Triangle Land Use Newsletter
Summer 2010
Authors:
William J. Brian, Jr.
bill.brian@klgates.com
919.466.1261
Mack A. Paul, IV
mack.paul@klgates.com
919. 743.7326
From the Editors:
This newsletter provides updates on many regulatory and policy matters being
considered by local governments in the Triangle area and highlights some practical
issues that may arise during real estate deals. Many local governments continue to
take advantage of the decrease in development applications to strengthen their
development regulations, often resulting in more onerous and restrictive measures.
Developers and property owners should be alert of the changing landscape in
anticipation of increased development activity.
Jason L. Barron
jason.barron@klgates.com
919. 743.7343
We hope you find this edition of the Triangle Land Use Newsletter to be of interest
and we welcome any feedback (email bill.brian@klgates.com or
mack.paul@klgates.com)
R. Michael Birch, Jr.
michael.birch@klgates.com
919. 743.7314
Patrick L. Byker
Drafter Beware: Technical Drafting Errors Can Result in
Significant Practical Problems
By: Michael Ovsievsky
patrick.byker@klgates.com
919. 466.1264
James L. Joyce
jim.joyce@klgates.com
919. 743.7336
Michael J. Ovsievsky
With the commercial real estate market continuing to find itself among the most
affected industries in the downturn, the increased prospect of litigation (whether in
the form of private lawsuits between parties, bankruptcies or foreclosures) makes it
more important than ever to be vigilant in making sure that transactions are properly
documented. The risks associated with an incompletely or incorrectly documented
transaction become heightened under the increased scrutiny of the litigation process
– and those risks can be significant.
3ichael.ovsievsky@klgates.com
919. 466.1260
Craigie D. Sanders
craigie.sanders@klgates.com
919. 466.1259
K&L Gates includes lawyers practicing out
of 36 offices located in North America,
Europe, Asia and the Middle East, and
represents numerous GLOBAL 500,
FORTUNE 100, and FTSE 100
corporations, in addition to growth and
middle market companies, entrepreneurs,
capital market participants and public
sector entities. For more information,
visit www.klgates.com.
Decided cases in 2006 and 2007 in North Carolina illustrate the significance that
seemingly small errors can have. The Bankruptcy Court for the Eastern District of
North Carolina determined that a deed of trust which references the indebtedness it
secures by referring to a “note of even date herewith” was invalid because the actual
date of the promissory note was one day later than the date of the deed of trust. The
result was that the promissory note was deemed unsecured. In re Head Grading Co.,
Inc. (2006).
More recently, the North Carolina Court of Appeals upheld a lower court’s
determination that an erroneous legal description attached to a deed of trust rendered
the instrument defective, provided no notice to subsequent purchasers or lien-holders
and was not subject to reformation (i.e., correction). Accordingly, the lender lost its
first lien position and its interest became subordinate to that of a subsequent lienholder. Fifth Third Mortgage Co. v. Miller, et al. (2010).
Triangle Land Use Newsletter
Some of the most important things to make sure are
correct and complete are also the most obvious: (i)
make sure the parties are correctly identified and
documents are all dated correctly, (ii) make sure
entity parties are organized/incorporated, in good
standing and authorized to do business in the state
where the transaction is taking place, (iii) be sure
that property descriptions are complete and correct,
and (iv) make sure that documents of conveyance
are fully executed, correctly acknowledged and
recorded in the land records of the county(ies) where
the subject property is located.
Specifically, the drafter should be aware of:



In North Carolina, only the following officers of
a corporation are presumptively authorized to
sign a real property conveyance on behalf of a
corporation: chairman, president, chief
executive officer, vice-president or assistant
vice-president, treasurer, or chief financial
officer. Otherwise, such an instrument of
conveyance may be subject to scrutiny unless
the signature that is attached to the instrument
bears the corporate seal or a resolution of the
board of directors of the corporation authorizing
the signatory.
