the arbitrator sustains the review fee charged; or, otherwise it shall be divided equally between the parties.
It is imperative that a developer challenging a professional service provider’s fees follows the statutory guidelines of the MPC set forth above. Failure to do so may have grave consequences on the challenge. In a case recently decided, Tobin v. Centre Township, the developers notified Centre Township (the “Township”) that they were disputing certain fees charged by the Township’s professional service provider and that they wanted to negotiate a reasonable fee. The Township refused to negotiate, and the developers filed a court action seeking to have the court determine the reasonableness of the fees charged. The Commonwealth Court of Pennsylvania ruled that the Township was required to negotiate reasonable review fees and remanded the matter to the trial court for further proceedings. After remand, the parties attempted to negotiate a fee that was acceptable to both parties, but failed to resolve the dispute. At no point prior to filing a subsequent court action did the developers invoke their statutory right to an arbitration proceeding pursuant to Section 10510(g) of the MPC, and therefore the Commonwealth Court ruled that the developers could not challenge the reasonableness of the fees charged by the municipality’s professional service provider.