Recent Blog Posts

  • Iran Divestment Act Changes – No Certification Required Anymore!

    Authored by: on Wednesday, August 16th, 2017

    In 2015, the General Assembly enacted the Iran Divestment Act (IDA) which prohibits state agencies and local governments from contracting with a company that the NC State Treasurer has determined invests more than $20 million dollars in the Iranian energy sector (for more information on the IDA, see this blog post).  The Treasurer is required to publish a list of such companies on its website (commonly known as the Treasurer’s IDA list) and to update the list every six months.  Two provisions of the IDA created challenges and confusion for local governments right from the start.  First, the IDA required contractors to certify at the time of submitting a bid or entering into a contract that they were not included on the Treasurer’s IDA list, but did not specify how or in what form the contractor was to make this certification.  Second, the definition of a “person” on the Treasurer’s IDA list with which state agencies and local governments could not contract included a reference to governmental entities that some interpreted to include state and local governments themselves.  Under this interpretation (which was not rendered by this author), state and local governments were required to certify that they were not investing at least $20 million dollars in the Iranian energy sector when entering into a contract with another governmental entity, such as an interlocal agreement or an award of grant funds.  Fortunately, the General Assembly enacted legislation during this year’s session that eliminated the certification requirement and put to rest the “person” confusion.

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  • System Development Fees are the New Impact Fees

    Authored by: on Tuesday, August 15th, 2017

    As detailed here, in 2016, the North Carolina Supreme Court held that municipalities (and by analogy counties) lack the statutory authority to impose certain upfront charges for water and sewer services. Upfront charges are charges imposed on new or existing development before a property parcel is actually connected (or under contract to connect) to a local government’s water or sewer system. Local government utilities across the state impose a wide variety of upfront charges, some that are assessed only on developers as a condition of securing development approvals, and others that are imposed on both new and existing property owners. The purposes of these fees range from reimbursing the utility for past investments, to reserving capacity, to covering the costs of extending infrastructure, to establishing a reserve for future maintenance or expansion of the system. In Quality Built Homes Inc. v. Town of Carthage, No. 315PA15, ___ N.C. ____ (Aug. 19, 2016), the supreme court invalidated certain types of upfront charges. Questions remained, however, as to whether government utilities have authority to impose other types of upfront charges pursuant to their general rate-making authority. As detailed in this post, local government utilities were left to make difficult decisions about who to charge, when to charge, and how to calculate the amount of the charge.

    A new law, the Public Water and Sewer System Development Fee Act, S.L. 2017-138, clarifies a local government utility’s authority to assess upfront charges for water and sewer. The new law grants local government utilities specific authority to assess one type of upfront charge—a system development fee—albeit with significant limitations. It also preserves the authority of local government utilities to impose certain other upfront fees. At the same time, however, it prohibits local government utilities from assessing many of the types of fees that have become routine in recent years. Local government utility providers will need to act soon to bring their fee schedules into compliance.

    This post sets out the basic contours of the new law. It discusses who must comply, who can be assessed and when, what the processes are for calculating and adopting the fee schedule, and how a local unit must administer the fee proceeds. It also lists the other types of allowable water and sewer charges. Finally, it identifies a few drafting quirks that may cause some implementation issues. The Generally Assembly has specified that the new law’s provisions be narrowly construed by the courts. To that end, local officials should carefully follow the statutory requirements and proceed cautiously when interpreting any statutory ambiguities. (Future posts will flesh out the details for the calculation requirements and deal with potential liability issues for past fees that were assessed unlawfully.) Read more »

  • Difficult Exemption Questions

    Authored by: on Monday, August 14th, 2017

    To qualify for most property tax exemptions in North Carolina, property must be both owned by a qualifying taxpayer and used for a qualifying purpose. (You know that because you’ve read this post, right?)

    A recent email from a county tax office highlights how difficult these question can become. Although you might never face the exact same scenarios as this county did, the analysis I share below should help with your next knotty exemption problem.

    Here’s a brief description of the two property owners in question.  (Names changed to protect the innocent and the guilty, the taxable and the exempt.)  Should either of these property owners be exempt?

