tag: North Carolina Land Use Litigator: February 2011

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Wednesday, February 23, 2011, 1:27 PM

North Carolina Court of Appeals Speaks On the Issues of Zoning Ordinance "Consistency Statements" and "Spot Zoning"

In a recent, unpublished opinion in Wally, et al. v. City of Kannapolis, North Carolina decided February 15, 2011, the North Carolina Court of Appeals revisited two issues of interest to land use practitioners operating in the zoning realm: (1) consistency statements pursuant to N.C.G.S. 160A-383 in the adoption of a zoning ordinance, and (2) spot zoning. And the picture? That must be one of the appellants.

Consistency Statements
Upon the adoption of a zoning ordinance, N.C.G.S. 160A-383 requires that "the governing board ... approve a statement describing whether its action is consistent with an adopted comprehensive plan and any other officially adopted plan that is applicable, and briefly explaining why the board considers the action taken to be reasonable and in the public interest." The law continues, however, that such a "consistency statements," as they are known, are "not subject to judicial review."

If you're asking yourself the following question, you're not alone: how can the "consistency statement" be both mandatory and invincible? The Wally Court appears to answer this question by appealing to the "good enough" approach to legal analysis. In essence, the Court defers to the "no judicial review" gods by simply "accept[ing] defendant's contention that it met this statutory requirement." And as for the fact that the "consistency statement" is mandatory, the Court notes that the local government did, in fact, "approv[e] the staff report containing the findings required by section 160A-383." In other words, when representing a local government, yes, a consistency statement is required but almost anything will do. And moreover, yes, a consistency statement is immune from judicial review but it is nonetheless wise to point out in responsive pleading, with any good faith basis, that the requirements have been satisfied.

Is this clear? We'll wait to see if ever a local government actually trips over this nonreviewable requirement.

Spot Zoning
Spot zoning occurs when "a zoning ordinance, or amendment ... singles out and reclassifies a relatively small tract owned by a single person and surrounded by a much larger area uniformly zoned, so as to impose upon the small tract greater restrictions than those imposed upon the larger area, or so as to relieve the small tract from restrictions to which the rest of the area is subjected." Spot zoning is not, in and of itself, illegal in North Carolina. However, should spot zoning be found to exist, the zoning ordinance is then presumed invalid -- whereas, it was once presumed valid -- and the burden shifts to the local government to "make a clear showing of a reasonable basis for the zoning."

The Wally Court concluded that the allegations couldn't satisfy "spot zoning" as a matter of law because spot zoning can only exist as a matter of law where the property subject to the zoning "is owned by a common owner." In Wally, the property "consisted of five tracts of land owned by two different entities - the Trust and Coddle Creek." Distinct and multiple ownership is enough to carry the day. But what about the same individual owner, via different corporate entities? May the corporate veil be pierced in "spot zoning" actions?

We shall see.

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

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Friday, February 18, 2011, 9:18 AM

Controversial Mixed Use Development In Durham County Takes Small Step Forward

You'll recall from prior posts here and here, the proposed 751 South development in Durham, North Carolina -- which is planned to consist of 1,300 houses, townhomes, apartments and condos plus as much as 600,000 square feet of office and retail space -- is rather divisive.

In a lawsuit filed in 2009, owners of property adjoining the 751 South site contested the Durham County Commissioners' vote to adjust a watershed boundary line, which removed the 751 South property from a development-restricted area around Jordan Lake. In the process, the Commissioners' vote also rezoned "dozens of other pieces of property within the lake's watershed," according to reports. In essence, the Commissioners' vote freed the 751 South property from yet another hurlde to its development while causing rippling land use effects, likely in an effort to circumventing any allegations of "illegal spot zoning."

This week the project took a step forward, however small. That lawsuit against the County has been "discontinued." At its core, it appears the "agreement" between the plaintiffs and the County to "discontinue" the lawsuit accepts a 2009 Superior Court Order carving out the 751 South property from the challenge, therefore allowing the commissioners' rezoning vote to stand with respect to the 751 South property while returning the other rezoned properties back to their pre-vote zoning designation. Is this tantamount to illegal spot zoning, even though it's pursuant to a court order? Does the court order render it legal spot zoning?

