TRIANGLE AREA LAND USE NEWSLETTER June 2 0 0 7 City of Durham - - PDF document

City of Durham Considers I ncreases to Street I m pact Fees Over the last several months, Durham's administration has been work- ing on an update to the impact fees imposed on new development with- in 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% recov- ery rate for the cost of each trip generated by the proposed new devel-

• pment. 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

• pen 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 uni- formly 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

• pen 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

• uter 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.

TRIANGLE AREA

LAND USE NEWSLETTER

June 2 0 0 7

www.kennedycovington.com

I n this I ssue:

· City of Durham Considers

I ncreases to Street I m pact Fees

· Raleigh Considers Significant

Text Change

· Stephanie Powell and Jack

Wiggen Join Firm

· Raleigh’s New Developm ent

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, m ixed-use/ urban- ism , and

• ther

"Sm art Growth" approaches, an integral part of this prac- tice involves dealing with governmental and quasi-governmental bodies. Each of

• ur attorneys has extensive practice

experience in all of the various regula- tions impacting real estate development and an appreciation of the challenges developers and landowners encounter. This group provides efficient, economic, and com prehensive 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 devel-

• pment, 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 devel-

• pment 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

• ffice 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 densi- ties. This proposed text change places the issue squarely before the Raleigh City Council.

Stephanie Pow ell and Jack W iggen 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, shop- ping center, retail, flex, and multi-use projects. She has extensive experience in negotiat- ing, drafting, reviewing, and analyzing complex agreements and documents, including pur- chase and sale agreements, leases (build to suit and ground leases), loan documents (insti- tutional lenders, life companies and conduit lenders), land use documents (easements and restrictive covenants), options, defeasance docum ents 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 cor- porate 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 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 experi- enced 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 Developm ent 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 prac- tices, and resolving conflicting processes within the City's development review process. An important aspect

• f 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 manage-

ment 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 cer- tified Building Code Official in Florida. Nitrogen Buy-Dow n Rules Back in the New s 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 sensi- tive 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 lim- its 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

Stephanie Powell Jack Wiggen

Restoration Fund, which is m anaged by the Ecosystem Enhancement Program ("EEP"). EEP uses the funds to implement nutrient controls, pre- dominantly 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

• ffset 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 tem- porarily 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

• f

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 eval- uation. At least for now, the current fee of $11 per pound of nitrogen goes unchanged; however, the conclusion

• f 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 knowl- edge 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.

Raleigh

Jason L. Barron 919.743.7343 Eric M. Braun 919.743.7315 Michael F . King 919.743.7310 Mack A. Paul IV 919.743.7326 Alan H. Peterson 919.743.7301 Lacy H. Reaves 919.743.7304

RTP/ Dur ham

Ann M. Anderson 919.466.1188 Eric M. Braun 919.466.1263 William J. Brian, Jr. 919.466.1261 Patrick L. Byker 919.466.1264 John E. Markham, Jr. 919.466.1268 Nathaniel C. Parker 919.466.1118 Craigie D. Sanders 919.466.1259

Char lot t e

Jefferson W. Brown 704.331.7471 John H. Carmichael 704.331.7509 Roy H. Michaux, Jr. 704.331.7462 Bailey Patrick, Jr. 704.331.7454

Sout h Car olina

Stephen R. McCrae, Jr.803.329.2602

Land Use and Zoning Practice Group