Now enters The Permit Extension Act of 2009, Senate Bill 831. This bill provides for the extension of any real estate related entitlements and approvals by counties and municipalities in the State of North Carolina that are current and valid at any point during the period beginning January 1, 2008, and ending December 31, 2010. As the statute states in Section 2. Paragraph 14, “It is the purpose of this act to prevent the wholesale abandonment of already approved projects and activities due to the present unfavorable economic conditions by tolling the term of these approvals for a finite period of time as the economy improves, thereby preventing a waste of public and private resources.”
The irony is that the statute that was intended for the public good (and perhaps to provide some aid to the real estate development community in a very difficult environment) has perhaps put lot owners in a lurch and taxpayers in the position of having to pick up the pieces of failed or failing developments. Seizing on wording rather than the intent of the statute, developers and bond companies are contending that incomplete, stagnate developments are not in default on completion requirements. They contend that the effect of the extension provisions of the Act was to also extend their completion requirements. Bond companies are challenging the claims of municipalities and counties in court to avoid having to pay on bond obligations.
The net result of the strategy buys time for both the developer and the bond companies. In the meantime, it means that there are no funds to complete the developments that have come to be known as “zombie developments”….developments that are neither alive nor quite dead yet. It is both unfortunate and interesting that our “best laid plans” don’t always work out as we intended them.