AGENDA #8

 

MEMORANDUM

 

TO:                 Mayor and Town Council

 

FROM:           W. Calvin Horton, Town Manager

 

SUBJECT:     Report on Regulation of Development Proposed by State and Local Governmental Units

 

DATE:            September 27, 2004

 

 

This memorandum reports to the Council on our approach to implementing Chapel Hill zoning regulations in the context of changed statutory authority.

 

INTRODUCTION

 

A provision of the State’s Technical Corrections Bill, enacted as Session Law 2004-199, modified municipal zoning authority over projects proposed by the State and units of local government.  Under the provisions of the new law, which is effective October 1, 2004, municipal zoning authority extends to development of land proposed by the State and local governmental units.  Present law provides that local zoning applies only to erection of buildings on such land. In addition, under this new statute, this publicly-owned property will now be subject to local overlay zoning districts.

 

This report addresses the implications of this change on the Town’s land use regulatory process, including the impact of this change on the Town’s own development projects and the Town’s review of projects submitted by the University and other public agencies.

 

DISCUSSION

 

This change in N.C. General Statutes carries procedural implications for projects being undertaken by the Town and by the University.  We offer here our determinations about the effects.

 

Implications for Town Projects

 

The Town of Chapel Hill, as a unit of government, has up until now been exempt from zoning regulations in pursuing development projects that do not involve buildings (examples include greenway construction and materials storage areas).  Under the new statutory language that removes this exemption, land disturbing activity by the Town on Town-owned land within the Town’s zoning jurisdiction is subject to zoning regulations, including provisions of overlay zones.  Being subject to zoning regulations means that a Zoning Compliance Permit would need to be issued prior to any land disturbing activity.

Implications for University Projects

 

Distinction needs to be made between University land that is zoned OI-4, and other land.

 

OI-4:  The Office/Institutional-4 zoning district is unique in the Land Use Management Ordinance.  Under OI-4, if a Development Plan is approved by the Town Council, the regulatory context shifts for land covered by that Development Plan.  In such a case, the Ordinance specifically refers to buildings (which need a subsequent Site Development Permit in order to proceed), and specifically omits a finding that development must be shown to meet all other requirements of the Land Use Management Ordinance (unlike a Special Use Permit process, which requires that finding).  Taken together, we believe that the correct administration of these regulations in the context of the new State legislation is that, for areas zoned OI-4 and covered by a Council-approved Development Plan, any activity related to a building must be authorized by a Town-issued Site Development Permit.  In accordance with vested right and OI-4 rules, land-disturbing activities not related to a building do not need Town approvals.

 

Land Other Than OI-4:  For all zoning districts other than the OI-4 district, a core principle is that no development activity of any kind may take place unless it is first authorized by the issuance of a Zoning Compliance Permit.  This means that all development activity, regardless of ownership or identity of developer, must meet zoning requirements (including provisions of overlay zones) and be authorized by a Zoning Compliance Permit.

 

Impact on Pending Projects

 

Under North Carolina law, there are certain principles that determine how a new zoning regulation applies to pending development.  In this particular situation, it has not been a matter of the Town enacting new regulations.  Rather, the regulations have been made to apply, for the first time, to projects of public agencies as a result of this change in the State law.  While this is a rather unusual way for new zoning regulations to be made to apply to pending projects, we believe that the principles that would apply if it were the zoning regulations themselves that were to be amended would be the proper principles to apply in these circumstances. 

 

There are three such standards to consider in determining the application of new regulations to pending projects.  Two are based on State statutes and one is based on principles of common law, established by decisions of the Courts.

 

The two statutory provisions are:

 

  1. Receipt of a building permit establishes vested rights.   Under N.C.G.S. 160A-385 (b),  changes to zoning regulations are not applicable if a building permit has been issued prior to the enactment of the amendment so long as the permit remains valid and unrevoked.  (Of course, in this situation, this particular statute would not be a factor since any pending “non-building” projects would not have been issued a building permit.)

 

  1. Approval of a site specific development plan establishes vested rights.  Under N.C.G.S. 160A-385.1, the issuance of a site specific development plan precludes the application of any new zoning regulations which would otherwise require modification of the approved development.  A site specific development plan vests such right for a period of time to be determined by the local agency but must be between two and five years.  The Town has established a two year period by ordinance and has defined a special use permit as a site specific development plan. 

 

Case law defines the concept of vested right more broadly, as illustrated by the following citation:

 

“A party's common law right to develop and/or construct vests when: (1) the party has made, prior to the amendment of a zoning ordinance, expenditures or incurred contractual obligations "substantial in amount, incidental to or as part of the acquisition of the building site or the construction or equipment of the proposed building," (2) the obligations and/or expenditures are incurred in good faith, (3) the obligations and/or expenditures were made in reasonable reliance on and after the issuance of a valid building permit, if such permit is required, authorizing the use requested by the party (a mistakenly-issued permit cannot give rise to a vested right); and (4) the amended ordinance is a detriment to the party.”

 

BFI Inc. v. Guildford County Board of Adjustment, 484 S.E.2d 411, 414 (N.C. App. 411) (citations omitted)

 

If it is determined that a particular development project has established a vested right, then that project can proceed as planned even though the new legislative change going into effect on October 1 would otherwise require a more involved approval process and application of more rigorous standards.  Vested rights determinations must necessarily be made on a case-by-case basis, upon presentation of facts and arguments demonstrating why a vested right has been established.

 

SUMMARY

 

If a project is already underway or a case can be made that a vested right exists, the legislative change that takes effect October 1, 2004, has no immediate impact on the development of that project.  Once completed, the project may be nonconforming, which means that it cannot be enlarged or expanded.   Vested rights determinations are made on a case-by-case basis.

 

For projects that have not yet achieved vested rights status by October 1, 2004, the following changes become effective: