When a child outgrows its clothes you simply buy larger clothes.  But when an older business outgrows its building and lot, new zoning codes often determine the extent to which physical expansion can occur.

             It can be frustrating, especially when you’re an oceanfront hotel, you’re hemmed in on four sides, and moving is not an option.  And that’s the situation Wrightsville Beach’s Blockade Runner hotel was in when it tried to add a four-story parking deck in 2006.

             Although the Blockade Runner and its predecessors have been on the same site for over 100 years, Wrightsville Beach adopted a zoning ordinance in 1972 that added requirements related to expansion of legal nonconforming uses and which delineated which new or expanded uses require conditional use permits.

             Side Bar: Colloquially, a “legal nonconforming use” is called a “grandfathered” use. The term “grandfather clause” originated in post-Civil War America when several southern states adopted constitutional amendments related to voting restrictions which exempted anyone whose grandfather had a right to vote, amendments that effectively denied pre-war slaves from being able to vote. Illiterate whites, however, were “grandfathered.”  End Side Bar.

             Anyone who has recently stayed at or visited the Blockade Runner knows that parking is woefully inadequate.  Although its plans for a four-story parking deck would only bring parking into partial compliance, the deck also had setback and landscaping issues.

             The town’s Code Administrator told the hotel’s owners that if they expanded parking – even if the expansion made parking less nonconforming – they needed to comply with the current zoning ordinance, which required that they apply for a conditional use permit, or CUP.  The Administrator’s decision was appealed to the local Board of Adjustment, which upheld the Administrator.  The BOA’s decision was appealed to the superior court, which upheld the BOA.  And the superior court’s decision was appealed to the Court of Appeals, which upheld the superior court in Four Seasons Management Services, Inc. v. Town of Wrightsville Beach.

             The Blockade Runner argued that the parking deck did not need a CUP because it was an accessory structure and, by definition, therefore an accessory use.  This contention received substantial attention at both the trial and appellate court levels, and both courts refused to equate accessory structures and uses.

             Although each local government can define these concepts as it wishes, two examples might bring the concepts into sharper focus.  A community swimming pool on its own zone lot would be a principal use, while a swimming pool behind a hotel (like the pool at the Blockade Runner) would be an accessory use to the primary use. Similarly, a cell tower on its own zone lot would be a principal structure, but a cell antenna mounted to the roof of a hotel would be an accessory structure to the hotel building.

             The Court of Appeals also held that expansion of the hotel to construct a four-story parking deck would be an expansion of a non-conforming use.  Generally, a “grandfathered use” can continue to exist as is until the end of the world, but it cannot be expanded without rezoning the lot to bring the use into compliance. Some local governments tinker with the concept and allow expansion by right under some circumstances, but the principle remains.  The town’s zoning code provided that “After May 15, 1972 . . . any structural alteration or change in use shall conform with the regulations specified in this chapter.”  And that meant first requesting a CUP.

             I found one point quite interesting.  The Blockade Runner’s attorneys argued that “since the proposed parking deck will mitigate the extent of the existing nonconformity by increasing the number of available parking spaces, the construction of the proposed parking deck cannot, as a matter of law, constitute the expansion of a nonconformity.” (emphasis mine) There’s a compelling logic to this point. The Court, however, was unpersuaded, noting that the same logic could be used to support construction of a ten-story building. 

             Although the principles of law in this case are not complex, this opinion emphasizes the importance of reading the local zoning ordinance carefully as your roadmap.  It is also worth noting that the Blockade Runner hasn’t “lost” in the sense that the parking deck is disallowed.  It’s just that four years after starting the effort they now have to request a conditional use permit.

 Color Commentary

             First, you may wonder why the Blockade Runner’s owner didn’t just apply for a CUP in 2006 and be done with the issue.  Sitting at my desk 200 miles away and without inquiring as to what would be proprietary information anyway, I would guess that there was a business logic to the decision to appeal.  If they sought a judicial declaration regarding their obligation to have a CUP in the first place and won, then that would end it.  But if they lost, they still have a second bite at the apple by applying for a CUP.  However, if they went for the CUP first, then they had only one bite at a very important apple.  Clients I have represented have been in this position many times.  It is better to have two bites than one, especially if losing is not an option.

             Second, non-attorneys sometimes equate a lawsuit against a government as an action filled with venom and acrimony, when it’s almost always the opposite.  I have litigated against the Town of Wrightsville Beach before and found its attorney, John Wessell to be, in every respect, a gentleman.  And a scholar too, but the point is that attorneys create an environment of civility completely contrary to your favorite TV Land lawyer shows.

