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A Second Chance for Development

9.17.2009

As a result of the slumping economy and the inability of many developers to obtain financing for development projects, the General Assembly recently approved legislation that would toll the expiration of various development approvals. The Permit Extension Act of 2009 (S.L. 2009-406 S. 831), effective August 5, 2009, provides a second chance for state and local development approvals, as well as extends the life of new approvals. In short, the legislation suspends the expiration of development approvals that were current and valid at any point during the three year period running from January 1, 2008 through December 31, 2010.

The law provides a detailed list of the "development approvals" that are tolled during the three year period. Among the state development approvals are erosion and sedimentation control plans, CAMA permits, water and wastewater permits, nondischarge permits, water quality certifications, and air quality permits. Approvals by local governments include sketch plans, preliminary and final plats under a land subdivision ordinance, site specific or phased development plans under the statutory zoning vested rights provisions, certificates of appropriateness issued by historic commissions, other development permits, and building permits. Federal permits, however, are not tolled by the new law.

The primary question raised by the new law is whether the expiration of all development approvals during this period are moved to December 31, 2010 or whether the approval retains whatever life it had remaining during the three year tolling period. The law says "the running of the period of the development approval" is suspended during the three year period. Therefore, the language clearly suggests that the time period to act on the development approval during the three year tolling period is suspended and the clock begins to run again on January 1, 2011. For example, if a developer obtains a development approval on March 1, 2008 that requires construction to begin within 12 months, that 12 month period would not begin to run until January 1, 2011. If, however, the development approval was obtained on March 1, 2007, the clock would stop running on January 1, 2008 and would resume on January 1, 2011. The developer would then have 3 months remaining on his development approval to begin construction.

This new legislation provides a substantial benefit to the development community and should help provide developers with the necessary time to obtain financing and/or other development approvals in order to keep projects alive during these tough economic times. Knowing how to take advantage of this new law could prove to be a valuable tool in the success of a development project. Poyner Spruill's Land Use, Government and Environmental Section regularly represents development clients in navigating the state and local development approval process in order to maximize a project's value.

A complete copy of the Permit Extension Act of 2009 can be found at http://www.ncga.state.nc.us/Sessions/2009/Bills/Senate/PDF/S831v6.pdf.

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