tag: North Carolina Land Use Litigator: April 2015

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Wednesday, April 22, 2015, 4:00 PM

What is Done is Done – and Cannot be Undone



Lady Macbeth tells her troubled husband, “What is done is done” and later says to herself “and cannot be undone.”  This is the outcome in Hillcrest Property, LLP v. Pasco County, 754 F. 3d 1279 (11th Cir 2014) and apparently the United States Supreme Court accepted it when the Court declined to review Hillcrest on April 21, 2015.
The Case
In 2001, Hillcrest purchased 16.5 acres of property in Pasco County.  Four years later, in 2005, Pasco County adopted The Right of Way Preservation Ordinance (the “Ordinance”).  Generally, the Ordinance requires dedication of right of way shown on officially adopted maps and tables in order to secure a development permit.  The Ordinance contains provisions permitting waivers when the required dedication is not roughly proportional or variances in hardship situations.  The burden lies with the landowner to prove entitlement to relief. 
Hillcrest submitted a preliminary site plan seeking a development permit in 2006.  From 2006 to 2010, Hillcrest, Pasco County and later Florida’s Department of Transportation engaged in a series of submittals of site plans, rejection of site plans, and negotiations regarding Hillcrest’s dedication of right of way.  Ultimately, Hillcrest made the required dedications and its preliminary site plan and construction plan was approved.  During this four year process, Hillcrest submitted written reservation of its rights to contest the exaction.
Hillcrest filed its lawsuit in 2010 challenging the exaction road right of way alleging violations of  its right to due process, to equal protection, to access to courts and to a jury trial and other state claims.  The federal district court entered judgment in favor of Pasco County on all claims except Hillcrest’s substantive due process as-applied claim and  substantive due process facial claim.  For Hillcrest’s facial claim, the district court entered summary judgment in favor of Hillcrest and issued a permanent injunction against enforcement of the Ordinance.  Pasco County appealed. 
The Eleventh Circuit Court of Appeals reversed.  The Eleventh Circuit held that a facial substantive due process claim brought pursuit to 42 U.S.C. § 1983 accrues (i.e. the time for bringing the claim begins) on the date the government adopts the law - not when Hillcrest applied for a development approval.  To reach this conclusion, the court extends takings law to apply to facial substantive due process claims and followed two cases decided by other federal circuits. 
Based upon precedent, the Eleventh Circuit reasoned that statute of limitation for a facial substantive due process claim brought pursuant to 42 U.S.C. § 1983 is the state statute of limitations for personal injury claims.  In Florida, the state statute of limitations for personal injury claims is four years.  Accordingly, Hillcrest’s claim of a facial violation of Substantial Due Process accrued in 2005 and expired in 2009, a year before Hillcrest filed its lawsuit.  Thus, under law, “What is done is done” and “cannot be undone.”
Hillcrest’s as-applied substantive due process claim remains pending in federal district court, and the outcome of the entire case is uncertain. 
Observations
In Hillcrest, two courts came to diametrically opposed conclusions.  The federal district court concluded that the period for bringing a facial substantive due process claim began when the Ordinance was applied to Hillcrest – when Hillcrest applied for a development permit in 2006.  On the other hand, the Eleventh Circuit reasoned that Hillcrest’s injury in a facial claim occurred when the Ordinance was adopted in 2005 and became applicable to Hillcrest’s property.   
Rules of statutes of limitations should be clear, but for land use controversies, statutes of limitations are complex, uncertain and evolving.  Litigants tend to focus the substantive elements of claims and available evidence.  Frequently, matters like statutes of limitation and appropriate remedies are considered too late, if at all. 
Of course, Hillcrest faced a practical dilemma.  Hillcrest would have had to sued Pasco County by 2009 to preserve its facial substantive due process claim - at the time Hillcrest was seeking a permit.  On the other hand, there were many other actors making important decisions who did not challenge the Ordinance.  A judgment finding that the Ordinance was, on its face, unenforceable unsettles transactions and occurrences well beyond Hillcrest’s property and development plan.  Perhaps, in that situation what is done is done and cannot be undone.

Tuesday, April 21, 2015, 11:58 AM

N.C. Court of Appeals Dismisses Municipal Takings Claim For Failing "Public Benefit" Standard

Today, the N.C. Court of Appeals affirmed the dismissal of a takings case filed by a local government.  The case is Town of Matthews v. Wright, No. COA14-943 (April 21, 2015).

Facts
The facts are important but protracted.  Essentially, plaintiff homeowners live at the end of a street, which is a dead end: Home Place.  Over time, the Town has made various efforts to claim the street as a "public street", all of which failed judicial scrutiny.  Home Place remains a private road today.

Eventually, the plaintiff homeowners at the end of the dead-ended private road Home Place constructed a fence on their property bordering, but not obstructing, the Home Place.  Other neighbors on Home Place expressed concern that the plaintiff homeowners "might eventually block access to Home Place".

The Town filed a suit pursuant to N.C.G.S. Chapter 40A to condemn only the portion of Home Place directly in front of the plaintiff homeowners' property for the stated purpose of "opening, widening, extending, or improving roads, streets, alleys, and sidewalks and more particularly described as Home Place."  Plaintiff homeowners asserted "numerous affirmative defenses" including that the condemnation "serves no public use or benefit", inadequate compensation (the Town deposited $1,500 with the filing) and unclean hands.

The Trial Court
The trial court dismissed the takings claim.  The court reasoned that "a takings case involving taking of private property cannot be considered in a vacuum and without regard to its factual history", and stated:

[T]he Plaintiff’s Board of Commissioners on April 8, 2013 is simply an attempt to accomplish, through other means, what was originally intended by its actions on March 25, 1985, February 5, 2004, and October 9, 2006, rather than constituting a taking of property for some recently realized new need for a public purpose or benefit.