             And third, this Court of Appeals opinion was authored by Judge Samuel James (“Jimmy”) Ervin IV, grandson of U.S. Senator and scholarly N.C. Supreme Court Justice “Sam” Ervin and son of the Honorable Samuel J. Ervin III, formerly judge of the United States Court of Appeals for the 4th Circuit.  Instead of writing a short, summary opinion, Judge Ervin’s well-written treatise is full of footnotes and other breadcrumbs for future courts to follow when this decision becomes precedent for future cases.  As a land use attorney, I’m more than impressed.  I’m appreciative.

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             Recent protests over the mosque near Ground Zero seem to have spawned similar protests across the country, from Murfreesboro, TN to Temecula, CA to Sheboygan, WI where proposed local mosques have become lightening rods for religious intolerance expressed in the context of allowable uses of land.

             An August 8, 2010 New York Times article (“Across Nation, Mosque Projects Meet Opposition”) listed the locations of some of the copy cat protests and made a point that, in a twisted way, caused me to respect the protesters: they’re being honest. The article’s main point seemed to be that the protesters aren’t trying to hide behind traffic or property values or other land use considerations.  Rather, they’re placing their true sentiments on the table of discussion for the whole world to see: they don’t want Muslims living in their communities.

             For almost 25 years I have spent countless afternoons and evenings in the council chambers and meetings rooms of towns and counties in every corner of North Carolina and in parts of Virginia and South Carolina where adjoining and nearby property owners protested everything from a subdivision strikingly similar to their own to a cell tower to a corner store.  If there is one thread of commonality, it is that the forum provided to discuss the use of land often becomes a cauldron of raw emotions where human fears and hatreds are disguised in the rational language of density, stream protection, property values and school capacity.

             It’s not the text, but the subtext.  It’s not the actual words that fall on your ears but what is left unsaid that often matters most.  The volume, tone of voice and intensity of expression may shout “I am terrified of change in my little part of the world” but the uttered words discuss traffic volume. After all, what is said and what is communicated in any context are often two different things.

             Anyone who has served long on a planning board or elected body has heard neighbors mention a rumor that the proposed subdivision is secretly planned as a “low income housing project,” a convenient way of rallying support from other neighbors who may not want blacks or Hispanics or “those others” living nearby.  Listen closely and you will understand that it’s not that they fear that their home values will decline but that their own sense of self worth will decline if people they consider less worthy live a block away.

             This summer I represented an entrepreneurial family from Mexico who wanted to rezone three corner lots in Greensboro. One of the neighbors listed all of the Hispanic stores and businesses that already exist in his part of town as though his argument was about retail supply and demand.  In reality he was saying “we have too many Hispanics near where I live.”

             Coded language in the land use context is far more the rule than the exception.  I have developed a deep appreciation for the professional planning staffs in large and small counties and towns who don’t succumb to the mob psychology of the protesters and who stick to their guns, in spite of occasional verbal reprimands from elected officials for making recommendations based upon the adopted comprehensive plan and prevailing principles of land use planning.  And I have lost commensurate respect for the elected officials who, by habit or personality, tend to channel and pander to the basest fears and emotions of the electorate.

             My law school alma mater (UNC-Chapel Hill) together with its sister institution, the UNC School of Government, support one of the best land use faculties in the country for understanding the historical, theoretical and applied aspects of land use and zoning.  If I had the mega millions, I would fund a cross-disciplinary program that would blend land use studies at UNC-CH with the university’s cultural anthropology and psychology disciplines so that some of the most critical components in land use decisions – the components that find hiding places behind the rocks and in the crevasses of surrogate issues – can be studied and understood.  After all, all of us are territorial.  We all have different tolerances for change.  And when our lives fall into the meaningless rhythm of daily work and evening sitcoms it feels good to be able to rally and protest.  But search for these topics in a textbook on zoning law and you won’t find them, despite the fact that real decisions in real life rise and fall on their expressions.

             The protests over new mosques are actually a good thing if the discussions are honest and direct and enable us to discuss the real rather than the concocted issues bothering citizens.  The debate over the American promise of religious freedom and the meaning of American liberty to believe as one chooses without the government deciding which political and religious beliefs are acceptable should always be vigorous and ongoing.

             Our country has weathered anti-Jew, anti-Catholic, and anti-denominational protests before.  We’ve had our wave of anti-communist hysteria where policies were made and laws were passed and wars were waged upon the assumption that there was a Communist in every closet.  The current wave of “anti-other” is little different except that the context is the appropriate use, through zoning, of local street corners.

             The real debate should not be about whether Islam – or Christianity or Judaism – is good or bad or right or wrong.  The real debate should be whether we ever give our local, state or federal government the power to decide for us, through zoning or other laws, which religious beliefs are acceptable.

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            As a young attorney I thought appellate decisions that weren’t published were the ones that established no precedent or posed no new facts to which old law could be applied.  Twenty-five years later I’ve realized that some cases aren’t published because the facts and applicable law are so muddled that the court just isn’t sure if its decision is right. 