The failure to properly acknowledge the
signature of a grantor on a recorded instrument
is also a fatal defect from a priority standpoint
because it provides no constructive notice to
subsequent purchasers and lien-holders.
Accordingly, such an instrument will be treated
as if unrecorded. In short, proper and complete
notary acknowledgements are vitally important.
As with any other conveyance of an interest in
land, an option to purchase real property is valid
against lien creditors or purchasers for valuable
consideration only if it is recorded in the county
where the land lies. An improper description of
the property subject to the option or an outright
failure to properly record the option can act to
unwind the option and leave the option holder
without its preferred recourse, i.e., the right to
purchase the property in question.
In a world where external forces continue to
negatively impact the positions of real estate actors,
parties should take the time and care to make sure
that those factors that they can control, including
documentation, do not lead to unnecessary problems
in the future.
Raleigh Changes Rezoning Process
By: Mack Paul and Michael Birch
The City of Raleigh recently adopted a text change,
TC-2-10, which imposes new prerequisites for filing
a rezoning petition and limits the types of conditions
an applicant can include as part of its conditional
use zoning case. These changes become effective
September 1, 2010, which is the first day of the next
rezoning filing period. Therefore, developers and
property owners considering filing next cycle
should start planning for these new requirements.
Neighborhood Meeting Requirement
The most important change requires an applicant
filing a conditional use rezoning petition to hold a
meeting with adjacent property owners prior to
filing. This meeting takes the place of the
neighborhood meeting that was previously required
after filing. At least ten days prior to the meeting,
notices must be mailed to owners of property within
one hundred feet of the proposed rezoning. A report
of this meeting must be filed contemporaneously
with the rezoning application. City Planning Staff
is directed to reject any application that fails to
comply with the new neighborhood meeting rules.
Trip Generation Comparison
TC-2-10 also requires an applicant to submit the
findings of a trip generation comparison at the time
of filing, unless the Public Works Director agrees
prior to filing that the comparison is not necessary.
The trip generation comparison contrasts the
number of vehicle trips that could be generated by
development under the current zoning designation
against the number of vehicle trips that could be
generated by development under the proposed
zoning classification. Because many rezoning
applications seek to reclassify property to a more
intense zoning district, a trip generation comparison
will likely be required for most rezoning cases.
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Triangle Land Use Newsletter
The aim of these two new requirements is to engage
the neighbors and City Planning and Transportation
Staff earlier in the rezoning process. While the text
change will certainly accomplish this goal, it
requires more advanced planning by the applicant,
both in terms of timing and cost. Because a
neighborhood meeting report and a trip generation
comparison are prerequisites for filing a rezoning
case, the ability of an owner or developer to file a
rezoning petition on short notice is substantially
impaired. Also, these prerequisites increase the
upfront costs associated with the rezoning process.
Restriction on Conditions
The text change also prohibits rezoning applicants
from incorporating certain conditions that have been
routinely included in the recent past. A few of these
conditions typically have been offered by owners
and developers to address issues raised by
surrounding property owners and City Planning and
Transportation Staff to gain their support.
For example, an applicant attempting to rezone a
parcel for high density residential or commercial
uses that is surrounded by established
neighborhoods will often hear from the neighbors
that they do not want any additional traffic. One
way an applicant can address this concern is to offer
a condition prohibiting access from the property
being rezoned to the adjacent neighborhoods. TC-210 takes this bargaining chip off the table by
forbidding applicants from including conditions that
attempt to prohibit or limit cross-access or public
street connections.
Another way applicants have addressed traffic
concerns is a condition requiring a traffic impact
analysis prior to site plan approval. This has
allowed applicants who do not have a specific use or
residential density in mind to avoid the expense of a
traffic impact analysis at the rezoning stage. Such a
condition postpones the cost of a traffic impact
analysis or shifts the cost to the end-user. However,
TC-2-10 now prohibits conditions regulating the
timing of a traffic impact analysis. Therefore, there
is a greater likelihood that an applicant will have to
do a traffic impact analysis at the rezoning stage.
