The courts and state planning and development regulation statutes establish standards for impartiality for those making development regulation decisions.
Conflicts of Interest and Impartiality in Zoning Decisions
David W. Owens
Gladys Hall Coates Professor of Public Law and Government
School of Government, The University of North Carolina at Chapel Hill
© 2020
April 2020
Persons making land use–regulatory decisions have an obligation to act in the public interest. Both the Due Process Clause and statutory provisions address the question of when a conflict exists between a decision maker’s personal interests and public obligations.
Many of the persons serving on boards making land use–regulatory decisions are directly involved in development issues. Since the early days of zoning, it has been common for developers, builders, real-estate agents, surveyors, engineers, architects, and lawyers to be disproportionately represented on boards making legislative and quasi-judicial land use decisions.[1] More recently neighborhood activists, conservationists, and others have joined these boards. Given the strong impact development regulations have on their interests, it is hardly surprising that those most directly affected by the decisions actively seek out membership on these boards. They bring expertise and well-informed perspectives to the crafting and implementation of development regulation. But the participation in decision making by so many persons who may be personally affected by the decisions presents the need for safeguards to assure that these decisions are being made in the public interest, not the personal financial interests of board members.[2]
In County of Lancaster v. Mecklenburg County, the North Carolina Supreme Court summarized the limitations on self-interest in land use–regulatory decisions:
Due process requires an impartial decisionmaker. An elected official with a direct and substantial financial interest in a legislative zoning decision may not participate in making that decision. Where there is a specific, substantial, and readily identifiable financial impact on a board 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.[3]
Legislative Decisions
Legislative decisions require policy judgment by elected officials. These officials’ 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. As a general rule, the individual or personal motives of governing board members are not examined in the judicial review of legislative decisions.[4] If the voters disagree with the judgment being exercised, the appropriate remedy is the ballot box. 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 and state statutes have imposed important conflict-of-interest limitations on land-development-regulatory policy decisions.
In addition to constitutional and common law coverage,[5] state statutes also specifically speak to the issue of financial conflicts in legislative decisions. In 2005 the zoning statutes were amended to specifically address conflicts of interest in both legislative[6] and quasi-judicial[7] settings. G.S. 160D-109 codifies the standard set out in County of Lancaster. The statute provides that members of city councils and county boards of commissioners “shall not vote on any zoning map or text amendment where the outcome of the matter being considered is reasonably likely to have a direct, substantial, and readily identifiable financial impact on the member.”[8] The statute applies the same prohibition to advisory boards making recommendations on zoning amendments. In 2019 the General Assembly added a requirement that governing-board and planning-board members not vote on any zoning amendment if the owner of property proposed for rezoning or the applicant for a text amendment is a person with whom the member has a close family, business, or associational relationship.[9]
The matter of financial interests occasionally poses difficult questions in land-development-regulatory policy decisions.[15] Although board 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 affects their property. The difficult question is, at what point does the financial interest become 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.
G.S. 153A-44 and 160A-75, which address voting on legislative matters by county commissioners and city council members, respectively, were also amended in 2005 to incorporate the statutes noted above as grounds for members’ abstentions.[12]
Quasi-judicial Decisions
With quasi-judicial land use decisions, the constitutional demand for impartiality extends beyond financial conflicts to include bias, close family or associational relationships, and undisclosed ex parte communications.[10] G.S. 160D-109(d) codifies County of Lancaster’s heightened standard for quasi-judicial decisions, providing that members of boards making quasi-judicial land use decisions
shall not participate in or vote on any quasi-judicial matter in a manner that would violate affected persons’ constitutional rights to an impartial decision maker. Impermissible violations of due process include, but are not limited to, a member having a fixed opinion prior to hearing the matter that is not susceptible to change, undisclosed ex parte communications, a close familial, business, or other associational relationship with an affected person, or a financial interest in the outcome of the matter.
