August 13th, 2025
Posted By
John Scarbrough

The North Carolina Supreme Court’s decision in Anderson Creek Partners, L.P. v. County of Harnett, 382 N.C. 1, 876 S.E.2d 476 (2022), provides important constitutional protections for property owners, land developers, and builders. John Scarbrough briefed and argued the case at the NC Supreme Court for the plaintiff land developers.

In Anderson Creek, the Supreme Court reversed the NC Court of Appeals by concluding that local government cannot condition a development permit on a landowner’s relinquishment of property (whether it be land or money) unless the local government’s demand for such property is “proportional” to the public costs of the proposed development. Development permit conditions that fail this test of reasonableness are nothing more than an “out-and-out plan of extortion” resulting in an unconstitutional “taking” of the landowner’s property.

While the legal principles discussed in the case are complex, their real-world application is straightforward. What follows is an actual scenario encountered by a land developer and how the Anderson Creek ruling would stop this city’s overreach.

A local developer owns land within the city limits and wishes to develop a 150-home subdivision. To do so, the developer must connect the subdivision to an existing pump station owned by the city. The pump station currently serves other subdivisions in the area. Because the pump station is old and in need of repair, it will have to be upgraded to serve the developer’s new subdivision.

Reluctantly, the developer offers to rehabilitate and upgrade the city’s pump station at the developer’s own expense – a cost of over $750,000.00. The developer views this as a more than generous offer since a lot of the work needed for the pump station is the result of years of sewer service to existing developments (and a lack of city maintenance).

Nevertheless, city staff wants more. They show the developer a city ordinance which requires “a one-time fee equal to the present worth of the cost for the city to operate and maintain, rehabilitate, and repair the pump station…in perpetuity.” This “one-time fee” is calculated by city staff and is in addition to the $450,000.00 in water and sewer “system development fees” the developer will have to pay to connect 150 homes to the city’s water and sewer systems.

To recap: “negotiations” with city staff have left the developer (1) paying over $750,000.00 for pump station upgrades needed after years of service to other developments; (2) paying a “one-time fee” for the city to maintain its own pump station “in perpetuity,” which is set at the discretion of city staff; and (3) paying $450,000.00 in system development fees which are supposed to reimburse the city for the cost of allowing the proposed subdivision to use the city’s water and sewer systems, including the pump station.

Before Anderson Creek, the developer’s options may have been limited to filing a lawsuit challenging the city’s statutory authority to charge the pump station fee, or perhaps lobbying the city council to do away with the fee ordinance. However, it was unclear whether the builder could challenge the “pump station fee” as being “unreasonable” or an unconstitutional “taking.”

The significance of Anderson Creek is that now the city must prove that its demand for the pump station fee is reasonable and not merely a money grab. Under these circumstances, the city cannot pass this constitutional test, irrespective of what its ordinance requires. After all, the developer is going above and beyond what would be necessary to mitigate the impact of his proposed development – he is not only paying to upgrade the pump station but will have to pay system development fees for each lot in the development. (Under these circumstances, the system development fees might even be excessive considering the developer’s work on the pump station.)

Such “negotiations” with local governments take place every day across North Carolina, with the deck seemingly always stacked in favor of the local government. If the developer doesn’t meet staff’s demands, no permits will be issued and the project—along with the developer’s investment of time and money—is lost. It’s the proverbial “offer that can’t be refused.” The decision in Anderson Creek begins to even the playing field — because a local government’s permits should never be more valuable than a landowner’s constitutional rights.