Apparently we have to wait a bit longer for a final answer to the state’s million dollar question: can schools be funded by assessing developers an “impact fee.”?  The latest non-answer was recently published in the N.C. Supreme Court’s non-decision in the Cary-originated Amward Homes case.

             I’ve covered this issue in numerous previous posts, including my first Amward Homes commentary in Can you Hear Me Now – Impact Fees are Not Allowed by Law, and my second Amward commentary in APFOs – They’re Back. 

             A short synopsis of the primary question raised by the Cary controversy (found in detail at the above links) is this: can planners and elected officials strong-arm developers into “offering” impact fees in order to get official blessings on new subdivisions, especially when nobody with integrity would claim with a straight face that the “offer” was anything more than a response to extortion?

             A synopsis of the Court of Appeals answer (authored by Judge Robert Hunter from Greensboro) is this: NO.

What Happened to Amward on Appeal?

             The Amward Homes decision in the Court of Appeals was unanimous, meaning all three judges agreed with the holding, although Judge Jackson added a further comment that she thought the appeal was “interlocutory,” or premature.  When Court of Appeals decisions are unanimous, the only way to get your case before the N.C. Supreme Court is to petition for what is called “discretionary review.”  And the high court’s discretion in 95% of its requests is not to touch the lower court decision.

            But Amward was accepted for review, and the Supreme Court’s decision was limited to three sentences: “Justice Jackson took no part in the consideration or decision of this case.  The remaining members of the Court are equally divided, with three members voting to reverse and three members voting to affirm the decision of the Court of Appeals.  Accordingly, the decision of the Court of Appeals is left undisturbed and stands without precedential value.”

 Confused?  Let me Translate

             Justice Jackson was a member of the Court of Appeals panel that decided Amward in 2010, but she was then elected to the state Supreme Court.  It would be improper in many respects for her to hear on appeal a decision she rendered below. 

             Because the remaining justices were three for and three against, there weren’t enough votes to overturn or affirm the Court of Appeals decision.  Consequently, it stands as written and is binding only on the parties before the court.  However, it also “stands without precedential value.”

             “Precedential value” is a slippery term.  What it really means is that the developers’ victory and Cary’s loss (including Cary’s obligation to pay the developers’ attorneys fees is undisturbed.  However, the decision is not “binding authority” on future courts in other but similar matters (that is, future courts may ignore it).  Nonetheless, the reasoning in the opinion certainly can be used as “persuasive authority” which a court may consider.

             Precedent versus persuasiveness.  There’s a difference, but it’s sometimes thin.

 Are There Any Tea Leaves for Future Decisions?

             You bet.

             As long as the N.C. Supreme Court maintains it current composition, future cases (I predict) will face a Court that disfavors impact fees by at least a 4-3 margin.

             Justice Jackson not only sided with the developers in Amward Homes, but she authored the Union County impact fee case (Union Land Owners v. Union County) that struck down Union County’s attempt to impose an APFO.  Based on past opinions, Justice Jackson has demonstrated a judicial philosophy that courts must keep a watchful eye on local governments seeking creative ways to use newfound powers to levy fees and taxes and to make sure those powers are properly exercised and not beyond clear statutory authority.

             I like that.

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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 https://www.foxrothschild.com/thomas-e-terrell-jr/.

Mr. Terrell can be contacted at mailto:tterrell@foxrothschild.com.