Other forms of conflict of interest or bias can require nonparticipation in quasi-judicial decisions. In the legislative arena, public policies are openly debated and resolved in decisions on zoning and rezoning. Bias, expression of opinions, and contacts with citizens about a matter before a hearing or a vote do not disqualify a member from voting on a legislative decision.[16] By contrast, the constitutional requirement for impartiality of those exercising quasi-judicial authority imposes greater demands for quasi-judicial decisions, such as decisions to grant or deny special and conditional use permits.[17] A board member whose opinion is fixed and not susceptible to change has an impermissible bias.[18]
While even the appearance of bias must be avoided,[19] a board member simply expressing a view as to the outcome after the evidence is presented but before the board votes does not constitute impermissible bias.[20] A person contending that a board member has an impermissible bias may move for recusal of that member, and the objecting party has the burden of demonstrating that grounds for disqualification actually exist.[21] When a permit may not, as a matter of law, be issued, improper participation will not invalidate the decision.[22]
Administrative Decisions
With admianistrative land use decisions, prior to the enactment of Chapter 160D there was not an express statutory provision on conflicts of interest, only the general provision that a staff member could not be financially interested in a firm doing regulated work within the jurisdiction and that staff members not engage in any work inconsistent with their duties.[11] G.S. 160D-109(c) extends a conflict-of-interest standard to staff making administrative decisions that is similar to that required for board members making legislative decisions. A staff member is prohibited from making a final decision on an administrative decision if the outcome would have a direct, substantial, and readily identifiable financial impact on the staff member or if the staff member has a close family, business, or associational relationship with the applicant. In these situations, the decision is to be assigned to the supervisor of the affected staff member or to such other staff person as may be designated by the development regulation.
While the focus of conflict-of-interest considerations is on the decision makers, conflicts by staff members advising the decision makers can occasionally be problematic, especially for attorneys advising a board making land use decisions.[24] Surveys of North Carolina jurisdictions indicate it is very common for the city or county attorney to provide legal advice to the boards making special and conditional use permit decisions and variance decisions. In both of these types of quasi-judicial matters, some 90 percent of the jurisdictions reported that the jurisdiction’s attorney provided legal representation for the decision-making board.[25] When this arrangement is used, the jurisdiction’s counsel must take care to avoid playing an active role assisting staff or advocating before the board while also providing legal advice to the board.
Resolving Dsputes Regarding Paricipation
The statutes also address the procedure for resolving disputes regarding board-member participation in quasi-judicial matters. If an objection is raised to a member’s participation and that member does not agree to recusal, the remaining members of the board rule on the objection by majority vote.[23]
[1]. A 1937 national survey of planning-commission members in large cities noted that some 80 percent of commission members came from professions with a stake in the development business. Robert A. Walker, The Planning Function in Urban Government 150–52 (1950). This practice has been persistent over time. Don T. Allensworth, The Political Realities of Urban Planning (1975). A study of the composition of planning boards and boards of adjustment concluded that a majority of members are in professions that stand to benefit from development. Jerry L. Anderson & Erin Sass, Is the Wheel Unbalanced? A Study of Bias on Zoning Boards, 36 Urb. Law. 447 (2004). The study recommended greater attention to members’ occupations by appointing boards (as well as prohibitions against direct financial bias).
[2]. See David W. Owens, Conflicts of Interest in Land-Use Management Decisions (1990). See generally A. Fleming Bell, II, Ethics, Conflicts, and Offices: A Guide for Local Officials (2d ed. 2010); Jerry L. Anderson et al., A Study of American Zoning Board Composition and Public Attitudes Toward Zoning Issues, 40 Urb. Law. 689 (2008); Jerry L. Anderson & Daniel Luebbering, Zoning Bias II: A Study of Oregon’s Zoning Commission Composition Restrictions, 38 Urb. Law. 63 (2006); Mark Cordes, Policing Bias and Conflicts of Interest in Zoning Decisionmaking, 65 N.D. L. Rev. 161 (1989); Patricia E. Salkin, Note, Crime Doesn’t Pay and Neither Do Conflicts of Interest in Land Use Decisionmaking, 40 Urb. Law. 561 (2008).
