Sec. 11.8.3. Safeguards from Undue Economic Hardship

Claim of Undue Economic Hardship
1. When the property owners believe that they will be unable to obtain a reasonable return on or a reasonable beneficial use from the property owing to the effects of this section, written notice of intent to file a claim of Undue Economic Hardship must be sent to the City postmarked within 10 days following the hearing on the petition, unless oral notice of intent is made to the City during the hearing. The City shall notify the Historic Development Commission within 3 days following receipt of a written notice of intent.
2. The Economic Documentation outlined in Sec. 11.8.3.C. shall be provided by the claimant to the City within 45 days following the hearing on the petition for transmittal to the Hardship Review Panel.
3. Under this section, the claimant for economic hardship and the City, the Historic Development Commission, the Hardship Review Panel, and any interested party shall consult in good faith in a diligent effort to seek an alternative that will result in preservation of the property. Such efforts shall be documented by the claimant and presented at the hearings described in Sec. 11.8.3.B.
Hardship Review Panel
1. A Hardship Review Panel shall be established to analyze documentation submitted in support of claims of undue economic hardship. The panel shall prepare a report of its determination whether the evidence supports a conclusion that the property owners will be unable to obtain a reasonable return on or a reasonable beneficial use from the property owing to the effects of this section. If in the panel’s opinion a hardship exists, the report may also offer recommendations for relief of the economic hardship.
2. The City shall coordinate the selection of an ad hoc review panel. The panel shall be comprised of real estate and redevelopment experts knowledgeable in real estate economics in general, and more specifically, in the economics of renovation, redevelopment and other aspects of rehabilitation.
3. The panel shall consist of 3 persons. Two of the persons shall be selected within 30 days of the hearing on the petition – one by the Historic Development Commission and one by the claimant. The third person shall be selected by the first 2 appointees. The City and the claimant shall bear the cost of their respective selectees and shall split the cost of the third person. If the first 2 appointees cannot agree on a third person within 45 days of the date of the hearing on the petition, the third appointee shall be selected by the City within 5 days after the expiration of the 45-day period. Members of the review panel may not be:
  1. A person with financial interest in the property;
  2. An employee of or paid consultant to the claimant, the City, or the Historic Development Commission; or
  3. A person that has generated or been involved with any of the economic documentation outlined in Sec. 11.8.3.C.
4. The City shall provide the Hardship Review Panel with the Economic Documentation provided by the claimant within 5 days of the panel’s formation or when the documentation is received, whichever occurs later.
5. Within 90 days of the hearing on the petition for Demolition by Neglect, the Hardship Review Panel shall review the Economic Documentation, hold a hardship hearing, and forward its findings and determination to the City.
  1. The City shall provide notice that a hardship hearing will be held before the panel at a place fixed not less than 30 nor more than 45 days after the panel is formed; that the property owners shall be given a right to give testimony at the place and time fixed in the complaint; and that the rules of evidence prevailing in courts of law or equity shall not be controlling in hearings before the Hardship Review Panel. The Historic Development Commission shall also be given notice of the hearing.
  2. The panel shall hold its initial meeting to review the claimant’s submitted Economic Documentation within 10 days of when the panel is formed. The panel may at any time request any additional information as set forth in Sec. 11.8.3.C.
  3. The purpose of the hardship hearing is to review the claimant’s submitted Economic Documentation, receive additional evidence concerning the claim of undue economic hardship, and to ascertain whether additional economic documentation is required.
  4. Following the Hardship Review Panel’s hearing on the claim, the panel shall consider all information received and cause to be made a determination of undue or no undue economic hardship. The panel shall prepare a written report of its determination that shall include findings of fact for such determination.
  5. If in the panel’s opinion a hardship exists, the panel’s report shall establish a monetary value of capital expenditure on the property that the panel believes would yield a return on the investment without economic hardship. If the panel believes the property cannot support any capital expenditure, it shall so state. The panel may also offer recommendations for relief of the economic hardship.
