CONDITIONAL ZONING DISTRICTS:
SOMETHING OLD AND SOMETHING NEW
North Carolina Municipal Attorneys Conference
Institute of Government
Chapel Hill
March 2003
Richard Ducker
Institute of Government
CB #3330 KnappBuilding
UNC – Chapel Hill
Chapel Hill, NC27599-3330
919/966-4179
CONDITIONAL ZONING DISTRICTS:
SOMETHING OLD AND SOMETHING NEW
The Massey case
Perhaps the most important zoning case of the last decade was handed down by the North Carolina Court of Appeals in 2001, but we will be sorting out its implications for some time to come. The case is the North Carolina Court of Appeals decision in Massey v. City of Charlotte, 145 N.C. 345, 550 S.E.2d 838 (2001), disc. rev. den., 354 N.C. 219, 554 S.E.2d 342 (2001). In Massey the court upheld, as a part of the city’s conditional zoning process, Charlotte’s rezoning of a parcel of land subject to a series of restrictions proposed by the property owner. The court validated the conditional rezoning despite the fact that the city conducted no quasi-judicial hearing in reviewing the site plan that was submitted with the rezoning petition. According to the court’s ruling, Charlotte’s conditional zoning process was a legislative one, and there was no need for Charlotte to grant a conditional-use permit in connection with it. The court also concluded that the “conditional district” upheld was neither a conditional-use district, nor a general-use district, nor an overlay district. It was a form of zoning district not expressly listed in the state’s zoning enabling statutes, but one authorized by implication.
The facts and holding
The case involved a petition submitted by Albemarle Land Company to rezone about 42 acres of land from R-3 Residential to CC (Commercial Center), a conditional district with some eighteen (18) permitted uses. The developer submitted a plan calling for the use of the property to be restricted to a retail center to house two “big-box” retailers (a Target and a Lowe’s Home Improvement warehouse) and five out-parcels. In addition, the site plan provided for a 100-foot buffer strip between the development and the neighboring properties. The city council rezoned the property as proposed. The city also granted a “conditional-use permit” but no hearing was held with respect to the permit.
Neighbors brought a legal action seeking a writ of certiorari, an action that may be used to review a quasi-judicial zoning decision. The case was brought in Mecklenburg County Superior Court but assigned to a special business court because of its importance. In a long memorandum decision, the business court judge ruled in favor of the neighbors, holding that the city had no authority to undertake conditional zoning without following quasi-judicial procedures for granting a conditional-use permit. Thus Charlotte’s decision was unlawful because the city lacked authority to engage in purely legislative conditional zoning.
Both the City of Charlotte and the developer chose to appeal the case to the North Carolina Court of Appeals. However, while the appeal was being pursued, Charlotte and other Mecklenburg County local governments were successful in obtaining local legislation from the North Carolina General Assembly authorizing the conditional zoning used in those jurisdictions to continue to be used until August 31, 2001.
The question of statutory authority
In the summer of 2001 the trial court decision was reversed by the court of appeals. At the heart of the case was the source of Charlotte‘s enabling authority to adopt the kind of zoning district involved. The trial judge noted that site-specific development conditions may not be added to ordinary zoning map amendments, at least not to a rezoning action involving a general-use district, because in such instances zoning regulations must be uniform with respect to all properties within a particular kind of district. Thus, as far as the business-court judge was concerned, G.S. 160A-382 must have been the statutory basis for the process used. G.S. 160A-382 provides, among other things, for “special use districts or conditional use districts, in which uses are permitted only upon the issuance of a special use permit or a conditional use permit.”
However, the Court of Appeals brushed this language aside, declaring it inapplicable. It pointed to the fact that G.S. 160A-382 provides that zoning districts “may include, but shall not be limited to” general use districts, overlay districts, and special-use and conditional-use districts. According to the court, the city had broad power to develop zoning districts and could employ districts other than the four types of districts listed.
Reinterpreting Chrismon
Massey also required a reinterpretation of the seminal 1988 case of Chrismon v. Guilford County, 322 N.C. 611, 370 S.E.2d 579 (1988). The case is widely viewed as affirming the authority of North Carolina local governments (and Guilford County in particular) to adopt conditional-use district zoning and special-use district zoning. But Chrismon also left unanswered questions in its wake. Throughout Chrismon, the North Carolina Supreme Court chose to speak of “conditional use zoning” rather than “conditional use district zoning,” the terminology used by the Guilford County development ordinance and codified in the zoning enabling statutes several years before Chrismon was decided. What’s more, the North Carolina Supreme Court opinion cited as precedent several cases from other jurisdictions that had upheld a pure form of conditional zoning involving no conditional-use permit. Thus it was unclear from Chrismon whether only the concept of conditional-use district zoning was being affirmed or a broader concept of conditional zoning as well. Finally, because the neighbors challenged the rezoning action of Guilford County rather than the grant of a conditional-use permit that went with it, the Chrismon court did not have an occasion to rule directly on the question of whether or not a conditional-use permit was an essential ingredient in the process. The lack of clarity in the Chrismon case allowed the North Carolina Court of Appeals in Massey to take the opportunity to rule that the Massey decision was entirely consistent with Chrismon and existing law.