Moreover, City Transportation Staff may request an
applicant to add a condition limiting development to
a certain trip count generated by the traffic impact
analysis. Such a condition may be problematic if an
applicant does not have a specific end-user or
development plan at that point in the process.
Third, applicants attempting to rezone property to
permit multifamily residential uses often encounter
neighbors fearful of lower-cost housing. One way
to address this concern is to prohibit certain building
materials or require a percentage of particular
building materials. Such a condition may have
exclusionary effects on segments of the housing
market. Although language prohibiting conditions
regulating building material was removed from the
approved text change, the new ordinance does
include a “catch-all” provision that prohibits
applicants from including a condition that attempts
to require a minimum value of improvements or that
can be construed as an exclusionary device.
TC-2-10 becomes effective September 1, 2010,
which is also the beginning of the next filing period,
so any rezoning case filed in Raleigh must comply
with these new requirements
Raleigh Strengthens Stormwater
Control Measures
Authors: Jason Barron and Michael Birch
On August 1, 2010, changes to the City of Raleigh
soil erosion and sediment control ordinances
become effective. The City Council recently
approved text change TC-11-09, which requires
increased design standards for temporary and
permanent stormwater control facilities. The text
change also includes provisions impacting the
settling efficiency of sediment control devices, site
stabilization standards and grading permit validity.
Given the City’s civil enforcement options, land
owners, developers and contractors need to be
aware of the changing requirements.
Temporary stormwater control measures aimed at
controlling runoff during construction are required
when more than five acres is being disturbed. Prior
to TC-11-09, when disturbing more than five acres,
the peak stormwater runoff leaving the site during
construction could not exceed the runoff leaving the
site in its pre-development state for the two-year
storm event. Pursuant to TC-11-09, when between
five and fifteen acres of land is being disturbed,
temporary stormwater control measures must be
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Triangle Land Use Newsletter
designed to control for the two- and ten-year storm
event. When more than fifteen acres of land is being
disturbed, the temporary stormwater control
measures must be designed to control for the two-,
ten- and twenty-five year storm event.
Currently, outside of the Falls Lake Watershed area,
permanent sediment basins aimed at controlling
stormwater runoff after construction must be
designed so that the peak stormwater runoff leaving
the site for the two- and ten-year storms is no greater
for post-development conditions than predevelopment conditions. TC-11-09 increases this
standard, requiring that permanent stormwater
control facilities be designed to control for the two-,
ten- and twenty-five year storm events.
The development community, including the Home
Builders Association of Raleigh-Wake County,
voiced concerns related to the additional cost and
increased surface area associated with the increased
design standards required under this text change. As
a result, the City Council directed City Stormwater
Staff and the Stormwater Management Advisory
Commission to develop a text change that would
provide developers with an option to design to the
pre-TC-11-09 standards. Such a text change will
likely be advertised for the October 19, 2010 public
hearing.
In addition to increased design standards for
stormwater control facilities, TC-11-09 also makes
the following changes:

Decreases the numbers of days within which a
contractor has to stabilize a disturbed site, from
21 days to 14 days;

Requires construction site operators disturbing
more than one acre to submit information
required by the NPDES permits to the City;

Increases the design standard for settling
efficiency of stormwater control facilities from
70% to 85%; and

Limits the effective time period of grading
permits to two years, with the ability to extend
the permit by increments of six months if some
land disturbing activity has occurred on site,
there are no outstanding violations on the site,
all penalties assessed have been paid or are
being appealed, and all violations have been
remedied at the time the extension request is
made.
The new regulations are effective August 1, 2010,
except for changes to the grading permit expiration,
which is effective January 1, 2010.
