As I’ve discussed in an earlier post, records made or received in the transaction of public business are subject to public access under our broad public records law, unless an exception allows or requires the public agency to deny access. A broad exception, G.S. 132-1.4, allows (but does not require) law enforcement agencies to withhold records of criminal investigations and records of criminal intelligence information. Criminal investigation records include all records “compiled by public law enforcement agencies for the purpose of attempting to prevent or solve violations of the law, including information derived from witnesses, laboratory tests, surveillance, investigators, confidential informants, photographs, and measurements.” GS. 132-1.4(b)(1).

Although it might be possible to argue the point, it seems to me that mug shots meet the definition of “criminal investigation records.”  Arguments to the contrary are that the photograph is not obtained for the purpose of solving or preventing crimes – after all, at that point, a crime has already been committed and presumptively solved. Perhaps the photographs are “jail records” or “booking records” that document the results of law enforcement efforts, rather than constituting records of the efforts themselves. These are reasonable points, but upon review of the statute and case law, I don’t find them to be persuasive.

Law enforcement agencies use mug shots to solve crimes in many ways following the initial booking of a person who is alleged to have committed a crime. First of all, the person photographed has not yet been convicted. The law enforcement agency may still have to strengthen its case. Law enforcement agencies may also use the photographs to identify witnesses to or collaborators in the alleged crime. Mug shots may serve as a deterrent to future criminal activity by the suspect and others, and may be used to prevent or solve a future crime committed by the same person.

A review of the whole statute also suggests that mug shots are a type of record that is within the scope of the exception. Subsection (c) of the statute lists information that is subject to public access. This list creates an exception to the criminal records exception. Mug shots are not on the list of information that must be released to the public, but that list includes types of information that are similar to mug shots. Subsection (c)(2), for example, includes the name, sex, age, address, and employment of a person arrested, charged, or indicted. This information seems akin to a photograph in the sense that it simply documents information about the person. David Lawrence notes in his book on North Carolina’s Public Records law that “the listing of investigative material that is public also offers assistance in determining the kinds of records that are excluded from public access by the statute.” He also includes mug shots as an example of records that have been held to be law enforcement records under comparable statutes in other states. See, Lawrence, Public Records Law For North Carolina Local Governments, p. 199. Since mug shots are similar to things that are listed as law enforcement records, but are not on the list of such records that must be made public, I conclude that they are law enforcement records that are within the exception and need not be made public.

Cases decided under the federal Freedom of Information Act (FOIA) have consistently held that mug shots are law enforcement records. For example, in World Publishing Co. v. U.S. Dep’t of Justice, 672 F.3d 825 (10^th Cir. 2012), a federal appeals court held that booking photos of pretrial detainees fall within the section 7(C) exception in FOIA for “records or information compiled for law enforcement purposes.” In Times Picayune Publishing Corp. v. U.S. Dep’t of Justice, 37 F.Supp.2d 472, (E.D. La. 1999), a federal district court held that the booking photographs of a well-known businessman were law enforcement records even though the suspect had pleaded guilty and been sentenced. The processing of individuals charged with federal crimes, the court held, is clearly a law enforcement function.

I reviewed the legal issue of whether mug shots may be withheld from public access, but I haven’t studied the policy issue of whether they should be withheld. The North Carolina Justice Center makes an argument against their release here. In doing research on the legal issue, I noted that there is significant case law about the admissibility of mug shots in criminal trials, which reflects their potential to be prejudicial to the defendant. And under the federal FOIA exception, law enforcement records may be withheld only if their release “could reasonably be expected to constitute an unwarranted invasion of personal privacy.” It appears that the stigma associated with mug shots has generally satisfied the test under the exception.  [The Sixth Circuit, in Detroit Free Press, Inc. v. Dep’t of Justice, 73 F.3d 93, 97 (6th Cir.1996) has held to the contrary, in a case involving defendants whose names had already been divulged and who had already appeared in open court.]

Businesses, public access advocates, and some law enforcement agencies, which regularly make mug shots widely available, argue that it helps solve crimes, provides transparency, and operates as a deterrent. For example, in support of proposed legislation that would guarantee public access to mug shots, the company mugshot.com says:

Public access to mugshots is undoubtedly in the public interest. Publishing mugshots helps avoid confusion and misidentification of who has been arrested, alerts residents to who is living in their community, helps law enforcement keep people safe, and helps hold government accountable.

Press organizations also advocate for public access, recently urging a probe of the United States Department of Justice policy of denying access under the 7(C) FOIA exception.

Yet another dimension of the issue arises when companies who publish mug shots also provide the service of removal, for a fee. Concerns about this practice are discussed in a Wired article here. These concerns are part of a broader discussion about the extent to which private companies should be allowed to use public information for profit. As to records that are clearly public, however, North Carolina’s statute does not allow consideration of privacy concerns, and prohibits a public agency from requiring a person to disclose the purpose or motivation behind a request for public records.

This brings me to a few final questions for law enforcement agencies to consider. If mug shots are indeed law enforcement records, agencies are allowed, but not required, to withhold them from public access. Could an agency decide to release them only selectively, on a case-by-case basis? And could an agency release them only for certain uses, for example, for media use but not commercial use for mass release?

I think a law enforcement agency may selectively release some mug shots and withhold others for reasonable, law enforcement purposes. An agency may certainly face pressure to release mug shots for other reasons, for example, in high profile arrests, but I’m not aware of any limitation on the agency’s discretion to refuse to release records when it has no law enforcement reason for doing so. Lawrence notes, in his public records book, that courts have imposed liability for selective release of records that are not open to public access, but the cases cited involve invasion of privacy and tort liability based on the impact of the release on individuals who were the subject of the records. See, Public Records Law at p. 110-111. Agencies should be careful to consider these interests in making decisions about whether and when to release specific mug shots.

Selective release of particular records to some members of the public but not others is probably not allowed under our statutory scheme. Given the strong policy of open access, and the prohibition on consideration of purpose or motive, I would be wary of a policy that allows release of the same material to one requester and denies it to another. Cases have held that a public agency waives its ability to withhold a record from public access if the record is released to some but not all members of the public. See, City of Riverdale, v. Diercks, 806 N.W.2d 643,658 (Iowa 2011)(“It is untenable for Riverdale to play the video for a reporter covering the dispute between the parties and yet withhold the same video from the defendants who requested it…It is axiomatic that disclosure to a third party waives confidentiality.”)

Law enforcement agencies have choices. They may routinely release all mug shots, they may release none, or they may choose to release some, when necessary or appropriate for law enforcement purposes. Agencies that wish to release some but not all mug shots should develop a policy outlining the justifications for withholding or releasing them.

Like defendants in other cases, a local government may have a particular claim or an entire lawsuit dismissed at the outset of litigation if the plaintiff’s factual allegations, taken as true, do not state a valid legal claim.  (The law generally requires a court to accept a plaintiff’s factual allegations as true when reviewing a motion to dismiss because the plaintiff hasn’t yet had the chance to compel the production of evidence favorable to his claims.)  Additionally, a local government may have a claim under the North Carolina Constitution dismissed if adequate relief is available to the plaintiff through a tort claim.  The existence of an adequate alternative remedy (“AAR”) results in the dismissal of a state constitutional claim, regardless of whether the plaintiff’s factual allegations describe a constitutional violation.

The recent opinion of the North Carolina Court of Appeals in Bigelow v. Town of Chapel Hill, ____ N.C. App. ____ (May 7, 2013), limits the authority of trial courts to dismiss state constitutional claims based on the availability of an AAR.  A cursory review of the opinion could also leave the impression that, even when a plaintiff’s allegations fail to allege a violation of the North Carolina Constitution, a trial court may not dismiss a state constitutional claim so long as the existence of an AAR is disputed.  As explained below, this is a misreading of Bigelow.