            Whatever the reason, three unpublished cases have appeared on the Court of Appeals website.  Each is enlightening in its own way.

            Side Bar: A “published” opinion becomes law.  It has precedential value in that it establishes a new principle of law or proclaims how the law should be interpreted when the same fact pattern in the present case reappears in another context.  The case can be cited in briefs as precedent another court should follow.  An “unpublished” opinion – officially – has no precedential value.  A trial or appellate court can ignore it.  Nonetheless, it’s difficult for a reviewing court to overlook an unpublished opinion, especially when there are no other cases on point.  These three “unpublished” cases were “published” on the Court of Appeals website but under the “unpublished” case section.  In essence, that means that they’ll never be printed in the permanent, hardbound books on library shelves, if those books are even still printed.  End Side Bar.

Whose owns the sewage problem?

            A case out of Alleghany County (McCann v. Town of Sparta) does more than spell out, in simple language, when a municipality is liable to a homeowner for a sewage backup.  It’s also a wonderful illustration of the value of hiring a lawyer when you sue somebody, but especially a town.

            In this case a residential tenant reported a sewage backup that flooded the floor.  The town’s maintenance department, upon notice and inspection, immediately visited the house and determined that there was a blockage in the line.  They used the town’s Jet Vac sewer machine rodder to free the clog (most likely from grease) and didn’t charge the tenant or owner a dime. The owner, nonetheless, decided to sue.  He also assumed, wrongly, that the case would be so simple that he would not need an attorney.

            The trial court entered summary judgment for the town in spite of the plaintiff’s last minute attempts to continue the hearing because, as the plaintiff belatedly realized, he was unprepared and needed a lawyer. He appealed the case to the Court of Appeals, which unmercifully dismissed some of his claims because they were not properly noticed to the court on appeal. In fact, most of the court’s opinion concerns the plaintiff’s procedural gaffes.

            Regarding the ultimate issue, though, the court stated “A municipal corporation which either constructs sewer lines or adopts sewer lines constructed by third persons becomes responsible for maintenance and liable for injuries resulting from lack of due care in upkeep. . . . However, a municipal corporation is not an insurer of the condition of its sewerage system, and liability may only arise where the municipality has [actual] or constructive notice of an obstruction or defect and fails to act.”

            The evidence before the court was that the tenant was seldom home, the blockage had occurred days earlier than reported, and that the town had no previous awareness of a problem.  Judgment in favor of the town (and the value of a lawyer to advise you when not to sue somebody) affirmed.

Ride ‘em Cowboy

            Fast growth areas tend to be magnets for land use litigation, and Union County is no exception. (In the last four years alone I’ve worked on matters in the Town of Wesley Chapel, the City of Monroe and in the county itself, two of which went to the Court of Appeals).

             Marsh v. Union County Board of Adjustment involved the appeal of a farmer who applied for and received a special use permit to use his 300 acre farm for rodeos.  The Board of Adjustment placed nine conditions on his permit, one of which was a limit of four rodeos per year and another was to have two road accesses.

             Within four months Mr. Marsh had failed to construct his second access and decided that the four-rodeo limit was just words on paper.  The zoning administrator recommended that the BOA revoke the special use permit, and it did. Mr. Marsh sued the county, arguing that he never needed a special use permit in the first place and that rodeos fell under the standard exception that counties are not allowed by state law to regulate bona fide farm activities.

            After the Board revoked his permit, Mr. Marsh, in ride-alone-under-my-own-law fashion, decided that the Board had no authority to revoke the permit he contended he was never required to have.  He sued and he lost, but he didn’t appeal.  He did, however, continue to hold rodeo events.

             The county issued more NOVs.  Although the decision doesn’t say so, I will go onto a limb here and assume that the NOVs contained daily and cumulative fines because Mr. Marsh hired a lawyer to sue again and to raise some of the same issues.

             The trial court held and the Court of Appeals affirmed that Mr. Marsh had his opportunity to fully litigate these issues the first time and therefore was “estopped” from asserting the Board’s lack of regulatory authority.  Unfortunately, because the estoppel argument stuck, the Court didn’t need to rope the other steer in the corral, the one dealing with whether a rodeo is a bona fide farm activity.  But since I suspect that you are dying to know the answer, I’ll step in and tell you what the Court didn’t.

             It’s not.

             Under N.C.G.S. §153A-340, a county may not regulate bona fide farm activities through its zoning ordinance.  As a rule of thumb, if it’s not a plant or animal that you sell at a market, it’s not a bona fide farm activity.  My first oral argument before the North Carolina Supreme Court involved just this issue.  Back in the mid-nineties, a landowner in Randolph County was allowing his land to be used for the remediation of petroleum-contaminated soil, mainly from gas station sites.  The dirty soil was spread onto the land and microbes were applied that broke the petroleum down. Colloquially, the process was called “land farming.”  Because it had “farming” in its description, the county decided that it was exempt from zoning regulations.  On behalf of the neighbors I claimed that it was inherently an industrial activity outside the definition of a bona fide farm and therefore not allowed in this zoning district.  Courts at three levels agreed with me.

