In 2008 our economic ship’s engines faltered before the ship itself started to list and then to sink. Local and state government agencies joined hands with the development community to devise an interesting floatation device, eventually termed, in governmental prose, “The Permit Extension Act of 2009.”

The Extension Act, essentially, stopped the earth from spinning on its axis.  Practically all forms of local and state development approvals that were scheduled to expire were given new life.  Whatever time was left on the permit was tolled until the end of 2010, with the clock starting to run again at that time.

In other words, if your special use permit or your 401 permit was expiring 90 days after the act was passed, it would now expire 90 days into 2011. (For last year’s perspective, you can view my blog post dated August 6, 2009, with commentary explaining the first Extension Act).

Midway through 2009, local and state governments liked this provision.  In many cases, permits had been issued after lengthy public hearings, substantial investment of staff time, and after many site visits and document reviews. Governmental staffs wouldn’t have the time or manpower to revisit old permits when new ones started to flow in.

The development community liked the Extension Act because projects would not die a natural regulatory death simply because the developer couldn’t get financing or financing was suspended by the bank before work could be started.  It also gave developers an opportunity to time construction with the return of a renewed economy when tenants and buyers were expected to return in 2010.

However, 2010 came, we’re still here in a rough economic sea, and the Extension Act itself is facing expiration.

 Extending the Extension

 In the wake of the looming expiration, the General Assembly debated House Bill 631, an act to extend the extension. Only this time the alignment of support had changed.

 The development community was solidly behind the extension of the extension.  Developers in every county are still working on ways to salvage projects and jobs and contracts to purchase before going into bankruptcy (if not already there) or being forced to start from scratch when economic conditions improve.

 Local and state governments, on the other hand, don’t like the uncertainties of permits floating in timeless space while local regulations and development conditions change. Can the previously budgeted sewer line be scuttled and the funds applied elsewhere or must the line be run into vacant, raw land?  And now that the city has adopted a new UDO with different street connectivity standards, can the developer be required to come back with a new subdivision design under the current regulations?

 The development community preferred a two year extension.  Local and state governments – depending on who you asked – either wanted the Extension Act to expire naturally or with some concessions to the development community.

 The Great Compromise of 2010

 The General Assembly, for the most part, heard everybody’s pain and adopted a compromise.  It extended the extension by one year instead of two and provided a mechanism for local governments to opt out.  The local “opt out” provision converted the 2009 Act from being an act of total pre-emption to an act of local choice.

 But the 2010 version is not without government-created ambiguity.  Section 4.1 doesn’t leave the clearest trail of procedural bread crumbs, suggesting simultaneously that opting out is done on a permit-by-permit basis while it can also be done by opting out as a unit of government.  To be safe and avoid litigation, a local government choosing to opt out by one resolution should consider listing all outstanding permits in the resolution and adopting findings related to each one.

 Finally, local governments won two small battles, one of which they should have won and the other which shouldn’t have been a battle at all.  As to the latter, developers are still required to comply with all laws that then-existed and perform as promised in the original approval.  If not, they don’t get final approvals or their certificates of occupancy. 

 The other battle is over termination.  Many developers no longer exist as business entities.  Local governments shall not be required to chase them all over creation to find them to provide notice of termination of their approval.  If the developer didn’t leave a forwarding address, they forfeit rights of notice.

 My last comment is simple: God help us all if the long session of 2011 arrives and the economy is still so poor that yet another extension is needed.

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Tom Terrell

Terrell_TomMr. Terrell is widely regarded as one of North Carolina’s leading land use attorneys, representing both private and governmental entities in matters related to real estate development. His practice “footprint” covers the state from the mountain counties to the coast and occasionally includes…

Terrell_TomMr. Terrell is widely regarded as one of North Carolina’s leading land use attorneys, representing both private and governmental entities in matters related to real estate development. His practice “footprint” covers the state from the mountain counties to the coast and occasionally includes parts of Virginia and South Carolina. His many clients are involved in commercial and residential real estate, solid waste hauling and disposal, telecommunications, quarries/asphalt and miscellaneous litigation related to permit denials, vested rights and rezonings.

He has published numerous articles and speaks regularly to legal, governmental and business groups on a variety of issues related to land use and zoning.

Mr. Terrell has served as a leader in numerous civic and legal endeavors, including Chairman of the Board of Trustees of the N.C. State Health Plan, Chairman of the Board of Trustees of Winston-Salem State University, and service on the Board of Directors of the UNC-CH General Alumni Association, Board of Directors of the High Point Chamber of Commerce, Board of Visitors of Guilford College and Board of Center Associates of the Center for Creative Leadership, and as a founding member of the N.C. Bar Association Zoning, Planning and Land Use Section.

More information can be found at

Mr. Terrell can be contacted at