No quasi-judicial hearing required
The clear implication of the decision is that a North Carolina local government may rezone property subject to use and other restrictions proposed by the property owner, if the zoning district involved is not a general-use district and the ordinance authorizes the use of conditional districts. It is unnecessary for the process to include both a zoning map amendment decision based on a legislative hearing and a conditional- or special-use permit decision based on a quasi-judicial hearing. Instead, a single decision may be made, and it may be based upon a legislative hearing. Such a decision may not be challenged with a writ of certiorari; such a writ may be used only to challenge quasi-judicial or judicial actions. According to the court, its ruling was entirely consistent with Chrismon because “a review of the procedures used in Chrismon does not reveal evidence of the requirements for an independent quasi-judicial hearing.”[1]
Not contract zoning
The Massey court also rejected the idea that Charlotte’s style of conditional zoning amounted to illegal contract zoning. The Court of Appeals reiterated the view developed in prior cases that illegal contract zoning involves a bilateral contract in which the landowner and the zoning authority make reciprocal promises. In Charlotte-style conditional zoning, the city council makes no promise to the landowner or developer. The only promise made is one made by the landowner is an implicit one to abide by the restrictions included in the landowner’s own proposal.
The Summers case
On April 2, 2002, the North Carolina Court of Appeals again affirmed both the concept and application of conditional zoning in a second case involving the City of Charlotte. In Summers v. City of Charlotte, 149 N.C. App. 509, 562 S.E.2d 18, disc. rev. den., 355 N.C. 758, 566 S.E.2d 482 (2002), the court upheld two rezoning actions taken by the Charlotte City Council with respect to properties in the vicinity of South Park Mall to expand and redevelop them in a manner consistent with a small-area plan adopted by the Charlotte-Mecklenburg Planning Commission. The first concerned a proposal to rezone land from an office-1 district to a Mixed Use Development Optional District. The proposal incorporated a site plan for a mixed-use development consisting of office space, ground floor retail space, multi-family residential units, and a hotel. The second concerned a companion proposal to rezone a site from business-1 shopping center district, office-1 district, and office-2 district to a commercial center district. The petition included site plans for a shopping center mall; mixed-use development; public open space; a pedestrian-friendly environment; public parks; and a transit facility.
On July 6, 2000, the North Carolina General Assembly enacted Session Law 2000-84, expressly permitting the city to engage in conditional zoning as a legislative process. (The city initiated that action to hedge against an unfavorable appellate ruling in the Massey case.) In the Massey case the primary issue was whether the city was legally authorized to treat conditional zoning as a legislative process. In contrast the Summers case focused on other issues.
The Court of Appeals first cited Massey for the proposition that conditional zoning, where the approval of a site plan and accompanying stipulations and conditions is made concurrently with the rezoning decision, constitutes a legislative act. However, it took the opportunity to distinguish between two types of “conditional use zoning.” It declared that “(c)onditional use zoning, as historically practiced, is a two-step process ‘with the rezoning decision meeting all of the statutory requirements for legislative decisions and the permit decision meeting all of the constitutional requirements for quasi-judicial decisions,’”[2] quoting Village Creek Property Owners’ Ass’n, Inc. v. Town of Edenton, 135 N.C. 482, 520 S.E.2d 793 (1999). (The statement above describes the procedure for using “conditional use districts” as authorized in G.S. 160A-382.) The court then continued by stating, “(m)ore recently, however, some local governments have combined this two-step process into one proceeding, commonly referred to as conditional zoning. Under this procedure, the rezoning decision is made concurrent with approval of the site plan. This combined procedure or conditional zoning is entirely a legislative act.”[3] (citing Massey).
The Summers court thus made explicit what was implied in Massey—that the term “conditional use zoning” as used in Chrismon actually could take either of two forms. Conditional use district zoning involves two steps and two decisions, one legislative and one quasi-judicial. Conditional zoning involves a single legislative decision involving just one major procedural step.