             A rodeo is inherently a sporting event.  Although animals bred and raised on farms might be used in the sport, the activity has nothing to do with breeding, raising and selling those animals.  Rather, what is sold is a ticket to enjoy a couple of hours of fun and cotton candy, and that’s not farming.

             Now, had the rodeos truly been marketing and promotional activities to attract buyers for horses, cows and vegetables grown on Mr. Marsh’s farm, his claim might have had merit. Those facts, however, were not before the court.

 Lumber Yard Redux

             Three years ago the N.C. Court of Appeals handed down a “spot zoning” case in which neighbors (McDowells and Winslows) of a Randolph County lumber yard (McDowell Lumber) sued the county over it’s rezoning of a portion of the property to an industrial district (McDowell v. Randolph County, 186 N.C. App. 17, 649 S.E.2d 920 (2007).

             The same plaintiffs returned, seeking to compel McDowell Lumber to comply with certain UDO requirements related to placement of buildings after its land was rezoned to an industrial district but before the court struck down the industrial designation as illegal spot zoning.  Reducing the facts to the bare bones, the Randolph County Board of Adjustment determined that the lumber company was now a legal non-conforming use and the new buildings did not constitute an expansion of an illegal non-conforming use.  The County claimed that the petitioners – who lived next door – lacked standing.

             On appeal, the merits of the case were not reached because the court concluded that the next door neighbors who complained about the noise and dust from newly constructed buildings had no standing to complain.

             For years we witnessed the bar to establish standing in land use cases rise a notch or two by each successive appellate opinion.  It almost got to the point where you had to have a real estate appraiser appear at the zoning hearing to put on evidence of your right to be there because of a substantial diminution of your property if the decision is favorable to the applicant.  Attorneys learned that your first line of defense was to challenge the next door neighbor’s right to be in court in the first place because of various technical arguments related to standing.

             The bar was re-lowered in Mangum v. Raleigh Bd. of Adjustment (2008).  However, in McDowell (redux) it went back up.  These plaintiffs actually did have an appraiser at the original hearing who testified about plaintiffs’ loss of property value, but because the appraisal addressed the entire lumber yard operation instead of the buildings complained of, plaintiffs lost on standing.

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            From the town that threw a zoning hissy fit when a farmer sold vegetables by the roadside and that had a conniption fit when a new but retro-design chrome diner was, well, too chrome-y, comes yet another one in a prolonged there-they-go-again parade.  Even though courts have clearly told every other local government that the State of North Carolina doesn’t allow it to impose impact fees in the form of adequate public facilities ordinances (APFOs), the Town of Cary insists that those laws and those cases only apply to others.

             An August 3rd Court of Appeals decision will cost Cary’s citizens over a million dollars (not including its own attorneys’ fees from two outside law firms) unless it’s overturned by the N.C. Supreme Court. This is not the first time Cary’s citizens have had to fund litigation when its council acted contrary to state law.

             The facts and legal claims in Amward Homes, et. al v. Town of Cary (COA09-923) are circuitous and cumbersome, but I’ll distill them to their basics.

             Side Bar: At the trial or summary judgment stage of a large case, attorneys and their staffs usually bring in several boxes and notebooks of affidavits and exhibits and depositions.  On appeal, those documents are reduced to the essentials which, along with legal briefs, are transmitted to the Court of Appeals.  The paper trail can still be several inches thick.  So when a newspaper gives the same case 3 column inches, there’s a good chance something has been left out.  Even with the 1,991 words in this post, there are several nuances that time and space will not allow me to explain.  For some of those nuances, you’ll have to read the full 44 page opinion. End Side Bar.

 The Facts

             The Town of Cary imposed an Adequate Public School Facilities Ordinance (APSFO) that did not require developers at the approval stage to pay fees for public schools.  Nonetheless, the Town of Cary planning staff and the Town of Cary mayor and council members, knowing that they could arm wrestle developers into offering – and their builders into paying – huge fees, threatened non-approval if the payments were not offered as zoning conditions.

             Developers have for years called this type of tactic “extortion.”  Actually, it’s not extortion in the strictest sense.  But the point remains.

            Each developer or builder was required to pay different levels of fees, with no discernible rationale for the disparate treatments. As the years went by, the Town amended the ordinance on occasions, once allowing some developers to be exempted from the fee payments, but not exempting the developers of the Cameron Pond subdivision, even after the ordinance was repealed.  The Cameron Pond builders comprise most of the plaintiffs in the action.

