NC Planning

 

Key Legal Issues

Conflicts of Interest

David W. Owens, Professor, Institute of Government,
The University of North Carolina at Chapel Hill, CB# 3330
Knapp Building, UNC-CH
Chapel Hill, N.C. 27599-3330
May 1998

Legislative decisions require policy judgments by elected officials. The official’s personal knowledge, positions on issues of importance to the community, and judgment about the preferred course for the community are important and valid components of the decision-making process in a democratic society. If the voters disagree with the judgment being exercised, the appropriate remedy is usually at the ballot box rather than a due process challenge in the courts. However, the judgment being exercised must be on behalf of the public interest, not the narrow self interest of an individual board member. Thus the courts have imposed important conflict of interest limitations on zoning decisions.[1]

In County of Lancaster v. Union County, the North Carolina court summarized these limitations as follows:

Due process requires an impartial decision-maker. With legislative zoning decisions, an elected official with a direct and substantial financial interest in a zoning decision may not participate in making that decision. Where there is a specific, substantial, and readily identifiable financial impact on a member, nonparticipation is required. Additional considerations beyond these financial interests require nonparticipation in quasi-judicial zoning decisions. A fixed opinion that is not susceptible to change may well constitute impermissible bias, as will undisclosed ex parte communication or a close familial or business relationship with an applicant. [2]

In addition to constitutional and common law coverage,[3] state statutes also specifically speak to the issue of financial conflicts in legislative zoning decisions. G.S. 153A-44 and 160A-75, which address voting on legislative matters by county commissioners and city council members respectively, provide, “No member shall be excused from voting except upon matters involving the consideration of his own financial interest or official conduct.”[4] A number of city and county codes also have ethics provisions regarding disclosure of financial interests in matters coming before elected officials, and requirements for nonparticipation in such matters. The Greensboro code, for example, provides, “No member of any board or commission may discuss, advocate or vote on any matter in which he has a separate, private or monetary interest, either direct or indirect.” [5]

The matter of financial interests occasionally poses difficult questions in zoning decisions. Although members should certainly not participate in voting on a small-scale rezoning of their own property, they must participate in adopting initial zoning for the entire jurisdiction, which does affect their property. The difficult question is determining at what point the financial interest becomes significant enough to warrant nonparticipation. The general rule is that if a member is affected no more significantly than all other members of the community, nonparticipation is not required. However, if there is a specific, substantial, and readily identifiable financial impact on a member, nonparticipation is required even if there are others who are similarly affected.

The financial interests that require recusal in legislative land-use decisions should be distinguished from other forms of conflict of interest that require nonparticipation in quasi-judicial decisions. Public policies are openly debated and resolved in decisions on zoning and rezoning. Expression of opinions, bias, and contacts with citizens about a matter before a hearing or a vote do not disqualify a member from voting on a legislative zoning decision[6] though such would be impermissible in a quasi-judicial zoning decision. As a general rule, the motives of a governing board member will not be examined in the judicial review of a legislative zoning decision.

In quasi-judicial zoning decisions, such as decisions to grant or to deny special and conditional use permits, a member whose opinion is fixed and not susceptible to change has an impermissible bias.[7] The fact that a board member hearing a quasi-judicial matter expresses a view as to the outcome after the evidence is presented but before a board vote does not constitute impermissible bias.[8] Members with a close family, business, or other association with the parties must also be excused from participation. Non-participation requires that the member not participate in the hearing, board deliberations, or voting on the decision.[9]

1.

 

For more details on this issue, see DAVID W. OWENS, CONFLICTS OF INTEREST IN LAND-USE MANAGEMENT DECISIONS (1990). See generally, A. FLEMING BELL, ETHICS, CONFLICTS, AND OFFICES: A GUIDE FOR LOCAL OFFICIALS (1997).

2. 334 N.C. 496, 511, 434 S.E.2d 604, ___ (1993).

3. In Kendall v. Stafford, 178 N.C. 461, 101 S.E. 15 (1919), a case in which city council members voted on a pay raise for themselves, the court held:

The public policy of the State, found in the statutes and judicial decisions, has been pronounced against permitting one to sit in judgment on his own case, or to act on a matter affecting the public when he has a direct pecuniary interest, and this is a principle of the common law which has existed for hundreds of years.

Id. at 464, 101 S.E. at 16.

4. The municipal statute goes on to provide that failure to vote by any member who is physically present or who has withdrawn without being excused is counted as an affirmative vote.

5. CITY OF GREENSBORO CODE OF ORDINANCES § 2-142.

6. Brown v. Town of Davidson, 113 N.C. App. 553, 556, 439 S.E.2d 206, ___ (1994); Bd. of Adjustment of the Town of Swansboro v. Town of Swansboro, 108 N.C. App. 198, 206, 423 S.E.2d 498, ___, aff’d, 334 N.C. 421, 432 S.E.2d 310 (1993).

7. Crump v. Bd. of Education, 326 N.C. 603, 392 S.E.2d 579 (1990); In re City of Raleigh, 107 N.C. App. 505, 421 S.E.2d 179 (1992).

8. Vulcan Materials Co. v. Guilford County Bd. of Comm’rs, 115 N.C. App. 319, 444 S.E.2d 639, rev. denied, 337 N.C. 807, 449 S.E.2d 758 (1994).

9. When a permit may not, as a matter of law, be issued, improper participation will not invalidate the decision. Rice Assoc. of the Southern Highlands, Inc. v. Town of Weaverville Zoning Bd. of Adjustment, 108 N.C. App. 346, 423 S.E.2d 519 (1992).