tag: North Carolina Land Use Litigator: September 2010

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Thursday, September 30, 2010, 1:29 PM

Someday My Zoning Administrator Will Come


It's a modern-day cinderella story: the pumpkin coach and a lucite platform slipper.

In what looks like a classic zoning case with a seasonal twist,
residents in a Kansas City neighborhood are objecting to the location of a pumpkin patch next to a strip club. The owner of Funtown--hold your applause; that's the pumpkin patch--claims that the patch's location next to Pure--yep, the strip club--does not violate any zoning laws because the patch is neither a school nor a day care center. Adding to the frustration, the same family owns both businesses, which are separated by a nine-foot chain link fence and a trailer.

We'll see how this plays out.

Mike Thelen is an associate in Womble Carlyle's Real Estate and Real Estate Litigation practice groups. He regularly represents a wide variety of clients in land use issues, from local governments to businesses, in both state and federal venues throughout North Carolina.

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Tuesday, September 28, 2010, 2:57 PM

Superwom-Analyst Meredith Whitney Reports On State Fiscal Health

Meredith Whitney announced today the publication of a 600-page report evaluating the financial condition of the 15 largest states in the Union, as measured by gross domestic product. Ms. Whitney is the one-time managing director with Oppenheimer & Co. who may be most famously--or is it infamously?--known for staking a decidedly bearish view on the financial sector prior to the emergency sale of Bear Stearns Companies and the fall of Lehman Brothers Holdings in the fall of 2008. She currently runs her own Firm.

The report, playfully entitled "The Tragedy of the Commons" after
a definitive theory on human behavior of the same name, rates the budgetary vulnerability of fifteen states on four criteria: economy, fiscal health, housing and taxes. Ms. Whitney is said to employ her same unique perspective as she applied to the banking sector to warn that the gap between state spending and state revenue threatens municipal fiscal health, employment growth, and overall economic expansion in a manner underestimated by many, just as was the case with banking. According to Ms. Whitney, growth in these states--the lower-rated of which are mostly the larger economies, such as California and Ohio--will remain feeble precisely because of available salves, such as higher taxes.

A summary from Fortune's Shawn Tully appears
here. Of interest to readers, the report rates North Carolina as fourth-healthiest of the fifteen states, scoring a "neutral" grade.

Mike Thelen is an associate in Womble Carlyle's Real Estate and Real Estate Litigation practice groups. He regularly represents a wide variety of clients, from local governments to businesses, in both state and federal venues throughout North Carolina.

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Developers Beware of the Interstate Land Sales Full Disclosure Act



In a 13-page summary judgment order entered last week, a federal court in New York ruled that the sponsor of a Manhattan luxury building--The Brompton--must return a $510,000 deposit plus interest to the once-prospective purchasers of a $3.4 million condominium. The decision,
termed a "real game changer" and a "free ticket out" of certain condominium purchase agreements, employs the relatively arcane Interstate Land Sales Full Disclosure Act, 15 U.S.C. Sec. 1701, et seq. to allow the plaintiffs, a Greek shipping executive and his wife, to back out of their sales contract.

The decision in Bacolitsas v. 86th & 3rd Owner, LLC, 09 Civ. 7158 (PKC) by The Honorable P. Kevin Castel could have broad implications for developers. Judge Castel ruled that the Act permits a purchaser to revoke a purchase contract--"for good reasons, bad reasons or no reasons"--in the event the terms do not provide "a description of the lot ... which is in a form acceptable for recording ... in the jurisdiction for which the lot is located." The snag, however, is that lenders will often prohibit the recordation of sales contracts, even going so far as to include clauses forbidding recordation, insofar as such a recorded contract could constitute a lien on the property (ironically, a fact Judge Castel found persuasive in ruling for the prospective purchasers).

The sponsor intends to appeal. In the meantime, that $510,000 will buy plenty of hot dogs at the Papaya King, which is pictured above and located, like The Brompton, at Manhattan's 86th Street and 3rd Avenue.


Mike Thelen
is an associate in Womble Carlyle's Real Estate and Real Estate Litigation practice groups. He regularly represents a wide variety of clients, from local governments to businesses, in both state and federal venues throughout North Carolina.