  • Angels’ Wings Aviation, Inc., a non-profit corporation that provides pilot training for religious missionaries and aviation education for youth. The taxpayer seeks an exemption under either GS 105-278.3 (religious) or GS 105-278.7 (charitable, scientific, educational). It plans to purchase a private plane that will be hangered in the county.
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  • Smoky Mountains Financial Institute Inc., non-profit corporation that provides education and coaching to help individuals achieve lifelong financial independence and self-confidence in managing their personal finances. It seeks an exemption under GS 105-278.7 (charitable, scientific, educational).
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  • Local Government Lawyers: Take Care in Asserting Governmental Immunity

    Authored by: on Tuesday, August 1st, 2017

    When a city, county, or other unit of local government is sued for negligence or other torts, it’s common practice for the unit’s attorney to file a motion asking the trial court to dismiss the lawsuit based on the defense of governmental immunity. (See blog posts available here and here for an explanation of governmental immunity fundamentals.)  Many local government attorneys believe that, if the trial court denies such a motion, the unit always has the right to an immediate appeal.  As a recent decision by the North Carolina Court of Appeals reminds us, however, whether the unit may immediately appeal can depend on how the immunity defense is framed in the motion.  This blog post aims to

    • explain when a motion to dismiss that alleges governmental immunity is immediately appealable and
    • identify practical steps local government lawyers should take to ensure that the right to an immediate appeal is preserved.

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  • Significant Change to North Carolina’s Rabies Law

    Authored by: on Friday, July 21st, 2017

    In July 2016, I wrote a blog post entitled Rabies Prevention and Control: Integrating Recent Research into North Carolina’s Legal Framework. It tells the story of Duke – a dog that was potentially exposed to rabies. Since that time, the North Carolina General Assembly enacted legislation that will have a significant impact on public health practice as it relates to rabies post-exposure management for dogs, cats, and ferrets. Rather than retract my old blog post, I thought I would tell Duke’s story again but change the outcome to reflect the changes in the law.

    I’ll talk a little bit about animal services in our upcoming Local Government Legislative Update Webinar. Several of my colleagues will be joining me to discuss changes and pending legislation in areas such as public records, land use and planning, elections administration, and public health. If you aren’t able to join us for the live program on Tuesday, July 25, the on-demand version will be available on our website shortly thereafter.

    Enough marketing.  Read on to hear what happens to dear old Duke…

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  • Can A Gentle Nudge Increase Tax Collections?

    Authored by: on Thursday, July 13th, 2017

    What do fly stickers in men’s room urinals have in common with handwritten notes on the outside of delinquent tax notices?  Both are examples of the effective use of behavioral economics, the study of how psychological and emotional factors play into our everyday decision making.

    Over the past decade, best-selling books and popular podcasts dedicated to behavioral economics have demonstrated how seemingly minor changes to our problem-solving approaches can produce big results. Great Britain was so excited about this field of study it created a new government agency dedicated entirely to behavioral nudges.

    The goals of these nudges might be vital and life-saving (obtaining more organ donors by making the donation commitment “opt-out” rather than “opt-in” when you obtain your driver’s license) or kind of gross (improving “aim” and minimizing rest room messes by placing the above-mentioned fly stickers in urinals).  Regardless, behavioral economics proves that by applying what psychologists and economists have learned about humans’ decision making we can produce better societal results and make government more effective.

    The Guilford County tax office recently put behavioral economics to the test by teaming up with a graduate student at Duke University’s Sanford School of Public Policy to see if some low-cost changes to the county’s collection procedures could improve taxpayer compliance. Read more »

  • Sunday Brunch Ordinances – Cheers!

    Authored by: on Saturday, July 8th, 2017

    In the waning days of the 2017 legislative session, the General Assembly passed an omnibus bill affecting a number of state laws regulating alcoholic beverages (SL 2017-87 (S155)).  Section 4 of the bill – commonly known as the “Brunch Bill” – enacts new statutes authorizing cities and counties to adopt ordinances allowing the sale of alcoholic beverages beginning at 10:00am on Sundays (in the absence of such an ordinance, state law prohibits the sale or consumption of alcoholic beverages before 12:00 noon on Sundays).  The new law’s authorization to imbibe mimosas and Bloody Marys on Sunday morning has generated a great deal of interest among cities and counties, not to mention their local restaurants.  Passed by the General Assembly on June 28th, the Brunch Bill became effective as soon as Governor Cooper signed it on June 30th.  Local government interest in adopting ordinances to allow “Sunday brunch” alcohol sales began quicker than you can say “Shaken, not stirred.”  The Town of Carrboro’s Board of Aldermen became the first local government in the state to take advantage of the new law, adopting its Sunday brunch ordinance on July 3rd.  The Raleigh City Council and Surf City followed suit two days later. By the end of the week, Atlantic Beach and Hendersonville also took action.  As cities and counties across the state gin up to consider whether to adopt their own Sunday brunch ordinance, the questions have been pouring in.

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