Lanvale Props., LLC v. Cnty. of Cabarrus

• Decision Date: 24 August 2012
• Docket Number: No. 438PA10.,438PA10.
• Citation: 731 S.E.2d 800
• Parties: LANVALE PROPERTIES, LLC and Cabarrus County Building Industry Association v. COUNTY OF CABARRUS and City of Locust.
• Court: North Carolina Supreme Court

731 S.E.2d 800

LANVALE PROPERTIES, LLC and Cabarrus County Building Industry Association

v.COUNTY OF CABARRUS and City of Locust.

No. 438PA10.

Supreme Court of North Carolina.

Aug. 24, 2012.

On discretionary review pursuant to N.C.G.S. § 7A–31 of a unanimous, unpublished decision of the Court of Appeals, 206 N.C.App. 761, 699 S.E.2d 139 (2010), affirming orders entered on 19 August 2008 by Judge Mark E. Klass and on 17 August 2009 by Judge W. David Lee, both in Superior Court, Cabarrus County. Heard in the Supreme Court on 17 October 2011.

Ferguson, Scarbrough, Hayes, Hawkins & DeMay, P.A., Concord, by James R. DeMay and James E. Scarbrough, for plaintiff-appellee Lanvale Properties, LLC.

Brough Law Firm, by G. Nicholas Herman, Chapel Hill, and Richard M. Koch, for defendant-appellant County of Cabarrus.

Hartsell & Williams, P.A., Concord, by Christy E. Wilhelm and Fletcher L. Hartsell, Jr., for defendant-appellee City of Locust.

J. Michael Carpenter, General Counsel, and Burns, Day & Presnell, P.A., Raleigh, by Daniel C. Higgins and James J. Mills, for North Carolina Home Builders Association, amicus curiae.

JACKSON, Justice.

In this appeal we consider whether defendant Cabarrus County (“the County”) had the authority pursuant to its general zoning powers or, in the alternative, a 2004 law enacted by the General Assembly, to adopt an adequate public facilities ordinance (“APFO”) that effectively conditions approval of new residential construction projects on developers paying a fee to subsidize new school construction to prevent overcrowding in the County's public schools. Because we hold that the County lacked this authority, we affirm the Court of Appeals.

I

Concerned about the effect of explosive population growth on the County's ability to provide adequate public facilities for its citizens, the Cabarrus County Board of Commissioners (“the Board”) adopted an initial APFO in January 1998. In that form the APFO, which was enacted as an amendment to the County's subdivision ordinance, conditioned County approval of new residential developments on the existence of sufficient public facilities to support the developments. In concise language the ordinance stated: “To ensure public health, safety and welfare the [Cabarrus County] Planning and Zoning Commission shall review each subdivision, multi-family development, and mobile home park to determine if public facilities are adequate to serve that development.” Cabarrus County, N.C., Subdivision Ordinance ch. 4. § 17 (Jan.1998). Pursuant to the ordinance, the County's Planning and Zoning Commission (“the Commission”) reviewed all proposed residential developments, except those located within the territorial jurisdictions of Concord and Kannapolis, ¹ to determine if the new homes would exacerbate overcrowding in the County's two public schools systems: the Cabarrus County Schools and Kannapolis City Schools.

The APFO first was applied when Westbrook Highland Creek, LLC (“Westbrook”) sought preliminary approval from the Commission for a single family development of approximately 800 units located in an unincorporated area of the County. The Commission denied Westbrook's application based upon insufficient public school capacity. Westbrook appealed to the Board, which ultimately approved the development after Westbrook agreed to place $400,000.00—$500.00 per unit—into an escrow account for the purchase of property for a new high school.

Over the next five years, the Commission denied preliminary approval applications for a number of proposed developments based upon insufficient public school capacity. However, as with the Westbrook development, the Board ultimately approved these developments on appeal once developers executed consent agreements designed to mitigate the impact of their developments on public school capacity. Developers typically agreed to pay an adequate public facilities fee of $500.00 per residential unit; however, some developers agreed to make an in-kind donation of land for future school sites or construct improvements to existing school facilities.

Following the APFO's enactment, county staff began monitoring the number of new residential developments being built in Concord and Kannapolis because these municipalities were not cooperating fully with the County in enforcing the APFO. In some instances, these cities voluntarily annexed residentialdevelopments, which precluded the County from collecting adequate public facilities fees. Jonathan Marshall, Director of the Commerce Department of Cabarrus County, stated in his affidavit in support of the County's motion for summary judgment that this practice frustrated the Board because approximately seventy percent of new residential developments in the County were located within municipal jurisdictions.