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Monday, September 27, 2010, 9:03 AM

Pinehurst Losing Sleep and Appetite Over Proposed Bed and Breakfast

Greg Owen and his wife own the Maryhurst Retreat House in Pinehurst, North Carolina. Built in 1910, the House was once owned by the Catholic Church where it served as a rest house for vacationing clergy and nuns. The Owens, who recently purchased the property and are in the process of conducting renovations, would like to operate an "upscale, five-star" bed and breakfast from the House to the reported goals of "cover[ing] the cost of extensive repairs to the home" and providing a "boon to the local economy." The problem? Such a use is not permitted where the House is located in the Village of Pinehurst.

Determined, the Owens proposed a text amendment to the Pinehurst Development Ordinance to allow bed and breakfast inns as a major special use in the residential district where the House sits, currently zoned R-30. Even as a special use, of course, qualifying operations would need separate Village Council approval to open and operate in the R-30 districts, assuming the zoning text amendment passes.

Nevertheless, public opposition has been vocal, as it can often be. Specifically, neighbors to the House have complained that the amendment's breadth will impact Pinehurst in a manner far beyond this one property, that the amendment contradicts the Village's Comprehensive Plan, that the public traffic created in a residential district would be "a nightmare," that property values will be adversely affected, and the additional resort space is unnecessary in this particular Village. Opponents to the amendment also note a
prior, unsuccessful attempt to accomplish precisely what the Owens are trying to do with the House.

The Village Council, which has once before returned the proposal to its Planning Board for further consideration, will hold its public hearing tomorrow evening to consider the proposed legislative action. We will watch with interest.
***Update***
The Pinehurst Village Council voted on Tuesday evening, September 28th, to deny the amendments proposed by the Owens, owners of the Maryhurst Retreat House.

Mike Thelen is an associate in Womble Carlyle's Real Estate and Real Estate Litigation practice groups. He regularly represents a wide variety of clients, from local governments to businesses, in both state and federal venues throughout North Carolina.

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Tuesday, September 21, 2010, 3:15 PM

Imposition Or Increase In Fees/Charges Relating To Subdivision Development



Effective September 1, 2009, the North Carolina General Assembly added electronic notice requirements and public comment opportunities with respect to the imposition or increase of fees. S.L. 2009-436, which added N.C.G.S. Sections 130A-64.1, 153A-102.1, 160A-4.1 and added N.C.G.S. Section 162A-9(a1), imposed the following requirements:





  • If a covered entity has a web site that is maintained by its employees, it must provide notice on the web site of the imposition of, or increase in, certain fees or charges at least 7 days before the first meeting at which the fees or charges are on the agenda for consideration. The local government or authority need not provide similar notice if the fees or charges are discussed or considered at subsequent meetings;



  • The governing board of a covered entity must provide a period of public comment on the imposition of, or increase in, the fees or charges during the first meeting at which the fees or charges are discussed;



  • Neither of the above two requirements applies if the imposition of, or increase in, the fees or charges are included in the proposed budget ordinance that the covered entity’s budget officer submits to the governing board during the annual budget process, in accordance with N.C.G.S. 159-12.


A "covered entity" appears to include sanitary districts (Chapter 130A), counties (Chapter 153A), municipalities (Chapter 160A), and water and sewer authorities (Chapter 162A). As to the applicable "fees or charges," a definition may be more squirrely. The new statutory language handed down by S.L. 2009-436 makes clear that the e-notice and public comment requirements apply to the assessment by a covered entity of "fees or charges applicable solely to the construction of development subject to" the subdivision regulation provisions of N.C.G.S. Chapters 153A and 160A. Specifically, it remains uncertain under this language as to whether the notice and comment obligations apply either to (a) fees or charges assessed during the construction phase of subdivision development (which would include charges/fees assessed by sanitary districts or water and sewer authorities) or (b) fees or charges that are themselves "subject to" the subdivision regulations (which would not include charges/fees assessed by sanitary districts or water and sewer authorities).

Time heals all wounds, however, and even answers a few questions. As Professor Millonzi points out
here, a subsequent amendment likely answers for us the question as to the subject "fees or charges." By S.L. 2010-180, the General Assembly focused the notice requirements so that qualifying adverstisement to "interested parties" include two of the following four "means of communication," broadening away from the website-only approach of the 2009 law:



  • Display the notice in a prominent location on a web site managed or maintained by the covered entity;



  • Display the notice in a prominent physical location, including, but not limited to, any government building, library, or courthouse;



  • E-mail the notice to a list of interested parties that is created by the covered entity for purposes of complying with the 2010 Act;



  • Fax the notice to a list of interested parties that is created by the covered entity for purposes of complying with the 2010 Act.

