Planning and Development Regulation
SUP: Application of Property Value Impacts Standard
[Adapted from Owens, Land Use Law in North Carolina (4th ed. 2023)]
North Carolina cities and counties report that the question of a proposed special use permit project’s impact on adjoining property values is the single most difficult standard for their boards to apply.
A significant portion of this difficulty is that evidence on property-value impacts is frequently offered by lay witnesses. When asked how evidence is typically presented on property-value impacts, North Carolina cities and counties report that testimony from neighbors and the owner or developer of the property are by far the most common sources of this evidence.[1] This in large part explains the amendment to the zoning statutes in 2009 that limits the use of opinion evidence from nonexpert witnesses on the issue of property-value impacts.[2]
Where expert testimony is offered to establish property-value impacts, it is important that the witness be properly qualified as an expert and that an adequate foundation be established for expert opinions that are offered. In Mann Media, Inc. v. Randolph County. Planning Board,the court noted that a rigorous standard is necessary to establish a foundation for opinion testimony regarding property-value impacts.[3] The applicant’s witness on property-value impacts was a professional appraiser; the objecting neighbors presented testimony from a contractor and a real-estate agent.The court noted that all three witnesses offered only speculative opinions about values without supporting facts or examples and ruled that such evidence cannot be the foundation of a finding of adverse impacts. Similarly, in Humane Society of Moore County. v. Town of Southern Pines, the court held that testimony by an appraiser as to the property-value impacts of a proposed animal shelter was based on speculative opinions rather than facts and could not be the basis of a finding on value impacts.[4] In Dellinger v. Lincoln County, the court held that testimony from two appraisers could not be used to make a determination about property-value impacts of a solar farm because the first used as a comparable a solar farm without similar setback, landscaping, and buffering being imposed on the proposed farm and the second appraiser offered only a personal opinion unsupported by quantitative analysis.[5]
By contrast, the court in Leftwich v. Gaines, a case for damages resulting from the improper actions of a zoning official, allowed testimony from a plaintiff with experience in real-estate matters to be used as a foundation for setting property values in the context of assessing damages.[6]
Conclusory statements and speculative comments by neighbors cannot properly be the basis of findings relative to property-value impacts. In Sun Suites Holdings, LLC v. Board of Aldermen, a case involving a special use permit to build an extended-stay hotel, speculative comments by a neighbor and a real-estate agent about property-value impacts were held to be insubstantial evidence on the effects of the hotel project on surrounding property values.[7]
When credible quantitative evidence on property-value impacts is presented, that evidence cannot be rebutted by generalized contradictory testimony, be it from opposing experts, lay witnesses, or the board itself. In PHG Asheville, LLC v. City of Asheville,[8] the applicant presented uncontroverted expert testimony regarding property-value impacts. The court held the board could not find the expert’s methodology inadequate based on only its own lay opinion. In Ecoplexus Inc. v. County of Currituck, the applicant presented expert testimony on the absence of adverse property-value impacts to neighbors of a proposed solar farm, while the neighbors’ expert on property-value impact testified only to his opinion of the “highest and best” use of the property, which was not a permit standard (and he offered no supporting studies).[9] In Little River, LLC v. Lee County, the applicant presented expert appraisal testimony on property-value impacts, and the opponents’ expert addressed potential impacts more broadly than the ordinance standard, which only addressed impacts on “adjoining and abutting” properties.[10] In Innovative 55, LLC v. Robeson County, the court held that once an applicant presented expert testimony on the absence of adverse property-value impacts, speculative lay opinion and a neighborhood petition were not sufficient evidence to deny a special use permit for a solar farm.[11] In Dellinger v. Lincoln County, the plaintiffs presented expert testimony from two qualified real-estate appraisers that a solar farm as proposed would not have an impact on neighboring property values. The court held that this established a prima facie entitlement to approval absent contrary substantial, material evidence.[12] In Weaverville Partners, LLC v. Town of Weaverville Zoning Board of Adjustment,[13] the plaintiff challenged the denial of a special use permit for an apartment complex. The plaintiff’s properly qualified real-estate appraiser testified that he had conducted a market analysis of similarly situated neighborhoods in the town, reviewed sales history around the site over the previous ten years, conducted interviews with nearby purchasers, and reviewed the architectural plans. The opposing testimony addressed two factors: (1) countywide data regarding the effect of apartments in depressing rates of property-value appreciation and (2) whether nearby sales were less than the asking price. The court held neither established a violation of the ordinance standard of substantial depreciation of value. Likewise, testimony regarding the incongruity of the project design with neighboring properties was based solely on personal observations and had no quantitative link to a substantial depreciation in property values.