In part to address these frustrations, the Board adopted a resolution on 25 August 2003 expressing its desire that all Cabarrus County municipalities should cooperate with the County in enforcing the APFO. Cabarrus County, N.C., Res. No.2003–26 (Aug. 25, 2003). The resolution also increased the minimum value of the adequate public facilities fee from $500.00 per residential unit to not less than $1,008.00 per unit. Id. Further, the resolution defined the term “school adequacy” to mean “estimated enrollment not exceeding 110% of capacity as determined by the Kannapolis and Cabarrus School Systems.” Id.

On 30 June 2004, the General Assembly enacted Chapter 39 of the 2004 North Carolina Session Laws (“Session Law 2004–39” or “the session law”), which authorized the annexation of several properties in Cabarrus County. Section 5 of the session law attempted to clarify the authority of municipalities to enforce the APFO. Act of June 30, 2004, ch. 39, sec. 5, 2004 N.C. Sess. Laws 42, 47. About a month and a half later, during its 16 August 2004 meeting, the Board adopted a resolution linking the APFO to the session law. See Cabarrus County, N.C., Res. No.2004–30 (Aug. 16, 2004).

Over the next few months, the Board made several more revisions to the APFO. On 20 September 2004, the Board adopted a resolution that increased the value of the adequate public facilities fee from not less than $1,008.00 per residential unit to not less than $4,034.00 per single family unit and $1,331.00 per multifamily unit. Cabarrus County, N.C., Res. No.2004–37 (Sept. 20, 2004). The resolution also indexed the fee to reflect annual changes in the cost of public school construction. Id. During the Board's discussion concerning the resolution, several Board members stated that developers should be required to pay for the cost of constructing new public schools in the County. The sentiment among most commissioners was “whoever creates the problems pays the bills.” One commissioner expressed the view that “[t]he people using [subdivision developments] should pay for the school[,] not 93 year-olds. If [developers] are going to build $150–$300 thousand dollar house [sic] they should pay for the schools.” The Board's vice chair voted against the resolution, citing concerns about “the legality of the [APFO's] advancement requirement” and the potential for litigation.

In August 2005 the Board began considering the possibility of making further changes to the APFO. Almost two years later, on 20 August 2007, the Board adopted the APFO in its current form. Cabarrus County, N.C., Zoning Ordinance No.2007–11 (Aug. 20, 2007). Notably, the revised APFO was added as a new chapter to the County's zoning ordinance. Id. As a result, the revised APFO superseded the version that appeared in the County's subdivision ordinance. The Board also attempted to tie the new version of the APFO to the session law, stating that “Per Session Law 2004–39, H.B. 224, Cabarrus County may review proposed developments within an incorporated area of the County for compliance with the Level of Service standards for schools.” Cabarrus County, N.C., Zoning Ordinance ch. 15, § 9(1)(b) (Aug. 20, 2007). Less than a month later, the Board amended its subdivision ordinance by inserting a cross-reference to the newly revised APFO. Cabarrus County, N.C. Subdivision Ordinance No.2007–12 (Sept. 17, 2007).

The current APFO is more sophisticated than the earlier version. Covering over twenty pages, the ordinance goes into great detail about the process for review of the County's school capacity. The current APFO includes thirty-four definitions, see Zoning Ordinance ch. 15, § 3, illustrates the ordinance's Reservation of Capacity Process with a flow chart, id. ch. 15, § 8, and describes the complex statistical formula used to calculate the estimated enrollment impact of a proposed development, id. ch. 15, §§ 9–11. In contrast, the prior version occupied only two paragraphs in the County's subdivision ordinance. See Cabarrus County, N.C., Subdivision Ordinance, ch. 4. § 17 (June 24, 2004).

Notwithstanding its complexity, the current APFO operates in much the same manner as the prior version; that is, it links residential development approval to the availability of space for students in the County's public school systems.² Pursuant to the ordinance, proposed residential developments, except those located in Concord, Kannapolis, and Locust, are reviewed to determine whether local elementary, middle, and high schools have sufficient student capacity to support the development. Zoning Ordinance ch. 15, § 7.

If there is sufficient unused student capacity to support a proposed development, the Board is required to approve the development without additional APFO conditions. Id. ch. 15, § 7(1). But if available student capacity is insufficient to support the development, the Board may either deny the developer's application or approve it subject to several “conditions that reduce or mitigate the impacts of the proposed development.” Id. ch. 15, § 7(2)–(3). These conditions include: (1) deferring approval of final plats, building permits, or certificates of occupancy...