This "update," which ironically accounts for a website-less world, is interesting enough. Where our answer with regard to the "fees or charges" comes in, however, is by the fact that the 2010 Act leaves in place its application to sanitary districts (Chapter 130A) and water and sewer authorities (Chapter 162A). Thus, it seems to be a more fair reading that option (a) from above rules the day: the applicable "fees or charges" are those assessed with liberal relation to the construction of subdivision development, such as plan review fees, permit fees, inspection fees, water and sewer tap or connection fees, and so on.



The bottom line is that local governments and certain authorities should take care to properly advertise when amending or adding fees, and developers should consider the quality of the same when adversely affected thereby.



Mike Thelen is an associate in Womble Carlyle's Real Estate and Real Estate Litigation practice groups. He regularly represents a wide variety of clients, from local governments to businesses, in both state and federal venues throughout North Carolina.



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Thursday, September 16, 2010, 11:54 AM

It's Beginning Look Alot Like Arbitrariness


For more than 13 years in the City of Poughkeepsie, located in the unparalleled Mid-Hudson Valley of New York State, from December to mid-January, an event known as the Celebration of Lights has taken place in the City's downtown. The Festival’s primary purpose is commercial—to attract shoppers to the downtown area—and its secondary is arguably aesthetic: the installation and operation of 1,000 feet of white lights along main thoroughfares; the hanging of approximately 100 to 150 wreaths on utility poles along portions of various City streets; the installation of garland and banners, as well as the adornment of two Christmas trees; and the marching of one grand parade. The decoratives also include a privately-owned menorah—that elegant nine-branched candelabrum symbolizing the Jewish holiday of Hanukkah—and, beginning in 2007, “a display of the Muslim faith in the form of a star and crescent.”

In late August, in what amounted to a forked analysis, the Appellate Division of the Supreme Court of the State of New York—New York’s court of appeals—concluded in Chabad of Mid-Hudson Valley v. City of Poughkeepsie, 2010 N.Y. Slip Op. 06514 (N.Y. App. Ct. August 31, 2010) that the context in which a menorah was displayed was not an unconstitutional endorsement of religion but that the nightly lighting of the menorah by municipal employees, even if the cost is reimbursed, violates the Establishment Clause of the First Amendment to the United States Constitution.

At the first fork, the Court concluded that the placement of the menorah on a public sidewalk in front of a private building—the “neutralizing[] secular background” that is the “five-story, commercial, and privately owned Barney Building”—does not offend constitutional principles insofar as “all public properties are not alike.” The Court distinguished circumstances in which the maligned religious symbol graced courthouse steps, state-owned plazas, or a City Hall Park. Pushing that “secular background” theme, the Court seemed convinced by a kind of secularization by sectarian company in reasoning that “in the immediate vicinity of the menorah, as well as throughout the downtown area, are garlands, wreaths, and white lights, which, like the Christmas trees, “‘typify the secular celebration of Christmas’” and, as such, “while the menorah does not lose its religious symbolism, its surroundings negate any appearance of government endorsement.”

At the second fork, where the City went wrong, the Court nonetheless held that the use of “municipal funds, labor, and equipment for the nightly menorah lighting, even if the plaintiffs repaid the City for such labor and equipment, as required under the stipulation, would foster the perception of an unconstitutional excessive governmental entanglement with religion.” Citing Walz v. Tax Comm’n of City of New York, 397 U.S. 664 (1970); Citizens Concerned for Separation of Church & State v. City & County of Denver, 481 F. Supp. 522 (D. Colo. 1979), appeal dismissed, 628 F.2d 1289 (10th Cir. 1980), cert. denied, 452 US 963 (1981); cf. American Civil Liberties Union v. City of Birmingham, 791 F.2d 1561 (6th Cir.), cert. denied, 479 U.S. 939 (1986); Ritell v. Village of Briarcliff Manor, 466 F Supp. 2d 514 (S.D.N.Y. 2006); County of Allegheny v. American Civil Liberties Union, Greater Pittsburgh Chapter, 492 U.S. 616 (1989).
Mike Thelen is an associate in Womble Carlyle's Real Estate and Real Estate Litigation practice groups. He regularly represents a wide variety of clients, from local governments to businesses, in both state and federal venues throughout North Carolina.

