BLOGS: North Carolina Land Use Litigator

Tuesday, August 4, 2015, 2:32 PM

Three-Judge Panel Invalidates State's Efforts to Spay/Neuter Town's Planning and Development Regulation Powers

Today, a three judge panel of the North Carolina state court declared unconstitutional a State law that blocks a municipality -- one municipality -- from exercising its power to create an extraterritorial planning jurisdiction, or "ETJ".

Thanks to my colleague Laura DeVivo (author of the incredible Keeping Up With Jones Street blog) for pointing me to the decision.  

The Law
Last summer, the North Carolina General Assembly adopted a law that states as follows:

Notwithstanding any other provision of law, the Town of Boone shall not exercise any powers of extraterritorial jurisdiction as provided in Article 19 of Chapter 160A of the General Statutes.

That's it.  That's the law.  Ordinarily, I'd link to a law.  Or, just maybe, I'd post a portion of the law.  Not here.  This is the entire law.

It's a so-called "local law" because it applies to a specific municipality.  After all, the law is entitled, "AN ACT PROVIDING THAT THE TOWN OF BOONE SHALL NOT EXERCISE THE POWERS OF EXTRATERRITORIAL JURISDICTION".  That's pretty local.  It's Session Law 2014-33.

Ok, What's an ETJ?
Since 1959, North Carolina municipalities have been vested with the power to apply their land development regulations to a perimeter area outside their corporate limits.  This is the extraterritorial planning jurisdiction, or "ETJ".  Once a municipality establishes its ETJ, the municipality has exclusive jurisdiction for development regulations in the ETJ; in short, the municipality's development regulations are to the exclusion of the county's development regulations.  See, generally, N.C.G.S. 160A-360 and about anything from Professor Dave Owens on the subject.

A municipality is not empowered to apply a development ordinance in the ETJ that it is not also applying within the municipal corporate limits.  But municipalities are not required to apply all of their development ordinances that apply within the corporate limits.  In other words, the ETJ can be development regulation light as compared to the corporate limits; but the ETJ cannot be development regulation heavy as compared to the corporate limits.

A number of North Carolina municipalities have adopted ETJs.  Including Boone.

So, What's Going On?
It seems N.C. Senator Dan Soucek (R) did not appreciate the Town of Boone's exercise of its ETJ powers.  Accordingly, in 2014, he sponsored legislation.  That legislation became Session Law 2014-33.

The Town sued, claiming the law violates the State Constitution's prohibition that, "The General Assembly shall not enact any local, private, or special act or resolution ... [r]elating to health, sanitation, and the abatement of nuisances."  N.C. Constitution, Art. II, sec. 24(1)(c).  You can read the Constitution for yourself, here.

On July 29, a three judge panel of the North Carolina courts agreed with the Town:  "The Court herewith enters summary judgment declaring that the revocation of the Town of Boone's power of extraterritorial jurisdiction by Session Law 2014-33 (Senate Bill 865) is unconstitutional pursuant to the prohibition on local acts contained in Article II, Section 24 of the North Carolina Constitution and the Act is therefore enjoined."

There are procedural issues at play, but we'll leave that analysis to someone with more time.  For our purposes, we're interested in the summary judgment decision.

We learned again today that what is usually thought of as a local act -- zoning -- is free from the State's efforts at a, um, "local act".

We'll see if the State appeals.

"And don't forget to have your municipalities spayed or neutered."

Mike Thelen practices in Womble Carlyle's Real Estate Practice Group out of the Firm's Raleigh office. He regularly represents a wide variety of clients, from local governments to businesses, in land use and real estate development litigations and transactions in state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw here and on Instagram at NCLandUseLaw here.

N.C. Court Reminds Litigants of Need to Preserve "Status Quo" When Appealing Denial of Preliminary Injunction

Today, we're looking at Shoeheel Farms v. City of Laurinburg, COA14-1089 (August 4, 2015).  The Court of Appeals dismissed as moot property owners' appeal of a trial court's decision denying a temporary restraining order and preliminary injunction.

Facts
The City of Laurinburg and a property owners entered into a Memorandum of Understanding in which property owners authorized the City to drill test wells on their property.  Should the tests reveal that the well locations were suitable for public use, the Memorandum of Understanding continued, the City and the property owners “shall negotiate a mutually agreeable purchase price of the well site.”

After the tests established that the well sites were suitable for public use, the parties were unable to negotiate a mutually agreeable purchase price. Soon after, the City sent property owners a Notice of Condemnation.