The Legal Claims

            The plaintiffs in this case claimed 1) that the APSFO was ultra vires, meaning the town did not have the legal authority to enact it; 2) that the APSFO violated their rights to equal protection and substantive due process guaranteed by the U.S. and N.C. Constitutions; and 3) that the fees they had paid must be returned and their attorney’s fees paid.

            Cary raised several defenses, including 1) the Court’s lack of jurisdiction over the subject matter; 2) that plaintiffs filed their claims too late; 3) plaintiffs are estopped from challenging an ordinance under which they had reaped advantage (e.g. project approval); and 4) all those other cases and laws just didn’t apply to Cary because, one would guess, Cary is special.

Legal Analysis and Case Commentary

            Side Bar: “Legal analysis” is the dry, academic discussion of the case’s facts and legal claims interpreted against principles of law that have evolved since the signing of the Magna Carta in 1215. “Case commentary” is the more colorful analysis that looks at the parties, the judge’s persona, the political context, the structure of the opinion itself, and that asks “what were they thinking??”

            Case Commentary

            Judge Hunter’s opinion subjected Cary to a full body slam.  Even when he had a reasonable opportunity to give Cary the benefit of the doubt over facts or to interpret case law and legal principles favorable to Cary on ,its defenses, he chose to craft an opinion that gave the private sector a clear victory on all counts, writing with a confidence and in a declarative voice that contained little wish or wash beyond occasional acknowledgements that there were contrary legal arguments to be made.

            When judges sift through the vast materials that comprise an appeal, they have to choose which needle in the big haystack is sharpest. Judge Hunter chose to dedicate an entire page of his 41 page opinion (there were 3 more pages in a dissent) to an affidavit in which the managing partner of the Cameron Pond development described in great detail how the planning staff and mayor told him, essentially, you have to pay to play even though the APSFO ordinance didn’t require such payments.  Such strong arm tactics were an integral part of the way Cary did business, using the APSFO as its justification.

            Judge Hunter, it seems, was offended by this abuse of entrusted power.

            Second Side Bar: There are fifteen judges on the Court of Appeals with fifteen different personalities.  Cases are randomly assigned to three-judge panels. It is often the random assignment that determines how a case comes out. In other words, luck of the draw can determine a legal outcome. In this case, the opinion was written by Judge Robert N. (“Bob”) Hunter, Jr. from Greensboro, a Republican who has a long career working primarily in the private sector.  But there is another Bob Hunter on the court.  Judge Robert C. Hunter from Marion, a Democrat, spent many years in government employment and in the legislature and rubbing shoulders with local and state agencies.  There’s a decent chance he would have been more patient with town officials and forgiving of Cary’s APSFO, in spite of recent and clear trial and appellate court decisions to the contrary.  End Second Side Bar.

           In Cary’s defense, however, it should be noted that the APSFO was adopted before the 2006 Durham case and 2009 Union County case.  Prior to those cases most North Carolina local governments generally acknowledged that General Stature Chapter 160A did not grant powers to impose impact fees, but the appellate courts had not yet spoken.  Additionally, Cary’s bipolar political culture has experienced wild pro-growth/anti-growth mood swings in the past two decades, with Mayor Glenn Lang (mayor when the fee was required) representing the anti-developer sentiment more than anyone. 

            Legal Analysis

             Why was the Ordinance Ultra Vires?

             In late 2009 the Court of Appeals decided the case Union Land Owners Ass’n v. County of Union where Union County had imposed a similar school impact ordinance.  The Court held that Union County “may not use the APFO to obtain indirectly the payment of what amounts to an impact fee given that the defendant lacks the authority to impose impact fees directly.” The Union case built upon yet another similar case out of Durham County in 2006.  To boil the issue to its essence, the state has never given local governments blanket authority to impose impact fees.

             Cary argued with some degree of disingenuousness that Union County’s ordinance actually required payment of a fee, whereas Cary’s (original) ordinance didn’t mention fees at all.  Rather, its staff and elected officials merely used the “non fee ordinance” as its legal basis to strong arm fee payments in every single case, and the developer’s “voluntary” offer of fee payments was an act of civic charity and freewill. 

             After reading the opinion I conclude that Judge Hunter was not amused. Whether the fee is required by written ordinance versus the power bestowed upon elected officials to mandate it through other means is an artificial and meaningless distinction.

             It is noteworthy that this case cannot be read as disallowing local governments from considering the adequacy of facilities to accommodate proposed growth.  That still remains an open question and is likely allowable.  However, this case can be read as disallowing a shifting of the responsibility of school construction and maintenance to the development community through impact fees.

             When was the Deadline to File the Claim?