Governmental Immunity and State Constitutional Claims

A basic understanding of governmental immunity and its relationship to state constitutional claims is necessary to appreciate Bigelow.  Governmental immunity bars claims against a local government for injuries caused by the negligence or intentional misconduct of its employees in the performance of governmental functions.  State law permits counties, cities, and school boards to waive their immunity against such tort claims by purchasing liability insurance.  G.S. 115C-42, 153A-435(a), 160A-485(a).  Immunity is waived only to the extent of coverage, however.  Thus, if a school district’s insurance policy expressly excludes injuries arising from athletic events, a student who slips and breaks his arm on a wet gym floor during basketball practice has no negligence claim against the district.  Likewise, if a county’s insurance policy covers a particular type of negligence claim but only up to $50,000, the most a plaintiff who prevails on such a claim may recover is $50,000.

Governmental immunity is typically not a defense to state constitutional claims.  This fact sometimes leads plaintiffs to allege both tort and state constitutional claims in hopes of avoiding the total dismissal of their lawsuits if the local governments being sued have not waived immunity from tort liability.

Our courts prohibit a plaintiff from obtaining relief under the North Carolina Constitution when an AAR is available because the judiciary as a whole prefers to avoid constitutional issues.  Local governments frequently succeed in having state constitutional claims dismissed by directing courts’ attention to the various tort claims (negligence, assault, battery, etc.) plaintiffs could use to seek compensation for their alleged injuries.

It perhaps seems obvious that a tort claim barred by governmental immunity is not an adequate substitute for a constitutional claim.  Nonetheless, the North Carolina Supreme Court had to clarify this point in Craig v. New Hanover County Board of Education, 363 N.C. 334, 678 S.E.2d 351 (2009).  The high court held that the plaintiff in that case had no AAR because the school district’s governmental immunity prevented him from pursuing his negligence claim.

The Bigelow Case

The plaintiffs in Bigelow alleged that the Town of Chapel Hill (“Town”) terminated their employment as sanitation workers because they engaged in statutorily protected union activities, made statutorily protected complaints about unsafe work conditions, and – in the case of one plaintiff – filed a grievance over racially discriminatory hiring practices.  The complaint asserted the tort of wrongful discharge and violations of the plaintiffs’ rights to free speech, due process, and equal protection under the relevant provisions of the North Carolina Constitution.  It also alleged that the Town had “purchased liability insurance which waive[d] any claim to immunity it . . . may have.”

The Town filed a response to the complaint denying wrongdoing and asserting the defense of governmental immunity, though it admitted having “certain coverage . . . with respect to Plaintiffs’ claims.”  The Town subsequently filed a motion to dismiss all claims.  (To be precise, the Town filed a “motion for judgment on the pleadings,” not a motion to dismiss, but the distinction is immaterial for purposes of this blog post.)  The motion argued that the pleadings didn’t allege a valid claim of any kind against the Town and that the plaintiffs’ state constitutional claims were barred by the existence of an AAR.

The trial court granted the Town’s motion, and the Bigelow plaintiffs appealed.

The court of appeals reversed the ruling of the trial court.  It first held that the complaint’s allegations succeeded in describing a wrongful discharge claim.  The court reasoned that an employer who fires an at-will employee for the reasons alleged in the complaint does so in violation of public policy, the legal standard for wrongful discharge.  Turning to the plaintiffs’ constitutional claims, the court declared that “[a]s long as [the Town’s] [governmental] immunity defense remains potentially viable for any or all of Plaintiffs’ wrongful discharge-related claims, . . . Craig . . . dictates that Plaintiffs’ associated North Carolina constitutional claims are not supplanted by those claims.”  Having reinstated the plaintiffs’ claims against the Town, the court of appeals ordered the case returned to the trial court for further proceedings.

What Bigelow Stands For

The Bigelow plaintiffs expressly alleged that the Town had waived governmental immunity as to their wrongful discharge claim.  Why didn’t the court of appeals uphold the dismissal of their state constitutional claims based on the presumed availability of relief in tort?  After all, the general rule is that a court must take a plaintiff’s factual allegations at face value on a motion to dismiss.

The court of appeals read Craig to require a final determination that governmental immunity doesn’t apply before a tort claim may be deemed an AAR.  The procedural posture in which Craig came to the North Carolina Supreme Court renders this interpretation questionable.  In Craig the defendant school district appealed the trial court’s denial of its motion for summary judgment on the plaintiff’s state constitutional claims.  Unlike a motion to dismiss, a summary judgment motion typically isn’t filed until the parties have completed the gathering and exchange of evidence in preparation for trial.  In ruling on a summary judgment motion, a trial court examines the actual evidence offered in support of or opposition to the motion, not the sufficiency of the plaintiff’s factual allegations.  Thus, Craig didn’t require the supreme court to decide whether, on a motion to dismiss state constitutional claims, a trial court must consider a plaintiff’s allegation that governmental immunity has been waived.

Instead of relying solely on Craig to support its treatment of the plaintiffs’ constitutional claims, the court of appeals could have offered at least two other justifications for the outcome in Bigelow:

1.  It could have said that the plaintiffs’ allegation regarding the Town’s waiver of governmental immunity involved a conclusion of law.  On a motion to dismiss, a court is bound by the factual allegations but not the legal assertions in a complaint.  For instance, while a court must accept as true a complaint’s allegation that a city employee punched the plaintiff, no deference is owed to a conclusory allegation that the city is liable for the employee’s conduct.  Similarly, the mere assertion that a local government has waived its immunity in tort may not provide the factual information necessary for a court to determine whether an AAR has been alleged.

2.   The court of appeals could have explained that affirming the dismissal of the plaintiffs’ state constitutional claims would create a dilemma for plaintiffs in future lawsuits against local governments.  Under current case law, the failure to allege that a local government has waived governmental immunity can expose a plaintiff’s tort claim to dismissal.  E.g., Paquette v. County of Durham, 155 N.C. App. 415, 418, 573 S.E.2d 715, 717 (2012) (“In order to overcome a defense of governmental immunity, the complaint must specifically allege a waiver of governmental immunity. . . . Absent such an allegation, the complaint fails to state a cause of action.”)  Allowing the inclusion of such an allegation to justify the dismissal of state constitutional claims would force plaintiffs to choose between their tort claims and their claims under the North Carolina Constitution before they even file their complaints.

What Bigelow Doesn’t Stand For

While Bigelow wasn’t a win for local governments, it’s important to understand what it doesn’t do.  The Bigelow opinion doesn’t hold that a trial court may never grant a motion to dismiss a state constitutional claim if the waiver of governmental immunity is in dispute.  Trial courts retain the authority post-Bigelow to grant a motion to dismiss a state constitutional claim that is insufficient on its face.  In such situations, it doesn’t matter whether an AAR is available:  dismissal is proper inasmuch as the complaint’s own allegations show the plaintiff isn’t entitled to relief.  The Bigelow opinion may lend itself to confusion on this point because the section on the plaintiffs’ constitutional claims doesn’t discuss whether the plaintiffs actually alleged violations of the North Carolina Constitution.  Earlier in the opinion, though, one of the reasons the court of appeals gives for reversing the dismissal of the wrongful discharge claim is that “[v]iolations of a plaintiff’s rights under the North Carolina Constitution . . . will support a claim of wrongful discharge from public employment.”  It therefore appears that the court evaluated the sufficiency of the plaintiffs’ constitutional claims as part of its analysis of the plaintiffs’ wrongful discharge claim.

