Demolition and Code Enforcement Involving Historic Districts and Landmarks

You know the old Jones house down on 4th Street in the town’s historic district, don’t you? Well, it’s a real shame that it is in such bad shape. I remember when that house was right at the center of a very charming neighborhood. Now? Well, I hear that there is a realty company that now owns it. Na, I don’t think they have much interest in restoring it. They’d probably love to tear it down and put up something new. That lot is probably worth something. Can the town stop them, you say? Well, what do you think?

I think that, as usual, the answer will depend on the circumstances. But the answer should not be as complicated and involved as it is, particularly since such situations occur over and over in this state. Read more »

Occupancy Tax 101

Occupancy taxes on hotels and other rental accommodations are growing increasingly common in North Carolina.  The General Assembly has granted special authorization to levy occupancy taxes to roughly 200 counties and municipalities.  This blog post provides a quick overview of how these somewhat unique taxes work.

Local Government Authorization

There is no general authorization for local occupancy taxes in North Carolina. The only local governments who may levy these taxes are those that have received authorization from the General Assembly via local acts.

The general administrative occupancy tax administrative provisions (G.S. 153A-155 for counties and G.S. 160A-215 for cities) list some but not all of those specially authorized local governments.  My friends on the General Assembly staff maintain this more complete list.

Local governments that are not on this list but that are interested in levying occupancy taxes would need to work with their local state legislators to introduce a local bill granting that authority.

Local Levy Procedure

Once it obtains occupancy tax authorization, a local government must pass a resolution formally levying the tax.  The general administrative provisions for occupancy taxes require a public hearing on the occupancy tax resolution.

Just like privilege license taxes, food and beverage taxes and all other local taxes other than property taxes, occupancy taxes need not be levied each year in the budget ordinance.  Once an occupancy tax is adopted it remains in place until repealed.  See G.S. 153A-148 and G.S. 160A-208.

The local governing board (meaning the city council or the board of county commissioners) sets the rate when it first levies the tax. That rate remains in effect unless it is changed or repealed by the local governing board or by the General Assembly.

Rates

All local occupancy tax rates are capped, most between 3% and 6%. Brunswick County appears to be subject to the lowest cap, with its rate limited to 1%.  The combined Mecklenburg County/Charlotte occupancy tax rate cap of 8% is the highest in the state and is the only one above 6%.  (The extra 2% was authorized in 2005 to help finance the NASCAR Hall of Fame.)  Lots of local governments started with 3% rate limits and later obtained additional authorization to raise their rates, usually to 6%.

Use of Proceeds

For almost every jurisdiction, local occupancy tax proceeds are not general fund revenue.  Two counties, Cleveland and Hyde, may use their occupancy tax revenue for any lawful public purpose—but even then Hyde County must spend a certain percentage to benefit its mainland portions.

The other 197 or so local governments that benefit from occupancy tax proceeds face restrictions on their use.  Nearly all of these restrictions involve tourism.  Other permissible uses for occupancy tax revenue common across the state include beach nourishment and the construction or operation of convention and performing arts centers.

Beginning with the adoption of the general occupancy tax administrative provisions in 1997, local bills authorizing these taxes have (almost always) required the creation of tourism development authorities (“TDAs”) for the taxing units.  The local TDA, rather than the local governing board, is charged with deciding how to spend occupancy tax revenue to benefit tourism in the area.  Similar requirements have been applied in recent years to local governments that received their initial authority for occupancy taxes prior to 1997 and later sought to raise their maximum tax rates.

The local act that authorized Jacksonville’s occupancy tax (S.L. 2009-429) provides a good example of the expenditure restrictions that have become standard.  This bill reads in part:

The City of Jacksonville shall, on a quarterly basis, remit the net proceeds of the occupancy tax to the Jacksonville Tourism Development Authority. The Authority shall use at least two-thirds of the funds remitted to it under this subsection to promote travel and tourism in Jacksonville and shall use the remainder for tourism-related expenditures. . . .

Definitions. – The following definitions apply in this act:

(1)        Net proceeds. – Gross proceeds less the cost to the city of administering and collecting the tax, as determined by the finance officer, not to exceed three percent (3%) of the first five hundred thousand dollars ($500,000) of gross proceeds collected each year and one percent (1%) of the remaining gross proceeds collected each year.

(2)        Promote travel and tourism. – To advertise or market an area or activity, publish and distribute pamphlets and other materials, conduct market research, or engage in similar promotional activities that attract tourists or business travelers to the area. The term includes administrative expenses incurred in engaging in the listed activities.

(3)        Tourism-related expenditures. – Expenditures that, in the judgment of the Jacksonville Tourism Development Authority, are designed to increase the use of lodging facilities, meeting facilities, or convention facilities in the city or to attract tourists or business travelers to the city. The term includes tourism-related capital expenditures.

Taxable Accommodations

Under G.S. 153A-155 and G.S. 160A-215, local occupancy taxes apply to the same taxpayers that are subject to state sales taxes on accommodations mandated by G.S. 105-164.4(a)(3).  That statute in turn refers to G.S. 105-164.4F, which defines the term “accommodation” as “a hotel room, a motel room, a residence, a cottage, or a similar lodging facility for occupancy by an individual.” This broad definition includes any type of structure that could be used as for lodging, including house boats, tree houses, or even hobbit houses.

