I had long thought that one could only learn integrity in two ways: from good parenting and personal mentoring and from the examples of inspirational people.  To that short list I’m tempted to add opinions from the N.C. Court of Appeals.

             A recent but unpublished opinion (ExperienceOne Homes v. Town of Morrisville) does little to advance our understanding of land use law (it was a cut and dried decision based upon clear facts), but it provides developers a lesson in integrity when dealing with local governments.

             The facts, slightly condensed, are straightforward.

             ExperienceOne Homes was a classic pre-2008 developer whose business model can be summarized as follows: if you build it they will come. [OK, granted that that’s not in the opinion, but you can shoot me if I’m wrong.]

             ExperienceOne owned four lots in Morrisville adjacent to 3 additional lots owned by KCR Investors.  The two companies joined forces to develop 200 townhomes and 3 single family homes on their combined 7 lots.  When they submitted it for “conditional use” approval in early 2008, they submitted a detailed site plan and subdivision plat that showed the location of roads, lot sizes and a clear 200 to 3 ratio of townhomes to single family residences.  In Morrisville (as in most places), conditional use zoning means any individualized conditions approved by the town become part of the zoning district requirements. 

             In this case, one condition (which I take to be a superfluous belt added to britches already held in place by strong suspenders) was that the developers must develop according to the site plan and plat submitted.  Why add this condition?  Because the specific proposal was what the developers told the town they would do, and it was what the town said it found to be acceptable.

             Then the economic tsunami, which we all wish we could have predicted, came crashing down, and the development was placed on hold.

             A year later, in response to the types of “product” that buyers in this new world order would buy and which lenders would lend for, ExperienceOne decided it could build and sell single family homes instead of townhomes.  It returned to the Morrisville town council with the same layout and plan, only it included 202 single family homes on postage stamp lots. 

             For those who analyze cases closely, you will note that Judge McGee found the following fact important enough to quote it verbatim from the record: The developers promised the town there would be “no other major change to the layout of the site.”

             She also quoted at length from the hearing transcript where the Senior Director of Development Services told the council (highly paraphrased): Look folks, these guys have had a horrible time in this economy.  They have financing deadlines, and if you’ll allow us – the planning staff – to approve minor changes administratively, then we’ll go out of our way to work with them on an expedited basis.  For this to happen, all they’ll need to do under our ordinance is to prepare a Flexible Design Option (FDO) request.  And that FDO has to be approved by you, the town council.

             The town council expressed its desire to comply with its staff’s request to be reasonable and to work with and help this developer by authorizing administrative approval of future changes as long as the developer 1) built a bridge to the adjacent subdivision; and 2) the conditions in the previous zoning ordinance and submitted site plan would be met.  And this was done in spite of a unanimous recommendation from the Planning and Zoning Board not to have allowed the development in the first place.

             The express language (which Judge McGee also chose to quote) was “Development . . . must occur in a manner consistent with the provisions of the Townes at Everett Crossing Site Plan and Preliminary Plat . . . provided, however, that minor amendments may be reviewed and approved administratively.

             You be the judge of the FDO application’s consistency.  Instead of the 7 lots, it only included the 4 owned by ExperienceOne because KCR had backed out.  Instead of 202 homes, it proposed 143, and the density per acre had increased, causing a rearrangement of the lots and reduced green space. The road layout had changed, the architectural renderings showed a different product design, and an additional entrance had been added.  The bridge, as you might guess, was not included.

             The developers were told that this new site plan could not and would not be approved because the resolution adopted by the town required consistency of plans and design.  The planning staff tried again to work with the developers, suggesting ways to move forward.

             Sidebar:  I can list several cities and counties in this state (and in Virginia) where the development culture in city hall is “our way or the highway.”  Morrisville, on the other hand, gets a double handful of gold stars in this case for going above the call in trying to assist, rather than impede, a developer in its attempt to move from raw land status to having “for sale” signs in every yard. End sidebar.

             When the FDO came before the town, the town council said to ExperienceOne (employing literary license here): “Dudes. We tried to work with you when times were tough.  You asked us to be flexible and we were. We told you exactly what we would do.  You not only accepted it, but it was essentially your proposal.  Now you’ve gone back on your word, so we deny your request for this completely new development plan.”

             So.  What did ExperienceOne do?  It sued the town, claiming 1) the town went back on its word; 2) the town “forced” it to apply for an FDO; 3) that the town was required to adopt the FDO as proposed; and 4) the town violated its constitutional rights.

             Seriously . . .

             The Court’s opinion is quite simple.  Liberally summarized, it said “The law is ‘A’, the facts are clearly ‘B,’ the town bent over backwards to work with ExperienceOne to reach plan ‘C,’ and the town council has powers of discretion ‘D,’ yet the developers not only went back on their word, they ungratefully sued the town when there were no facts to support their claim.”  The Court cited no case law to support its position, and didn’t need to.  It just said ExperienceOne has no case.

             Under these facts, the developers’ claim that the town violated their constitutional rights was not a 90-yard Hail Mary pass to the end zone.  It was a 90 mile pass to the next stadium. 

             The lesson: There is a high probability that this case will never be cited by a future court.  It does, as I said, provide a valuable lesson in integrity.  Judge McGee never used that term, nor did she say (or do I say) that the developers lacked integrity.  However, the fact recitation and the holding return again and again to the fact that there was a bargain that the developers accepted then tried to change to their benefit.  Basic facts like this can color a court’s interpretation of a case.

             And another set of facts reaches out from between the sentences.  The developers were victims of forces beyond their control, and the town recognized it.  Rather than being arrogant and rigid, the town stuck out its hand and offered to help the developers get up off the ground.  The town clearly wore a white hat.  The developers, on the other hand, did not.  Judges are human, and most humans, all else being equal, try to do the right thing.

             How do we tell whose side is right and just?  Why, the white hat, of course.

 Humorous Comment to Readers

             WordPress, my blog’s host, tells me where my readers are coming from on any given day I choose to look.  Not who they are, but their country of origin. I am sure, for example, that if I looked today, I would have nothing but hits from the USA for the past week.

             I laughed, however, after publishing a post April 22nd titled “Learning How to Kill People for Sport and Entertainment,” a commentary on Cumberland County’s decision to classify a training ground for mercenary soldiers as an amusement park.  I suddenly had readers from Paraguay, Portugal, Saudi Arabia, Pakistan and about 20 other countries.  No doubt somebody in a beige cubicle in a nondescript federal agency noticed the traffic and now there is a file in D.C. with my name on it.

             If so, at least it didn’t stop me from recently boarding an overseas flight.

             Scroll down to read recent posts.  Click on topics of interest in the right hand column for other posts. For email alerts on new posts, click the “sign me up” button above.  And forward to others who might be interested.

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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.