             Regarding Cary’s claim that the developers and builders filed their case too late, the Court determined that there was no statute of limitations that clearly applied, and therefore the time period was ten years beyond the last act in the series of offenses (payment of fees).  The Court reasoned that if this were a zoning ordinance that required town council approval there would have been some merit to this defense.  However, the APSFO was a subdivision ordinance that required town council approval, and that was different.

             Although I personally am not impressed with the Court’s distinction, I also am not impressed with the fact that our courts for years have confused zoning text amendments with zoning map amendments, each adopted by a “zoning ordinance” yet each being completely different than the other.  And the same two month statute of limitations intended for map amendments has erroneously been applied to text amendments with gusto.  So it goes.

             Violating Constitutional Rights

             Nothing illustrates the plaintiffs’ complete victory more than the fact that they prevailed on their substantive due process claims and received attorney’s fees.  In short, substantive due process claims in the zoning context are extremely difficult to prove.

             Substantive due process is a somewhat vague standard that requires a government to use its powers to enact laws with at least a plausible degree of reasonableness and requiring at least an arguable connection between the law and the desired result, generally giving the government the benefit of the doubt.  The Court held that the fee payment “requirement” was completely contrary to law and therefore had no relation to a valid state objective. What is usually a higher bar for other plaintiffs seems to have been lowered for these plaintiffs. But if you need consistency in your life, don’t practice law.

             The Court also found that the plaintiffs were required to pay higher fees than several other citizens, and that when the APSFO was repealed the plaintiffs were singled out and required to continue paying the fees. When there is no rational basis for disparate treatment between citizens, this is called “unequal treatment.”

             When somebody’s constitutional rights are violated “under color of law,” 42 United States Code §1988 allows attorney’s fees to the prevailing plaintiff.  In this case, all $368,000 worth.

             Can the Case Be Appealed?

             Yes.  Because there was a dissenting opinion, the loser (Cary) has an automatic right of appeal to the North Carolina Supreme Court.  However, the dissent was on technical grounds related to the right of appeal.  If appeal is taken, I’ll explain the subtleties of appeal and reduction of issues at that time.

             What is the “Take Away” Point?

             For “bottom line” understanding, don’t try imposing impact fees unless your town or county has specific authorization from the General Assembly.  Even the best lawyers can’t help you then, and Cary hired some outstanding lawyers who did an outstanding job.  You can consider the adequacy of roads and water/sewer infrastructure and schools to serve a development during the approval process, short of requiring impact fees. 

 In the Meantime . . . ?

        My firm regularly represents both the private sector and local governments. Those of us in this area of practice don’t for a minute think that Cary’s huge portion of humble pie will prevent it from continuing to be Cary.  After all, name another town in North Carolina that would find it to be a zoning ordinance violation when a man with his business logo painted on the side of his pickup parks in his own driveway in a residential district when he comes home each day.  Even most HOAs are more reasonable than that.

            [To read previous blog posts, continue to scroll down or click on a category of interest in the right hand column.  To be alerted when a new post is published, simply click the “sign me up!” button above.  If you learned something, please forward this link to others who also might benefit.]

I recently began a series of interviews of individuals involved in land use and government, using their experiences as windows into the evolving world of land planning and economic development.  Today’s conversation is with Alan Weidt, owner of Carolina Commercial Realty, who works throughout the Triad region, focusing on restaurants, retail, furniture showrooms and some office and industrial buildings.  He has represented such companies as Lowe’s, Belk and Dillards and he recently handled the sale of Greensboro’s Carolina Circle Mall.

Outside of real estate, Alan has been a restaurant reviewer for In the Spotlight and In the Carolinas magazines.  I recently ran into him at a small-venue concert by bluegrass impresario, Mark O’Connor, and continue today the conversation that began at the concert’s intermission.

How did you get into commercial real estate?

About 26 years ago, I was ready for a career change from being an Ophthalmic Technician.  I interviewed my patients as to what they did as well as what they liked and didn’t like about their careers.  Three of the people I questioned were involved in commercial real estate. They all were very happy in their careers and we were all compatible in terms of demeanor, style and personality.  I made the plunge then and never looked back.

Tell me about the boom years of the early to mid 2000s. What were they like from your perspective?

The good times were very good.  We were enjoying easy financing of projects and had confidence to undertake deals that none of us would touch today.  It seemed as if we didn’t look back to previous downturns and didn’t look forward to the inevitable next wave of financial difficulties. It has been said: “Ignorance is bliss.”

Give me an example of what you called “easy financing.”

Three years ago, I bought a building on spec, needing rehab, zone change and leasing.  I received money to purchase and rehab the property, walking out of the closing with cash.

Was there a single event or observation that told you a market collapse might be around the corner?

My biggest concern then was banks giving out NINJA (No Income, No Job, no Assets) loans to unqualified home buyers who amounted to no more than renters.  With “no skin in the game” they could and did walk at any time. The 95, 100, and even 115% loans seemed absurd to me, not to mention unsustainable.