Furthermore, Bigelow doesn’t mean that plaintiffs should be permitted to pursue state constitutional claims when their own actions have made it impossible to obtain relief in tort.  The court of appeals specifically observed:  “The reasoning in Craig clearly does not extend to situations where a plaintiff has lost the right to pursue an [AAR] due to his own action.”  So, for instance, if a plaintiff is barred from pursing her negligence claim because she didn’t file suit within the three years required by statute, she may not cite the inability to obtain relief in negligence to show that she lacks an AAR.

The Bigelow decision makes it more difficult for local governments to have state constitutional claims dismissed in the early stages of litigation based on the existence of an AAR.  Fortunately for local governments, these claims remain subject to dismissal at the outset of a lawsuit when a plaintiff’s factual allegations fail to describe a violation of the North Carolina Constitution.

One of the more bizarre arguments in support of the bill is that local government regulation of community appearance (“design”) is, except with respect to the situations noted above, statutorily unauthorized. In other words some argue that the activity proposed to be banned has been illegal all along. Is that so? If it is not so, what tips can be provided to those local governments who wish to proceed with such regulations?

Opponents of “design controls” would say that the complexion of the debate about whether such standards are legal has changed since the North Carolina Supreme Court case of Lanvale Properties, LLC v. County of Cabarrus, __N.C.__, 731 S.E.2d 800 (2012), was handed down last summer. In that case our state’s highest court ruled that the “adequate public facilities (APF)” provisions of the Cabarrus County Unified Development Ordinance, as applied to public schools, were invalid. A critical element of the program was the payment by developers of “voluntary mitigation fees (VMF)” as a means of ameliorating the lack of capacity in schools that would serve the new development. The court compared VMF with school impact fees, which had been ruled invalid in an earlier case involving Durham County. Among other things, the Lanvale court concluded that the North Carolina zoning enabling statutes clearly failed to authorize APF programs with VMF components.

The court in Lanvale first noted that G.S. 153A-340(a), which lists the types of zoning standards that may be used to achieve zoning purposes (e.g., standards affecting the percentage of lots that may be occupied; those affecting the height, location, and use of buildings, structures, and land) did not expressly authorize the county’s APF and VMF provisions. Likewise G.S. 153A-341, which describes the permissible purposes of zoning (e.g., preventing “the overcrowding of land,” “avoiding undue concentration of population,” “conserving the value of buildings and encouraging the most appropriate use of land”) also did not provide express authorization.

The court then concluded that G.S. 153A-4 did not apply either. That statute calls for county statutes to be “broadly construed” and grants of power “construed to include any powers that are reasonably expedient to the exercise of that power.” According to the court, G.S. 153A-4 applies only when statutes are ambiguous, and the referenced zoning statutes were not ambiguous. Furthermore, the court concluded that APF provisions were not a “reasonably expedient” method of ensuring that school facilities were adequate. (Apparently the court viewed the fees charged either as being unreasonably high, or, perhaps, simply an unreasonable fee-based means for achieving the otherwise allowable purpose of facilitating the efficient and adequate provision of schools.)

How, then, does this case relate to community appearance issues? The zoning enabling statutes for cities are virtually identical in relevant respects to the county statutes interpreted in Lanvale. The words “appearance,” “aesthetics,” and “design” are not mentioned in the zoning statutes. Yet a moderate number of municipalities in North Carolina have adopted “neighborhood conservation districts,“ zoning districts that do not qualify as historic districts, but in which residential appearance standards apply to new development and alterations to existing development. Other cities have adopted more unconventional design standards that apply in districts where traditional lot-related standards and use standards have given way to form-based standards. These may include aesthetic standards regarding architectural style, exterior materials, and color that seek to ensure that a development project conforms to the purposes of the community’s comprehensive plan. Does Lanvale imply that all of these community appearance standards that apply to buildings other than historic properties or manufactured housing units are legally impermissible?

Not necessarily. Below are a few reasons why that conclusion is unwarranted.

The law in North Carolina has long held that reasonable regulation based on aesthetic considerations alone may constitute a valid basis for the exercise of government’s regulatory power. In State v. Jones, 305 N.C. 520, 290 S.E.2d 675 (1982), the North Carolina Supreme Court upheld an ordinance which required owners of junkyards and auto graveyards in certain areas to screen their premises over objections that the purpose of the ordinance and the means for achieving it were not legally justifiable. Since then, a number of North Carolina courts have upheld or applied zoning measures based on community appearance considerations in particular situations involving signs, telecommunications towers, resource conservation districts, accessory buildings and structures, historic preservation, fences, and manufactured housing. Our courts have held that these measures may be used to protect property values, promote tourism, and preserve the character of the community. G.S. 160A-383 provides that zoning regulations shall be made “with a view to conserving the value of buildings and encouraging the most appropriate use of land throughout the city.” The use of appearance and design standards is an obvious way to achieve these ends.

If a local government is interested in proceeding with community appearance standards , what should the community keep in mind?

First, appearance standards and design controls, particularly those affecting buildings should be carefully conceived and developed with an eye to how they affect the property owners subject to them. The Jones case reminds us that any diminution in value of an individual’s property must be balanced against the corresponding gain to the public from the regulation. Appearance standards that are applied to buildings have the potential for affecting values more than appearance standards that may apply to incidental commercial signs or landscaping.

Second, the design controls and appearance standards for buildings that work best are those that are based on the context of the affected structures. The standards are based on an inventory of the features and elements of the area or neighborhood in which the regulated property is located that provide its character. Design controls and appearance standards allow new development to fit into those existing areas that give the standards and elements context. The suitability of regulatory standards must, then, reflect both a prior identification of visual themes for the area and be consistent with future plans for the area. If this sounds like it is similar to the process for planning, developing, and applying historic district and landmark standards and guidelines, it is.

Third, it is probably unwise to establish a design review board or similar organization to administer appearance standards or design controls that apply to properties other than historic properties. Boards of this type are generally established in order to exercise permitting authority and discretion in the process of approving development projects. But this can be a legal problem in circumstances where there is no express enabling authority for the board to make such decisions. Community appearance commissions (see G.S. 160A-452) have been authorized for decades, but they are not allowed to make final decisions regarding permits and approvals. Indeed, the court in the Jones case warned that “(w)e feel compelled to caution local legislative bodies charged with the responsibility for and the exercise of the police power in the promulgation of regulations based solely upon aesthetic considerations that this is a matter which should not be delegated by them to subordinate groups or organizations which are not authorized to exercise the police power by the General Assembly.”  (305 N.C. at 531).  This delegation-of-power problem is potent in part because the role North Carolina historic preservation commissions play in issuing certificates of appropriateness is spelled out in the general statutes in considerable detail.

Fourth, appearance standards and design controls that apply to properties that are not parts of historic preservation efforts need to be concrete and specific. Regulation of appearance and design is plagued by the perceived notion that those regulated are subject to the whims and arbitrariness of regulators with wide-ranging discretion and that decisions are based on highly subjective notions of good taste and beauty. Making standards specific and spelling them out in an ordinance is one way to curtail the risk of arbitrariness that comes with discretion. Doing so also provides some assurance that the standards will not be found to be impermissibly vague. Well-conceived standards can be administered by staff if they are concrete and specific enough.