Due process rights of neighbors
In Summers neighboring property owners also alleged that the ordinances violated their procedural due process rights. Ordinarily, procedural due process protections apply to quasi-judicial or administrative decisions, not to legislative decisions.[4] Even when procedural due process requirements do apply, a property owner must demonstrate an entitlement to the property interest protected rather than a mere expectancy. The Summers court dismissed the neighbors’ procedural due process claim, but stopped short of declaring that neighboring property owners contesting a rezoning petition lack any procedural due process protection. Instead the court concluded that even if the plaintiffs held property right worthy of constitutional protection, “adequate due process protection was afforded to them.”[5] The court pointed to various community meetings that had been held to solicit comment from neighbors and the opportunity and the opportunity to argue for or against the rezoning proposal at the city council’s public hearing that was required by statute
Conditional zoning as arbitrary and capricious
In Massey the court rejected the view that the rezoning actions were taken arbitrarily and capriciously. According to the court, “A decision is arbitrary and capricious if it was ‘patently in bad faith,” ‘whimsical,’ or if it lacked fair and careful consideration.”[6] In this case the city council had received the planning commission's recommendations and report, storm water management studies, traffic reports, community meeting notes, and memoranda. The commission had found that both petitions promoted the goals of the adopted small area plan, and the council’s decision was based on and consistent with the various reports and recommendations and entered after fair and careful consideration.
Spot zoning issues
In neither Massey nor Summers were illegal spot zoning allegations raised on appeal. Conditional use zoning does not immunize against spot zoning. The mere fact that conditions have been added to the permit does not mean that an otherwise arbitrary or discriminatory rezoning will be upheld.
Spot zoning singles out and reclassifies a relatively small tract owned by a single person and surrounded by a much larger area uniformly zoned, so as to impose upon the small tract greater restrictions than those imposed upon the larger area, or so as to relieve the small tract from restrictions to which the rest of the area is subjected, is called “spot zoning.”[7] Spot zoning is void in the absence of a clear showing of a reasonable basis for the practice.[8] Among the factors relevant to a determination as to whether a reasonable basis exists are the following: (i) the size of the tract in question; (ii) the compatibility of the disputed zoning action with an existing comprehensive zoning plan; (iii) the benefits and detriments resulting from the zoning action for the owner of the newly zoned property, his neighbors, and the surrounding community; and (iv) the relationship between the uses envisioned under the new zoning and the uses currently present in adjacent tracts.[9]
Since Chrismon, four conditional use zoning cases have been decided by North Carolina appellate courts that have involved allegations of illegal spot zoning. In three of the four cases the rezoning was invalidated on grounds it constituted illegal spot zoning.[10] Unless the governing board uses due caution, individually negotiated rezoning actions can undercut the uniformity of development standards imposed by the zoning ordinance, accommodate development without regard to its impact on the larger community, and allow incompatible development at locations where it does not belong.
However, aptly used site development restrictions and good site design can render more compatible “the uses envisioned under the new zoning and the uses currently present in adjacent tracts,” and ensure that the costs of new development are not disproportionately visited upon the owners of neighboring property. Site-specific development conditions may also be used to allow development of projects that do not fit well into any of the classes of zoning districts that a local government ordinance may make available. Conditional use district zoning may also be used to provide transition between general use districts of rather than different types (e.g., conditional use neighborhood business district as a transition zone between a neighborhood business general use district and a multi-family residential general use district), thereby providing benefit for the entire community. In this regard an adopted local area plan can provide a reference point for determining whether the rezoning is compatible with an existing comprehensive plan and whether the pattern of proposed zoning has a reasonable basis.[11]
Vested rights
G.S. 160A-385.1 provides for the establishment of a vested right that protects a property owner against future ordinance changes. The right is established with respect to any property “upon the valid approval, or conditional approval, of a site specific development plan or a phased development plan, following notice and public hearing.”[12] Vested rights established pursuant to site plan approval shall vest for a period of at least two years and, in the city so provides, for a period of up to five years. Similarly, a vested right may be established for a phased development plan for a period of five years.[13] A site specific development plan may be in the form of, but shall not be limited to, any of the following plans or approvals: A planned unit development plan, a subdivision plat, a preliminary or general development plan, a conditional or special use permit, a conditional or special use zoning plan, or any other land-use approval designation as may be utilized by a city. Each governing board is authorized to determine for itself through its zoning ordinance what constitutes a site specific development plan for purposes of vesting.
May a conditional zoning district qualify the petitioner for a vested right based on the nature of the development plan submitted? According to the North Carolina Court of Appeals in Michael Weinman Associates v. Town of Huntersville, 147 N.C. App. 231, 555 S.E2d 342 (2001), the answer is yes. Huntersville’s Zoning Ordinance defined a site specific development plan to include “(a) a parallel conditional use district; (b) a special use permit; (c) any overlay district for which a site specific development plan is required; (d) a conditional district; or (e) an approved cluster development plan. According to the court, a vested right was established when the Highway Commercial (CD) district was applied to the petitioner’s property.[14]