2022 North Carolina Land Use Litigation
David W. Owens
School of Government
The University of North Carolina at Chapel Hill
© 2023
Below are brief digests of reported decisions regarding planning, land use, and related issues in North Carolina. State court of appeals decisions are listed first, followed by federal cases arising in North Carolina (there were no relevant state supreme court decisions). The cases are in chronological order (the more recent cases at the bottom of each list). Index terms are included in italics for each case.
North Carolina Supreme Court
Belmont Association v. Farwig, 381 N.C. 306, 873 S.E.2d 486 (2022)
Covenants
The defendants placed solar collectors on the roof of their home in Belmont. The collectors were placed on a south-facing roof that was visible from a public area. Although the applicable covenants did not expressly address solar collectors, the plaintiff’s architectural review board denied approval on aesthetic grounds. The court held G.S. 22B-20(b), which voids covenants prohibiting or having the effect of prohibiting solar collectors, was applicable. The court held the exception to this prohibition in G.S. 22B-20(d) was not applicable because that exemption only applies to a restriction that prohibits solar collectors visible to a public area, as opposed to this restriction that had the effect of prohibiting them without expressly doing so.
Anderson Creek Partners, LP v. County of Harnett, 382 N.C. 1, 876 S.E.2d 476 (2022)
Utility fees; Judicial procedure; Takings
Plaintiff developers challenged a county “capacity use fee” of $1,000 for water service and $1,200 for sewer service. The purpose of the fee was to partially recover from new customers the costs of expanding capacity of the utility services to account for future customers to be added to the system. The fee was required to be paid for each lot as a precondition to county concurrence in water and sewer permits issued by the state.
The court concluded the fees were not “user fees” to cover the cost of any service currently provided. They are properly characterized as an “impact fee” and a monetary land-use exaction because they were required to be paid prior to county approval to develop a particular parcel of land. The fact that the fees were a nondiscretionary fixed amount set by a legislative body does not exempt them from this categorization since the county had the discretion to amend and increase the fees by regulation at any time. As such the fee is subject to the constitutional Nollan/Dolan/Koontz requirement that they be rationally related and roughly proportional to the impacts of the proposed developments (which as the court noted is incorporated into the system development fee legislation subsequently enacted by the General Assembly). The court held the plaintiff’s pleadings conceded the fee was rationally related to the impacts of the development, but remanded for findings relative to whether it was no more than a roughly proportional amount.
United Daughters of the Confederacy, N. C. Div., Inc. v. City of Winston-Salem, ___ N.C. ___, 881 S.E.2d 32 (2022)
Standing; Monuments
Plaintiffs challenged the city’s decision to remove a Confederate Monument located in front of the former county courthouse. The court held that since the plaintiff’s complaint had no allegation that the group had any ownership or contractual interest in the monument, it had no legal rights under common law, state statutes, or the constitution that would be affected by its removal. Without such a proprietary or contractual interest, it had no standing to challenge the city’s action. As there was no identification of individual members of the organization and no allegations related to their standing, the group could not have associational standing based on the standing of a member of the organization. The court held the action should have been dismissed without prejudice since without standing, the trial court could not review the substance of the claim to determine if it should be dismissed with prejudice.
C Investments 2, LLC v. Auger, ___ N.C. ___, 881 S.E.2d 270 (2022)
Restrictive covenants; Interpretation
The court interpreted a provision in the Real Property Marketable Title Act that when an owner has a thirty-year unbroken chain of title, any restrictive covenants that are not mentioned in the chain of title, other than those that restrict the property to residential use, are extinguished. In this instance, a 1952 subdivision included covenants limiting the property to residential use; it also included additional covenants restricting development of the lots. The court held that the plain and unambiguous language of G.S. 47B-3(13) provides that where the subdivision had covenants applicable to a general or uniform scheme of development that restrict the property to residential use only, the covenant is not extinguished. However, the other covenants related to the size and number of structures, placement of the structures on the lot, future subdivision of lots, or other architectural limits on structures were all extinguished after thirty years.
