www.kennedycovington.com
TRIANGLE AREA
LAND USE NEWSLETTER
June 2007
City of Durham Considers Increases to Street Impact Fees
Over the last several months, Durham's administration has been working on an update to the impact fees imposed on new development within Durham. The accompanying spreadsheet shows Durham's current
impact fees for the land uses that concern many in the non-residential
development community, along with the transportation impact fees
currently charged in Cary and Raleigh. The increased amounts for each
land use category are what is termed a "starting point" and is not a City
staff recommendation. This "starting point" is based on a 65% recovery rate for the cost of each trip generated by the proposed new development. The starting point for almost all office categories is well over
a 100% increase above the currently imposed transportation impact
fee for new development in Southern Durham. Similarly, the starting
point for the impact fees for a single family home in Southern Durham
would increase from $795 to $1,924, and for a multi-family dwelling, it
would increase from $488 to $1,181. However, it is important to note
that the starting point for impact fees assessed in Northern Durham
essentially will be unchanged from the current fees, and in Downtown
Durham, the impact fees will be eliminated. There are also impact fees
charged to new residential development for parks and recreation and
open space, which for a single family home, the "starting point" for an
increase is from the current fees amounting to $348.56 up to $647,
and for multi-family, the increase would be from $216.30 up to $514.
The parks and recreation and open space impact fees are imposed uniformly across Durham.
Pursuant to the enabling statute, Durham's impact fee ordinance must
be updated periodically. Kimley-Horn, a leading national engineering,
planning and transportation firm, performed the transportation impact
fee study for Durham. These transportation, parks and recreation and
open space impact fees are not like school impact fees. These impact
fees are legal and were duly authorized by the General Assembly back
in the 1980's. Several local jurisdictions in the Triangle and on the
outer banks have received authority from the General Assembly to
impose impact fees. It certainly seems likely that more cities and
towns will receive authority from the General Assembly to impose
these types of impact fees.
In this Issue:
· City of Durham Considers
Increases to Street Impact
Fees
· Raleigh Considers Significant
Text Change
· Stephanie Powell and Jack
Wiggen Join Firm
· Raleigh’s New Development
Services Manager
· Nitrogen Buy-Down Rules
Back in the News
Our land use and zoning practice group
addresses the specific and unique legal
issues associated with zoning and land
use regulations on behalf of developers
and landowners. With the increased
emphasis by governmental bodies on
controlling growth, mixed-use/urbanism, and other "Smart Growth"
approaches, an integral part of this practice involves dealing with governmental
and quasi-governmental bodies. Each of
our attorneys has extensive practice
experience in all of the various regulations impacting real estate development
and an appreciation of the challenges
developers and landowners encounter.
This group provides efficient, economic,
and comprehensive legal services
throughout the Carolinas.
FOR MORE INFORMATION:
LACY H. REAVES
919.743.7304
lreaves@kennedycovington.com
WILLIAM J. BRIAN, JR.
919.466.1261
bbrian@kennedycovington.com
While non-residential developers are focused on the increases applicable to new office and industrial development, the Homebuilders Association of Durham, Orange and Chatham Counties is very concerned about
this proposal. However, Durham has decided that any increases of these impact fees will not be a part of
the FY 2007-08 City Budget, which means that this impact fee issue will be dealt with after July 2007. This
gives concerned parties time to spread the word about this issue, do more research, and have a greater
chance of impacting the debate about Durham's impact fees.
Raleigh Considers Significant Text Change
Raleigh is considering a text change intended to clarify the cumulative maximum residential office development permitted in units of Office & Institution-1 and Office & Institution-2. The text change allows the
net lot area of the parcel to be used in calculating both the maximum residential density and maximum
office floor area permitted by the applicable zoning district. Under this text change, each use may be
developed to its maximum intensity without any proportionate reduction for other uses on the lot.
This text change would reverse an interpretation of Section 10-2088 of the Raleigh Zoning Code by the
Board of Adjustment decided on July 9, 2001, (case A-45-01). The Board found that the Raleigh City
Code did not specifically address calculating maximum residential and office density on the same lot and
concluded that this issue is a policy matter that should be determined by the City Council. By refusing to
resolve this issue, the Board reversed the interpretation by the Zoning Enforcement Officer, who argued
that the Code permitted a single building to be developed to the maximum residential and office densities.
This proposed text change places the issue squarely before the Raleigh City Council.
Stephanie Powell and Jack Wiggen Join Kennedy Covington’s RTP Office
Stephanie is special counsel in the real estate department and focuses her practice on all
phases of real estate development, with particular emphasis on the acquisition, leasing,
financing, development, exchange and sale of commercial real estate, including office, shopping center, retail, flex, and multi-use projects. She has extensive experience in negotiating, drafting, reviewing, and analyzing complex agreements and documents, including purchase and sale agreements, leases (build to suit and ground leases), loan documents (institutional lenders, life companies and conduit lenders), land use documents (easements and
Stephanie Powell
restrictive covenants), options, defeasance documents and construction contracts.
Stephanie has also implemented numerous Section 1031 standard exchanges, reverse
exchanges, and Tenants-in-common exchanges. Stephanie also practices in the areas of business and corporate transactions including entity formation, mergers, acquisitions, and stock and asset sales. Her vast
experience and knowledge make her a valuable asset to the real estate development practice of Kennedy
Covington. Stephanie can be reached at 919-466-1113.