The development continues to plug along, legal piece by legal piece. We'll continue to update.

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

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Friday, February 11, 2011, 9:41 AM

Historic Amusement Park, In Dire Straits, Is Getting the Land Use "Once Over"

Opening in the summer of 1928 along the Long Island Sound waterfront of Westchester County, New York, the Rye Playland amusement park has been offering "family fun" to generations. The wooden Dragon Coaster, the pioneering Airplane Coaster, and the novel Kiddie Coaster have dazzled guests of this Coney Island-esque perma-carnival putting the City of Rye on the map. You might remember Rye Playland as the penultimate hiding place of the elusive Zoltar machine. Or where Glenn Close's character in Fatal Attraction takes Michael Douglas's daughter, Ellen, on a pretty creepy and mildly threatening roller coaster ride.

Rye Playland, listed on the National Register of Historic Places, is America's only government-owned and -operated amusement park. That's right. This socialist's delight is located within the premier suburban county of capitalism's main banquet hall. One can manipulate the stock market roller coaster by day, and ride a subsidized merry-go-round at night. Whee!

Well, the Park has fallen on significantly hard times, of late. Rumors of sale, re-development, re-purposing and even Donald Trump-ing have abounded. No one savior, however, seems to have an admission ticket in hand. So, in 2010, the Rye City Council appointed a Playland Strategic Planning Working Group to study and help implement a "Rye vision" that will "Reinvent Playland Park for the 21st Century."

What does this have to do with land use, local government or litigation? Plenty! In a Report published February 9 to the City Council, the Commission recommended application of the below "principles" to whatever course is taken with respect to the property. These "principles" are undeniably, and fascinatingly, land use in species -- environmental, zoning, historic landmark designation -- which has us (and, we hope, you) excited. It isn't often we get to ply our trade in the amusement park context.

1. Playland is first and foremost a public resource for the use and enjoyment of all
residents of Rye and Westchester County. Any proposed use of the Playland site
should be consistent with insuring public use of and access to open space, Long
Island Sound and facilities....

2. Any use of the Playland site must be sensitive to environmental considerations
and sustainability, including the integrity of the Edith Read Sanctuary, Playland
Lake and the waters of Long Island Sound. Playland’s fragile natural site requires
any proposed use be carefully examined for adverse impact. Sewage, solid
waste, noise and visual pollution are vital considerations as are congestion and
energy efficiency. Any future use of Playland should emphasize the improvement
of the environmental impact to the site.

3. A substantial portion of Playland has been designated a National Historic
Landmark. This is the highest level of national historic designation and reflects
Playland’s unique historical importance. While adaptive uses of existing facilities
or changes, removal or replacement of structures which are not national historic
landmarks could be considered, any of these should be consistent with the
historic heart of Playland.

4. Any proposal affecting the Playland site must be examined to insure it is both
financially responsible and sustainable. Demonstrated financial viability over the
long term is an essential criterion in evaluating any proposal....

5. Rye has a long established designated zoning policy which reflects a careful
balancing of many considerations. This policy insures the interests of affected
neighborhoods and the community at large is given appropriate consideration.
Any proposal affecting Playland should comply with existing Rye ordinances.
New structures or uses should be on a scale including height and mass and in a
style consistent with, or complimentary of, Playland’s site, neighborhood and

Here's to better, and well-planned, days ahead to an American amusement icon. As the song goes, "You can almost taste the hot dogs and french fries they sell."

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

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Thursday, February 10, 2011, 12:56 PM

Federal Court Concludes Sign Ordinance Regulating Political Posters Is Facially Unconstitutional

Sometime in 2007, plaintiff joined the fray for local government public office in a suburb of New York City. The outlines of the race, contentious in ways only politics will be, can be sampled here.