Fifth, even the court in Lanvale declared that local governments “enjoy flexibility” in developing and applying zoning regulations and have “considerable latitude” in exercising their zoning power. Some of the most important concepts in urban planning today, such as form-based development and traditional neighborhood development, include strong aesthetic and appearance themes. Courts are influenced by emerging ideas and trends that affect their disposition of cases, even as they interpret legislative intent. Courts do not want to seem oblivious to the changing complexion of planning and zoning. It is in the interest of local governments to develop programs that enable that tendency.

House Bill 150, which curtails certain appearance standards and design controls, is on its merry way and may be adopted by this General Assembly in 2013. If adopted, any uncertainty about the application of design standards to single-family residential development would be resolved by the prohibition. The considerations and suggestions noted above, however, would still be important with respect to the use of design standards for multi-family residential development and nonresidential development. In any event, to suggest that the use of community appearance standards for non-historic development projects is at the moment categorically invalid and unauthorized is to miss the mark.

The café is now owned by Vic and Ilsa’s grandson Sam.  While the business has been stable over the years, Sam believes it needs to be substantially modernized to remain viable.  He would like to do the following.  First, he would like to build a modest addition to the side of the building to expand the café’s small bar area.  This would allow Sam to add the piano bar of his dreams.  Second, he would like to convert a large unused back room into extra seating space for the café.  This room has only been used for storage for decades.  Some say that Sam’s grandparents used this back room for an illicit gaming operation in the café’s early days, but that is another story.  Now, with some modest renovations, it could add 30% more seating space, helping to pay off the loans he needs to take out for his renovations.  Finally, he would like to completely replace the building’s wiring, plumbing, and heating/air conditioning systems, and while he is at it, replace all of his kitchen equipment with modern appliances.  He knows this will cost a good deal, but he wants to make the building comfortable, more functional, and bring it up to modern code standards.

Sam ran these ideas by some of his regular Friday evening bar customers as several of them were builders and contractors knowledgeable about such things.  One of the regulars happened to be Hank Strasser, a retired builder who is now the town zoning officer.  Hank agreed that Sam’s plans would be a great improvement for the café, but immediately saw a red flag.  The building housing Rick’s is structurally sound and meets all of the town standards regarding setbacks and the like.  But the cafe is not allowed in this zoning district since the land is zoned for residential rather than commercial uses.  Hank told Sam that he could always seek a rezoning, but that would be a long shot in this situation.  The neighbors had vigorously opposed several prior proposals to rezone parcels for commercial use and the town’s new land use plan calls for the entire area to stay predominately low density residential.  Hank explained that since Rick’s was a nonconforming use, the ordinance prohibits enlargement or expansion.  “What, pray tell,” says Sam, “does that mean for my plans to improve the café?”

The answers are not as certain as one might think, especially if the town ordinance only has the typical brief provisions regulating nonconformities.  There are important policy implications to consider when framing limits on nonconformities, balancing the interests of the landowner, the neighbors, and the community.  A local government should carefully consider these implications and make clear, explicit policy choices when the restrictions are adopted.

The general law on limiting nonconformities is fairly straightforward.  If a land use, structure, or lot was lawful when created, the ordinance making it nonconforming is generally applied prospectively only. Preexisting conditions are allowed to continue.  A common restriction on nonconformities though is that they not be expanded or enlarged.  The courts have readily accepted that concept. The court noted over three decades ago that while zoning ordinances are “in derogation of the right of private property” and should be construed in favor or free use of property, “our courts have nevertheless limited the expansion of nonconforming uses with a view toward their eventual elimination.”  Atkins v. Zoning Board of Adjustment, 53 N.C. App. 723, 729, 281 S.E.2d 756, 759. More recently the court observed, “Prohibition of the expansion of a nonconforming use is lawful and consistent with good zoning practices.”  Huntington Properties, LLC v. Currituck County, 153 N.C. App. 218, 223, 569 S.E.2d 695, 699 (2002).

Sam has proposed three things:  (1) a structural addition to enlarge his existing bar area; (2) an expansion of seating space within the building; and (3) an extensive renovation of fixtures within the building.  Assume in our case the town’s ordinance has a typical provision on nonconformities, such as, “A nonconforming use or structure may not be enlarged or expanded.”  Assume also that the ordinance and does not further define those terms.  Would any of these be a prohibited enlargement or expansion of Rick’s Cafe?

1.  Addition to Structure Housing Nonconforming Use

The first question is whether Sam can add space to the building in order to expand his bar area.

Most ordinances prohibit increasing the size of a nonconforming building.  These limits are clearly applicable when it is the structure itself that is nonconforming, such as a building that sits in a setback area.  But in our case the structure housing the café is not in itself nonconforming.  It is the commercial use of the structure that cannot be enlarged or expanded according to the ordinance.  The question is whether a conforming structure can be expanded within the dimensional limits of the ordinance if it houses a nonconforming use.

Several cases have upheld limits on additions to structures that house nonconforming uses.  Construction of a new pilot’s lounge and airplane-storage building at a nonconforming airport in a residential district was prohibited in City of Brevard v. Ritter, 14 N.C. App. 207, 188 S.E.2d 41 (1972). The construction of a storage building to enclose a previously open storage area was held to be an unlawful enlargement of a nonconforming use in Cannon v. Zoning Board of Adjustment, 65 N.C. App. 44, 308 S.E.2d 735 (1983).  The court upheld prohibiting construction of a four-story parking structure to replace a surface parking lot at a nonconforming hotel in Four Seasons Management Services, Inc. v. Town of Wrightsville Beach, 205 N.C. App. 456, 695 S.E.2d 456 (2010).

This is an area in which careful wording in a zoning ordinance is needed to clearly establish the governing board’s intention.  If the intent is to prohibit any structural additions to a building housing a nonconforming use, that limitation should be specified in the ordinance so folks like Sam and his neighbors will not have to go to court to find out the scope of the restriction.

2.  Intensification of Nonconforming Use

What about Sam’s proposal to convert a storage room into additional seating capacity for his café?

The majority rule nationally is that an increase in volume or intensity of a nonconforming use is generally not presumed to be prohibited.  Several North Carolina cases have held an intensification of a nonconforming use within the footprint of the existing nonconformity is permissible unless expressly prohibited.  In Stegall v. Zoning Board of Adjustment, 87 N.C. App. 359, 361 S.E.2d 309 (1987), review denied, 321 N.C. 480, 364 S.E.2d 671 (1988), the court allowed the owner of a nonconforming cemetery that contained only in-ground burial plots to add an above-ground mausoleum.  The court ruled the mausoleum would be not an expansion of the nonconforming use but an intensification that was allowed by the terms of the ordinance.  Similarly, the court in Stokes County v. Pack, 91 N.C. App. 616, 372 S.E.2d 726 (1988), review denied, 324 N.C. 117, 377 S.E.2d 246 (1989), allowed additional vehicles to be brought into a nonconforming salvage yard provided they only occupied the space actually being used for junk storage when the ordinance was adopted.  In Clark v. Richardson, 24 N.C. App. 556, 211 S.E.2d 530 (1975), the court held that the enclosure of a porch on a nonconforming grocery store did not constitute enlargement or extension of the nonconformity.

Under this rationale, Sam’s proposal to add seats within the existing building housing his nonconforming café could be viewed as a permissible intensification rather than an impermissible expansion of a nonconforming use.

