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TURLEY v. NEW YORK CITY POLICE DEP'T

December 18, 1997

ROBERT TURLEY, Plaintiff, against NEW YORK CITY POLICE DEPARTMENT and NEW YORK CITY DEPARTMENT OF PARKS AND RECREATION, RAMOND W. KELLY, in his official capacity, and BETSY GOTBAUM, WILLIAM F. DALTON, ALEXANDER R. BRASH, MICHAEL FOX, KEVIN DOUGHERTY, and RAYMOND SPINELLA, in their individual and official capacities, Defendants.


The opinion of the court was delivered by: SCHEINDLIN

 SHIRA A. SCHEINDLIN, U.S.D.J.:

 I. Introduction

 After a six-day trial, a jury found, inter alia, that the former fee of $ 29 per day was excessive, but that the current fee of $ 45 per day and $ 5 for four consecutive days was not excessive. Plaintiff subsequently moved for a new trial on the issue of whether the current permit fee is excessive. In an Opinion and Order dated August 22, 1997, I granted that motion because the jury was not asked whether the $ 45 per day fee for a single-day permit exceeded the cost of processing a single permit, making it impossible to reconcile the jury's decisions that a $ 29 per day fee was excessive, but a $ 45 daily fee was not. See Turley v. New York City Police Dep't, 988 F. Supp. 675, 1997 U.S. Dist. LEXIS 12815, 93 Civ. 8748, 1997 WL 529012 (S.D.N.Y. 1997). A bench trial on this issue was held on November 10 and 11, 1997.

 II. Findings of Fact

 Plaintiff is a self-employed street musician who plays the treble bass, a ten-string electrical guitar that requires a sound amplifier to be audible, in several of New York City's public spaces. Trial Transcript ("Tr.") at 32-33. Turley testified that he performs five days each week for about fifty weeks of the year, from about noon until 10 p.m. Tr. at 33. Turley plays primarily in three locations: on a traffic island on Broadway between 43rd and 44th Streets, on the northwest corner of Broadway and 47th Street, and on the northwest corner of Broadway and 45th Street. Tr. at 34. To play at these locations, Turley applies for SDPs at the Midtown South and Midtown North police precincts. *fn1" Turley testified that over a fifty-two week period, he applies for a five-day permit approximately twenty-six times at Midtown North and approximately twenty-six times at Midtown South. Tr. at 41. Each five-day permit costs $ 65: $ 45 for the first day and $ 5 per day for each of the next four days at the same location.

 At trial, the City presented evidence supporting its position that the administrative cost of issuing an SDP is $ 45 for a one-day permit. The City's evidence relied on two assumptions of primary importance: (1) that the average SDP is processed in one hour, and (2) that the persons processing the SDPs earn a senior patrolman's salary. To understand the importance of these two assumptions, it is necessary to review the City's cost calculation methodology.

 A. The City's Cost Calculation Methodology

 New York City's Office of Management and Budget ("OMB") follows a defined methodology--the user service cost analysis ("USCA")--to determine the cost of providing licenses and permits, including loft board permits, gun licenses, Fulton Fish Market permits, and SDPs. Tr. at 157-58. The OMB distributes the same USCA form and instruction sheet to approximately 55 City agencies, including the NYPD. Id. The USCA form requires the agency to determine (1) the salary and fringe benefits attributable to providing the permit or license ("personal service" costs); and (2) the costs directly attributable to providing the permit or license, other than the personal service costs ("OTPS" costs). See Df.'s Ex. M. The sum of the personal service and OTPS costs equals the total direct cost of the license or permit. The total indirect cost is then calculated by adding (1) executive management overhead, (2) administrative service overhead, (3) space and utilities costs, (4) cost of other agency services, and (5) miscellaneous indirect costs. Id. The sum of the total direct cost and total indirect cost equals the total cost of the license or permit. Id. The cost of each individual permit or license is then calculated by dividing the total cost by the number of permits or licenses issued. Id. Based on the calculated cost of a permit or license, the agency preparing the USCA form recommends the fee necessary to cover the cost of providing the permit or license. Tr. at 158-60. A deputy assistant director at the OMB reviews the agency's USCA form and adopts or modifies the agency's recommendation and proposes a fee for OMB approval. Tr. at 177.

 Lieutenant Edward Paroulek prepared the NYPD's USCA for fiscal year 1997 which served as the basis for the City's SDP cost estimate. Tr. at 192-93. Attached to the USCA form prepared by Officer Paroulek are two pages that present the calculations which Paroulek made in determining the appropriate figures to include on the USCA form. See Df.'s Ex. M. Paroulek calculated that the City's cost for each SDP issued in 1996 was $ 91.12. Id. In reaching this result, Paroulek made several assumptions. First, he assumed that a patrolman with an hourly salary of $ 24.47 works for two hours on each permit, costing the city $ 48.94 in salary for each SDP. See Df.'s Ex. M; Tr. at 194-95. Paroulek also calculated that the senior patrolman's hourly fringe benefits of $ 11.73 cost the City an additional $ 23.46. See Df.'s Ex. M. The costs of executive management overhead and administrative overhead (collectively, "overhead costs") were calculated by multiplying the total direct cost, of which the senior patrolman's salary and fringe benefits were major components, by predetermined ratios, .0701 and .1035 respectively. Id.; see also Tr. at 164-65. The cost of a senior patrolman's salary and fringe benefits for two hours of work ($ 72.40) multiplied by the predetermined overhead cost ratios equals $ 12.57 of overhead costs per permit. These figures total to $ 84.97. *fn2"

 B. Paroulek's Modifications to SDP Cost Calculation

 Paroulek's two hour estimate was based on the assumption that a senior patrolman works for one hour in processing an SDP and one hour inspecting and measuring the requested permit location to determine if that location is suitable for the proposed use. Tr. at 194-95. Because location investigation is not necessary for every permit, Paroulek separated the location investigation costs from the processing costs by dividing the $ 92.12 total SDP cost in half, attributing $ 45.56 to processing the SDP and $ 45.56 to investigating the requested location. Tr. at 194-95. Paroulek then recommended a fee of $ 45 for permit processing and $ 45 for location measuring. See Df.'s Ex. M. Anthony DeLorenzo, the deputy assistant director of the OMB who reviewed Paroulek's USCA for SDPs, chose not to include the cost of investigating a requested SDP location in proposing a permit fee to the OMB, but included only the estimated cost of processing the permit. Tr. at 170-71. The OMB accepted DeLorenzo's proposed fee of $ 45 and the City Counsel adopted this as the fee for an SDP. Tr. at 177.

 The $ 45 per permit estimate assumes that a senior patrolman spends one hour processing each permit. Thus, if the City overestimated either the salary and fringe benefits of the permit preparer or the time required to prepare a permit, then the license fee does not reflect the City's actual cost. The next ...


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