In connection with his campaign, plaintiff posted hundreds of signs in and around the Village within which he sought office, the Village of Airmont. However, the Village's deputy mayor and trustee (which, in a New York village, is the equivalent in North Carolina to a member of a local government's governing board) was a candidate for the same political position of county legislator.

In August of that summer, campaign manager for the deputy mayor (also, a fellow trustee) sent plaintiff a letter requesting that he remove his signs from the Village's Wal-Mart. The campaign manager contended that the deputy mayor had the exclusive right to post political campaign signs at the Wal-Mart, and plaintiff's signs were therefore not welcome. The first question we have is, "Why did the opponent, rather than the owner of the shopping center, make that statement and rather aggressive request?" Something tells me it's because the shopping center owner had no such qualms about the opposing signs.

Plaintiff did not remove his signs. But that's okay because, according to the plaintiff, the Village police department was directed by the opposing campaign manager to remove the signs from the Wal-Mart property.

Then, adding salt to the wounds, the Village's code enforcement officer issued a violation notice to plaintiff for his posting of political signs in excess of the size limitations contained in the local code. This last part, the code enforcement officer's actions, turned this into a land use case. Plaintiff brought a lawsuit against the Village challenging, inter alia, the Village's sign ordinance with respect to political signs. That's why we're here.

On summary judgment, the court determined that the ordinance is content-based because the provisions applicable to political signs “are in their own section of the Code with different limitations than those that apply to other temporary signs.” As a point of contrast, the court noted that other temporary signs (e.g., historical markers, flags, house/building numbers, private for-sale signs, etc.) were exempt from permit requirements entirely, while political signs remain subject to regulation. Thus, the Court ruled that since the Village Code was a content-based regulation, “strict scrutiny” applies.

Applying "strict scrutiny," the court ruled that the sign ordinance is unconstitutional because it “impermissibly regulat[es] speech based on content" and the ordinance is "not narrowly tailored to serve a compelling government interest.” Specifically, the court ruled that neither the durational limits on political signs while exempting other signs altogether from these limits, nor the size limitations on political signs, nor the requirements to post a security deposit for the display and location of political signs serves a compelling interest.

It doesn't appear from the decision in Withers v. Village of Airmont, et al., 07 Civ. 9674 (SCR)that plaintiff political candidate ever aimed to exhaust or otherwise actually did exhaust his administrative remedies. Nor does it appear that the Village offered this legal insufficiency as a defense to the court's jurisdiction over plaintiffs' lawsuit. Assuming that's true, consider the language from a more recent decision out of the U.S. Court of Appeals for the 6th Circuit, Miles Christi Religious Order v. Township of Northville, No. 09-1618, which touches on exhaustion of local government administrative remedies within the context of First Amendment claims:

"But a claim does not become ripe at the first whiff of governmental insensitivity or whenever a government official takes an adverse legal position against someone, even if one potential response is to curtail protected activities. One justification for the ripeness doctrine is that it avoids the premature resolution of constitutional questions, including First Amendment questions.... And 'the existence of a ‘chilling effect,’ even in the area of First Amendment rights, has never been considered a sufficient basis, in and of itself, for prohibiting state action....' The answer instead is to look at each case to determine the consequences of staying our hand."

Curious, to say the least.

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

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Monday, February 7, 2011, 12:10 PM

County Plans to Amend Development Ordinance to Address "Adequate Public Facilities" Language

Adequate public facility ordinances (APFOs) tie local government development approvals to the availability of essential public facilities. In other words, development is not permitted at a particular site unless and until a defined level of public services is available or somehow, in some way, provided for -- schools, roads, wastewater, fire services, and the like.

While this type of ordinance is common in many growing states, a quite specific approach is used in North Carolina. N.C.G.S. 153A-341 and 160A-383 grant counties and cities, respectively, the authority to regulate development “to facilitate the adequate provision of transportation, water, sewerage, schools, parks, and other public requirements.” This provides a statutory basis for local government facilitation of adequate public facility requirements. That being said, according to a study published in 2005 by the UNC School of Government, APFOs has been "sparingly applied" in our State.