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Thursday, September 9, 2010, 5:59 PM

Challenging Zoning Ordinances and the Applicable Statute of Limitation/Repose


To resolve the uncertainty of zoning ordinances—previously protected from challenge by the arcane, equitable defense of laches—the North Carolina General Assembly enacted in 1981 a nine-month statute of limitations. This statute, more appropriately described as a statute of repose, defined the window within which “a cause of action as to the validity of any zoning ordinance … shall be brought.” The policy behind this window has been artfully described: "There is a strong need for finality with respect to zoning matters so that landowners may use their property without fear of a challenge years after zoning has apparently been determined.” Pinehurst Area Realty, Inc. v. Village of Pinehurst, 100 N.C. App. 77, 80-81, 394 S.E.2d 251, 253 (1990), review denied and appeal dismissed, 328 N.C. 92, 402 S.E.2d 417, cert. denied, 501 U.S. 1251, 115 L. Ed. 2d 1055 (1991).

In 1996, the General Assembly trimmed that nine-month statutory window to two-months:

A cause of action as to the validity of any zoning ordinance, or amendment thereto, adopted under this Article or other applicable law shall accrue upon adoption of the ordinance, or amendment thereto, and shall be brought within two months as provided in G.S. 1-54.1.

N.C.G.S. §160A-364.1 (municipalities); see also N.C.G.S. §153A-348 for county-based zoning ordinances.

This summer, in Schwarz Properties, LLC v. Town of Franklinville, __ N.C. App. __, 693 S.E.2d 271 (2010), the North Carolina Court of Appeals ruled that the two-month statute of repose foreclosed even an ultra vires challenge to a zoning ordinance, citing the Court’s holding in White v. Union County, 93 N.C. App. 148, 377 S.E.2d 93 (1989). That is, the statute of limitation/repose applies even to zoning ordinances or zoning ordinance amendments that are not, in essence, adopted pursuant to the zoning power. This significant moment denotes the strict application North Carolina courts are willing to make as to an already strict window. Developers and local governments alike should take note of this decision.

A link to the full decision can be found
here.

Mike Thelen is an associate in Womble Carlyle's Real Estate and Real Estate Litigation practice groups. He regularly represents a wide variety of clients, from local governments to businesses, in both state and federal venues throughout North Carolina.

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Friday, September 3, 2010, 3:21 PM

Research Triangle Park To Develop New Master Plan


The Board of Directors of the Research Triangle Foundation, which oversees North Carolina's 7,000-acre Research Triangle Park ("RTP"), has selected New York-based design firm Cooper, Robertson & Partners to handle the process of preparing a new master plan for park development. This marks the first such plan update since RTP--one of the most prominent high-tech research and development centers in the United States and an iridescent gem in North Carolina's business environment crown--was first founded in 1959.

According to the Foundation, the 12-month Master Plan project will consider changes needed within the Park’s boundaries to ensure RTP remains a pre-eminent and globally competitive location for research and development operations and a leading global center of innovation. Anticipated components of the RTP Master Plan project include land use, financial planning, transportation/transit, economic clusters, market demand, and other infrastructure and zoning recommendations.

Richard Daugherty, Chairman of the task force charged with assembling this development team, is quoted as saying, "While RTP has successfully addressed its mission over the past 50 years to create high-quality jobs and opportunities in North Carolina, the original development plan for the Park has not been updated since the 1960s. Considering how drastically the environment in which research parks and innovative economies operate has transformed over the past few years, the Foundation is taking this opportunity to re-envision the Master Plan for the Park to ensure we remain a place known globally as a hot spot for innovation and a key component of the region’s and State’s economic success and competitive position."

Work on the Master Plan project will begin immediately and will engage a broad spectrum of RTP’s stakeholders, including the RTP Owners & Tenants Association, Durham and Wake Counties, the Triangle J CORE group and other surrounding municipalities, as well as Duke University, North Carolina State University, and the University of North carolina at Chapel Hill. The project is expected to last 12 months.

From a land use perspective, at least, this proves to be an exicting time for the Foundation and for RTP, itself. We'll see what kind of land use innovation is conjured to dazzle the seemingly monopolistic purveyors of scientific innovation. More to follow, I'm sure.

