Special Bulletin
A weakening economy creates many unwelcome problems for land developers and local governments. One of the most significant problems is that land development projects can fall behind schedule or come to a halt while the developer waits for the economy to improve. What happens if a project stalls or is not commenced before a development permit expires? In the past, the developer would need to apply for a new development permit. Obtaining a new permit is time consuming and costly; all of the time and expense required to receive the first permit is wasted; and, new laws, ordinances, or regulations may make the new permit less valuable. This Special Bulletin explores a new North Carolina law that provides some relief to developers by automatically reviving and extending certain development permits.
The North Carolina Permit Extension Act of 2009 (“Act”) revives and extends many land development approvals previously issued, including those that have expired since January 1, 2008. It was the intent of the General Assembly to give developers the breathing room they need until the economy improves and real estate development gets back on a more normal course. The Act is a significant departure from the normal development approval process, and the speed with which it was adopted has left several unanswered questions that need to be explored.
What Does the Act Do?
The expiration date for any development approval that was current and valid at any time during the period from January 1, 2008, until December 31, 2010, has been “suspended” by the Act until at least December 31, 2010. Although it is not entirely clear from the text of the Act, it is likely that this means that the running of the expiration date is tolled – that is, the development approval’s expiration is actually extended until at least December 31, 2010, and, in many cases, later. For example, a development approval that was issued on January 1, 2009, and due to expire on December 31, 2009, would be extended through December 31, 2011 (December 31, 2010, plus the one-year original effective period of the approval). Similarly, a development approval that was issued on September 1, 2009, with a locally-imposed original expiration date of March 1, 2010 (six months), would actually remain valid until June 1, 2011 (December 31, 2010, plus six months). In addition, the Act allows local or state government development approvals to be extended by the issuing agency even beyond the time period required in the Act.
What About Development Approvals that Have Already Expired?
If an expired development approval was current and valid at any time on or after January 1, 2008, then it has been revived automatically and is now in effect again. The Act resurrects such dead development approvals and grants them a new life span lasting until December 31, 2010, plus the number of days left on the development approval’s effective period as of January 1, 2008. For example, if a development approval originally expired on February 1, 2008, then it would be revived and given a new expiration date of February 1, 2011 (December 31, 2010, plus the 31 days remaining on the permit as of January 1, 2008).
What is a “Development Approval”?
The Act applies to only “developments” and “development approvals,” as those terms are defined in the Act. According to the Act, a “development” is the “division of a parcel of land into two or more parcels, the construction, reconstruction, conversion, structural alteration, relocation, or enlargement of any building or other structure or facility, or any grading, soil removal or relocation, excavation or landfill, or any use or change in the use of any building or other structure or land or extension of the use of land.”
The definition of “development approval” includes many different governmental approvals and permits required for development activities, including:
- Building permits;
- Sketch plans, preliminary plats, plats regarding a subdivision of land, site specific development plans or phased development plans, development permits (including, probably, conditional and special use permits), and development agreements;
- Environmental approvals granted by state agencies;
- Coastal Area Management Act permits;
- Sedimentation Control Commission permits;
- Water and wastewater permits;
- Nondischarge or extension permits;
- Stream origination certifications;
- Water quality certifications;
- Air quality permits; and,
- Certificates of appropriateness issued by a municipality’s preservation commission.
The answer to whether or not a permit or approval is included in the statutory list can be complicated and requires careful attention to the specific statutory sections referenced. For example, the Act does not specifically identify a conditional use permit as a development approval. However, it is probable that many sorts of zoning permits, whether special, conditional, or otherwise, are covered as development approvals because they are “development permits” under Item 2 in the list above. Cooperation between the permitting government agency and the developer will be helpful in clarifying whether the developer needs to take additional steps, including possible court action, to protect extensions granted by the Act.
What Permits are not Covered by the Act?
The Act does not affect any federal permits, deadlines required by federal law, permits that have been rejected voluntarily by a developer, or Department of Environment and Natural Resources consent orders. The Act also may be trumped by a government’s authority to revoke or modify a development approval for reasons unrelated to the passage of time. For example, if a permit is contingent on the developer completing some specific task, such as providing certain driveway access, then the Act does not change that requirement.
What About a Water or Sewer Allocation that Has Expired?
As originally enacted, the Act created a problem for municipalities and counties with water or sewer allocation limits in the situation in which a developer received a permit for water and sewer allocation, the permit expired, and the municipality or county subsequently reallocated the water and sewer capacity to another development prior to August 5, 2009. An amendment to the Act addresses this situation. If the water and sewer capacity has been reallocated to another project, then the permit revived by the Act is entitled to “first priority” to any new water or sewer allocation that may become available. If there is water or sewer capacity available, the revived permit automatically receives its original allocation without the need for additional approvals by the municipality or county.
What Should Developers and Governments Do Now?
Developers should contact the local or state government agency that issued a development approval affected by the Act and request confirmation of the new expiration date. Although the Act applies to the entire state, it is still up to the local or state permitting agency to calculate the new expiration date. Water and sewer allocation issues, if any, should be addressed at the same time. Local governments and state agencies may not impose new requirements, such as an application form or new hearing, for receiving a permit extension. Developers that disagree with how the relevant government agency determines the new expiration date should seek legal counsel.
The Act creates an opportunity for developers to see their delayed projects through to a successful conclusion. The additional time may be exactly what is needed to get through the recent recession. However, developers must not assume that their permits and approvals are extended. The Act is not entirely clear on how the extension applies in many situations, and different local and state governments may apply the Act differently. Therefore, careful analysis and discussions with the permitting government agency and legal counsel will be important if a developer intends to take advantage of the Act.
For further information regarding the issues described above, please contact one of our Real Estate Development Attorneys, Samuel B. Franck, Justin M. Lewis, James W. Norment, William E. Martin, Clifford P. Parson, Eric J. Remington, Ryal W. Tayloe, or Amy P. Wang.