Legal Posture
Property owners filed suit seeking to enjoin the City from initiating the condemnation proceedings, and they moved for a temporary restraining order and preliminary injunction to prevent the City from filing a condemnation proceeding and to prevent title and right of possession from vesting in the City upon the filing of the "quick take" condemnation complaint.

The trial court denied the TRO and the PI, and the property owners appealed that denial.  The property owners did nothing more, according to the Court of Appeals, except to notice an appeal.

In the interim -- after the trial court decision and before the Court of Appeals heard the appeal -- the diligent City filed a complaint initiating condemnation proceedings.

As a result of that condemnation complaint, the Court of Appeals dismissed the appeal as "moot".

Takeaway
This case is not about condemnation.  It's about litigation procedure.

The property owners "did not take any action in either the trial court or this Court to preserve the status quo pending the appeal. Consequently, the City filed a complaint initiating condemnation proceedings against plaintiffs in a separate action."  It was this shortfall that allowed the City to file its suit, and, in turn, "moot" the property owners' appeal as to the preliminary injunction to prevent the filing of a condemnation lawsuit.

The case is not over, mind you.  The property owners can still defend within the context of the City's condemnation lawsuit.  It is the opportunity to prevent that suit that has since passed.

Mike Thelen practices in Womble Carlyle's Real Estate Practice Group out of the Firm's Raleigh office. He regularly represents a wide variety of clients, from local governments to businesses, in land use and real estate development litigations and transactions in state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw here and on Instagram at NCLandUseLaw here.

N.C. Court of Appeals Denies Bid to Return Water/Sewer "Impact Fees"

Impact fees are defined, generally, as a charge on new development to pay for the construction or expansion of off-site capital improvements that are necessitated by and/or benefit the new development.  Impact fees have been a hot topic in North Carolina, which is perfectly logical in a growing state.

In Quality Built Homes, Inc. v. Town of Carthage, COA15-115 (August 4, 2015) (unpublished), the North Carolina Court of Appeals upholds the authority of a municipality to assess impact fees for services "to be furnished" as opposed to impact fees for, say, improving or maintaining services presently available.

Can the Town Charge for Services "To Be Furnished"?  Yes Yes!
The Quality Built Homes, Inc. plaintiffs argue that because impact fees are due at the time of subdivision plat approval, which is well before construction, it is not certain that a home will ever be built on any of the lots.  Thus, plaintiffs continue, it is not certain that water and sewer services will ever be connected on "assessed" lots.  In other words, plaintiffs contend the Town is charging for a service that is not certain to be utilized, which is a charge that is beyond the statutory authority of the Town.

The Court is unpersuaded.  Citing the "broad construction" mandate of N.C.G.S. 160A-4, the Court concludes: "N.C. Gen. Stat. §§ 160A-312, -313, and -314 ... allow towns to charge impact fees that are necessary to ensure the continued quality of water and sewer services in the face of development."  Yep, even where those services are not certain to be used.

Does the Ultimate Use of the Impact Fee Render It Ultra Vires?  Probably Not.
Plaintiffs next contend that the Town's actions in collecting impact fees were ultra vires because although the ordinances provide that the fees shall be used for the expansion of water and sewer systems, the Town used the impact fees to maintain its existing systems.

Again, the Court is unpersuaded.  The Court concludes that the plaintiffs failed to identify any authority prohibiting the use of revenue generated from defendant’s impact fees, as imposed by ordinance, in part for the maintenance of defendant’s existing water and sewer systems, to which plaintiffs’ developments will ultimately connect.

Basically, the plaintiff first contends that the Town's authority to assess impact fees can be defined by how the fees are spent.  That makes sense -- no "bait and switch" on the part of the Town.

Second, the plaintiffs argue further that the spend for maintenance, rather than expansion, renders the fee ultra vires because the fee can only be assessed for expansion; there is no statutory authority for the Town to assess an impact fee for maintenance.  The Court, however, points to the lack of legal prohibition for the action rather than to the lack of affirmative legal authority for the action.  This is a little confusing; are the arguments passing in the night?

Whatever the case, local government impact fees have been under assault for some time.  This decision marks a respite.

Mike Thelen practices in Womble Carlyle's Real Estate Practice Group out of the Firm's Raleigh office. He regularly represents a wide variety of clients, from local governments to businesses, in land use and real estate development litigations and transactions in state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw here and on Instagram at NCLandUseLaw here.

