BLOGS: North Carolina Land Use Litigator

Friday, April 10, 2015, 2:14 PM

The Economist Newspaper Takes On a Review of Global Land Use Regulations

The Economist Newspaper this month features an interesting review of land use laws in the context of the changing global economy.  

The issue is not overall scarcity [of real property], but scarcity in specific places—the cities responsible for a disproportionate amount of the world’s output. The high price of land in these places is in part an unavoidable concomitant of success. But it is also the product of distortions that cost the world dear. One estimate suggests that since the 1960s such distortions have reduced America’s GDP by more than 13%.
  
In this piece, the Newspaper suggests a recent perversion of land use regulations -- a relatively young field of the law -- has gone unchecked:

Zoning codes were conceived as a way to balance the social good of a growing, productive city and the private costs that growth sometimes imposes. But land-use rules have evolved into something more pernicious: a mechanism through which landowners are handed both unwarranted wind falls and the means to prevent others from exercising control over their property. Even small steps to restore a healthier balance between private and public good would yield handsome returns. 
Regulatory limits on the height and density of buildings constrain supply and inflate prices. A recent analysis by academics at the London School of Economics estimates that land-use regulations in the West End of London inflate the price of office space by about 800%; in Milan and Paris the rules push up prices by around 300%. Most of the enormous value captured by landowners exists because it is well-nigh impossible to build new offices to compete those profits away.

The Newspaper then suggests two approaches to better effectuate the purest intention and highest and best purpose of land use regulations: 

Policymakers should focus on two things.
First, they should ensure that city-planning decisions are made from the top down. When decisions are taken at local level, land-use rules tend to be stricter. Individual districts receive fewer of the benefits of a larger metropolitan population (jobs and taxes) than their costs (blocked views and congested streets). Moving housing-supply decisions to city level should mean that due weight is put on the benefits of growth. Any restrictions on building won by one district should be offset by increases elsewhere, so the city as a whole keeps to its development budget. 
Second, governments should impose higher taxes on the value of land. In most rich countries,land-value taxes account for a small share of total revenues. Land taxes are efficient. They are difficult to dodge; you cannot stuff land into a bank-vault in Luxembourg. Whereas a high tax on property can discourage investment, a high tax on land creates an incentive to develop unused sites.Land-value taxes can also help cater for newcomers. New infrastructure raises the value of nearby land, automatically feeding through into revenues—which helps to pay for the improvements.

The result of these changes, the Newspaper concludes, is more and more broad-based economic opportunity:

The costs of this misfiring property market are huge, mainly because of their effects on individuals....  Lifting all the barriers to urban growth in America could raise the country’s GDP by between 6.5% and 13.5%, or by about $1 trillion-2 trillion. It is difficult to think of many other policies that would yield anything like that. 
If regulatory limits on building heights and density were relaxed, fewer plots of land would be needed to satisfy a given level of demand. That would reduce the rents collected by landowners, since any uptick in demand could quickly be met by new development. Just as soaring agricultural productivity led to a decline in the relative economic power of rural landowners in the 19th and 20th centuries, the relaxation of strict limits on development would lead to a decline in property wealth relative to the economy as a whole. More of the gains of economic activity would flow to workers and investors. 


We don't highlight the analysis for any reason other than to point out that land use laws will be at the fore of local, State, National and Global economic development.  



Mike Thelen practices in Womble, Carlyle's Real Estate Litigation and Land Use practice group. 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.

Tuesday, April 7, 2015, 11:39 AM

N.C. Court of Appeals Rules That Contractual Forum Selection Clause Can Track, But Not Vary, Legislatively-Determined Forum

The North Carolina Court of Appeals handed down a decision today that clarifies the rule that a contractual venue/forum selection provision can track, but it cannot vary from, the venue/forum determined by State law.

At issue is the following agreement provision, contained within a a non-compete, non-solicitation, and confidentiality agreement related to an employment relationship:

Moreover, any litigation under this Agreement shall be brought by either party exclusively in Mecklenburg County, North Carolina. . . . As such, the Parties irrevocably consent to the jurisdiction of the courts of Mecklenburg County, North Carolina (whether federal or state) for all disputes related to this Agreement.

However, it appears undisputed that State law requires this contract dispute “must be tried in the county in which the [Plaintiff] or [Defendant] . . . reside[s.]”  N.C.G.S. § 1-82.

Plaintiff corporation brought suit on the agreement in Guilford County, North Carolina.  Defendant individual sought dismissal pursuant to Rule 12(b)(3) on the wings of the above contractual provision.  The trial court denied the motion, and the defendant individual appealed from that ruling.

Regarding Defendant, the record discloses that he is a resident of Orange County, North Carolina.

Regarding Plaintiff corporation, there is nothing in the record showing that it is a resident - for venue purposes - of Mecklenburg County.  As a domestic corporation, Plaintiff is considered a resident of the county where it maintains its “registered or principal office” and also any county where it “maintains a place of business[.]” Here, Defendant fails to point to any evidence in the record showing that Plaintiff maintains a place of business in Mecklenburg County.  Moreover, Defendant did not dispute Plaintiff’s assertion in its verified complaint that its principal place of business is in Guilford County.

The Court of Appeals concludes:  "[W]e hold that a forum selection clause which requires lawsuits to be prosecuted in a certain North Carolina county is enforceable only if our Legislature has provided that said North Carolina county is a proper venue."  As Mecklenburg County is not a proper venue for the contract dispute at issue, according to N.C.G.S. § 1-82, the Court of Appeals affirmed the trial court's ruling denying plaintiff's dismissal motion.

"Ok, now I think I know how we all ended up in Mecklenburg County."

Mike Thelen practices in Womble, Carlyle's Real Estate Litigation and Land Use practice group. 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.

