New Law Modernizes Preaudit and Disbursement Processes–Part II

Effective October 1, 2015, local governments, public authorities, and school units are subject to new preaudit and disbursement processes. In S.L. 2015-246, the legislature modified G.S. 159-28 (applicable to local governments and public authorities) and G.S. 115C-441 (applicable to school units) to address common issues faced by local units in implementing the preaudit and disbursement requirements, particularly with respect to electronic transactions. (The changes do not apply to ABC Boards, which will continue to be subject to the existing preaudit and disbursement requirements under G.S. 18B-702.)

This post summarizes the changes to the disbursement process. Click here for a discussion of the new preaudit provisions. Read more »

Richmond County Board of Education v. Cowell: Clear Proceeds of Improper Equipment Offense Surcharge Belongs to Public Schools

As part of the Justice Reinvestment Act of 2011, the legislature enacted G.S. 7A-304(a)(4b), which assesses a $50.00 surcharge on any individual convicted of an improper equipment offense. Improper equipment offenses are generally defined in G.S. Ch. 20, Art. 3, Part 9, and include operating a vehicle without properly functioning equipment (such as a steering mechanism, speedometer, brakes, horn, directional signal, windows, windshield wipers, exhaust system, emission control device, tires, etc.). The surcharge is assessed in addition to any other penalty or cost authorized by law for conviction of the offense. The proceeds are remitted to a state fund (State Confinement Fund) and used to pay a portion of the cost of housing certain misdemeanants in county jails. 

The North Carolina Court of Appeals recently held that the use of the proceeds for this purpose violates the North Carolina Constitution. The court determined that the $50.00 surcharge “falls within the ambit of Article IX, Section 7(a)” of the Constitution and, therefore, the clear proceeds generated from the surcharge must be used to fund education rather than be contributed to the State Confinement Fund.  Read more »

Cash Grants for Real Estate Developers without Competition for Jobs—A Constitutional Quandary

A local real estate developer, Al Czervik, proposes to construct a mixed-use development with residential, office, and retail space. The city council likes the development plan because it is consistent with the council’s vision for the area. Czervik, seeing incentives being offered to convince companies to locate in North Carolina rather than other states, misses the significance of the competition element of those incentives and thinks his development, too, should receive incentives. He requests a $1 million cash grant ($100,000 per year for 10 years) from the city to “make the project work.” Czervik is unwilling to promise jobs, of course—because it is the tenants who will provide jobs, not his development—but he is confident that tenants with jobs will locate in the development and therefore he seeks a subsidy nonetheless. Czervik’s request gets the attention of the city attorney, who is well aware that this request rests on very shaky legal ground (as explained in this blog post and this law review article). How might the city attorney frame the legal issues for city council members, who are initially receptive to Czervik’s request? Read more »

New Exclusions for Residential and Commercial Real Property Improvements

In my last post I discussed S.L. 2015-204, which creates new authority for counties to waive interest on old registered motor vehicle taxes.  Today I analyze the second major property tax law passed this session, S.L. 2015-223, which is much more likely than S.L. 2015-204 to have a substantial impact on local government finances.

S.L. 2015-223 creates new exclusions for improvements to real property being held for sale.  For years home builders have been pushing to exempt their real property inventory from property taxes in the same fashion that personal property inventory held by traditional merchants and manufacturers is exempt under G.S. 105-275(32a), (33) and (34).

Home builders got their wish, sort of, for a few years.  In 2010 the General Assembly created a deferral for taxes attributable to the construction of new, unsold residential homes.  That deferral “sunsetted” (in other words, disappeared) as of 2013.

But now it’s back and stronger than ever.  Instead of deferring taxes, S.L. 2015-223 excludes them entirely. And the new law covers non-structural improvements and commercial properties, neither of which fell within the scope of the old deferral.

Here’s a summary of the new law:

Read more »

Annexation Agreements for Economic Development – Not an Option

The City of Promiseland has been in discussions with a developer about a property just outside the city that is perfect for a small business center. The city is willing to extend water and sewer services to the property, and according to the city’s policy, will require the developer to petition for annexation. The property is subject to county zoning (currently, agricultural and low density residential uses), so the developer will expect the city to annex the property and rezone it for commercial use. The developer also wants to make sure the annexation takes places as soon as possible in order to take advantage of the inside rates for water and sewer, and the other city services that will be necessary for the project to be marketable. The lawyers are ready to put all of these conditions into a development agreement along these lines: City agrees to annex the property, rezone the property and extend water and sewer services and other services under existing city rates and policies; developer agrees to petition for annexation, apply for rezoning, and construct the project according to the parameters set out in the agreement. There’s just one problem: This agreement is not legally enforceable in North Carolina because the city’s promises to take legislative action are not binding on the board that made them or on any future boards.

Read more »

Subdivision Performance Guarantees: Legislative Changes

Piedmont County is in a bind. Several years back county officials approved a 250-home subdivision. The county approved the final plat before the developer completed all of the necessary improvements. After a few years and some lot sales, the economy soured and the development company went bankrupt. Some neighborhood roads were graded but never paved. The roads that were paved never reached a density to be accepted by NCDOT, and they are crumbling now. A private park was constructed but the homeowners association never collected dues sufficient to maintain the association-owned amenities. Now the park is overgrown and the playground is safety hazard.

What’s a county to do? Piedmont County wants to put rules in place to avoid this happening again. The county wants to: (1) ensure completion of promised infrastructure, (2) make sure roads are maintained in advance of DOT acceptance, and (3) have funds to guarantee maintenance of private improvements.

New legislation affecting the city and county statutes for subdivision regulation has refined and narrowed the authority for subdivision performance guarantees, calling into question some of things Piedmont County wants to do. The law applies to subdivision performance guarantees approved or extended on or after October 1, 2015. This blog considers these new limitations on performance guarantees. Read more »

New Limitation on Animal Control Ordinances

Recently enacted legislation restricts local government authority to adopt ordinances that “regulate standards of care for farm animals.” S.L. 2015-192. This change has implications for existing animal-related ordinances, specifically those related to animal cruelty and exotic animals. Local governments will want to review their animal ordinances and enforcement practices to ensure their programs comply with this new limitation. This post summarizes the new law and explores how this change intersects with existing state and local animal laws in these two areas.  Read more »