Friday, July 24, 2015, 3:25 PM

Doin' the Deed: State Conveys 300 Acres of Urban Property to City of Raleigh

We've blogged in the past here, here and here about the political saga between the City of Raleigh and the State of North Carolina over the Dorothea Dix property in downtown Raleigh, a 300-plus acre piece of lovely real estate.  And you thought cities and states were on the same side, didn't you? Oh, how cute.

Anyway, enough about the political row.  Let's talk about the real estate, which is rolling, with open fields and mature trees and which features an unmatched, majestic view of Raleigh's quickly-growing downtown skyline (yes, we have other skylines; we are a modern city).

Let's put this in perspective: 300-plus acres of mostly undeveloped urban real estate.  San Francisco's Golden Gate Park (created in 1870s) is 1,017 acres in size.  New York's Central Park (1850s) is 843 acres.  Chicago's Grant Park (1840s, as Lake Park)  is 319 acres.  We have something here.  From a city planning standpoint, we have something here.  In terms of modern city planning, we very much have something here.  I mean, it's 2015.

Today, the State recorded a deed conveying to the City: "[A]ll of Lot 1, containing approximately 154.439 acres, Lot 2, containing approximately 9.950 acres, and Lot 3, containing approximately 143.589 acres, all as shown on that plat titled "Subdivision & Recombination Plat Properties of The State of North Carolina," prepared by Taylor Wiseman & Taylor, dated July 15, 2015 and recorded in Book of Maps 2015, Pages 1183 through 1191, inclusive, Wake County Registry."

A copy of the deed can be viewed here.

Look!  From here, I can see significant political will!

We'll see what the City does from this point.  In the meantime, for the citizens of Raleigh and the citizens of the State, many view this as a good day.

Mike Thelen practices in Womble Carlyle's Real Estate Practice Group out of the Firm's Raleigh office. He regularly represents a wide variety of clients, from local governments to businesses, in land use and real estate development litigations and transactions in state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw here and on Instagram at NCLandUseLaw here.


Wednesday, July 22, 2015, 5:27 PM

N.C. Court of Appeals Dissent Asserts That Spot Zoning Does Not Require a "Single Owner"

Appellate court dissents are often overlooked by the public, viewed more intently by the litigants as bases for further appeal or other strategic maneuvering.  But dissents are an important part of legal doctrine.

In Good Neighbors of Oregon Hill Protecting Property Rights v. County of Rockingham, No. COA12-121 (July 21, 2015), we are specifically interested in the dissenting judge's view that spot zoning in North Carolina does not require "a single owner".   

In Good Neighbors, Judge Dillon dissents from the majority decision, which concludes that the rezoning of a parcel owned jointly by two individuals cannot constitute spot zoning "as our courts have defined it" because "the definition of spot zoning requires a single owner of property".

Judge Dillon would uphold the rezoning -- he believes it is legal spot zoning -- but he separates himself from the majority on the "single owner" point.  We turn to Judge Dillon:

I recognize that our Supreme Court has used the phrase a single “tract owned by a single person” as part of a definition of spot zoning, Blades v. City of Raleigh, 280 N.C. 531, 549, 187 S.E.2d 35, 45 (1975), a phrase which has been repeated in subsequent cases, see Chrismon v. Guilford County, 322 N.C. 611, 627, 370 S.E.2d 579, 588 (1988); Musi, 200 N.C. App. at 382-83, 684 S.E.2d at 895, and, therefore, I understand how the majority reached its conclusion in the present case. I do not believe, however, that the Supreme Court intended by the use of this phrase to fashion a definitive rule whereby the question of whether the rezoning of a single tract of land constitutes “spot zoning” turns on whether that tract is owned by a single person rather than by two people. Such a rule would allow a landowner to avoid the spot zoning analysis simply by conveying a partial interest in his land to a “straw” entity. Rather, by its use of the phrase “by a single person” in certain opinions, I believe the Supreme Court was merely describing an example of spot zoning, as was the case in Chrismon....  I note that the Supreme Court has never expressly held – in Good Neighbors or otherwise – that a rezoning of a single tract did not constitute spot zoning simply because the tract was owned by multiple individuals. Rather, the Supreme Court recently avoided reaching this question. Wally v. City of Kannapolis, 365 N.C. 449, 722 S.E.2d 481 (2012).

We'll see if the North Carolina Supreme Court has the opportunity and interest to settle the question Judge Dillon's Good Neighbors dissent presents.

Mike Thelen practices in Womble Carlyle's Real Estate Practice Group out of the Firm's Raleigh office. He regularly represents a wide variety of clients, from local governments to businesses, in land use and real estate development litigations and transactions in state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw here and on Instagram at NCLandUseLaw here.
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