Historic Lawsuit Filed Against Forced Annexation In Federal Court

First Of Its Kind Lawsuit Seeks To Stop Pinehurst’s “Hostile Takeover” Of Pinewild Community

RALEIGH- The grassroots free-market group Americans for Prosperity-North Carolina, along with opponents of forced municipal annexation, today announced the filing of an historic federal lawsuit that seeks to halt the planned “hostile takeover” of the Moore County community of Pinewild by the near-by resort village of Pinehurst. The lawsuit is filed on behalf of more than 600 Pinewild residents.

The Federal lawsuit claims that the forced annexation of Pinewild constitutes a “taking” under the Fifth Amendment of the U.S. Constitution. Accordingly, the Village must pay “just compensation” if it insists on forcibly annexing Pinewild.

The Pinewild suit is led by well respected North Carolina attorney G. Eugene (Gene) Boyce, a lawyer in practice for 43 years in North Carolina. Boyce has successfully litigated several pivotal lawsuits striking down unconstitutional state taxes, including the Bailey/Emory/Patton case on retiree pensions and the Smith and Shaver intangibles tax case. Some 435,000 plaintiffs/clients have recovered judgments for more than $1.5 billion in illegally collected taxes thanks to the work of Mr. Boyce.

“The forced annexation of Pinewild is not simply a redrawing of the Village’s borders to include Pinewild, followed by nothing more than an increase in the property taxes of all Pinewild owners,” said Gene Boyce, lead attorney for the plaintiffs. “This annexation will diminish the quality of life of Pinewild owners and reduce the value of their private, commonly owned property. Just compensation, therefore, is required by both state and federal constitutions.”

Pinewild is a private, gated, Common Interest Community with its own infrastructure, including roads, water, sewer and fire protection. When each owner purchased property in Pinewild, he paid for, and continues to pay for, the infrastructure and for the services Pinewild residents receive including road maintenance, garbage collection services, and law enforcement.

“By buying in Pinewild, we paid for the right to control our community and our streets,” said Lydia Boesch, a plaintiff in the lawsuit and a grassroots member of Americans for Prosperity-North Carolina. “Pinewild owners’ control who has access to drive on Pinewild roads. Because of restricted access to Pinewild, I feel safe and secure in my home, on my street and using my golf cart.”

“We are so proud to be working with residents of Pinewild and their grassroots effort to stand up to the undemocratic process of forced municipal annexation,” said Americans for Prosperity-North Carolina State Director Dallas Woodhouse.

“This lawsuit is just one aspect of a growing grassroots movement against forced annexation. It is simply wrong to force people in Pinewild to become part of Pinehurst with no majority vote of the people. This is an abuse of government power at its worst, and Americans for Prosperity will not rest until these massive attacks on private property rights stop. It is time for the General Assembly to act and reform annexation laws and at least give the property owners a right to vote on the process.”

Woodhouse also said that the Village of Pinehurst is going out of its way not to annex poor minority areas that are in need of services, instead opting to forcibly annex well developed areas that have for decades provided their own services.”

The Village of Pinehurst is looking for new sources of revenue, and therefore is attempting to “forcibly annex” Pinewild. Village officials have stated several times that one of their reasons for forcibly annexing Pinewild is to use the tax revenues received from Pinewild to fund amenities for Village residents.

“Property owners in Pinewild have both tangible and intangible property rights protected by the U.S. and N.C. Constitutions,” said Boyce. “Some of what is threatened to be taken from Pinewild residents is tangible property for which owners have already paid for dearly including 22 miles of rights-of-way, private streets, and 20 miles of water lines.

In addition Pinewild residents will have their intangible property rights confiscated including the rights of privacy, personal security, contractual rights between Pinewild owners, and self control over garbage collection, police protection, parking and other services.”

Other Pinewild residents have filed a lawsuit in state court, challenging the annexation itself. This lawsuit simply is asking the court to conclude that the Village did not follow North Carolina’s annexation statutes. This case is still at the trial level.Once decided by the trial judge, the case likely will be appealed and may not be ultimately decided until 2009 or 2010.

The trial court in that case will be deciding only whether the annexation statutes were followed.