What was the first sign you observed that the real estate world as you knew it was changing?

It was pretty obvious, business hit a wall.  Everything pretty much stopped dead. The banks stopped lending on most commercial projects.  When the banks did lend, the down payments were elevated to a point where much fewer deals could be done. Housing dried up, businesses contracted and we, in the real estate business, were searching for opportunities.  There was nowhere to go geographically. The problem was and is pandemic.

What has to happen before commercial property listings and sales return to normal?

Our entire economy is tied to employment. It is a vicious circle: no jobs, no money, can’t buy things, things aren’t produced, employees aren’t needed, therefore no jobs… round and round we go.  What breaks this cycle? I don’t know.  I hear lots of complaining and finger-pointing, but I’m not hearing solutions from anyone.  U.S. exports are down as well.  We are not the manufacturing entity that we once were. We’ve out-sourced much of that.  The rest of the world is also in a financial “hurt locker”, therefore their buying power is compromised.

Have you seen any signs that the economy is recovering?

In the commercial real estate business, I have seen a flurry of activity lately.

Whether it’s a “bump” or a trend, only time will tell. Financing remains a problem.

Finally, does your crystal ball tell you when we should emerge from the Great Recession and commercial real estate sales and development will return to some level of normalcy?

No idea. Most “experts” are saying within 2 years. How are we going to get back?  What is going to change?  How will employment improve? I don’t know.  Most just blindly believe that things will get better because they have before and that we can’t survive indefinitely as things are now.  As bleak as my answer is, I think we are indeed crawling our way out as we speak.  How or why?  Because that is what America does.

            Last week I got an email from an attorney in Hoke County. She had heard that I possessed some sort of definition of quasi-judicial proceedings written by Dr. Seuss and wondered if I could forward it.  [Side Bar: I really do know where most of our counties are, and I’ve been through or practiced in most of them, but I admit that I had to check my official North Carolina State Transportation Map (2007 version) to confirm.  End side bar.] 

             Rumors . . .  I actually don’t have such a creature, but I know how the rumor got started.

             I did a quasi-humorous Continuing Legal Education seminar (CLE) for the N.C. Bar Association Zoning and Land Use Section in 2009.  The title was “A Seussian View of Quasi-Judicial Proceedings.”  I did a reprise of the same CLE at last February’s “Festival of Legal Learning” sponsored by the UNC School of Law.  The CLE was serious, but it was sprinkled with quotes by and references to Dr. Seuss characters and books. Actually . . . it was quite fun. [Second Side Bar:  I noticed many weeks before the UNC seminar that my presentation had some how been dropped from their agenda.  Not so, I was told.  It’s just that it was one of the first sessions to become “sold out” with early registrants, even as an 8:00 a.m. seminar.  Thank you Dr. Seuss!  End side bar.]

             I kicked off each seminar with a two sentence description of quasi-judicial proceedings that extended over six power point slides.  Think about that. Six slides. Two sentences.   The run-on appositives and dependent clauses, coupled with a clearly confusing lexography, illustrated how thoroughly mind-numbing quasi-judicial concepts and procedures could be, largely because we employed similar terms that rhymed but didn’t match and definitions that morphed the moment you crossed the county line. 

             I pity the planner who has to guide his or her board and the governmental attorney who has to wade through this morass to explain the inexplicable.

             Here’s what my legal colleague was seeking, and I’m pleased to quote it here, in full.

             “Conditional and special use permits are issued for uses otherwise allowed if certain standards are proven by evidence before the board, with conditional use and special use permits being the same thing, except in those circumstances when one jurisdiction issues both special and conditional use permits depending upon the land use requested, and except, of course, in those jurisdictions where all rezonings are done by conditional use zoning, which is just another form of special use permitting except in those cases when a city or county actually engages in legislative conditional district zoning (not to be confused with quasi-judicial conditional use zoning) which is distinguishable from those cities and counties that still call their process conditional use zoning and that issue a conditional use permit yet have nonetheless officially adopted legislative procedures (as opposed to other cities and towns which never adopted those legislative procedures but do conditional use zoning in a legislative format anyway because that’s how it has always been done there, even though you are still held to quasi-judicial standards when the permit’s issuance or denial is litigated), none of which is to be confused with special exceptions, which are issued by a Board of Adjustment and which refer to variances and not special uses, or to be confused with special district rezonings which are legislative approvals of site specific plans (although site specific plans are approved quasi-judicially in some cities and counties), unlike some jurisdictions that just adopt written conditions at the zoning stage and engage in site plan approval at a later stage where the process is administrative, which is a different process than that used in jurisdictions that make subjective findings in their staff level subdivision reviews, and which is different than jurisdictions that make subjective findings in subdivision review at the board level, which is quasi-judicial as well, even though many jurisdictions ignore those cumbersome procedures.  All of the above is easy to distinguish from variances and administrative appeals which, by law, go to the Board of Adjustment where the required standards are mandated at the state, not local, level and only ignored at the local level on arbitrary and whimsical bases depending upon local custom and whether money was budgeted to provide for monthly board legal representation.”

