Two New Property Tax Appeal Decisions: Jets and Churches

[UPDATE 9/29/15:  S.L. 2015-185 amended the religious exemption to exempt real property “under construction” if the property is owned by a religious organization and is intended to be used for religious purposes upon completion.  “Under construction” is defined to include property for which a building permit has been issued regardless of whether construction has actual begun.  The new law overrules the Court of Appeals decision discussed below.]

Property tax officials should take notice of two recent appellate decisions, one from the state Property Tax Commission in January and one from the state Court of Appeals in early June.  While neither decision creates entirely new law, they provide helpful guidance to assessors navigating the confusing area of property tax exemptions.

The PTC case, In re: Corporate Fleet Services LLC concerned whether a private jet held for sale but used occasionally by third parties can qualify for the inventory exemption in GS 105-275(34).  The Court of Appeals case, In re: Vienna Baptist Church, concerned whether a partially completed church building and the land on which it sits can qualify for the religious exemption in GS 105-287.3.  In a nutshell, the answers were yes for the jet and no for the church.  Here are the details for each case . . . Read more »

Transferring Money from an Enterprise Fund: Authority, Limitations, and Consequences

As local governments finalize their budgets, many governing boards are wrestling with difficult decisions over how to raise sufficient revenues to cover estimated expenses during the upcoming fiscal year. G.S. 159-8 requires a governing board to adopt a balanced budget ordinance, whereby estimated revenues plus appropriated fund balances equal appropriations. This balanced budget requirement applies to the general fund and to each of the unit’s enterprise funds. G.S. 159-13(b)(16). Governing boards are often reluctant to raise property tax rates to balance the general fund if there are any other available revenue sources. Units sometimes look to transfer excess revenues from an enterprise fund to the general fund in order to balance the latter. North Carolina local governments are authorized to make such transfers, but there are certain limitations and potential consequences of which local officials should be aware. This post defines what it means to “transfer” money from one fund to another and reviews the legal authority to make a transfer from an enterprise fund in North Carolina. It then discusses the potential negative effects of making such a transfer. Read more »

Removing Members of Appointed Boards

In the last election, a new majority was elected to the city council. They want to appoint new members to the board of adjustment and to the parks and recreation commission. It’s not that the current members aren’t doing a good job. It’s just that the new majority has in mind some folks who they think will do a better job. Can the council simply remove the current members and appoint new ones? The answer depends on whether they were appointed for a term, whether the term is established under state or local law, and whether the council has authority to abolish the board in question. Read on to learn about two key rules that apply to removing people from office.
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The Tax Foreclosure Decision

Tax collectors are obligated to “use all lawful means” to collect their local governments’ property taxes. G.S. 105-350(1).  This provision implicitly obligates local governments to use the foreclosure remedy when available and necessary.

Despite this legal obligation some local governments remain hesitant to use foreclosure. They might be worried about the administrative and financial aspects of the process or about the negative publicity that might arise if they wind up evicting residents from their homes.

Those concerns are understandable but outweighed by the harm caused by the government’s refusal to use what might the only effective remedy to collect certain taxes.  The property tax system becomes less equitable when some taxpayers are permitted to ignore their tax obligations with no negative consequences.  Collection rates and public confidence in the tax system are sure to drop as a result.

Taken together, the statutory guidance and the public policy interests lead to only one reasonable conclusion: local governments should at least consider the use of foreclosure on every property subject to a tax lien when other collection remedies fail.  That said, there are a few legitimate reasons—most of them financial—why a local government might choose not to foreclose on a particular property.

Here are a few questions for tax officials and their governing boards to ask as they consider moving forward with a foreclosure. Read more »

Keeping the Public Informed about Communicable Diseases

The last year has been a very active one for North Carolina public health workers who deal with communicable disease. The 2014-15 flu season was a bad one, with a total of 218 deaths reported by the time the season began to wind down in the spring. A majority of North Carolina counties had at least one pertussis (whooping cough) case in 2014, and the state’s total number of cases for the year was quite high at 782. The largest Ebola epidemic in history was well underway by last summer, and in the fall four cases were diagnosed in the United States. A large outbreak of measles associated with theme parks in California did not reach North Carolina but caused over 100 cases in seven states, and spread to Mexico and Canada as well.

Perhaps you read news stories about these or other communicable diseases. Perhaps you even wondered how information about particular cases or outbreaks could be made public. I’ve had quite a few questions along those lines in recent months—questions about when information may be released, when it may not, how much information can be made public, and why information is released in some cases but not others. Read more »

Subdivision Performance Guarantees: A Little More Clarity

In North Carolina, a developer can get final plat approval before he completes the required infrastructure—but only if the developer provides financial assurance to guarantee the infrastructure completion. North Carolina’s General Statutes allow cities and counties to permit these performance guarantees in conjunction with subdivision approvals.

Two fairly recent cases provide some additional clarity about the scope and enforcement of performance guarantees. The key issues from these cases include:

• Courts generally will enforce the terms of the performance guarantee and financial instruments.
• The benefits of a performance bond may be assigned from a county to a municipality.
• For enforcement, local governments may not be time-barred by the standard statute of limitations.

This blog will consider each of these topics as they are addressed in Developers Surety & Indemnity Co. v. City of Durham and The Town of Black Mountain v Lexon Insurance Company.

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Speeding: Local Ordinance Violation or State Law Infraction?

[Note:  This post originally appeared here on the North Carolina Criminal Law blog.]

Suppose a North Carolina city adopts an ordinance establishing a local speed limit of 25 miles per hour for all city streets that are not otherwise marked. Signs are posted on city streets reflecting the 25 mile per hour limit. Absent this ordinance, state law would provide for a speed limit of thirty-five miles per hour inside the municipal corporate limits. The city’s municipal code provides that violations of its provisions are not governed by G.S. 14-4, which otherwise would render the violation of a local ordinance regulating traffic an infraction. The municipal code also states that speeding on a city street is punishable by a civil penalty of $75 and requires that payment be made to the town hall. A local law enforcement officer stops a car that is traveling 40 miles per hour on a city street. May the officer issue a civil citation to the driver, requiring payment of the $75 penalty?  May the officer cite the driver for speeding in violation of state law, an infraction?  May the officer choose between these two methods of enforcement?

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