In other words, the trial court did not agree with the Town's attempt to do by condemnation -- render Home Place a public street -- what it could not accomplish by other means.  Such an attempt to take is "an arbitrary and capricious exercise by [the Town] of its powers of eminent domain."

The Court of Appeals
The appellate court affirmed the trial court's dismissal though with a twist.

First, because a street was involved, the Court of Appeals noted that the burden is on the homeowner to refute the taking: "If a municipality’s condemnation action purports to serve one of the statutorily enumerated purposes for public condemnation, then the burden shifts to the property owner to refute the municipality’s showing of a “public use or benefit.” See City of Burlington v. Isley Place Condominium Ass’n, 105 N.C. App. 713, 714–15, 414 S.E.2d 385, 386 (1992);
see also N.C. Gen. Stat. § 40A-3(b) (2014)."

Second, the appellate court noted that a taking must satisfy the two prongs of the "public" test--the taking must be for both a public use and for a public benefit:

Our Supreme Court uses two tests to determine whether a condemnation is for the public use or benefit: “The first approach—the public use test—asks whether the public has a right to a definite use of the condemned property. The second approach— the public benefit test—asks whether some benefit accrues to the public as a result of the desired condemnation.” North Carolina courts have held that a condemnation must satisfy both the “public use” and the “public benefit” test. 

Again, the appellate court cites City of Burlington v. Isley Place Condominium Ass’n, 105 N.C. App. 713, 714–15, 414 S.E.2d 385, 386 (1992) as well as N.C.G.S. § 40A-3(b).

The appellate court applies the public benefit analysis to conclude that the condemnation fails the standard, which means a "public use" analysis is not necessary.  Again, from the court:

[C]ondemnation of the Wrights’ portion of Home Place would only allow for those public benefits on the Wrights’ portion of Home Place, which is at a dead end and landlocked by other individuals’ portions of Home Place. Most of the other portions of Home Place have neither been dedicated to the Town as public land nor condemned by the Town. Thus, opening the Wrights’ thirty-foot portion of Home Place to the public through condemnation will have no effect on the present ability of fire fighters or utility providers to access Home Place as a whole.

Third, is the twist.  The appellate court determines that it "need not" reach the issue of the "arbitrary and capricious" nature of the condemnation, which the trial court concluded.  The appellate court thinks that the failure to meet the "public benefit" test is enough for one day, and enough for dismissal.  Perhaps this neutralizes any attorney fee claim along the lines of NCGS 6-21.7.

"Private property.  Unless you're a fire truck.  Or an ambulance.  Or repairing that water main.  Or ..."

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, 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.

Wednesday, April 1, 2015, 1:44 PM

North Carolina Land Use Litigator Expands Platforms to Twitter and Instagram

We are now on Instagram and Twitter, adding dimension to our conveyance and analysis of real estate, land use, and litigation information impacting businesses and local governments throughout North Carolina.

We'll continue to blog in "long-form".  But please visit these other platforms for links to our blogging as well as real-time, different information and other perspectives on land use and local government issues.  It's the same, but it's different.

You can follow us on Twitter here.  We are @NCLandUseLaw.

You can follow us on Instagram here.  We are NCLandUseLaw.

"You can upload it from here, but I'm significantly more adept on my smartphone."

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.

Federal Court Upholds Permit Fee for Backcountry Sheltering in Great Smoky Mountains National Park

There is a constant, and I believe growing, tension between the government and the governed as to whether taxes should be used for or user fees should be charged for myriad services.

The use of National Park land is no exception.

Great Smoky Mountains National Park has a significant amount of backcountry, including approximately 100 backcountry campsites and shelters maintained by the National Park Service. Prior to 2013, permits for use of the backcountry sites and shelters were available free of charge. Reservations could be made by telephone to the National Park’s backcountry office or in person at the National Park's Backcountry Information office.

Beginning at least in 2009 and continuing through 2011, the NPS received complaints from backcountry campers in the National Park about difficulties in making backcountry camping reservations.  NPS staff also received complaints about backcountry campers who were not following Park rules, such as using backcountry campsites without a permit, bringing dogs into the backcountry, and trash left at campsites.

In order to address these and other issues, after certain processes, the NPS mandated a permit fee for use of the backcountry campsites and shelters in the National Park.  The proposal identified a $4 per-person, per-night fee for backcountry campsites and shelters “to recover the direct costs for providing a reservation system with both internet and phone-in reservation capability, increased public access to trip planning assistance and permit compliance monitoring”.

In 2013, a group call the Southern Forest Watch filed suit in federal court challenging the fee and other actions on varied statutory bases.

This week, the federal court in Tennessee granted summary judgment on all claims in favor of the federal government and its officials.

We view the following as the most telling portion of the Court's opinion supporting the decision in the government's/fee's favor:

Plaintiffs do not appear to argue that the fee is not commensurate with the benefits and services provided; rather, they seem to argue that they do not want or need the services. While the statute provides no mathematical formula or other interpretation for determining how much or what type of services are sufficient to be “commensurate” with the recreation fee, the Court finds that the NPS adequately considered the benefits to be provided by implementation of the fee as required by § 6802(b)(1) and that the NPS’s determination that the benefits and services would be commensurate with the amount charged is not arbitrary or capricious. The Court further concludes that the amount charged, $4 per-person, per-night, does not unlawfully “impair” the public’s enjoyment of the Park.

Southern Forest Watch intends to appeal, telling the Knoxville News-Sentinel that they "expos[ed] a corrupt system" in the course of the lawsuit.

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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