The legal landscape changes when North Carolina local governments employ this APFO paradigm to assess fees -- commonly referred to as "impact fees." According to Professor David Owens, "Local governments in North Carolina have authority to impose fees for a variety of 'public enterprise' functions, such as the provision of water and sewer services. The zoning and subdivision statutes also allow regulations to require land dedication, construction, or payment of fees to address specific public facility needs generated by the development, such as internal roads, utilities, parks, and community service facilities." However, in the absence of specific statutory basis to assess a particular species of fees, recent court cases have indicated that local governments are without authority to do so. And this is despite the broad language of N.C.G.S. 153A-341 and 160A-383. On this score, public enemy number one from a local government authority standpoint is with regard to "school impact fees."

This very issue has popped up on the coast. New Hanover County, within which sits the City of Wilmington, is amending its planned development ordinance in the wake of developer-led challenges. It's been reported that the current ordinance requires that developers of certain sized projects provide "adequate public elementary school facilities" by either donating land to the board of education or paying a fee equal to the tax on the market value of the land. Developers take issue with the fact that they, rather than home buyers, are footing this bill, which, in essence, will amount to double taxation. The County, for its part, is looking to "pass muster" with its protection of adequate facilities while encouraging "orderly" development.

We'll report back as to what sort of language the County is able to whip up that will satisfy both the necessary obligations and restrictions.

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

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Tuesday, February 1, 2011, 9:50 AM

California Court Affirms $30 Million Judgment Against Local Government for Breach of Development Agreement

The challenges posed by complex development projects to roads, water, sewer, school, and other public services demand an orderly solution. Beginning in 1979 with California, states have enacted statutes to expressly authorize cities and counties to enter into "formal contractual agreements with landowners that lock in existing ordinances affecting a project for an extended period." David Owens, The Use of Development Agreements to Manage Large-Scale Development: The Law and Practice In North Carolina (October 2009).

In 2006, the North Carolina General Assembly authorized the use of development agreements as a way of addressing the complexities inherent in large-scale development. These arrangements enjoy widespread use in development and local government circles throughout the State. We've blogged before here about the use of development agreements to attract innovative, job-creating companies to The Great North State.

But the contractual arrangement isn't always pretty. Consider a recent case from the California appellate courts affirming a $30 million jury verdict (and judgment in another $2 million of attorney's fees) in favor of a developer, and against a local government suffering from buyer's remorse, for the local government's repudiation of a development agreement. This is especially interesting in light of California's role, referenced above, on the vanguard of these local government-developer contractual arrangements.

The facts of Mammoth Lakes Land Acquisition, LLC v. Town of Mammoth Lakes are relatively straightforward. Developer and local government entered into a development agreement for improvements to an airport and to build a hotel or condominium complex at the airport. At some point, the local government "changed its priorities and no longer wanted the hotel/condominium project." In a fairly savvy move, and likely realizing the binding contract within which its whims were held hostage, the local government enlisted the FAA--yes, the FAA--to "eliminate the developer's ability to build." I'm guessing the local government saw an impossibility defense on the horizon. The FAA heeded the request, but the developer demanded that the local government move ahead with the terms of the development agreement, anyway. The local government refused and the developer sued for anticipatory breach of contract, claiming the local government repudiated the development agreement.

A jury found in favor of the developer, awarding $30 million in damages. The court assessed another $2.36 million in attorney's fees against the local government. The local government appealed.

The court of appeals affirmed the jury verdict. The court reasoned that (1) the developer showed breach through the conduct of the local government officials acting within their authority, (2) the evidence was not too speculative to show breach insofar as it was clear the officials had no intention of being bound by the development agreement, (3) an un-exercised option to purchase contained in the development agreement did not render the breach claim unripe, and (4) there was no evidence the local government retracted the repudiation.

The lesson, it seems, is that these development agreements are contracts just like any other contract, especially when it comes to enforcement, and should be be treated accordingly. Local governments should not convince themselves otherwise, a fact of which $32 million-plus is a sobering reminder.

Well, at least California local governments have that kind of cash, right?

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

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