North Carolina Court of Appeals
Batson v. Coastal Resources Commission, 282 N.C. App. 1, 871 S.E.2d 120 (2022) [appeal filed]
Attorney fees; CAMA
The plaintiffs sought to appeal a CAMA permit issued to NCDOT for replacement of the bridge to Harkers Island. The Coastal Resources Commission denied this third-party request to appeal, finding the one-page request for a hearing did not demonstrate that the appeal was not frivolous. The trial court reversed that decision and remanded the case for an appeal hearing. The court also awarded the plaintiff attorney fees for the appeal of the denial of their request for a hearing.
The court held the trial court had the authority under G.S. 6-19.1(a) to award attorney fees for the judicial challenge of the denial of the right to file an appeal. A petition for judicial review is a “civil action” subject to this statute. G.S. 113A-121.1 provides that the CRC decision not to allow an appeal is a final agency decision subject to judicial review. The plaintiffs prevailed on the decision to allow an appeal to be made. The court noted that the CRC offered a thorough analysis of the plaintiff’s claims prior to dismissing the appeal as frivolous. However, a claim is not “frivolous” simply because it does not have merit or is unlikely to succeed. Rather, it is “frivolous” only if the proponent can present no rational argument based on the evidence or the law to support it. The court remanded to the trial court for additional findings as to whether the CRC knowingly applied the wrong reading of “frivolous” (that the appeal lacked merit as opposed to having no rational argument to support it) and thus acted without substantial justification in denying the right to the appeal.
Dismas Charities, Inc. v. City of Fayetteville, 282 N.C. App. 29, 870 S.E.2d 144 (2022)
Special use permit
The plaintiff applied for a special use permit to construct a halfway house for prisoners transitioning back into society on a vacant lot in the downtown area. The site was zoned for office and institutional uses, which included hospitals, community centers, police and fire stations, fraternity houses, and motels as permitted uses. The city council denied the permit based on a finding that the applicant did not meet its burden to produce evidence on the permit standard that the project “allows for the protection of property values” and for the neighboring lands to develop the uses permitted in that district. The city argued that this standard was essentially similar to the more typical standard that the use must not have a substantial adverse effect on neighboring property values.
The court applied a de novo review to the question of law as to whether the plaintiff met the burden of production for this standard. The court noted the standard was not whether the project would substantially harm adjoining property values, but rather addressed the impact on property values generally and would protect values generally. As the hearing record included evidence as to how the project would protect property values generally (evidence submitted that it would be a “high quality, attractive commercial grade building,” would be well maintained, and would be professionally staffed), the plaintiff’s burden of production was met. As no competent evidence to the contrary was presented, the applicant was entitled to permit approval.
Town of Midlands v. Harrell, 282 N.C. App. 354, 871 S.E.2d 392 (2022)[appeal filed]
Enforcement; Attorney fees
The defendant in 2004 constructed a subdivision and asked NCDOT to assume maintenance of its streets. The NCDOT declined since the subdivision was within the newly incorporated town. The town refused to accept the streets until the defendant fixed construction damage to the streets. When repairs were not made, the town cited the defendant for a zoning violation for failure to properly construct and maintain the streets. That enforcement action was upheld by the court of appeals in 2017. The town assessed civil penalties of $18,900 for the continuing violation in 2017 (189 individual citations). In this action the town sought collection of the civil penalties, an order of abatement and mandatory injunction to compel the road repairs, and attorney fees. The defendant contended the civil penalties were stayed while their appeal was pending.
The court held the town had the authority to initiate these enforcement actions, including litigation, under the terms of its ordinances without an individual resolution by the town council to do so. The court upheld the imposition of the civil penalties, noting that the defendant has unsuccessfully appealed the notice of violation. The court held that while the issue of the defendant’s obligation to maintain the roads had been conclusively resolved in the prior litigation, Rule 65(d) of the Rules of Civil Procedure requires that an order granting an injunction must describe in reasonable detail the acts to be taken. Here the order required compliance with a Proposed Repair Plan to be developed. The court remanded with a direction for the court to specify the specific NCDOT standards that have not been met and to provide a specific decree for necessary repairs. The court agreed that the civil penalties were stayed during the initial appeal of the notice of zoning violation, so the defendant’s attorney fees to contest that unauthorized action were appropriate.
Daedalus v. City of Charlotte, 282 N.C. App. 452, 872 S.E.2d 105, rev. denied, 876 S.E.2d 285 (2022)
Impact fees; Scope of authority
The city charged applicants for water and sewer services three fees: (1) a capacity fee to pay a portion of the capital costs of the system; (2) a connection/tap fee to cover the cost of connecting the property to the system; and (3) a user fee based on debt incurred for construction of the system and for its operation and maintenance expenses. The plaintiff developers contended there was no statutory authority for the capacity fee.