[3]. 334 N.C. 496, 511, 434 S.E.2d 604, 614 (1993). See also Caperton v. A.T. Massey Coal Co., 556 U.S. 868 (2009) (state supreme court justice may not participate in case involving substantial contributor to his campaign); Mayberry v. Pennsylvania, 400 U.S. 455 (1971) (judge who had been repeatedly insulted by defendant was disqualified for bias in deciding criminal-contempt charge); In re Murchinson, 349 U.S. 133 (1955) (judge who charged defendant with perjury and contempt in prior proceeding disqualified from hearing present matter).
[4]. In Barger v. Smith, 156 N.C. 323, 72 S.E. 376 (1911), the state high court held that generally the motivations behind adoption of an ordinance are irrelevant. However, the facts alleged to have been the foundation of an improper motivation can be considered in determining whether the ordinance is arbitrary.
[5]. In Kendall v. Stafford, 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 cause, 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.
178 N.C. 461, 464, 101 S.E. 15, 16 (1919).
Courts in other states have held that campaign contributions to board members do not constitute an impermissible financial conflict of interest. See, e.g., Breakzone Billiards v. City of Torrance, 97 Cal. Rptr. 2d 467, 81 Cal. App. 4th 1205 (Ct. App. 2000).
[6]. S.L. 2005-426, §§ 5(a), (b). In addition, the statutes were amended in 2009 to require all cities and counties to adopt a code of ethics. S.L. 2009-403. That provision is codified as G.S. 160A-86. The U.S. Supreme Court upheld the constitutionality of state legislation prohibiting elected officials from voting on or advocating passage or failure of matters that would materially affect the personal interests of the official. Nev. Comm’n on Ethics v. Carrigan, 564 U.S. 117 (2011).
[7]. S.L. 2005-418, §§ 8(a), (b).
[8]. G.S. 160D-109 [153A-340(g); 160A-381(d)]. Other states have similar prohibitions. For example, the Maine statute prohibits a board member from voting if they have a direct or indirect pecuniary interest in the outcome. In these instances, a board member is to disclose any pecuniary interest, abstain from voting, and make no attempt to influence the decision. Me. Rev. Stat. Ann. tit. 30-A, § 2605.
[9]. S.L. 2019-111, Part II. Prior to the enactment of Chapter 160D, this restriction was only applicable for quasi-judicial decisions. G.S. 160D-109(a) and (b) extend it to legislative and advisory decisions. G.S. 160D-109(f) defines a close family relationship to be a spouse, parent, child, brother, sister, grandparent, or grandchild, including step, half, and in-law relationships. For examples of cases alleging a conflict of interest based on associational relationships, see Global Tower Assets, LLC v. Town of Rome, 810 F.3d 77 (1st Cir. 2016) (membership in nonprofit conservation organization); Piscitelli v. City of Garfield Board of Adjustment, 205 A.3d 183 (N.J. 2019) (patient-physician relationship); and Grabowsky v. Township of Montclair, 115 A.3d 815 (N.J. 2015) (church membership).
[10]. See Cox v. Hancock, 160 N.C. App. 473, 586 S.E.2d 500 (2003) (distant family relation not a conflict); JL Invs., Inc. v. Guilford Cty. Bd. of Adjustment, 133 N.C. App. 426, 515 S.E.2d 715 (1999), review denied, 251 N.C. 357 (2000) (participation by former county staff member on board not a per se conflict); Vulcan Materials Co. v. Guilford Cty. Bd. of Cty. Comm’rs, 115 N.C. App. 319, 444 S.E.2d 639, review denied, 337 N.C. 807, 449 S.E.2d 758 (1994) (not bias to announce intentions on decision after evidence submitted but prior to deliberation); Rice Assocs. of the S. Highlands, Inc. v. Town of Weaverville Zoning Bd. of Adjustment, 108 N.C. App. 346, 423 S.E.2d 519 (1992) (potential bias irrelevant if board has no discretion on permit outcome); In re City of Raleigh (Parks & Recreation Dep’t) v. City of Raleigh, 107 N.C. App. 505, 421 S.E.2d 179 (1992) (governing-board decision on application by city agency not per se conflict).