The Federal lawsuit asks the court to conclude that the annexation of a private, gated, Common Interest Community is a “taking of property rights,” entitling the owners of that property to just compensation for the taking. That compensation could exceed $50 million, because the property owners of Pinewild paid for certain property rights and now are being forced to give up those rights.

Research shows that no Federal or State Court has ever faced the issue of whether the forced annexation of a private community without the payment of just compensation to the property owners is permissible under the 5th Amendment. Being a case of “first impression” this case could be headed for the U.S. Supreme Court. “The life of every Pinewild resident will change abruptly, unalterably and detrimentally at the day the forced annexation takes place,” said Boyce.

“Pinewild residents have paid dearly for their property and sense of security. The enjoyment of these rights and freedoms is the same reason there are more than 200,000 similar communities in the United States. In 46 of 50 states the property rights of these people are protected. Until the North Carolina General Assembly takes action to protect the property rights of its citizens and ends forced annexation, we have no other choice than to look to the protections and guarantees of the U.S. Constitution to stop this abuse of property owners rights in Pinewild.”

The forced annexation of Pinewild is not simply a redrawing of the Village’s borders to include Pinewild, followed by nothing more than an increase in the property taxes of all Pinewild owners. This annexation will diminish the quality of life of Pinewild owners and reduce the value of their private, commonly owned property. Just compensation, therefore, is in order.

The present Village Council says it will allow Pinewild’s roads to remain closed after Pinewild is annexed. This statement alone demonstrates that Pinehurst has control over Pinewild’s roads. In addition, a subsequent Council could change its mind and remove the gates. Also, any Pinehurst resident could challenge the exclusion of Pinehurst citizens from Pinewild’s roads, forcing the Council to evaluate whether access to Pinewild’s roads should remain restricted.

Many also view the police patrols, the Village garbage collection services, and the application of all Village ordinances as a diminution in the quality of life enjoyed in Pinewild. The Federal lawsuit asks the court to conclude that the annexation of a private, gated, common interest community is a “taking,” entitling the owners of that property to just compensation for the taking.

That compensation could exceed $50 million, because the property owners of Pinewild paid for certain property rights and now are being forced to give up those rights.

Questions and Answers

What is Involuntary Annexation?

A procedure by which a municipality can “absorb” an area that meets certain contiguous boundary and population criteria.

Is Involuntary or Forced Annexation allowed in North Carolina?

Yes. North Carolina is one of 4 states that still allow it if certain criteria are met. The other 3 states are Idaho, Kansas and Tennessee. Additionally, Louisiana, Illinois and Oregon also provide for limited annexation if more specific criteria are met.

Why does North Carolina still provide for Involuntary Annexation?

Municipalities have a very strong and well-funded lobby to oppose changes to the forced annexation statutes. There have been many attempts to change the law, which currently offers obvious financial benefits to municipalities. They can pick and choose from surrounding communities, annexing those that provide increased tax revenue at minimal cost, and avoiding communities that truly need municipal services since the cost would exceed the financial return.

Is there anything unique about a Pinehurst attempt to annex Pinewild?

Yes. Pinewild is a gated community that already has achieved orderly growth, and has a fully developed infrastructure. Also, unlike most other potential annexation target communities, water and sewer are not provided by the municipality. In our case, it's Moore County, NOT Pinehurst. If the intent and/or objective of Involuntary Annexation is to provide orderly growth and services and to improve health safety and welfare as prescribed in the NC General Policy Statute, (GS160A-45), Pinewild is not a candidate for annexation. Also, since it is a gated community and most property owners want this to continue, Pinehurst would not be required to be responsible for street maintenance. Provision of water and sewer, which is often a justification for annexation (described in the Statutes) doesn’t apply, since Pinewild already has these services, and they are provided by the county, not the Village of Pinehurst. Annexation of Pinewild by Pinehurst requires Pinewild property owners to pay a significant tax increase, but Pinewild gains virtually nothing in the way of additional services or improved health, welfare and safety. This is clearly not the intent of the Annexation statute. Also, although there are examples of gated communities that have voluntarily agreed to Annexation, we have been unable to find any examples of Involuntary Annexation. Several communities have been successful in defeating or delaying forced annexation attempts.