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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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            Five years ago I was a guest lecturer at UNC-Chapel Hill.  My anthro-laden topic was “territoriality” in the land use context.  This past month, researchers in Uganda’s Kibale National Park published a paper stating “Tom Terrell was right.”  Well . . . not in those specific terms, but close enough for me to exclaim “See!?!”

             My thesis, broadly stated, was that humans are genetically wired to be territorial, and that this helps to explain why, among other things, neighbors in the first subdivision in the area will turn out with torches and pitchforks to stop additional subdivisions in their area or along what used to be their former country road.

             The first claim-staking settlers have already established that they had no regard for the traffic they were adding to a country road or the wildlife they were displacing or the urbanizing transformation they were bringing to a rural area.  At the same time, they will appeal to their local government to recognize that those are the very problems that the second subdivision would create and ask that its approval be withheld. On the surface, there is no logic to this construct, yet anyone with much experience in local government has seen variations of this pattern many times.

             The researchers in Uganda followed a troop of chimpanzees for ten years, noting that every couple of weeks they would line up in single file, move to the edge of their territory, and invade the neighboring troop’s land.  Over ten years they increased the size of their territory by 22%, adding more fruit trees to their food stocks and enabling females to reproduce faster. It was hypothesized that both humans and chimps have a genetic predisposition to protect and expand their territories for essentially the same reasons. 

             The analogy between a housing development and chimpanzee territorial warfare is rough, but the connection is there to see.  As humans, we are territorial in many ways.  It’s part of our psyche. But when we attend public hearings to oppose others expanding (invading) our turf, it’s hard to say with a straight face, “This is our turf and we got here first and staked our claim.”  So we talk about traffic and property values and loss of rural character and wildlife – all the problems we ourselves created. And we do it with a straight face.

            Economists speaking to national media tend to translate our evolving economic situation in macro terms using national data and statistics when the best views of the nation’s economy are seen at street level.  I had a good street level view this past week when I traveled to Savannah to speak to the annual meeting of the North Carolina Aggregates Association – a trade group representing the mining industry – about changes in laws affecting land use.

             Speaking in very general terms, “aggregate” is crushed stone. It is widely used for a variety of construction purposes, including railroad beds, residential home foundations, retaining walls, French drains, and roads.  Because of its many uses, its demand is an accurate barometer of the nation’s economic strength.

             For a couple of years now companies that mine and supply aggregate have been walking with a limp.  As commercial and residential construction have dried on the vine and government-financed road construction has been delayed, fewer and fewer truck loads of aggregate have been exiting our state’s and nation’s quarries.  In a predictable ripple effect, companies that supply blasting material and equipment for extraction have slowed their production and sales.

             If you like to separate the world into “good guys” and “bad guys,” these are the good guys who did nothing to create the mess we’re in but who, like many other industries, are left to sweep up the pieces.

             Although I’ve represented several mining companies over the past 25 years and could probably draw a portrait already, two days of meetings and receptions and Savannah-style dinners would leave any keen observer with several impressions.  This is not a group marked by flash or arrogance.  You get the clear impression that these are folks who get up early, work until the job is done, use Saturday for family or fishing or golf and who are in church the next day.  If this was a group that gathered to party, I never saw it.  They came for fellowship, friendship and business.

             I asked several of the attendees about their business, and I heard several honest answers.  But I never heard a complaint of being a victim. If we’re patient, things will get better.  And when we all see more trucks leaving the local quarry, that will be a good thing.

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            A few days ago I commented upon North Carolina’s woefully inadequate protest petition statute and how the Town of Jamestown had to figure out whether protest petitions were valid (or not).  I received several replies, some offering further commentary and others with questions.

             In response to one of the comments I offered this reply: “I’m still a strict constructionist on this one.  Deciding an issue by majority vote is so integral to our democratic processes that placing the power to change the entire model in the hands of (often) one single person is something that should only be done when the statutory threshold, as clearly written, on clear facts, has clearly been met.  To view this as “the” neighbor versus “the” developer is myopic.  It’s “the” neighbor with unilateral power to alter the manner in which duly elected officials can transact the public’s business.”

             I stand by that.  When we start toying with the structural foundations of our democratic institutions, allowing a single individual to usurp the authority that thousand of citizens placed into the hands of their elected officials at the ballot box, the threshold for allowing that usurpation should be high and it should be exactingly clear.

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