The fact that evidence of property-value impacts is available and not presented can seriously undermine the case of the party with the burden of establishing (or contesting) that fact. In SBA, Inc. v. City of Asheville,[14] the plaintiffs appealed the city council’s denial of a special use permit for a telecommunication tower. The Asheville ordinance required a conclusion that the project would not substantially injure the value of adjoining or abutting property. The plaintiffs presented a property-value impact study to demonstrate compliance with this standard, but the city staff expressed concern that the study addressed other towers and neighborhoods, not the neighborhood in question. The court was particularly concerned with the plaintiffs’ failure to address the property-value impacts of an existing telecommunication tower a short distance from the proposed site that potentially affected the same neighborhoods. The court thus held that the plaintiffs “simply did not meet their burden of demonstrating the absence of harm” to neighboring property values.[15] Similarly, in American Towers, Inc. v. Town of Morrisville,, the ordinance required the applicant to show the project would not substantially harm neighboring property values.[16] The court upheld denial of the permit based in part on the board’s finding that the appraisal information submitted by the applicant failed to address potential impacts in settings similar to the case at hand. By contrast, the court in PHG Asheville, LLC v. City of Asheville, found that the board could not reject substantial evidence from expert testimony in the record based on its own assessment of that testimony’s adequacy.[17]
On occasion, a zoning regulation will include a standard regarding property-value impacts that is similar to the standards discussed above but different in some critical aspect. In one example, Dismas Charities v. City of Fayetteville,[18] the standard employed was that the use “allows for the protection of property values.” The court held that this was not the equivalent of the typical standard that the use “not substantially injure the value of adjoining or abutting property” for two reasons. First, it was not limited to impacts on adjoining or abutting properties. Second, allowing for “the protection of property values” is not the same as substantially injuring adjoining property values. The court held that this standard only required that the applicant show it has incorporated “reasonable” elements in its plans that provide for the benefit of the protection of property values generally as opposed to showing adjacent property values would not be harmed.[19]
[1]. Sixty-four percent of jurisdictions responding to a 2005 SOG survey reported that testimony from neighbors was typically offered to establish property-value impacts in special use permit hearings. Fifty-nine percent of the jurisdictions reported testimony from the owner or developer was typically offered on this point, 39 percent reported evidence was typically presented from a real-estate appraiser, and 24 percent reported testimony from real-estate agents.
[2]. G.S. 160A-393(k)(3).
[3]. 356 N.C. 1, 565 S.E.2d 9 (2002).
[4]. 161 N.C. App. 625, 589 S.E.2d 162 (2003). The appraiser testified that data on impacts of comparable facilities were not available and had based his testimony on seven case studies based on inquiries of appraisers, assessors, brokers, developers, and landowners near other objectionable land uses.
[5]. 266 N.C. App. 275, 832 S.E.2d 172 (2019). The case was subsequently remanded for reconsideration in light of PHG Asheville. 374 N.C. 430 (2020).
[6]. 134 N.C. App. 502, 511, 521 S.E.2d 717, 724–25 (1999), review denied, 351 N.C. 357, 541 S.E.2d 714 (2000). See also Huff v. Thornton, 287 N.C. 1, 213 S.E.2d 198 (1975); Zagaroli v. Pollock, 94 N.C. App. 46, 379 S.E.2d 653, review denied, 325 N.C. 437, 384 S.E.2d 548 (1989) (allowing real-estate-developer testimony relative to property value).
[7]., 139 N.C. App. 269, 533 S.E.2d 525, review denied, 353 N.C. 280, 546 S.E.2d 397 (2000).
[8]. 374 N.C. 133, 839 S.E.2d 755 (2020).
[9]., 257 N.C. App. 9, 809 S.E.2d 148 (2017).
[10]. 257 N.C. App. 55, 809 S.E.2d 42 (2017).
[11]. 253 N.C. App. 714, 801 S.E.2d 671 (2017). The court reached the same conclusion for the same reasons on evidence regarding traffic impacts on public safety.
[12]. 248 N.C. App. 317, 789 S.E.2d 21, review denied, 369 N.C. 190, 794 S.E.2d 324 (2016). The court subsequently addressed the property-value evidence to the contrary and found it insufficient. 266 N.C. App. 275, 832 S.E.2d 172 (2019). This second case was then remanded for reconsideration in light of PHG Asheville. 374 N.C. 430 (2020).
[13]. 188 N.C. App. 55, 654 S.E.2d 784 (2008). The site was across the street from an apartment building and adjacent to a commercial strip on one side with single-family residential development on the other sides.
[14]. 141 N.C. App. 19, 539 S.E.2d 18 (2000).
[15]. Id. at 27, 539 S.E.2d at 23.
[16]. 222 N.C. App. 638, 731 S.E.2d 698 (2012), review denied, 743 S.E.2d 189 (2013). The board had found the appraisal information insufficient for several reasons. In reviewing impacts on neighboring subdivisions, the submitted study had only looked at subdivisions built after the adjacent telecommunication tower was present, while in this case the adjacent subdivisions were already in existence. (The study also failed to consider potential loss in value due to reduced “curb appeal.”)
[17]. 374 N.C. 133, 839 S.E.2d 755 (2020). Here, the board was not resolving conflicting evidence since there was no evidence presented to the contrary; it did have concerns, however, about the reliability of the expert testimony.
[18]. 282 N.C. App. 29, 870 S.E.2d 144 (2022). The plaintiff applied for a special use permit to construct a halfway house for prisoners transitioning into society. The property was a vacant lot in the downtown area.
[19]. The court found that the record included evidence that showed the proposed use incorporated elements to protect property values generally, and the attractive, commercial-grade building would have high-maintenance standards. As no contrary competent, material, and substantial evidence was presented, the plaintiff was entitled to permit issuance.