[11]. G.S. 160D-109.
[12]. S.L. 2005-426. The municipal statute goes on to provide that the failure to vote by any member who is physically present or who has withdrawn without being excused is counted as an affirmative vote. G.S. 160A-75. This provision would not, of course, be applicable if the nonparticipation in the vote is mandated by statute.
[13]. S.L. 2009-403.
[14]. For example, the Chapel Hill code provides that the mayor and members of the town council may be required to disclose their financial interests related to those applying for permits or approvals from the town and to refrain from voting where conflicts are present. Chapel Hill, N.C., Code of Ordinances ch. 3, § 3.12.
[15]. A 2008 UNC School of Government survey explored how often financial conflicts of interest arise in legislative zoning decisions. Responding jurisdictions reported that this was an infrequent occurrence for both the planning board and governing board. Three-quarters of the responding jurisdictions reported that a member of the planning board never or only rarely abstained or was excused from voting because of a financial conflict of interest, with a quarter of the respondents indicating this happened only occasionally. Only 2 percent of the responding jurisdictions reported that this happened frequently or more often. Financial conflicts were reported to arise even less frequently for governing board members: 81 percent of the jurisdictions surveyed reported that a city-council or county-board member either never or only rarely had to be excused from voting on a zoning-amendment matter due to a financial conflict, and 17 percent reported that this happened only occasionally. Only 2 percent of the responding jurisdictions reported that this happened frequently or more often. David W. Owens, Zoning Amendments in North Carolina 17 (UNC School of Government, Special Series No. 24, 2008).
[16]. Brown v. Town of Davidson, 113 N.C. App. 553, 556, 439 S.E.2d 206, 208 (1994); Bd. of Adjustment v. Town of Swansboro, 108 N.C. App. 198, 206, 423 S.E.2d 498, 503, aff’d, 334 N.C. 421, 432 S.E.2d 310 (1993).
[17]. Helpful guidance is provided by Canon 3(C)(1) of the Code of Judicial Conduct:
(1) A judge shall disqualify himself or herself in a proceeding in which the judge’s impartiality might reasonably be questioned, including but not limited to instances in which:
(a) the judge has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding;
(b) the judge served as a lawyer in the matter in controversy, or a lawyer with whom the judge previously practiced law served during such association as a lawyer concerning the matter, or the judge or lawyer has been a material witness;
(c) the judge knows that the judge, individually or as a fiduciary, or the judge’s spouse or minor child residing in the judge’s household, has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be affected substantially by the outcome of the proceeding;
(d) the judge or the judge’s spouse, or a person related to either within the third degree of relationship, or the spouse of such a person is:
(i) a party to the proceeding, or an officer, director, or trustee of a party;
(ii) acting as a lawyer in the proceeding;
(iii) known by the judge to have an interest that could be substantially affected by the outcome of the proceeding; or
(iv) to the judge’s knowledge likely to be a material witness in the proceeding;
(e) the judge has served in government employment and in that capacity participated as a judge (in a previous judicial position), counsel, advisor, or material witness concerning the merits of the particular case in controversy.
Code of Conduct for U.S. Judges Canon 3, § C(1) (Judicial Conference 2019). See Michael Crowell, Recusal, Admin. of Just. Bull. No. 3 (UNC School of Government, Sept. 2009) for a collection of North Carolina cases addressing this issue in the context of judicial recusal.