The court held the capacity fee charged before the 2017 statutory amendment to the public enterprise statute authorizing system development fees was ultra vires because these fees were not for “contemporaneous use” but were held for future discretionary spending on water and sewer expansion.
Schroeder v. City of Wilmington, 282 N.C. App. 558, 872 S.E.2d 58 (2022)
Preemption; Interpretation; Short term rentals
The city established a regulatory program for short term rentals of residential property. The program required annual registration of properties to be offered for rent, limited their location to certain zoning districts, set various operational requirements, required a 400-foot setback from other rentals, capped the overall number of rentals to two percent of the city’s residential parcels, and had a lottery system to allocate permits. Existing short-term rentals who did not get permits in the lottery were given a one-year amortization period before being required to cease operations. The plaintiff registered their townhouse for the program but was unsuccessful in the lottery. The challenged the city’s authority to implement the program.
The court held that G.S. 160D-1207(c) preempted the registration program but not the authority to require zoning permits. The statute prohibited local ordinances that: (1) require “any permit or permission under Article 11 or Article 12” of Chapter 160D to lease or rent residential real property; or (2) to register rental property with the local government. The city’s annual registration and lottery system was preempted by the second of these limitations. The court noted that the original 2011 statute had been amended in 2019 to add the reference to Articles 11 and 12 (the building and housing code articles within Chapter 160D) relative to permits and permissions that could be required. This clarified that while permit requirements under the building code or housing code are preempted by the first limitation, zoning “permits and permissions” under Article 7 of Chapter 160D are not preempted. The court therefore upheld the regulatory provisions that restricted whole-house short term rentals to specified zoning districts, as well as those that set parking requirements, limits on use of the properties for large gatherings, mandatory insurance and other operational requirements. The court held the cap and separation requirements, and the amortization requirements were so intertwined with the invalid registration requirement that they were also preempted.
TAC Stafford, LLC v. Town of Mooresville, 282 N.C. App. 686, 872 S.E.2d 95, rev. denied, 880 S.E.2d 696 (2022)
Exactions; Subdivisions; Attorney fees
Plaintiff sought approval for subdivision plat to develop 467 lots on a 209-acre parcel. The town approved a concept plan for the subdivision conditioned upon completion of a traffic impact analysis (TIA) to be paid for by the developer and the completion of “any required on-site and off-site improvements.” Upon completion of the TIA, the plaintiff entered into a Mitigation Measures Agreement with the town that included off-site road improvements up to 2.3 miles away from the subdivision. When the plaintiff was unable to purchase rights-of-way from the owners of some off-site properties, they requested that the town condemn those properties. The town refused to do so and denied certificates of occupancy for more than half of the subdivision lots due to the plaintiff’s breach of the mitigation agreement.
The court held the town lacked statutory authority under the subdivision enabling statute to require off-site transportation improvements. The plaintiff had spent $993,584 to comply with the mitigation agreement. The court upheld the order that the town return the $101,500 paid directly to the town under this agreement, but also held that the moneys paid to other landowners for off-site rights-of-way were not an exaction paid to the government, so the town could not “return” those fees. The court remanded the question of repayment of the $155,679 cost of the TIA to determine if that amount was paid to the town or to the engineering firm. The court also held that attorney fees must be paid by the town under G.S. 6-21.7 as the town’s off-site fee charges exceeded unambiguous limits on its statutory authority.
The Society for the Historic Preservation of the Twenty-Six N.C. Troops, Inc. v. City of Asheville, 282 N.C. App. 700, 872 S.E.2d 134, rev. allowed, 880 S.E.2d 679 (2022)
Standing; Monuments
Plaintiffs sued to block the city’s removal of the Zebulon Vance Monument from Pack Square in Asheville, contending it had a contract with the city to raise funds to restore the monument. The court held the plaintiffs had no legal injury under the contract, as it involved only work to restore the monument, not to preserve it, and that work had been completed. The association likewise had no standing to address the city and county’s compliance with the state’s monument removal statutes.
