Industry’s eyes are on Cabarrus fee case

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The future of a controversial fee the construction industry is charged to build housing in Cabarrus County will be in the hands of the state Supreme Court next week.

On Monday, the court will hear arguments in the case involving the county’s adequate public facilities ordinance.

Despised by many in the building industry but intended to keep growth from getting out of hand, the APFO has meant fees to the tune of more than $8,000 to build just one house. The fees are meant to mitigate the impact that more development will have on local schools’ resources.

It seems the construction industry is set for a victory Monday. After all, the North Carolina Court of Appeals already ruled in December 2009 against a similar ordinance in Union County.

Still, industry officials are watching the Supreme Court case, saying it could be crushing to construction businesses across the state if the court were to side with the county.

“If they were to find that it was OK in Cabarrus, not only Union but other jurisdictions around the state would look at this as an opportunity to do something similar,” said Mike Carpenter, executive vice president and general counsel for the North Carolina Home Builders Association.

The purpose of the APFOs, in Cabarrus and Union counties, was to keep growth in check thanks to a skyrocketing population in the Charlotte region.

The premise behind the ordinances goes like this: If a county’s school district could not serve its current load of students, the ordinances give the county the authority to stop more subdivisions from being built until there’s capacity for more students.

Under the language of the Union County ordinance, developers would have to wait at least five years before resubmitting subdivision plans, and even then there was no guarantee that there would be adequate capacity, Carpenter said.

Carpenter, who assisted the construction industry in a 2006 lawsuit against Union County, said the industry had what he called an “alleged” option if a school district were overcapacity: They could pay the county to offset the impact that new housing would have on the school district.

But Carpenter said the payments were steep and restricted growth, which is what the ordinance intended. For any subdivision with six or more lots — the threshold for a development to fall under the rules of the APFO — a developer would pay $16,000 per house in fees.

In Union County, where the APFO was adopted Oct. 2, 2006, the fee applied in just about the entire western part of the county, which is the part closest to Charlotte.

In December 2006, the Union County Land Owners Association, which is composed of developers and other landowners, filed suit opposing Union County’s ordinance.

“In our view, and in the view of the plaintiffs, for all practical purposes the ordinance made it virtually impossible to develop property and provide housing,” Carpenter said.

“As far as I know, because of the amount charged per house, there really weren’t a whole lot of fees collected under that ordinance,” he said.

Actually, Dick Black, director of planning for Union County, said the county collected $147,240 in APFO fees from developers since 2006.

Following the Court of Appeals opinion that struck down the ordinance in Union County, that money was returned to developers, Black said.

Union County’s ordinance adoption followed three attempts by the county to seek authority from the state General Assembly to impose on developers a fee to offset the impact new housing construction would have on schools. All three attempts, in 1998, 2000 and 2005, were unsuccessful, Carpenter said.

But attorney Richard Koch, who represents Cabarrus County, has a different read on the state’s actions. He said Cabarrus County received General Assembly authority in 2004 to turn to an ordinance like the APFO to deal with overwhelmed schools.

Koch also points to a statute of limitations defense that he plans to roll out in court, a defense he says would not have been applicable in the Union County case.

Koch claims his county has been enforcing an ordinance similar to the APFO one for the past 13 years.

So, when the case goes before the Supreme Court, the argument over what, if any, authority the state legislature gave to Cabarrus County will likely be a central one.

Initially, Union County’s APFO was upheld at the trial court level, but the landowners association appealed that decision to the Court of Appeals, which reversed the decision because the General Assembly had not authorized any county to adopt such an ordinance, Carpenter said.

Union County didn’t abandon its fight, but the state Supreme Court rejected the county’s efforts to challenge the Court of Appeals decision.

Meanwhile, during the battle in Union County, Cabarrus County was also adopting ordinances intending to curb growth.

Beginning in 1998, Cabarrus had an ordinance that essentially accomplished the same thing as an APFO. A newer version of the ordinance was adopted in 2004 and again in 2007. The most recent ordinance — the one being challenged by builders — is almost identical to Union County’s, Carpenter said.

In 1998, Cabarrus County’s fee was $500 per house, but it’s since been raised to $8,617 for a single-family house, $4,571 for a townhouse and $4,153 for a multifamily development.

The construction industry sued. Among the plaintiffs in the case against Cabarrus County: Lanvale Properties — which owned 54 acres in the city of Locust, with plans to develop it into a single-family subdivision — and the Cabarrus County Building Industry Association.

Although Cabarrus County is heading to court to fight the attempts to eliminate the fees, Cabarrus County Schools meets the state’s student-teacher ratio requirements, at least for some grades.

Ronnye Boone, CCS spokeswoman, said the district is fulfilling state guidelines for kindergarten through third grades of no more than 24 students per class. Boone could not be reached before press time to explain whether CCS meets class size guidelines for grades fourth through 12th.

Class size has increased over the past three years as CCS’ budget has become leaner, Boone said.

Boone said there are 88 mobile classrooms and two mobile unit pods, or clusters of several mobile units, in the district, the 10th largest school district among 115 in North Carolina. Nationally, CCS ranks 313th, the district says.

There were 28,362 students enrolled in the 2010-11 school year and 1,934 teachers on staff, according to the district.

Over the past 13 years, the district has opened 16 new schools. Cabarrus has 19 elementary schools, seven traditional middle schools, seven traditional high schools, two preschools, one nontraditional middle school and three nontraditional high schools.

Despite growth in the school district, the trial court ruled against Cabarrus County in the APFO lawsuit last year. It sided with the developers, citing its December 2009 decision against the ordinance in Union County.

The Court of Appeals heard the Cabarrus case in June 2010 and sided with the developers, citing its December 2009 decision against the ordinance in Union County.

In June, the state Supreme Court granted the county’s petition to hear the case.

Meanwhile, Carpenter says APFO fees are hurting the construction industry at a time when it is already down thanks to the economy.

“Any impediment to building and affordability exacerbates the current economic situation we’re all in,” he said. “These sorts of fees, in whatever name, are not good for housing and certainly not good for affordable housing.”

Koch said he just wants a definitive answer from the Supreme Court on on the APFO’s legality.

“I’m glad they decided to pick it up as an issue that they are willing to rule on instead of leaving it to a number of Court of Appeals decisions,” he said.

Ramsey can be reached at [email protected].