Other cases have, however, upheld limits on increasing the scale of nonconforming uses even where that did not involve use of a larger footprint.  In  Kirkpatrick v. Village Council of Pinehurst, 138 N.C. App. 79, 530 S.E.2d 338 (2000), the petitioner owned a nonconforming campground for recreational vehicles.  The ordinance provided that nonconforming uses must not be “enlarged or increased, nor shall any non-conforming use be extended to occupy a greater area of land” than occupied at the time it became nonconforming.  The court held that this provision not only precluded expansion of the campground to portions of the parcel beyond the area originally occupied, it also precluded renovations that would add additional campsites within the portion of the site already being used.  The court applied a similar analysis in Huntington Properties, LLC v. Currituck County, 153 N.C. App. 218, 569 S.E.2d 695 (2002), to find that only the spaces within a nonconforming mobile home park that were actually in use (as opposed the number of permitted spaces) constituted the existing nonconformity and that expansion beyond that number of spaces could be prohibited.  If expressly stated in the ordinance, the courts will also uphold a prohibition on the expansion of space allocated to a nonconforming use within the same building.  Fantasy World, Inc. v. Greensboro Board of Adjustment 128 N.C. App. 703, 496 S.E.2d 825, review denied, 348 N.C. 496, 510 S.E.2d 382 (1998).

Whether Sam’s conversion of the storage room would be allowed then depends on the exact terms of the ordinance, not upon some general principle of state law.  Clarity in the ordinance language defining impermissible expansion of a nonconformity is again the critical factor.  If increases in the intensity of use are intended to be included within the prohibited expansion of a nonconformity, the terms of the ordinance must clearly include that restriction.

3.  Modernization of Structure Housing Nonconforming Use

What about Sam’s proposal to upgrade his electrical, plumbing, and HVAC systems and to improve his kitchen equipment?

The general rule is that improvements required to maintain compliance with other laws are not a prohibited enlargement or expansion of a nonconformity.  In re O’Neal, 243 N.C. 714, 92 S.E.2d 189 (1956), is the leading North Carolina case on this point.  The petitioners had a nonconforming nursing home (an institutional use not permitted in the applicable residential zoning district).  They needed to replace the existing frame building with a modern fireproof building in order to comply with updated building code requirements. The court interpreted the ordinance to allow reconstruction in order to comply with the building code, provided that the new building was limited to the same scale in terms of numbers of patients served.  The court in MNC Holdings, LLC v. Town of Matthews, ___ N.C. App. ___, 735 S.E.2d 364 (2012), recently applied this concept to hold that alterations to a nonconforming medical waste incinerator, which was located in a residential zoning district, made to comply with environmental laws were permitted since the ordinance allowed alterations “when required by law.”

So to the extent Sam’s modernizations are needed to bring the café building up to code, they would almost certainly be allowed.  The courts are particularly sympathetic when the owner is required by law to make the improvements.

His kitchen upgrades would probably be allowed as well, as long as they are not so extensive as to trigger the limits on repair versus replacement discussed in an earlier blog post.  But he should be aware that some cases have held it is not permissible to modernize equipment for a nonconforming use if that would result in a substantial increase in the impacts of the nonconforming use.  In Malloy v. Zoning Board of Adjustment, 155 N.C. App. 628, 632, 573 S.E.2d 760, 763 (2002), the court held it would be an unlawful expansion if a nonconforming welding and gas supply business replaced a liquid oxygen storage tank with a substantially larger tank because that would increase the scope of the nonconforming business by allowing additional and faster service to its customers.  Similarly, in APAC-Atlantic, Inc. v. City of Salisbury, 210 N.C. App. 668, 709 S.E.2d 390 (2011), the court upheld a determination that modernizing a nonconforming asphalt plant in ways that would allow a significant increase in its capacity and lower its operating costs was a change in the scope of the use and an impermissible enlargement.

Some courts might view Sam’s kitchen proposal as a permissible intensification of the use.  Other courts may view it as an impermissible enlargement.  This is once again a point on which ordinance clarity can avoid confusion and litigation.

So what are the lessons for local governments?  The main one is that clarity and specificity in drafting provisions regarding limits on nonconformities is essential.  It would be nice if the ordinance could simply and only say “No enlargement or expansion of a nonconforming use or structure is allowed.” There is great merit in such a clear, brief, and plain directive.  But reality is too complex for such a simple directive.  It leaves unanswered several critical questions that will invariably arise.

The prudent local government will anticipate these common situations, deliberate the policy to be applied to them, and explicitly provide the answers in the ordinance itself.  As time goes by, that extra work will make implementation of the ordinance simpler and fairer for all concerned, and will not force the courts to divine unstated intentions about the scope of limits on expanding nonconformities.

Virginia’s FOIA provides that “all public records shall be open to inspection and copying by any citizens of the Commonwealth,” but it grants no such right to non-Virginians. (The court noted seven other states with similar restrictions.) Petitioners  McBurney and Hurlbert are non-Virginians who claimed that the restriction violated the Privileges and Immunities and dormant Commerce Clauses of the United States Constitution. McBurney sought information from a public agency regarding his efforts to compel his ex-wife to make child support payments. Hurlbert has a business that involves obtaining real estate tax records from state and local governments across the country. The petitioners argued that the citizens-only provision violates four different “fundamental” privileges or immunities: the opportunity to pursue a common calling, the ability to own and transfer property, access to the Virginia courts, and access to public information. The court held that the first three items on the list were not abridged by the Virginia FOIA. The court noted that many of the records McBurney and Hurlbert sought were actually available to them under other laws.

The Court also rejected the claim under the dormant Commerce Clause, a constitutional doctrine that reflects an implicit limitation on State interference with interstate commerce. (Justice Thomas entered a concurring opinion for the sole purpose of reiterating his view that that “[t]he negative Commerce Clause has no basis in the text of the Constitution, makes little sense, and has proved virtually unworkable in application, and, consequently, cannot serve as a basis for striking down a state statute.”) The Court concluded that Virginia’s FOIA law neither “regulates” nor “burdens” interstate commerce; rather, it merely provides a service to local citizens that would not otherwise be available at all.

Most importantly, perhaps, the Court held that there is no general common law or constitutional right of access to governmental information.The Court noted that FOIA laws are of “relatively recent vintage,” the federal FOIA having been enacted in 1966.

A key aspect of the Court’s analysis is its characterization of the state’s purpose in creating a statutory right of access to records and meetings for its citizens:

“By its own terms, Virginia’s FOIA was enacted to ‘ensure the people of the Commonwealth ready access to public records in the custody of a public body or its officers and employees, and free entry to meetings of public bodies wherein the business of the people is being conducted’…The state FOIA essentially represents a mechanism by which those who ultimately hold sovereign power (i.e., the citizens of the Commonwealth) may obtain an accounting from the public officials to whom they delegate the exercise of that power… In addition, the provision limiting the use of the state FOIA to Virginia citizens recognizes that Virginia taxpayers foot the bill for the fixed costs underlying recordkeeping in the Commonwealth…Even shoehorned into our dormant Commerce Clause framework…Hurlbert’s claim would fail. Insofar as there is a ‘market’ for public documents in Virginia, it is a market for a product that the Commonwealth has created and of which the Commonwealth is the sole manufacturer. “

The language in North Carolina’s public records law seems quite consistent with the Court’s holding about the purpose of Virginia’s law. As stated in G.S. 132-1(b) “The public records and public information compiled by the agencies of North Carolina government or its subdivisions are the property of the people. Therefore, it is the policy of this State that the people may obtain copies of their public records and public information free or at minimal cost unless otherwise specifically provided by law.” I suppose it could be argued that the intent of the statute is to provide access to the people of North Carolina. Without an explicit limitation in the statute, however, I don’t think a court would uphold the denial of access to a non-North Carolina requester.