Jack Wiggen
Jack is an associate in the real estate department and focuses his practice on real estate
development. He has closed transactions for commercial real estate, residential real estate
and loan refinancing, including performing the title searches. In addition, Jack is experienced in drafting and negotiating contracts of purchase and sale and lease agreements for
commercial landlords. This practical experience, provides Jack with the knowledge and skills
to assist clients in navigating the ever expanding real estate market in the Triangle. Jack
can be reached at 919-466-1127.
Raleigh's New Development Services Manager
Hamid Dolikhani, AICP, is Raleigh's new Development Services Manager, heading the Development Services
Division. As Development Services Manager, Mr. Dolikhani is responsible for establishing a more efficient
development approval process for the City. To achieve this goal, he is in charge of coordinating the five
departments involved in the development process, analyzing and implementing innovative business practices, and resolving conflicting processes within the City's development review process. An important aspect
of Mr. Dolikhani's work will be implementing and monitoring changes to the development review process
suggested by the Farragut Study.
Mr. Dolikhani brings an extensive educational and practical background in the development and management fields to this new position. He received both a Master's Degree in Urban & Regional Planning from
Florida Atlantic University and a Master's in Public Administration from Florida International University.
Prior to joining the City of Raleigh, Mr. Dolikhani served as the Assistant Building Director for the City of
Miami Beach. In this capacity, he implemented many innovative technology improvements to the city's
development review process. He also worked for the City of Miami Beach as the Assistant Director of the
Miami Beach Building Department. In addition to serving in these management positions, Mr. Dolikhani has
experience as an Engineering Assistant and field inspector. He is also a licensed General Contractor and certified Building Code Official in Florida.
Nitrogen Buy-Down Rules Back in the News
Nutrient pollution, specifically nitrogen and phosphorous pollution, has been a concern in the Neuse River
for several decades. By the late 1980s, the entire Neuse River Basin had been classified as nutrient sensitive waters by the Environmental Management Commission ("EMC"), which lead to the implementation of a
variety of regulatory actions aimed at reducing nutrient-laden runoff. One such action was the adoption of
the Nutrient Sensitive Waters Management Strategy, a collection of rules that set forth nutrient loading limits for sources of nutrient pollution. Under the Nutrient Sensitive Waters Management Strategy, all new
development in the Neuse River Basin is subject to nutrient loading limits. If a development fails to meet
this limit, the developer is required to install on-site nutrient controls, and, if the limit cannot be met even
after on-site controls have been implemented, the developer may pay an offset fee into the Riparian Buffer
Restoration Fund, which is managed by the
Ecosystem Enhancement Program ("EEP").
EEP
uses the funds to implement nutrient controls, predominantly in the form of riparian buffer restoration,
throughout the Neuse River Basin.
The original offset fee established in 1998 for the
Neuse River Basin was set at $11 per pound of
nitrogen per year. In 2005, in a move that caught
the development community somewhat by surprise,
the EMC approved a rule that increased the nitrogen
offset fee for nitrogen to $57 per pound per year.
The rule was to become effective on March 1, 2006.
However, prior to the rule's taking effect, the North
Carolina General Assembly enacted a bill that temporarily re-established the nitrogen offset fee at $11
per pound. That bill also called for the General
Assembly's Environmental Review Commission to
conduct a study of the nutrient offset fee program
and report its findings to the General Assembly
upon the convening of the 2007 session.
Specifically, the Environmental Review Commission
was directed to evaluate, among other issues, the
sustainability of the program through the year 2020
at the current fee of $11 per pound of nitrogen. A
draft of the report was made public in early May.
In short, the report concludes that the offset fee
program is not sustainable at the current fee of $11
per pound of nitrogen. Subsequent to the release of
the report, a bill was introduced that grants the
Environmental Review Commission additional time
to study the cost-effectiveness of the current offset
payment program. This bill was passed the House
in late May, crossed over to the Senate, and is now
in the Senate Agriculture, Environment, and Natural
Resources Committee. Assuming the bill passes the
Senate, the Environmental Review Commission will
have until September 1, 2008 to complete its evaluation.
At least for now, the current fee of $11 per pound of
nitrogen goes unchanged; however, the conclusion
of the report signals an impending fee increase.
Additional developments in the offset fee issue can
be expected over the next year. Consequently, the
development community should remain vigilant in
monitoring the situation.
This bulletin is published as a service to clients and others interested in land use and zoning issues. The information
provided herein is general in nature and should not be relied upon as legal advice as to specific factual situations. Listed
below are members of our land use and zoning practice group.
Founded in 1957, Kennedy Covington is one of the largest law firms in the Carolinas with offices in Charlotte, Raleigh,
Research Triangle Park, Columbia and Rock Hill. Our more than 200 attorneys use their diverse experience and knowledge to counsel clients in varied industries such as banking and finance, real estate, technology and manufacturing. At
Kennedy Covington, we give more than a legal opinion; we provide a business perspective.
Land Use and Zoning Practice Group
Raleigh
RTP/Durham
Charlotte
Jason L. Barron
919.743.7343
Ann M. Anderson
919.466.1188
Jefferson W. Brown
704.331.7471
Eric M. Braun
919.743.7315
Eric M. Braun
919.466.1263
John H. Carmichael
704.331.7509
Michael F. King
919.743.7310
William J. Brian, Jr.
919.466.1261
Roy H. Michaux, Jr.
704.331.7462
Mack A. Paul IV
919.743.7326
Patrick L. Byker
919.466.1264
Bailey Patrick, Jr.
704.331.7454
Alan H. Peterson
919.743.7301
John E. Markham, Jr. 919.466.1268
South Carolina
Lacy H. Reaves
919.743.7304
Nathaniel C. Parker
919.466.1118
Stephen R. McCrae, Jr.803.329.2602
Craigie D. Sanders
919.466.1259