The only type of accommodation rentals exempted from occupancy taxes are:

Do Mayors Have a Duty to Vote?

North Carolina holds its local government board members’ feet to the fire when it comes to voting. City council members and county commissioners have a legal duty to vote unless they are excused for any of several grounds allowed under the statutes. The statutes do not authorize board members to abstain. In cities, if a member abstains he or she is recorded as voting in the affirmative.

What about mayors? Does a mayor who votes only in the case of a tie have a duty to vote?  If she doesn’t vote does it count as a yes? What if the mayor has a conflict of interest? May she be prohibited from breaking a tie? Read more »

Special Assessments for Economic Development Projects

Tonald Drump, a national real estate tycoon, is interested in developing an area in Frugal Village, NC. His proposal includes mixed-use residential and commercial development, located just outside the village’s downtown. Drump is an experienced developer and knows that adequate public infrastructure is essential to a successful development project. In particular, he wants to ensure that his properties will be connected to the village’s water and sewer systems. He also wants the streets within the development to be owned and maintained by the village. Finally, experience tells Drump that public sidewalks, street lights, and nearby parkland will enhance the marketability of his properties.

In the past, Drump has constructed the necessary infrastructure to support his development project and then deeded the infrastructure to the local government. Drump currently is a bit strapped for cash, though. He is trying to capitalize on the recent housing resurgence and is managing numerous development projects around the country. He lacks the financial capital to construct the infrastructure projects to support his development in Frugal Village. Drump approaches village officials to see if they are willing to complete (and fund) the public infrastructure projects.  Village board members are excited about Drump’s proposed development. They believe it is the key to the village’s revitalization and future prosperity. The board members, however, live in Frugal Village for a reason. They are very reticent to spend the public’s funds. They are particularly concerned about using general fund dollars to finance projects that directly benefit only a small portion of private property owners within the unit. Ideally, both Drump and village officials would like the public infrastructure projects to be completed without either party having to pay for them. Is that possible? Read more »

Salaried Employees and the FLSA

Susan is a salaried employee and does not receive overtime pay no matter how many hours she works in a given workweek. Robert is a salaried employee and is paid overtime whenever he works more than 40 hours in a week. Both are paid in accordance with the requirements of the federal Fair Labor Standards Act (FLSA).

Can that be right? Salaried employees do not have to be paid overtime, do they? The answer to these questions requires an understanding of the difference between “salaried” and “exempt.” Read more »

Tort Liability for Negligent Housing Inspection Resulting in Injury?

Like other local governments, the Town of Hapless has adopted a minimum housing code pursuant to G.S. 160A-443 (for more on minimum housing codes, see Tyler Mulligan’s book here).  In March of this year the town’s inspection department received numerous complaints about the condition of four rental houses owned by Deathtrap Properties, LLC.  In response to the complaints, Homer Simpson, the department’s overworked and absentminded housing inspector, conducted a preliminary investigation which revealed significant code violations at each house.  It was not until several weeks later, however, that Simpson sat down to prepare the written charges and hearing notice G.S 160A-443 required him to serve on Deathtrap before taking further action.  By then Simpson remembered only three of the four houses, and nothing in his incomplete and practically illegible notes reminded him of his visit to the fourth.  Accordingly, just three houses were referenced in the charges served on Deathtrap and at the hearing conducted by Simpson.  Following the hearing, Simpson found the three houses unfit for human habitation and ordered Deathtrap to bring them into compliance with the housing code within 90 days.  Deathtrap completed the necessary repairs to the three houses in record time but made no effort to correct the fourth house’s deficiencies.

Bill and Barbara Gripe leased the fourth house from Deathtrap.  Shortly after Deathtrap completed the repairs ordered by Simpson, Mr. Gripe fell through a rotten spot in the fourth house’s kitchen floor, breaking one of his legs and seriously injuring his back.  Deathtrap subsequently went out of business.  The Gripes have now filed a lawsuit in superior court naming the town and Simpson as defendants.  The lawsuit seeks monetary compensation from the town and from Simpson personally for Mr. Gripe’s pain and suffering and for medical expenses and lost wages.  It alleges that Mr. Gripe was injured due to Simpson’s negligent handling of the complaints against Deathtrap and that the town is vicariously liable for the negligence of its employee.

Are the town and Simpson liable for the harm to the Gripes? Read more »

Board Members at Candidate Forums: Does the Open Meetings Law Apply?

Three members of a five-member city council are up for reelection. They attend multiple candidate events, including candidate forums. The Chamber of Commerce and League of Women Voters sponsor forums for candidates that are open to the public. A neighborhood and other private groups or organizations invite candidates to forums open only to their members. If all three incumbent board members attend and participate in a candidate forum, does the open meetings law require it to be open to the public? What if the three candidates meet privately to discuss running as a slate, and agree upon a platform? Would this violate the open meetings law?

No North Carolina cases address political activities of sitting board members. Cases from other states suggest that the open meetings law would not apply to political gatherings that do not involve the transaction of public business. Read more »