Appalachian Materials, LLC v, Watauga County, 283 N.C. App. 117, 872 S.E.2d 591 (2022) [reiew pending]
Judicial procedure; Appeals
In 2015 the county denied the plaintiff’s application for a permit to construct an asphalt plant because it was located too close to an educational facility and on other grounds. On appeal the court overturned the denial, ruling that the school office building was not an “educational facility” covered by the separation requirement. The county had not exercised an appeal under Rule 10(c) of the Rules of Appellate Procedure to have the court consider the other grounds for approval. On remand the county again denied the permit, citing the other grounds for denial.
The court held the initial order on appeal reversed the original decision rather than vacating it. It therefore held its mandate on the initial appeal directed the trial court to order issuance of the permit. Although the county was not required to raise these other issues in the original appeal, by failing to ask for reconsideration of the initial broad mandate or to appeal that to the supreme court, the original broad mandate is the law of the case.
Violette v. Town of Cornelius, 283 N.C. App. 565, 874 S.E.2d 217 (2022)
Standing; Evidence
Plaintiff adjacent property owners challenged a conditional rezoning of a 13.6-acre parcel that would allow construction of an amenity center for a 728-home residential subdivision for persons aged fifty-five or more. The property was zoned Rural Preservation prior to the rezoning. After the suit was filed, the town accepted a new rezoning application and again rezoned the property to correct procedural deficiencies in the original rezoning. Both rezonings were challenged in the suit.
The court held the plaintiffs lacked standing to challenge the rezonings. The court noted that at one time allegations of a specific personal and legal interest that would be directly and adversely affected was sufficient to establish standing in a declaratory judgement action. However, the court held that a showing of “special damages” is now required. The neighboring property owner’s opinion regarding diminution of value is not competent evidence to show a substantial reduction in property value that would have established the neighbor’s standing.
Thompson v. Union County, 283 N.C. App. 547, 874 S.E.2d 623 (2022)
Enforcement; Vested rights
This case involved a residence constructed in 2004 and a detached garage constructed in 2009. When the property was listed for sale in 2018 a survey showed the house encroached upon the 20-foot side yard setback set by the county’s 2014 unified development ordinance. The garage, which had been constructed without a building permit, encroached into the setback and into a private access easement on the property. In 2018 the plaintiff’s predecessor in title applied for an “after-the-fact” building permit for the garage and a survey that showed these encroachments. The plaintiff’s predecessor contended the garage met the pre-2014 setback requirements, but the county disagreed. The county contended the structures were “continuing violations” and issued a notice of violation regarding the setback encroachments. Plaintiff then purchased the property “as is” with notice of the right of way encroachment. The county issued a new notice of violation, required an updated survey, and issued a civil penalty. The board of adjustment and superior court upheld the notice of violation.
The court noted the burden of proof to show a violation is on the county. Neither the 2014 unified development ordinance, the ordinances in effect when the structures were built, nor the original building permits (permit records had been purged by the county) were introduced. A court may not take judicial notice of municipal or county ordinances. As the ordinances were not in the hearing record, board of adjustment findings based on the terms of the ordinance were not supported by competent evidence. With no evidence of the ordinance requirements or permit conditions in the record, the county failed to meet its burden of establishing an ordinance violation regarding the residence. The court held that since the garage was admittedly built without a permit, it remanded that issue to determine consistency with the ordinance in effect at the time of construction.
The court further held that since a building permit was issued for the residence, there was a statutory vested right under G.S. 160D-108(c) to maintain the residence as constructed since there was no evidence submitted to show the construction failed to meet the terms of the permit that had been purged. As no permit had been issued for the garage, there were no statutory vested rights to continue it as built.
Schooldev East, LLC v. Town of Wake Forest, 284 N.C. App. 434, 876 S.E.2d 607 (2022) [review pending]
Interpretation; Plans
Plaintiff applied for site plan and subdivision approval for a K-12 charter school on a 35-acre parcel zoned RD, a rural holding district. The standards for quasi-judicial approval of the major site plan included plan consistency, adequate infrastructure, and that it is not detrimental to the use or development of adjacent properties or other neighborhood uses. The application was denied by the town council because it failed to meet town plan policies regarding pedestrian and bicycle connectivity to the surrounding neighborhood. The trial court upheld the denial.