6. The determination of the Hardship Review Panel shall be final, subject to appeal as noted in Sec. 11.8.4.B.
Economic Documentation
1. When a claim of undue economic hardship is made owing to the effects of this Article, the property owners must provide evidence describing the circumstances of hardship. The minimum evidence provided by the property owners shall include for all property:
  1. The property owner's knowledge of the landmark or historic overlay designation at the time of acquisition, or whether the property was designated subsequent to acquisition;
  2. Form of ownership or operation of the property (sole proprietorship, for-profit corporation or non-profit corporation, limited partnership, joint venture, etc.) or legal possession, custody, and control;
  3. Amount paid for the property, date of purchase, and party from whom purchased, including a description of the relationship between the owner and the person from whom the property was purchased, or other means of acquisition of title, such as by gift or inheritance, and any terms of financing between buyer and seller;
  4. The annual gross and net income, if any, from the property for the previous 3 years;
  5. Itemized operating and maintenance expenses for the previous 3 years, including proof that adequate and competent management procedures were followed;
  6. Past capital expenditures during ownership of current owner;
  7. Depreciation deduction and annual cash flow before and after debt service, if any, for the previous 3 years;
  8. Remaining balance on any mortgage or other financing secured by the property and annual debt service, if any, during the previous 3 years;
  9. Real estate taxes for the previous 3 years and assessed value of the property according to the 2 most recent Wake County assessed valuations;
  10. All appraisals obtained within the previous 3 years by the owner or applicant in connection with the purchase, financing or ownership of the property;
  11. Any state or federal income tax returns on or relating to the property for the previous 3 years;
  12. Any listing of the property for sale or lease within the previous 3 years, price asked and any offers received, the name of the any real estate broker or firm engaged to sell or lease the property, and any advertisements placed for the sale or rent of the property;
  13. A report from a licensed engineer or architect with experience in rehabilitation as to the structural soundness of any structures on the property and their suitability for rehabilitation;
  14. An estimate of the cost of the required construction, alteration, repair, demolition, or removal required by the order;
  15. The estimated market value of the property in its current condition and such value after completion of the required construction, alteration, repair, or removals;
  16. A report from an architect, developer, real estate consultant, appraiser, or other professional experienced in rehabilitation as to the economic feasibility of rehabilitation or reuse of the existing structure on the property;
  17. An analysis of common costs expended in both rehabilitation and comparable new construction immaterial to which type of project is undertaken;
  18. Economic incentives and/or funding available to the applicant through federal, state, city, or private programs.
2. The review panel may receive and consider studies and economic analyses from other city agencies and from private organizations relating to the property in question.
3. The review panel may require that the property owners furnish such additional information that is relevant to its determination of undue economic hardship. The review panel may request the City to furnish additional information as it believes is relevant. The review panel shall also state which forms of financial proof it deems relevant and necessary to a particular case.
4. In the event that any of the required information is not reasonably available to the property owners or the City and cannot be obtained by the owner or the City, the owner or City shall describe the reasons why such information cannot be obtained.
Action on Hardship Review Panel’s Determination
1. The City shall provide a copy of the Hardship Panel’s report to the property owner and to the Historic Development Commission.
2. In the event of a determination of no undue economic hardship, the City shall cause to be re-issued the stayed order for such property to be repaired within the time specified.
3. In the event of a determination that undue economic hardship would result from an order to repair, the Historic Development Commission shall within 60 days of its receipt of the report prepare a Plan for Relief of Economic Hardship.
4. Should the Historic Development Commission fail to act within 60 days of its receipt of the report, the City shall rescind the order for repair and return the petition to the Historic Development Commission.
Plan for Relief of Economic Hardship
1. In the event of a determination of undue economic hardship, the Historic Development Commission shall develop a plan to relieve the economic hardship. This plan may include, but is not limited to,
  1. Capital expenditure by the property owner,
  2. Property tax relief as may be allowed under North Carolina law,
  3. Loans or grants from the City, the County, or other public, private, or nonprofit sources,
  4. Acquisition by purchase or eminent domain,
  5. Building code modifications,
  6. Changes in applicable zoning regulations, or
  7. Relaxation of the provisions of this section sufficient to mitigate the undue economic hardship.
2. The Commission shall give precedence to recommendations for relief of hardship contained in the report of the Hardship Review Panel, if any; the plan should include the Commission’s rationale for not incorporating any Panel recommendations into the Commission’s plan. The plan should also include a statement documenting good faith consultation as outlined in Sec. 11.8.3.A.3.
3. The Commission’s plan shall utilize the Hardship Review Panel’s estimation of monetary value of capital expenditure outlined in Sec. 11.8.3.B.5.e. (if any) as a budget figure to recommend prioritized repairs that shall to the greatest extent possible stabilize the effects of deterioration upon the property.
4. The Commission shall report its plan to the City. The City shall provide notice that a hearing will be held before the Director at a place fixed not less than 10 nor more than 25 days after the report is received; that the property owners, the Historic Development Commission, and the Hardship Review Panel shall be given a right to give testimony; and that the rules of evidence prevailing in courts of law or equity shall not be controlling in hearings before the Director. The Historic Development Commission and Hardship Review Panel shall also be given notice of the hearing.
5. Following the hearing, City shall either approve the Plan or refer it to the Historic Development Commission for amendment. Referrals for amendment shall specify items to be amended. The amended report shall be returned to the City by the Historic Development Commission within 15 days. Upon receipt of the approved or amended Plan, the City shall cause to be re-issued the stayed order for such property to be repaired within the time specified, and according to the provisions of the approved plan.

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