Recent Blog Posts

  • Construction in Progress and Property Tax Exemptions

    Authored by: on Thursday, May 2nd, 2019

    If property is under construction, is it being “used” by its owner? That is the arcane but important question that the North Carolina Court of Appeals recently addressed in the Highwater Solar appeal concerning the 80% property tax exclusion available for solar electricity equipment in GS 105-275(45). The court’s answer was yes, construction counts as a qualifying use for the exclusion.

    This decision might have big-time ramifications across the state, for two reasons. First, most exemptions require that an owner use property for an exempt purpose.  Second, local tax officials have long assumed that property under construction was not being used for an exempt purpose. If the Highwater Solar decision forces counties to change this practice for all exemptions and exclusions with a use requirement, many more properties will qualify for special property tax treatment across the state in coming years.  Read more »

  • The Charitable Hospital Exemption

    Authored by: on Tuesday, April 23rd, 2019

    The national trend towards consolidation of the healthcare industry under large providers is very evident across our state. Be it the purchase of western Carolina’s largest non-profit hospital system by an even larger healthcare provider or the continued expansion of Novant and Vidant health systems in central and eastern Carolina, our state has seen more and more hospitals and clinics operating under larger and larger corporate umbrellas.

    These healthcare mergers and acquisitions raise the stakes for counties deciding when to grant the property tax exemption for charitable hospitals created by G.S. 105-278.8. If one of these mega-providers receives the exemption for one of its hundreds of hospitals and clinics, does that mean all of that mega-provider’s locations should be exempt? Novant alone operates over 600 healthcare sites.  The tax dollars involved are enormous. Read more »

  • Occupancy Taxes and AirBnB

    Authored by: on Monday, April 1st, 2019

    North Carolina’s booming short-term rental (“STR”) industry presents both opportunities and challenges for local governments. The opportunities include more tourist spending and more tax revenue. The challenges include a loss of affordable housing and noise, trash, and traffic complaints as more residential properties are turned into “mini-hotels.” Also worrisome is the adversarial approach some STR websites have adopted towards cities and counties. WIRED magazine describes AirBnB’s strategy as “a city-by-city, block-by-block guerilla war against local governments” that involves secrecy, lawsuits, and heavy lobbying of state legislatures.  Read more »

  • Short-Term Rentals and Regulatory Approaches

    Authored by: on Wednesday, February 27th, 2019

    In July Chris McLaughlin and I hosted a webinar on the topic of STR regulation and occupancy taxes (available here). We have also written a manual for local governments on these topics, which we hope will be available to readers this summer. In the meantime, I recognize that some local governments are ready to move forward with drafting short-term rental regulations. Therefore, this blog post offers some tips for local officials on how to approach STR regulation and offers ideas of what to include in an ordinance.

    Read more »

  • More Legal Ethics Lessons from Penn State

    Authored by: on Tuesday, February 26th, 2019

    [UPDATE: Adopting reasoning similar to mine below, in March 2019 the Pennsylvania Disciplinary Board rejected the 2018 ethics report and recommendation and concluded that Baldwin violated the attorney-client privilege held by the three Penn State executives. The Disciplinary Board recommended that Baldwin receive a public censure for her professional misconduct.  In February 2020, the Pennsylvania Supreme Court agreed with that Baldwin violated her duties of professional responsibility and ordered that she receive a public reprimand from the Disciplinary Board. That reprimand occurred in July 2020.]

    The Penn State child abuse scandal first hit the national consciousness years ago but continues to make headlines today.  In 2019, the university’s former president Graham Spanier lost a state appeal of his conviction on child endangerment charges relating to his failure to properly report allegations of child abuse in 2001.  He then appealed to the federal courts, lost, and finally began serving his prison sentence in June 2021.  Two other senior Penn State executives served jail terms in 2017 for their guilty pleas on similar charges.

    From my legal ethics perspective, the most important recent development was the issuance of a Pennsylvania state bar ethics report and recommendation in late 2018 concerning Cynthia Baldwin, Penn State’s former general counsel.  That report focused on some of the disturbing ethical issues relating to Baldwin’s conduct during the scandal that I raised in this 2014 blog post.

    Although the 2018 ethics report concludes that Baldwin did not technically violate any legal ethics rules, it paints a troubling picture of an attorney who allowed her loyalty to her organizational client to become tainted by her relationships with that organization’s senior employees.  It also adopts an unusual and potentially problematic interpretation of the “Upjohn” warnings that organizational attorneys use to remind employees that they represent the organization and not individual employees.

    Today’s blog post analyzes that ethics report and explains how it provides important professional responsibility lessons for all attorneys who represent organizations, be they local governments, universities, or private corporations.

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  • What is Exempt Inventory?

    Authored by: on Thursday, February 21st, 2019

    Three times in the past five years North Carolina appellate courts and administrative bodies have wrestled with the question of how to define inventory for purposes of the property tax exclusion created by G.S. 105-,275(34). In the first two cases, the courts expanded the inventory exclusion.  But this past week the Court of Appeals reversed that trend by concluding that the exclusion does not cover furniture, appliances, and other consumer goods held by a “rent-to-own” business.

    Before diving into the most recent inventory exclusion case, In re: Appeal of Aaron’s, here’s a quick summary of how we got to this point.

    Read more »

  • Settlements Under the North Carolina Public Records Law

    Authored by: on Friday, February 15th, 2019

    Under the North Carolina public records law, government records are subject to public access unless an exception says they’re not. The law’s broad definition of “public records,” as interpreted by the courts, covers any record, regardless of format, made or received in the transaction of public business. GS 132-1So, if a government agency receives a request for a record that relates to the transaction of government business, and there is no exception that applies, the agency must provide access (inspection and/or a copy) as required under GS 132-6. Over the years, the legislature has modified the public records law, primarily to create new exceptions. In 1989, the legislature added a new statute about settlements. GS 132-1.3  states that settlement records of certain types of actions are public records. It also restricts litigants and judges from sealing settlements in such actions, except in certain circumstances described in the statute. Unlike most of the other provisions in the public records law, the settlements statute seems primarily to affirm that settlements of the covered actions are public, and to restrict the sealing of settlements of those covered actions. This statute raises two issues, which are discussed below.    Read more »