The court held that G.S. 160A-307.1 did not preempt the city’s sidewalk connectivity requirement. That statute prohibits cities from requiring “street improvements” for schools beyond those required for safe ingress and egress to the city street system and that are physically connected to a school driveway. The court applied a de novo review of the statutory interpretation issue. As the statute did not define the terms, the court applied the ordinary meanings of “street,” “improvements,” and “for ingress and egress” to the street system. The court held that while sidewalks might be a part of a “street,” they were not related to the safe entry and leaving of the city street system for school driveways. When read as a whole this statutory limit was not intended to include sidewalks. The fact that sidewalks are included within “streets” in other statutes does not affect this statute, which only addresses school driveway connections.
The court concluded the record included competent, material, and substantial evidence that the application was not consistent with adopted town plans and policies. The plan included a policy that “school campuses shall be designed to allow safe, pedestrian access from adjacent neighborhoods” and the unified development ordinance required a school to achieve “walking and bicycle accessibility by schoolchildren” through off-premises sidewalks, multi-use trails or paths, or greenways connecting to existing networks. The evidence showed those policies were not met.
Ashe County v. Ashe County Planning Board, 284 N.C. App. 563, 876 S.E.2d 687 (2022) [appeal pending]
Permit choice; Moratoria; Interpretation
The county denied an application for approval of an asphalt plant under the county’s High Impact Land Use Ordinance. The planning board (sitting as a board of adjustment) reversed the denial on appeal and the county board of commissioners appealed the planning board decision to the court. In 2020 the supreme court held a letter from the planning director regarding the proposed plant was not a binding determination that the permit standards had been met and remanded the case.
On remand, the court first addressed the permit choice statutes, G.S. 143-755 and 160D-108(b). The statutes only apply if an application has been “submitted” prior to the ordinance amendments (in this case adoption of a moratorium and subsequent adoption of more stringent requirements for affected high impact industries, which included asphalt plants). The court held the application submitted under the then effective Polluting Industries Ordinance was not “submitted” until the required state air quality permit required before local permits could be approved had been obtained. At the time the state permit received and submitted to the county to supplement its application, the county had adopted a moratorium on these permits, and it was still in effect. The court noted that G.S. 160D-107(c) specifically provides that the permit choice rule only applies to developments for which “a complete application” was submitted prior to the effective date of the moratorium. Because the court held the application was not complete without the state permit approval, this application was not exempt from the moratorium and the permit choice rule did not apply when permit review resumed upon expiration of the moratorium.
The court the upheld the permit denial under the ordinance in effect at the time of the expiration of the moratorium. The court found the hearing record supported the staff conclusion that the proposed plant was located within 1,000 feet of two commercial buildings -- a barn storing hay for sale and a quarry. As the ordinance prohibited that (as did the originally applicable ordinance), the application was properly denied.
Visible Properties, LLC v. Village of Clemmons, 284 N.C. App. 743, 876 S.E.2d 804 (2022)
Interpretation; Signs
The plaintiff’s application to erect a digital billboard was denied as not permitted in the applicable overlay zoning district and because the sign regulation prohibited “moving and flashing signs’ and “electronic message boards.” The board of adjustment and trial court upheld the denial. The court conducted a de novo review of the interpretation of the ordinance restrictions and reversed on both grounds.
On the question of whether off-premises advertising was a permitted use on the property, the court found the ordinance ambiguous. Three sections of the ordinance addressed this: (1) the applicable general zoning district, which permitted off-premises signs; (2) an overlay zoning district that did not include off-premises signs among the permitted uses; (3) and specific sign regulations, which permitted off-premises signs and set sign standards. These signs were also prohibited in view corridors, but this property was no designated as such. The ordinance also provided that where there was conflict between multiple ordinance provisions, the more restrictive provision applied. The court held that where a “reasonable interpretation” can avoid a conflict between sections, it should be adopted. Here the court reconciled these provisions to find they were not in conflict, ruling the more specific sign regulation superseded the more general provisions of the base and overlay district regulations.
On the question of whether a digital billboard was permitted, the ordinance prohibited “moving and flashing signs” and “electronic message boards,” without defining either term. “Digital billboards” were not addressed by the regulations. The proposed digital billboard would not include any animation or moving images, but the static image displayed would change every six to eight seconds. The court held that while inclusion of digital billboards within this category was a reasonable interpretation, it was also reasonable to interpret it as not including a sign with static (but changing) images with no moving or flashing parts or images. Similarly, it would be a reasonable interpretation to include or exclude digital billboards as an ”electronic message board.” Given two reasonable interpretations, there is ambiguity that must be resolved in favor of the interpretation that permits the free use of property.