North Carolina local government officials might well be jealous of Virgina’s citizen-only rule.  Demands for access to public records by businesses from outside the state are sometimes a frustration to public agencies. A private company recently sent a records request to numerous North Carolina local governments seeking copies of all invoices and contracts for the past 5 years. The company proposes to use this information to develop a database, which it will market to public agencies and vendors for a fee. The Supreme Court’s mention of tax dollars footing the bill for the costs of record-keeping might resonate with these agencies, especially since the North Carolina law generally does not allow the recovery of personnel time for responding to the request.

In the Virginia case, the Court rejected petitioner’s claim that the state’s law impeded his ability to operate his business. Does this mean that North Carolina public agencies can refuse to provide records that will be used for an out-of-state commercial purpose? I’m afraid not. In addition to the broad right access for any person, our statute specifically prohibits consideration of, or even inquiry about the purposes for which records are sought. And there is a provision in the statute specifically authorizing a limitation on commercial use, but it only applies to GIS records.  (See G.S. 132-10.)

As I’ve previously described here, North Carolina public agencies have almost no authority to impose conditions on the right of access to public records. Requests do not have to be in writing, nor does a person even have to identify him or herself. Access to public information is an important part of a healthy democracy, and there are important policy issues to consider when crafting the requirements for public access. It’s also worth noting, of course, that a citizen-only law doesn’t necessarily prevent access. It may simply mean that a person has to use an in-state intermediary to obtain records. The Supreme Court has made clear, in any case, that limitations on access are mostly policy considerations, rather than constitutional ones.

Here’s a hint: it’s the same tax that requires local tax officials and taxpayers to navigate more than 60 different exemptions and caps housed in multiple chapters of state and federal law to determine exactly how much tax is owed for a particular business activity. 

If you guessed privilege license taxes, it’s your lucky day.

Of course if you got this question correct it means you are probably the unlucky person charged with administering this tax.  Which means you are the person responsible for counting vending machines and restaurant seats and defining the term “bowie knife” and distinguishing between the sale of sandwiches and the sale of crackers with peanut butter filling and answering a hundred other seemingly trivial questions on which local privilege license tax obligations often rest.

I’ve blogged about the administration of local privilege license taxes here, here, and here.  Those posts dealt mostly with privilege license taxes based on gross receipts, meaning they are calculated as a percentage of a business’ income.

But not all businesses can be subject to gross receipts privilege license taxes.  That approach is permitted only for businesses that are not covered by Schedule B, the nickname given to a collection of statutes that either exclude a particular type of business from local privilege license taxes or set the maximum level for local privilege license taxes on a particular type of business. 

Repealed But Not Forgotten

To make things even more confusing, most of the Schedule B statutes were repealed in 1997 but remain effective because they are specifically incorporated into the statutes that authorize city and county privilege license taxes.

G.S. 160A-211, the authorizing statute for city privilege license taxes, lists 30 different repealed Schedule B exclusions and limitations, while G.S. 153A-152, the authorizing statute for counties, references 11 repealed Schedule B provisions. 

One reason privilege license tax administration can be so confusing is that the text of these repealed-but-still-effective statutes cannot be found in the current N.C. General Statute listings. To learn exactly what level of taxes these repealed statutes permit, tax officials either need to hunt down an old copy of the statutes or read a School of Government publication such as this one. (Try this compilation of the repealed statutes or the privilege license tax treatise authored by my former colleague Bill Campbell that explains each of these restrictions.)  This extensive reliance on repealed statutes—unique in North Carolina local government law—does great harm to the transparency and efficiency of the privilege license tax scheme.

Local privilege license taxes are also limited by several Schedule B statutes that were not repealed and remain in Chapter 105 of the N.C. General Statutes. Additional restrictions reside elsewhere in state and federal law.

A Floor, Not a Ceiling

It is important to note that local governments are not required to levy privilege license taxes on Schedule B businesses at the maximum levels created by those statutes.  Schedule B imposes a ceiling on these taxes, not a floor, meaning cities are free to set their taxes on the covered businesses at lower levels or even exempt those businesses entirely.   Most of those ceilings are very low, however ($12.50 for the sale of gasoline, $10 for building contractors), and as a result most local governments that levy privilege license taxes adopt the maximum tax permitted on Schedule B businesses.

The privilege license tax’s reliance on repealed statues creates some seemingly illogical results.  For example, farmers who sell their own produce at roadside stands or other temporary locations are excluded from Schedule B’s definition of itinerant merchants in the repealed-but-still-effective G.S. 105-53.  This means they are not subject to the $100 maximum tax permitted on itinerant merchants. 

But the fact that farmers selling their own produce fall outside of any Schedule B category means that cities may tax them any way they deem appropriate.  This may result in these farmers being taxed as “regular” retailers and paying a higher tax (often on a gross receipts basis) than they would have if they were classified as itinerant merchants.  While this was clearly not the intent of the General Assembly when it originally adopted the itinerant merchant provisions, the plain language of the relevant statutes leaves little room for any other conclusion. 

A city could choose to exempt farmers selling their own produce from all local privilege license taxes, which would more closely reflect the General Assembly’s likely original intent.  None has, as far as I know, meaning that in many North Carolina cities farmers selling their own produce are subject to “regular” retail privilege license taxes.

A Master List

Linked here is my attempt to list all exclusions and maximums for local privilege license taxes. Most of these restrictions are created by Schedule B. But a mishmash of other state laws and even some federal laws also restrict local privilege license taxes.  On the attached list, the non-Schedule B restrictions are distinguished by highlighted text.

This list of privilege license tax restrictions remains a work in progress and would benefit greatly from your input.  There might be more restrictions lurking in different corners of the General Statutes (or U.S. Code) that I missed.  Let me know if you find any errors or omissions and I will happily update the list.

The truck driver, the police chief, and the payroll clerk are all afraid for their jobs, and they are distrustful of the boss.  They ask for permission to record the meeting.

When an employee of a unit of government in North Carolina asks for such permission, must the supervisor grant it?

No.  The employee may be told that recording will not be permitted and that any attempt to record the meeting will result in immediate dismissal from employment.

That’s what the law allows, but the mere fact that the law allows it does not necessarily make it a good idea.  My advice when this question comes—and it comes every once in a while—is to let the employee record the meeting and be glad that the employee asked.

I give this advice for three reasons.

First, for the supervisor to refuse the employee permission to record the meeting can give the impression that the supervisor has something to hide.  That should not be the case.  The supervisor should, of course, be genuinely interested in keeping the content of the meeting confidential.  The provisions of the personnel records privacy statutes—GS 153A-98 for counties and GS 160A-168 for cities—probably require confidentiality.  But the primary purpose of that confidentiality is to protect the employee.  The employee is, of course, going to be hearing what is said in the meeting.  If she wants, additionally, to record it, and thus risk some kind of later breach of confidentiality if the recording is played for someone else, I recommend letting her.

Second, the supervisor is warned that the meeting will be recorded.  She can be on her toes not to say anything she would later regret hearing played back.  To the extent she is concerned about her own reputation and image, she can protect them by not saying stupid things.  In fact, she can enhance her reputation and image by saying careful, thoughtful, wise, and fair things.  To the extent that she is concerned about protecting the confidentiality interests of other employees, she can simply avoid saying anything that would compromise those interests.  She shouldn’t be saying such things even if the meeting were not being recorded.

Third, under North Carolina law, it would be fully lawful for the employee to secretly record the meeting without even informing the supervisor.  GS 15A-287 makes it a felony to record oral communications “without the consent of at least one party to the communication.”  That is, either party to a conversation can give sufficient consent to its recording.  When the boss meets with the employee, it would be a felony for a third person to secretly record the meeting.  But since the employee herself is a party to the communication in the meeting she can consent to secretly recording it herself.  She doesn’t have to tell anyone about her consent.  She can just stick the recorder in her purse or pocket—or turn on the “record” function on her smart phone and record away.

