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Wednesday, 23 May 2007 00:00

Moratorium opponents suffer setback

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A group of Realtors and developers challenging the legality of Jackson County’s five-month moratorium on new subdivisions lost the first round in court Thursday (May 24.)

The group argued that it is being financially harmed and that the moratorium should be lifted immediately. It was not a full-blown trial on the validity of the moratorium, but rather a hearing for a temporary injunction. A full-blown trial will come later. But the Realtors argued they are being irreparably harmed with each passing day and need relief from the moratorium in the meantime.

“They are losing daily, weekly, monthly thousands — if not hundreds of thousands — of dollars because of the stoppage of development by the moratorium and the signal that has been sent,” argued Charles Clement, an attorney from Boone representing the Realtors.

Jackson County’s attorney argued that lifting the moratorium pending a full-blown trial would allow a flood of developers to launch subdivisions counter to the county’s aim of controlling growth. Jackson County would be irreparably harmed if the temporary injunction was granted, argued Sharon Alexander, the attorney representing the county.

“You cannot go and undo those subdivisions,” Alexander said. “Jackson County and its citizens would suffer extraordinary and irreparable harm by the recordation of subdivision plats willy-nilly with no compliance.”

Judge Marlene Hyatt, who presided over the hearing, ruled against granting a temporary injunction. The Realtors and developers failed to meet the two-part litmus test for a temporary injunction: that those seeking it are suffering irreparable harm with each passing day; and that they deserve relief in the short term because they have a likely chance of winning their case at a full-blown trial down the road.

“They have demonstrated financial loss, but not immediate and irreparable damage,” Hyatt said.

Hyatt also said the group had not demonstrated a likelihood of success at trail. Hyatt said they did demonstrate a stake sufficient enough to move forward with a trial.

Following Hyatt’s ruling, the attorney for the plaintiffs indicated they might appeal the decision. None of the plaintiffs would comment following the trial, however.

 

Chilling effect?

The moratorium on new subdivisions in Jackson County was enacted in February by a 4 to 1 vote of county commissioners. The commissioners were embarking on the county’s first-ever slate of development regulations, a move that would end the free-for-all climate previously enjoyed by developers. Seeing the writing on the wall, many developers sought to get their subdivisions recorded before new regulations went into effect. The number of lots being recorded tripled just before the moratorium was enacted.

Clement argued that the moratorium has placed a cloud over real estate industry in Jackson County, turning would-be developers away and quelling land sales. In other cases, pending sales were lost. One of the Realtors claims he lost a $1 million sale that had been in the works prior to the moratorium.

Alexander argued that the alleged losses are not concrete enough to constitute real damage.

“The allegations of damage are that a couple plaintiffs would like to earn a living on buying and selling real estate. Because folks are now not willing to buy and sell real estate during this five-month period, they cannot earn the commission they would otherwise earn. That is speculative,” Alexander said.

Hyatt did rule that the plaintiffs had established a “sufficient stake” and “financial loss,” only that it wasn’t irreparable with each passing day.

One of the plaintiffs is a developer who claims his progress on a subdivision was thwarted by a moratorium. But Alexander argued otherwise.

“One of them said they were getting ready to go to their surveyor — getting ready to,” Alexander said. “None of them say they had hired a surveyor and spent money and had a plan for a subdivision of their property that they now can’t do.”

For that developer, the problem isn’t so much the moratorium but the development regulations Jackson County is expected to pass in coming weeks. The regulations will both increase costs for developers and reduce the number of lots they can put on land — ostensibly affecting the bottom line for developers compared to the old days when they could do whatever they wanted.

That could be one motive of the lawsuit. The goal might not simply be getting out of the moratorium — since it ends in five weeks anyway — but getting out of the regulations that will follow. If the plaintiffs had succeeded in their temporary injunction, they could have promptly record subdivisions and been grandfathered in by the time new development regulations go into effect.

The regulations are poised to be some of the most protective in Western North Carolina — mandating everything from open space in new subdivisions to the portion of a lot that must be left natural on steep slopes.

The county argued that all its planning would be for naught if the moratorium was lifted and developers given a window to record subdivisions before the regulations go into effect. Alexander said the pace of uncontrolled development had become detrimental to Jackson County residents as a whole. Alexander said towns and counties have an inherent right to enact a moratorium while studying regulations to solve such problems.

The moratorium does not apply to existing subdivisions or subdivisions already underway in some form or fashion. Even if lots hadn’t been officially recorded, a developer could be exempt from the moratorium — along with development regulations coming down the road — if he could show he made a substantial investment already in surveying, planning or marketing of a subdivision.

The moratorium also does not stop individual lot owners from building homes, or people with existing lots from selling those lots, or the sale of acreage.

It applied only to the creation of new subdivisions, namely preventing tracts from being subdivided into multiple lots through the register of deeds office unless a landowner could prove it was a project he already had in the works.

Alexander argued the county was within its bounds to enact such a moratorium.

“The had determined there as a need to control growth in Jackson County. It was a very limited subject matter. It wasn’t on building permits. It wasn’t on construction. It was only on subdividing,” Alexander argued.

The attorney for the Realtors and developers argued that the moratorium is not valid, however.

(See next week’s issue of the Smoky Mountain News, out on Wednesday, May 30, to read more about the arguments in the hearing.)

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