The court concluded that the village could have prohibited “digital billboards” or those that changeable copy. It could have clearly provided that the overlay district standards superseded the sign regulations. In the absence of that clarity, the ordinance was ambiguous and must be interpreted to allow the contested use.
Frazier v. Town of Blowing Rock, ___ N.C. App. ___, 882 S.E.2d 91 (2022)
Nonconformities
The plaintiff owned a three-unit residential property in a residential zoning district that was used for short-term rentals. Beginning in 1984, the town’s zoning regulation limited “tourist homes and other temporary residences renting by the day or week” to non-residential zoning districts. In 2019 and 2020 the regulations were amended to define “short-term rental of a dwelling unit” and to allow these only in a short-term rental overlay district. The town cited the plaintiff for a zoning violation, contending his use violated the 1984 regulation on tourist homes and the 2020 regulation on short-term rentals.
The court held the regulation of short-term rentals prior to 2020 was ambiguous as the 2020 amendments were adopted to clarify whether the restrictions on the location of tourist homes included short-term rentals. The two uses are substantially similar but different. As ambiguities are to be resolved in favor of the free use of property, as a matter of law plaintiff’s use should be considered a lawful nonconformity. Since the notice of violation was for a “short-term rental” use and not for a “temporary residence renting by the day or week,” the question of whether the use violated the pre-2020 regulations was not before the board of adjustment and thus cannot be considered by the court.
Askew v. City of Kinston, ___ N.C. App. ___, 883 S.E.2d 85 (2022)
Demolition; ExhaustionThe city condemned three vacant, dilapidated residential properties as unsafe buildings pursuant to G.S. 160D-1119. In each case there the building inspector issued orders of abatement after an administrative hearing. The plaintiff appealed to the city council on one of the cases, but not the other two. No appeals were made to superior court. An appeal was made to federal court, which dismissed the action for lack of subject matter jurisdiction. This action was then commenced, claiming a violation of equal protection and due process under the state constitution. The rights of appeal of the condemnation orders to the city council or superior provided an adequate statutory remedy to address the plaintiff’s claims. As the plaintiff failed to exhaust their administrative remedies, the court lacks subject matter jurisdiction to hear these direct constitutional claims.
Federal Cases
5-Star Athlete, Development, LLC v. City of Shelby, No. 1:21-CV-323-MR-WCM, 2022 WL 4287921 (W.D. N.C. May 26, 2022)
Fair housing
Plaintiff, a minority-owned company, applied for a rezoning to build eleven townhouses on property previously zoned commercial and single-family residential. The application was denied and the plaintiff alleged a violation of the state and federal Fair Housing Acts. The court granted a motion to dismiss, finding no allegation of disparate impact or disparate treatment based on racial or ethnic grounds. The plaintiff made no allegations about the demographics of the community, race, or color of those who would reside in the townhouses. Public opposition to the potential for low-income housing if the rezoning was approved, without any expression of racial or color involved, does not constitute racial animus on the part of the speaker. The racial identity of the applicant, standing alone, does not in and of itself establish racial discrimination. There was no allegation about the racial identity of applicants for the rezonings approved by the city in this time period to support a claim of disparate treatment.
Fairway Outdoor Advertising, LLC v. City of High Point, No. 1:21-CV-00867, 2022 WL 17975990 (M.D. N.C., Dec. 28, 2022)
First Amendment; Signs
The city denied the plaintiff’s applications for six new digital billboards and for the replacement of an existing vinyl billboard with a digital billboard. The city zoning ordinance only allowed billboards in the heavy industrial zoning district and did not allow any digital signs in that zoning district, effectively banning digital billboards citywide. The court held the on-site/off-site distinction for signs was a content-neutral regulation. The court held that traffic safety and aesthetics were significant governmental interests and were sufficient to justify the sign regulations. Adequate alternative avenues of expression remained given that nonconforming billboards were allowed to continue and new billboards, albeit not digital billboard, were permissible in the heavy industrial zoning district.