Now, the mere fact that the law provides that recording is lawful where only one party consents does not mean that the employee has a right to record.  Just because it is lawful does not mean that it has to be permitted.  It’s also lawful to wear a swim suit with tassel loafers, but an employee does not have a right to dress that way at work.  The supervisor is free to tell the employee that such attire is unacceptable.  And the supervisor is free to tell the employee that recording the meeting is unacceptable.

Still, I recommend giving permission to an employee who wants to record.  In fact, I recommend celebrating.  At least the supervisor is on notice that the recording is happening and can be on guard not to say something she would hate to hear played back later.  If the employee simply took advantage of the fact that the law permits one-party consent to secretly record, the supervisor may later find unfortunately, unguarded statements played back.

In cases where the supervisor knows that the employee is recording the meeting, the supervisor should record the meeting as well.  It would be a good idea to say, on the recording, that the meeting is being recorded at the employee’s request.

First, the good news: home sales, home prices, and home construction starts are up. 

The North Carolina Association of Realtors reports that home sales through the end of March rose 22% compared to a year ago.  Prices also increased, up 7% from 2012.  Inventory is tight, which is encouraging more new construction both nationally and locally:  home construction across the country is at its highest pace in 5 years, while residential building permits issued in Mecklenburg County have increased more than 300% since 2011 in both number and dollar value.  

Now, the bad news.  Property tax bases in North Carolina communities are still suffering.  

For decades, local governments in North Carolina reasonably expected increases of 20% to 35% in their tax bases after reappraisals.  Those expectations evaporated following the Great Recession of 2008.  Since then, numerous counties have suffered drops in their tax bases following reappraisals.  This trend continues in 2013. 

An informal survey of the counties that conducted reappraisals effective January 1, 2013 produced this list of estimated changes to county tax bases: 

 The two counties with the largest tax base losses are of course coastal counties with lots of high-end vacation homes.  Currituck and Dare counties got huge bumps in their tax bases when they last reappraised their real property in 2005 and since then have maintained two of the lowest property taxes in the state. Currituck’s rate has been $.32 for years while Dare’s rate was $.26 immediately after its 2005 reappraisal and $.28 since 2010.  

Not any longer.  The two counties have yet to set their tax rates for 2013-2104, but they are sure to jump up closer to the statewide average of $.62.  Consider the situation in neighboring Brunswick County, which increased its property tax rate by 80% following a 2011 reappraisal in which the county’s real property tax base dropped by nearly a third. 

In the past two years tax rates also increased subtantially in Carteret County ($.23 to $.30 in 2011) and New Hanover County ($.46 to $.55 in 2012).  Nor is this phenomenon is limited to the coast.  Up in the mountains, Henderson and Rutherford counties raised their tax rates by more than 10% after recent reappraisals.  

As the list above proves, not every reappraisal since 2008 has resulted in a a lower tax base. Plenty of counties continue to experience modest tax base growth.  But five years after the Great Recession it is now clear that local government officials can no longer depend on a substantial tax base increase following a reappraisal. And this state of affairs is not likely to change any time soon.

Despite some positive trends, North Carolina’s real estate market has a ways to go before it regains the ground it lost in 2008.  The average sale price of an existing home at market peak in 2007 was $223,000; that same figure year-to-date 2013 is $192,000.  Based on these statistics, it seems certain that upcoming reappraisals will continue to produce negative or very flat tax base growth. 

Ten counties are scheduled for reappraisals effective January 1, 2014, including three (Mitchell, Onslow, and Watauga counties) with high proportions of vacation homes that tend to rise and fall in value more dramatically than other types of real property.  Onslow County might be able to escape the negative tax base trend, given the strong growth around Camp Lejuene and the county’s recent reappraisal in 2010.  But the other counties had best prepare for shrinking tax bases. 

When a local government’s tax base shrinks, its revenue neutral tax rate will be higher than its existing tax rate because it will require a higher tax rate to produce the same revenue next year on the new (lower) tax base as this year’s tax rate did on this year’s tax base.  Local governments are required only to publish the revenue neutral tax rates, not adopt them for the coming year.  But when its tax base shrinks, a local government usually has only two choices: reduce the amount of services it provides or raise its tax rate to make up for the lost tax base.  (Click here for more details on the often confusing revenue neutral tax rate.) 

Higher tax rates can cause political as well as economic problems for local governments, especially in jurisdictions with large amounts of high value vacation homes owned by non-residents.  When the assessments of those vacation homes drop precipitously, the resulting tax rate increase has a much greater relative impact on owners of modest homes than it does on the owners of the expensive vacation homes.  And the owners of the more modest homes tend to be residents and voters in the county, not folks from away. 

Consider two hypothetical houses in Brunswick County, an oceanfront mansion owned by a rich lawyer from D.C. originally assessed at $3 million and a modest in-land bungalow owned by a local retiree originally assessed at $150,000.  In 2010 the county tax rate was $.305, meaning the taxes on the mansion would have been $9,150 while taxes on the bungalow would have been $457.  

After the 2011 reappraisal, assume that the mansion was assessed at $1,800,000 (a drop of 40%) while the bungalow assessment remained unchanged at $150,000 (not unusual for more modest homes in coastal communities).  At the county’s new tax rate of $.54, taxes on the mansion would be $9,720, while taxes on the bungalow would be $810.  

The wealthy D.C. lawyer saw his property taxes increase only 6%, while the county resident who owns the bungalow saw his property taxes rise by 77%. How well do you think the county’s voters will react to that change of affairs? 

Sure, county officials can try to explain to their voters that for years the county was able to balance its budget mostly on the backs of those rich folks from away. But it’s unlikely that explanation will do much to each the pain of a tax bill that grew by 77%. 

Unless and until the North Carolina real estate market replicates its healthy annual growth of the mid-2000’s, local government officials will continue to face trying property tax troubles.

Under current law, how much can a public agency charge for responding to public records requests under the current law?  The statute limits charges to a “minimal amount,” which is defined as the “actual cost of reproducing the public record or public information.” G.S. 132-1(b). A separate statute defines “actual cost” as:  “direct, chargeable costs related to the reproduction of a public record as determined by generally accepted accounting principles and does not include costs that would have been incurred by the public agency if a request to reproduce a public record had not been made.” G.S. 132-6.2(b).

Several important and commonly accepted interpretations of these provisions are:

1. Charges are limited to a very few kinds of costs — the cost of paper, CD’s, flash drives, or other media in which copies of records are provided, and any postage or shipping charges for mailing.
2. There is probably nothing that can be charged for providing electronic records by email.
3. There is no authority to charge anything when the request is to inspect (rather than receive copies of) public records.
4. There is no general authority to charge for the employee time spent to analyze a public records request, determine what records are responsive to it, search for the records, and redact them as necessary.
5. Since employees are already on the payroll, the time they spend responding to public records requests is an existing cost and is not attributable to the existence of the request.
6. The only authority in the current law to charge for labor is in the case of a request that requires “extensive use of information technology resources or extensive clerical or supervisory assistance by personnel of the agency…” G.S. 132-6.2(b)

SB 617 would modify G.S. 132-1(b) by specifying that “minimal cost” includes “personnel costs associated with the amount of time spent reproducing the record or information, which shall be computed based upon the minimum wage in this State in effect under Article 2A of Chapter 95 of the General Statutes.” According to G.S. 95-25.3(a), the minimum wage is the federal minimum wage or $6.15, whichever is higher. According to the current United States Department of Labor website, the current minimum wage is $7.25 per hour.