NC 54-I40 Corridor Study Moves
Toward Adoption
Authors: Patrick Byker and Craigie Sanders
The Durham, Chapel Hill, Carrboro Metropolitan
Planning Organization (the "DCHC MPO") is in the
final stages of reviewing its new NC 54-I40
Corridor Study (the "Corridor Study"). The DCHC
MPO hopes to complete the Corridor Study by the
end of the year. This entity is the "regional
organization responsible for transportation planning
for the western part of the Research Triangle area in
North Carolina," according to its website, and
encompasses all of Durham County, Chapel Hill,
Carrboro and Hillsborough in Orange County, and
the northern part of Chatham County. Federal, state
and local land use planners and transportation
planners as well as elected officials and citizens
comprise the DCHC MPO.
The purpose of the Corridor Study is to improve
traffic circulation in the I-40 area along NC 54.
This corridor serves as one of the primary
connection points between Durham - Research
Triangle Park/Duke University on the east side and
Chapel Hill - University of North Carolina Chapel
Hill on the west side.
The NC 54-I40 interchange area is of significant
importance. First, the interchange is the I-40 exit
for west bound traffic going to Chapel Hill.
Second, the immediately surrounding area is
currently developing as an office and residential
area; and, based on development patterns, more
office space and residences will likely be built in the
area in the mid- to long-term. Third, the
Meadowmont mixed use subdivision is located
along NC 54, approximately 2 miles from the
interchange. Finally, there are significant
undeveloped contiguous properties, upwards of 300
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Triangle Land Use Newsletter
acres, in Durham County in close proximity to the
interchange.
The DCHC MPO hosted three community
workshops, with the first conducted in November of
2009. Elected officials, local planning and
transportation staff members and citizens attended
the workshops. Durham City Councilman Mike
Woodard, Chair of the DCHC MPO, stated, "NC 54
west of RTP and its interchange with I-40 are vital
to the future of the region. Many economic,
development and quality-of-life issues depend on an
effective plan for both the traffic and land use in this
area, and there are many complex issues we must
consider. Active participation from all stakeholders
is critical to the success of the plan we will develop
over the next nine months."
The Corridor Study will likely come before the
Durham City Council and the Durham Board of
County Commissioners for adoption, possibly in the
early months of 2011. It is anticipated that other
DCHC MPO member communities will adopt the
Corridor Study. Once adopted, it could have farreaching implications in land use and zoning
matters. In Durham, for example, a rezoning must
conform to adopted plans. Accordingly, future
improvement of the undeveloped contiguous
properties in Durham in the Corridor Study area will
be influenced by the plan.
Update: Raleigh’s New Unified
Development Ordinance
Authors: Mack Paul and James Joyce
The City of Raleigh and consultant Code Studio are
moving forward with the overhaul of the City’s land
development regulations. Over the next few months,
Code Studio will be developing a draft of Raleigh’s
new unified development ordinance (“UDO”) in
three modules. The modules will concern
administration and process, districts and uses, and
general regulations.
The first module was released on July 12, and
focuses on the new zoning districts, development
standards, and use categories. It also introduces
different zoning districts and changes how certain
uses are regulated. Of the three modules, this one
will have the greatest impact on land use and
development in Raleigh, so the development
community and property owners should pay
particular attention to this stage of the process.
The three modules will be reviewed by the UDO
Advisory Group. After all three modules are
drafted, they will be presented and reviewed by the
Planning Commission. Public stakeholder meetings
will be held after all three modules are consolidated
and a public draft of the full code is released.
The impact of the new UDO cannot be overstated.
Raleigh’s present development regulations have
been in place for almost thirty years without
substantial changes, and the new UDO is likely to
alter land development practices and procedures that
many have grown accustomed to over the years.
Stay engaged and help ensure that these changes
provide a framework for a workable land
development process.
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Triangle Land Use Newsletter
This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon
in regard to any particular facts or circumstances without first consulting a lawyer.
©2010 K&L Gates LLP. All Rights Reserved.
Summer 2010
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