Posted by: Patricia Salkin | August 20, 2015

NC Appeals Court Invalidates Town’s Adequate Public Facilities Ordinance and Orders Repayment of Fees Interest on Impact Fees

Land developers brought an action against the Town to secure interest on impact fees that the town charged pursuant to ordinance, which the town reimbursed with a letter indicating that the refund, without interest, was consideration for waiver of claims under ordinance. The ordinance in question was the Adequate Public Facilities Ordinance (“APFO”) requiring land developers to pay impact fees as a condition of obtaining necessary permits for development. The Superior Court, denied the town’s motion to dismiss, granted developers’ motion for judgment on the pleadings, and awarded developers interest and the Town appealed.

Defendant first argued that the APFO is a valid ordinance pursuant to N.C. Gen.Stat. § 160A–372 (2013), and that consequently the trial court erred in entering judgment in favor of plaintiffs. Here, the Town’s APFO stated that its purpose is to “ensure that public facilities needed to support new residential development meet or exceed the level of service standards established herein.” However, Contrary to defendant’s argument, there were no provisions in section 160A–372 authorizing the Town to make its development approval contingent on securing funds to subsidize its law enforcement, fire protection, and parks, which was the stated purpose of the APFO.

Next, the defendant contended that a claimant is not entitled to recover interest pursuant to N.C. Gen.Stat. § 160A–363(e) when the municipality has already voluntarily refunded the illegally extracted fee. The court disagreed, finding that the statute’s plain language neither prevented a claim for interest when the city returns the principal amount to a claimant nor barred a claim for interest that arose from a separate civil action. Finally defendant asserted that the plaintiffs’ acceptance of $54,284, coupled with the initialing of defendant’s letter, established an accord and satisfaction and released defendant from any requirement to pay outstanding interest. Here, the contract terms, indicated in the body of the letter, referenced a “mutual release … of all obligations and liabilities under the [APFO].” While, the terms of the contract clearly denoted a waiver of all obligations arising out of the APFO to which both parties agreed, the letter contained no reference to a waiver of any obligations or liabilities that might arise vis-à-vis defendant regarding interest payments allowed under N.C. Gen.Stat. § 160A–363(e). Accordingly, the defendant’s argument that plaintiffs were barred from seeking interest payments under the accord and satisfaction doctrine was without merit. The judgment denying the town’s motion to dismiss was therefore affirmed.

China Grove 152, LLC v Town of China Grove, 773 S.E. 2d 566 (NC App. 7/7/2015)

The opinion can be accessed at:

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