This proposed change would expand the scope of authority to charge for personnel costs, but apparently, only for the cost of making copies. Referring back to the interpretations set out above, this change would not affect the assumptions 2, 3, and 4. The bulk of the employee time spent in responding to public records would remain an unrecoverable expense of the public agency, a part of the cost of doing the public’s business, as it is now.

The change could raise at least two new questions of interpretation. First, if a request is for electronic copies of records, what activities might be considered to be included in “time spent reproducing the record or information?”  Would this include time spent searching for, extracting, and compiling records, or would it be limited to the acts of sending an email or downloading files to an external storage device for delivery. The provision in G.S. 132-6.2, which only applies when there is “extensive use” of information technology resources or personnel, raises similar questions, and has never been subject to any judicial interpretation. Without more specific legislative clarification, I would advise that if the proposed change becomes law, the cost of retrieving, reviewing, and redacting records remains an unrecoverable agency expense, but that perhaps the time spent downloading or copying electronic records to an external storage device, or compiling multiple electronic records for sending by email could be charged to the requester at the minimum wage rate.

A second question is whether the minimum wage rate applies to charges imposed under the special service change authorized in G.S. 132-6.2 for excessive use of information technology resources. Currently, that statute does not establish a rate, providing only that the charge must be “reasonable” and based on the “actual cost” incurred for the information technology resources and labor. Since the proposed legislation does not specifically apply the minimum wage requirement to G.S. 132-6.2,  it seems reasonable to assume that the actual rate of pay for the employees doing the work  may be the basis of a charge under this provision.

Status Update

Throughout the fall and winter, School of Government colleagues and I met with several counties around the state to discuss all of the options available for organizing and governing local human services agencies, including the three new options available pursuant to the 2012 legislation (H 438) amending G.S. 153A-76 and G.S. 153A-77. For ease of discussion, we summarized the new options as follows:

Option One

• Organization: Under this option, the Board of County Commissioners (BOCC) does not change the overall organization of the agency or agencies involved.
• Governance: The BOCC directly assumes the powers and duties of one or more of the governing boards responsible for overseeing a local human services agency (i.e., local board of health and/or county board of social services).
• Counties electing: One county (Columbus) has elected this option. The BOCC abolished the county board of social services and assumed its powers and duties.

Option Two

• Organization: The BOCC creates a new agency called a consolidated human services agency (CHSA) by combining two or more county human services agencies. The term “human services” is undefined in the law.  Most of the discussion has focused on local health departments and departments of social services, but other departments and agencies may also be involved (such as local agencies focused on veterans, aging populations, or transportation). Note that local management entities (LMEs) involved with mental health, substance abuse, and developmental disabilities services may not be included in these new CHSAs (with the exception of the CHSA serving Mecklenburg county).
• Governance: The BOCC appoints a new consolidated human services board that serves as the CHSA’s governing board.
• Counties electing: Four counties have elected this option (Buncombe, Edgecombe, Union, and Wake). Wake elected this option many years ago when the option was available only to counties with large populations.

 Option Three

• Organization: The BOCC creates a new agency called a consolidated human services agency (CHSA) by combining two or more human services agencies.
• Governance: The BOCC becomes the governing board when it directly assumes the powers and duties of the consolidated human services board.
• Counties electing: Five counties have elected this option (Bladen, Brunswick, Mecklenburg, Montgomery, and Yadkin). Mecklenburg adopted Option One many years ago but transitioned to Option Three in 2008.

There are lots of nuances, exceptions and additional requirements related to each of these three options but I will not be able to  dig into those details now. In the coming months, we will be posting updated legal research and data online so please stay tuned. At this point, I simply wanted to use the description of these three new options to help explain the actions that counties have taken to date and to help with the process discussion below.

Process Considerations

Before a county elects one of the new options described above, there are some fairly legalistic process issues it should take into consideration. Please note that the list of considerations below is by no means exhaustive. These are just a few of the “hot topics” that have come up over the last few months.

• Public hearing:  If the board of county commissioners plans to serve as the governing board for the new CHSA, it must hold a public hearing.  The law requires “30 days’ notice of said public hearing given in a newspaper having general circulation in said county.” GS 153A-77(a).  The hearing requirement is triggered by the board of commissioners assuming the powers and duties of another board – which could be a local board of health, a county board of social services, or a consolidated human services board.

• State Personnel Act: As a general rule, employees of county departments of social services and local health departments are county employees but are subject to the State Personnel Act (SPA). When a county creates a new consolidated human services agency by electing either Option Two or Option Three, the employees of the new agency are removed from SPA coverage and placed under county personnel policies, unless the BOCC affirmatively elects to keep them under the SPA. If the employees are not kept under the SPA, the county personnel policies must comply with the federal merit personnel standards. (5 CFR Subpart F). Therefore, prior to taking an action that removes employees from the SPA, a county should conduct a careful review of its policies and make any changes that are necessary to comply with those standards.

• Advisory committees: If a BOCC decides to assume the powers and duties of either a local board of health or a consolidated human services board, it must appoint an advisory committee for public health. The committee membership must, at a minimum, meet the requirements for a county board of health found in G.S. 130A-35. It may include more members – for example, if a CHSA will include DSS, this advisory committee could have a broader scope and include people with social services expertise or interests.  The BOCC also has the option of appointing a separate advisory committee for social services or other issues, but that is not required by law (see G.S. 153A-77(a)). The law does not specify whether the public health advisory committee needs to be appointed before the BOCC assumes the powers and duties of the local board of health or consolidated human services board.

• Agency leadership:  If a BOCC is considering establishing a new CHSA, the county manager will have the authority to appoint the agency director but may do so only with the advice and consent of the governing board (which is the consolidated human services board under Option Two or the BOCC under Option Three). Because of the advice and consent requirement, there is a logical sequence that should be followed for appointing the director:
  1. Establish the CHSA.
  2. Either appoint a consolidated human services board or have the BOCC assume the powers and duties of the agency governing board.
  3. The county manager identifies a candidate for consolidated human services director and seeks the advice and consent of the agency governing board.
  4. If the agency governing board consents to the appointment, the county manager appoints the consolidated human services director.

In other words, it does not make sense to appoint the director before the agency has been created and the governing board is in place because the governing board must consent to the appointment.  These four steps may take place in the same meeting but the order of events matters under the law.

• Appointing the initial consolidated human services board: If a BOCC elects Option Two, it will need to appoint a new consolidated human services board. The law includes quite a few details about board composition, terms and term limits, and powers and duties. G.S. 153A-77(c). It also includes a specific process for appointing the initial board. The BOCC must first create a nominating committee that includes members of the current board of health and social services board, as well as (somewhat surprisingly) the board responsible for managing mental health, developmental disabilities, and substance abuse services in the county. The nominating committee then recommends members for the new consolidated human services board and the BOCC makes appointments based upon those recommendations. After the initial board is in place, the BOCC will fill vacancies based upon nominees presented by the members of the consolidated human services board.

As I mentioned earlier, this is not a comprehensive look at all of the factors or issues a county will need to consider before moving forward with any change. These are simply some of the quirky process steps associated with this area of the law. Please feel free to share other process tips in the comments field below.

The local human services landscape is evolving rapidly these days. We are doing our best to keep track of changes as they are happening so please let me or  Jill Moore know if your county is considering or has made a change pursuant to this new legislation.