Impact Fees (APFOs) – So, Is that Your Final Answer?
Apparently we have to wait a bit longer for a final answer to the state’s million dollar question: can schools be funded by assessing developers an “impact fee.”? The latest non-answer was recently published in the N.C. Supreme Court’s non-decision in the Cary-originated Amward Homes case.
I’ve covered this issue in numerous previous posts, including my first Amward Homes commentary in Can you Hear Me Now – Impact Fees are Not Allowed by Law, and my second Amward commentary in APFOs – They’re Back.
A short synopsis of the primary question raised by the Cary controversy (found in detail at the above links) is this: can planners and elected officials strong-arm developers into “offering” impact fees in order to get official blessings on new subdivisions, especially when nobody with integrity would claim with a straight face that the “offer” was anything more than a response to extortion?
A synopsis of the Court of Appeals answer (authored by Judge Robert Hunter from Greensboro) is this: NO.
What Happened to Amward on Appeal?
The Amward Homes decision in the Court of Appeals was unanimous, meaning all three judges agreed with the holding, although Judge Jackson added a further comment that she thought the appeal was “interlocutory,” or premature. When Court of Appeals decisions are unanimous, the only way to get your case before the N.C. Supreme Court is to petition for what is called “discretionary review.” And the high court’s discretion in 95% of its requests is not to touch the lower court decision.
But Amward was accepted for review, and the Supreme Court’s decision was limited to three sentences: “Justice Jackson took no part in the consideration or decision of this case. The remaining members of the Court are equally divided, with three members voting to reverse and three members voting to affirm the decision of the Court of Appeals. Accordingly, the decision of the Court of Appeals is left undisturbed and stands without precedential value.”
Confused? Let me Translate
Justice Jackson was a member of the Court of Appeals panel that decided Amward in 2010, but she was then elected to the state Supreme Court. It would be improper in many respects for her to hear on appeal a decision she rendered below.
Because the remaining justices were three for and three against, there weren’t enough votes to overturn or affirm the Court of Appeals decision. Consequently, it stands as written and is binding only on the parties before the court. However, it also “stands without precedential value.”
“Precedential value” is a slippery term. What it really means is that the developers’ victory and Cary’s loss (including Cary’s obligation to pay the developers’ attorneys fees is undisturbed. However, the decision is not “binding authority” on future courts in other but similar matters (that is, future courts may ignore it). Nonetheless, the reasoning in the opinion certainly can be used as “persuasive authority” which a court may consider.
Precedent versus persuasiveness. There’s a difference, but it’s sometimes thin.
Are There Any Tea Leaves for Future Decisions?
You bet.
As long as the N.C. Supreme Court maintains it current composition, future cases (I predict) will face a Court that disfavors impact fees by at least a 4-3 margin.
Justice Jackson not only sided with the developers in Amward Homes, but she authored the Union County impact fee case (Union Land Owners v. Union County) that struck down Union County’s attempt to impose an APFO. Based on past opinions, Justice Jackson has demonstrated a judicial philosophy that courts must keep a watchful eye on local governments seeking creative ways to use newfound powers to levy fees and taxes and to make sure those powers are properly exercised and not beyond clear statutory authority.
I like that.
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Doing a little research, I find that the majority of states have legislation that allows impact fees of some sort; also that Florida saw no change in development from no-impact-fee areas to those that impose fees. Why is this not a legitimate source of, for example, school funding, in North Carolina? Is the lobbying of the realtors’ association a strong factor?
When we say “impact fee” in North Carolina it doesn’t mean that it’s the same creature here as in Florida or Arizona or Kansas, even though the same term is used. For that reason alone it’s difficult to know whether comparisons state-to-state are true comparisons.
As to whether the fee is a “legitimate source,” North Carolina courts have limited their discussion to whether the fees are allowed by statute (e.g. legally legitimate).
As to whether they are “legitimate” as a matter of policy, I have cut and pasted below two paragraphs from my blog post concerning the Union County case, where developers clearly weren’t causing the demand for housing but were being treated as if they were (and then punished for it).
“Housing demand primarily is a function of two things: organic population growth (i.e. mom and dad have children) and jobs. Nobody from Ohio has ever come to North Carolina just because they especially liked one of our new subdivisions. But North Carolina is full of folks from Ohio and New York and Pennsylvania and West Virginia who came here looking for jobs.
“This raises an interesting irony. Some counties spend millions of dollars in incentives to lure new companies that will create jobs and expand the tax base so that infrastructure such as schools can be more easily paid for. But instead of using the added tax base to build more schools to meet the expanding population that came for the jobs, these same counties are tempted to restrict the ensuing population growth to protect existing school budgets.”
Having said that, I would add that I’m not opposed to developers being required to pay for entrance turn lanes or extension of water and sewer lines, all of which serve their subdivision and the demand for which was caused by the subdivision itself. But as to schools, I have trouble with new homeowners paying a fee or tax that a family moving into an existing home in the same school district does not have to pay.