Maine Supreme Court Looks Past City Planner's "Unprofessional" Plea to Zoning Board of Appeals

This March, the Maine Supreme Judicial Court considered a claim that an "unprofessional" email from a city planner to the city's zoning board of appeals, pleading for a specific outcome on a land use appeal, does not per se violate constitutional due process rights.

The case is Fitanides v. City of Saco, Maine, 2015 ME 32 (March 17, 2015).

The lawsuit involved the entitlement of a disc-golf course in the City of Saco, Maine, and a neighbor's efforts to prevent the entitlement.

Essentially, the City granted conditional use permits for the construction of the disc-golf course, which abutted a neighboring campground.  The owner of the campground appealed the permits to the City's zoning board of appeals.

Prior to the zoning board of appeals consideration of the appeal, the city planner for the City of Saco sent an email to the zoning board of appeals stating that: “[The appellant] has demonstrated numerous times in the past that litigation is little more than a hobby of his”.  The city planner then urged the zoning board of appeals not to “compound the injury inflicted on the applicant by [the appellant] by dragging this unfounded appeal on any longer.”

First, the Supreme Court made known its feelings about such behavior:  "Such comments from a municipal official have no place in municipal proceedings because they create a public perception of bias and may raise questions about a municipality’s willingness to consider the contentions of its citizens in a fair and responsible way."

Second, however, the Supreme Court noted that "prejudice" is the standard; the question is not "public perception".  The Supreme Court concluded:

A biased statement by a municipal officer who is not a member of the [zoning board of appeals] is not sufficient to impute bias to the [board], and [appellant] has not presented any evidence of bias harbored by any of the [board] members themselves. To the contrary, [appellant] was given ample opportunity to fully participate in the permit process and to present arguments during the [board] hearing. The [board] discussed all of the issues in [appellant's] appeal 'with a view toward making a sincere effort to fairly decide the issue before them,' and even after receiving the email, the [board] ruled in [appellant's] favor on the issue of delegation to the City Planner."

Mike Thelen practices in Womble, Carlyle's Real Estate Litigation and Land Use practice group. 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.

Monday, April 6, 2015, 5:42 PM

N.C. General Assembly House Moves On Bill Eliminating Zoning Protest Petitions

A decision on whether and how to rezone property is left to the sound discretion and good judgment of the elected officials.  The philosophy behind this thinking is that the decision to rezone or not to rezone is a legislative decision, and any recourse against a legislative decision should be at the ballot box.

However, the protest petition allows citizens a more direct say in a rezoning decision at the time it is made.

What they can do.  The protest petition law states, generally speaking, that if the owners of a sufficient amount of land most directly affected by a rezoning decision file a protest petition, the rezoning can be adopted only if it is approved by a three-fourths (3/4) majority of the municipality's governing board rather than the usual simple majority.  In other words, if a valid protest petition is filed -- and the rules are strict -- the voting requirement to pass a rezoning goes from a default simple majority to a super majority.

What they can't do.  Protest petitions can only be used to object to changes in the zoning map.  Protest petitions cannot be used to protest changes to the zoning ordinance text, nor can they be used to protest the initial zoning of a parcel or parcels of land, such as in the case of an annexation.  Moreover, protest petitions cannot be used to protest individual permits -- like special and conditional use permits -- nor can they be used to protest minor changes in special and conditional use districts or conditional zoning amendments.  

The law governing protest petitions is at NCGS 160A-385, 160A-386.

Why are we talking about the protest petition?

Well, they might go away.  And people are mad, or at least skeptical, as you can read here, here and here.

On March 25, 2015, the N.C. General Assembly's House passed HB 201.  The bill now goes to the General Assembly's Senate.  Entitled "An Act to Amend the Process By Which the City Councils Receive Citizen Input In Zoning Ordinance Amendments", if adopted in its current form, the proposed law will remove protest petitions from the statutory processes and the protest petition power will be removed from State law.

We will keep an eye on this bill as it makes its way through this session.


"Please, sir.  Stop asking me about my 'frontage'."

Mike Thelen practices in Womble, Carlyle's Real Estate Litigation and Land Use practice group. 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.

Thursday, April 2, 2015, 9:59 AM

N.C. State Senate Introduces Bill Granting Tax Credit for "Property" Serving Renewable Energy Efforts

Last week, the North Carolina State Senate introduced a bill that seeks to extend renewable-energy tax credits applicable to eligible property -- which is defined as specific "machinery and equipment or real property" -- that is placed into service before the end of the calendar year 2020, at which point the proposed credit sunsets.  The bill is SB 447.

The tax credit is equal to 35% of the "costs" of the renewable energy property.  The credit is not available "to the extent the cost of the renewable energy property was provided by public funds", excluding "grants made under section 1603 of the American 25 Recovery and Reinvestment Tax Act of 2009".

In terms of when the credit is to be taken, in terms of "taxable year", there are limits depending on whether the property is for business purposes or nonbusiness purposes.  In the case of renewable energy property that serves a nonbusiness purpose, the credit must be taken for the taxable year in which the property is placed in service. For all other renewable energy property, the entire credit may not be taken for the taxable year in which the property is placed in service but must  be taken in five equal installments beginning with the taxable year in which the property is placed in service.

The proposed law is entitled the Energy Investment Act, and is expected to meet a companion bill from the North Carolina State House.

Assuming a bill close to SB 447's current form comes out of the General Assembly, it is unclear how the Governor will react.  We are reminded that the Governor's proposed budget is favorable to tax treatment as to some renewable energy technologies, but notably excluding solar energy.

"It's hooked up to my toaster.  So, I'm going to claim a tax credit.  Abs and money; what else is there?"

Mike Thelen practices in Womble, Carlyle's Real Estate Litigation and Land Use practice group. 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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