Mike Thelen is an associate in Womble Carlyle's Real Estate and Real Estate Litigation practice groups. He regularly represents a wide variety of clients, from local governments to businesses, in both state and federal venues throughout North Carolina.

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Thursday, September 2, 2010, 4:53 PM

Judicial Review of Quasi-Judicial Decisions: N.C.G.S. Section 160A-393

Late last year, the General Assembly adopted S.L. 2009-421 (S. 44) to create N.C.G.S. §160A-393. Effective January 1, 2010, that section codifies the specific framework guiding judicial appeals of quasi-judicial decision concerning or relating to development regulation ordinances. This was the General Assembly’s third shot at such a statute, which, as the saying goes, was a charm.

The new law applies to appeals of quasi-judicial decisions rendered on or after the January 1, 2010 “by decision-making boards when that appeal is to superior court and in the nature of certiorari as required by this Article.” The “Article” being N.C.G.S. Chapter 160A, Article 19 for cities and N.C.G.S. Chapter 153A, Article 18 for counties, which implies that the law is limited to decisions made pursuant to development regulation ordinances adopted pursuant to these Articles. The lines are not entirely clear and neat, however, and it remains to be seen whether these provisions would apply to quasi-judicial decisions delivered under other statutory authorizations, such as under the general police powers.

The statute articulates a definition of quasi-judicial land use decisions with its roots in North Carolina jurisprudence: “A decision involving the finding of facts regarding a specific application of an ordinance and the exercise of discretion when applying the standards of the ordinance.” This definition includes local government decisions involving variances, special and conditional use permits, and appeals of administrative determinations. Site plan approvals and subdivision plat decisions are likewise quasi-judicial, according to N.C.G.S. §160A-393, if the governing ordinance’s standards for approval include discretionary as well as objective standards.

In addition to defining the types of determinations to which it applies, N.C.G.S. §160A-393 also outlines the parties maintaining standing to appeal these decisions, the method for appeal, the record on appeal, the scope of judicial review, and the spectrum of available relief. The statute specifies that appeals “shall be initiated by filing with the superior court a petition for writ of certiorari,” and requires that the petition contain the facts establishing standing, the grounds of the alleged error, the facts supporting any alleged conflict of interest at the decisionmaking stage, and the relief sought from the court. As to standing, the statute affords the following three categories of persons, associations, or cities standing to file a petition: (1) those who applied for approval or otherwise have a property interest in the project or property, (2) other persons who will suffer “special damages” as a result of the decision, which are defined by a long line of North Carolina caselaw, and (3) the local government whose board made the decision being appealed (only if the local government is appealing, of course). Litigants should play close attention to the language of the statute with respect to the persons or entities named in litigation and the manner of filing a proper petition for writ of certiorari.

Of significant interest, N.C.G.S. §160A-393 codifies the scope of review to be used by the courts in reviewing a quasi-judicial decision, which aims to settle some disparity in the existing North Carolina caselaw. The rerviewing court is to consider, but it not bound by, the interpretations of the quasi-judicial decisionmaker and may consider whether the appealed determination was:

--In violation of constitutional provisions;

--In excess of statutory authority;

--Inconsistent with procedures set by statutes or the ordinance involved;

--Affected by error of law;

--Unsupported by substantial, competent evidence in the record; or

--Arbitrary or capricious.

The court will apply the scope of review to the record established before the quasi-judicial body, which “shall consist of all documents and exhibits submitted to the decision-making board whose decision is being appealed, together with the minutes of the meeting or meetings at which the decision being appealed was considered.” The record may include audio and video as well as verbatim transcripting, and the record may be supplemented in the court’s discretion. Once again, litigants should pay close attention to the procedures concerning development and presentation of the record on appeal, as a sleepy approach in this regard can sink even the best of arguments.

Lastly, N.C.G.S. §160A-393 paints the remedies available for consideration by the court on appeal of a quasi-judicial ruling, which include appropriate injunctive relief. A court may affirm or reverse the original quasi-judicial decision, or the court may remand the matter either with instructions or with a direction for further proceedings. If the court does not affirm the appealed decision in its entirety, the remand may include an order to issue the proper approvals or to revoke the approvals.


--Mike Thelen is an associate in Womble Carlyle's Real Estate and Real Estate Litigation practice groups. He regularly represents a wide variety of clients, from local governments to businesses, in both state and federal venues throughout North Carolina.

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