[18]. Crump v. Bd. of Educ., 326 N.C. 603, 392 S.E.2d 579 (1990); In re City of Raleigh (Parks & Recreation Dep’t) v. City of Raleigh, 107 N.C. App. 505, 421 S.E.2d 179 (1992). See also Lane Constr. Corp. v. Town of Wash., 2008 ME 45, ¶ 30, 942 A.2d 1202, 1211 (personal support for project during conditional use permit review does not disqualify member absent showing of bias or predisposition). Courts in other states have generally held that past political support for a board member is not in itself a disqualifying bias. See, e.g., Breakzone Billiards v. City of Torrance, 97 Cal. Rptr. 2d 467, 81 Cal. App. 4th 1205 (Ct. App. 2000) (fact that city-council members hearing conditional use permit received campaign contributions from applicant’s landlord more than twelve months earlier not a conflict); Commonwealth v. Veon, 150 A.3d 435 (Pa. 2016) (intangible political gain could not constitute private pecuniary gain).
[19]. It is not enough for a judge to be just in his judgments; he should strive to make the parties and the community feel that he is just; he owes this to himself, to the law and to the position he holds. . . . “The purity and integrity of the judicial process ought to be protected against any taint of suspicion to the end that the public and litigants may have the highest confidence in the integrity and fairness of the courts.”
Ponder v. Davis, 233 N.C. 699, 706, 65 S.E.2d 356, 360 (1951) (quoting Haslam v. Morrison, 113 Utah 14, 20, 190 P.2d 520, 523 (1948). See also Daly v. Town Plan & Zoning Comm’n, 191 A.2d 250 (Conn. 1963) (avoid appearance of conflict to protect public confidence in integrity of zoning decisions); Haggerty v. Red Bank Borough Zoning Bd. of Adjustment, 897 A.2d 1094 (N.J. Super. Ct. App. Div. 2006) (key issue is potential for conflict, not actual conflict); In re Tuxedo Conservation and Taxpayers Ass’n v. Town Bd., 408 N.Y.S.2d 668 (App. Div. 1979) (apparent conflict where board member employed by advertising company that had applicant’s parent company for a client); Buell v. City of Bremerton, 495 P.2d 1358 (Wash. 1972) (planning-commission members must be open-minded, objective, impartial, free of entangling influences both in fact and in appearance).
[20]. Vulcan Materials Co. v. Guilford Cty. Bd. of Cty. Comm’rs, 115 N.C. App. 319, 444 S.E.2d 639, review denied, 337 N.C. 807, 449 S.E.2d 758 (1994).
[21]. In re Ezzell, 113 N.C. App. 388, 394, 438 S.E.2d 482, 485 (1994). If no objection is made at the hearing and there is no showing of prejudice as a result of improper participation, appellate courts will not set aside the decision. JWL Invs., Inc. v. Guilford Cty. Bd. of Adjustment, 133 N.C. App. 426, 515 S.E.2d 715, review denied, 251 N.C. 715, 540 S.E.2d 349 (2000) (upholding board member’s participation in a hearing contesting a notice of violation where this board member was a former staff member in the county’s planning department and had been consulted in that capacity about a rezoning of the property in question).
[22]. Rice Assocs. of the S. Highlands, Inc. v. Town of Weaverville Zoning Bd. of Adjustment, 108 N.C. App. 346, 423 S.E.2d 519 (1992).
[23]. G.S. 160D-109(e). G.S. 160D-109(e) clarifies that this process of the rest of the board voting on an objection applies to legislative, quasi-judicial, and advisory decisions.
[24]. In an analogous situation, Kansas’s highest court held that it created an impermissible appearance of conflict for an attorney to advise the board and serve as an advocate before or on behalf of the board. Davenport Pastures, LP v. Morris Cty. Bd. of Cty. Comm’rs, 291 Kan. 132, 238 P.3d 731 (2010).
[25]. David W. Owens, Special Use Permits in North Carolina Zoning 10 (UNC School of Government, Special Series No. 22, Apr. 2007); David W. Owens & Adam Brueggemann, A Survey of Experience with Zoning Variances 13 (UNC School of Government, Special Series No. 18, Feb. 2004). Jurisdictions with large populations and a substantial case load were more likely to provide outside counsel for these boards making quasi-judicial decisions.