At a prominent corner in downtown, there’s a vacant lot. The adopted Downtown Plan envisions a café or a bookshop or a boutique—something to contribute to a walkable, touristy downtown. The owner of the vacant lot has a different vision. The owner submits a site plan and application for zoning approval for an auto repair shop. Town council is alarmed to learn that the zoning ordinance still allows such auto-oriented uses at prominent sites downtown. Council quickly proceeds to amend the ordinance to prohibit auto repair shops, gas stations, and related auto-oriented businesses in the downtown district.

So, can the owner proceed with the auto repair shop? This blog considers this scenario and the details of the permit choice rule.

What is the permit choice rule?

The permit choice rule provides this: If an applicant submits a permit application for development, and a rule or ordinance is amended after the application is submitted but before the permit decision is granted, then the applicant may choose which version of the rule or ordinance applies. That is, they can choose whether the original rule (applicable at the time of application) or the new rule (as amended) applies to their development application. The permit choice rule was first adopted in 2014, expanded to apply to zoning in 2015, and broadened further in 2019 (S.L. 2014-120, Sec. 16(a); S.L. 2015-246, Sec. 5(a); and S.L. 2019-111, Sec. 1.1.) The statutory provisions for permit choice are outlined at G.S. 143-755, as well as 160D-108(b) & (e).

Permit choice applies to all state and local “development permits.” The definitions and scope of coverage are discussed more below. Permit choice may also apply in situations where a permit decision is appealed and found to have been wrongfully denied or illegal. Consider this example. Suppose a permit is denied and the applicant appeals to court, arguing that there was some legal error. While the appeal is ongoing the local government amends the ordinance to change the applicable rules. The court finds in favor of the applicant, and the court sends the case back to the local government to process the application. In that case, permit choice applies—the applicant may choose the rules applicable at the time of application or the newly amended rules.

Is this the same as vested rights?

Permit choice is closely related to vested rights, but they are notably different concepts and rights. One applies before the permit is approved and one applies after the permit is approved. In the case of vested rights, the developer already has a valid permit—they have relied upon an approved permit and are allowed to continue development in accordance with the approved permit even if rules are subsequently changed.

In the case of permit choice there is no approval yet, only an application. The question for permit choice is this: What rules apply when the government official reviews the application? The application must still meet all of the standards of applicable rules before it can be approved.

There is a statutory provision that seemingly ties these related concepts together, but the precise impact of that provision is not perfectly clear. G.S. 160D-108(d) states that “[u]pon issuance of a development permit, the statutory vesting . . . for a development project is effective upon filing of the application . . . .”

When does permit choice begin?

Under G.S. 143-755, the permit choice rule applies after “a development permit applicant submits a permit application for any type of development.” But, when is a permit application considered submitted? An applicant scribbling “I want a permit!” on a napkin is not sufficient. But also, it is not acceptable for a public agency to deny that an application is submitted because the applicant failed to cross one “t” or dot one “i”. In the normal course of permitting review, there is some natural back-and-forth: a site plan needs tweaking, a spreadsheet needs updating, or a report needs amending. This creates ambiguity about when the permit is fully submitted.

An application completeness determination can resolve some of the ambiguity. A clear procedure to provide written confirmation of completeness of applications can provide clarity and consistency for applicants, help ensure that an application is sufficiently complete to initiate the permit review process, confirm that applicable fees are paid, and set a clear starting point for the permit choice rule. While completeness determinations are not specified in the statutes concerning permit choice rule, local governments have general authority for establishing procedures for the administration and enforcement of development regulations that is broad enough to encompass as completeness determinations (G.S. 160D-402).

How long does permit choice last?

Permit choice is not indefinite. Pursuant to G.S. 143-755(b1), permit choice is waived if the applicant places an application on hold for six consecutive months or if the applicant fails to respond to comments or provide additional information requested by the government agency for six consecutive months. In those cases, when the applicant renews the application, applicable new regulations apply.

What about a development that requires multiple permits?

Permit choice rule applies beyond one single permit or ordinance. Pursuant to G.S. 160D-108(e), when a development requires multiple permits under local development regulations, the applicant may choose the version of each land development regulation applicable to the project at the time of the initial permit application. This provision recognizes that many developments require multiple permits that may be sequenced for approval. With this permit choice provision, the project is considered as a whole, allowing the entire project to be reviewed under the regulations in effect at the time of application, if desired by the applicant.

Consider the example from the opening. Suppose the owner submitted a zoning application for the auto repair shop (the initial permit). Then, two months later the town alters the driveway permit standards (before a driveway permit application has been submitted). With the broadened permit choice rule, the applicant may choose the original driveway permit standards that were applicable at the time of the initial permit application (the zoning permit application).

In order to access this extended permit choice, the applicant must submit the subsequent permit applications within 18 months of approval of the initial permit. Additionally, sign permits and erosion and sedimentation control permits do not count as initial permits for purposes of this extended permit choice. Language added to 160D-108(e) by Session Law 2021-168 states that the provision for multiple permits “does not limit or affect the duration of any vested right established under subsection (d).” Subsection (d) provides that, as a general rule, development permits are valid for one year, and if development work has begun then vesting expires if work is voluntary discontinued for 24 months.

Can the applicant pick-and-choose rules?

G.S. 160D-108(e) states that the “permit applicant may choose the version of each of the local land development regulations applicable to the project upon submittal of the application for the initial development permit.” This language seems to allow the applicant to choose some old rules and some new rules (for example, the old zoning standard but the new subdivision standard).

Notably, permit choice is just that—a choice. Most often the applicant will opt for the original rules, but if the rule change is favorable for the applicant, they may choose the new rule.

On the topic of applicant options, note that if the applicant chooses the original rule, then the local government cannot require the applicant to wait for final action on a proposed amendment.

What if there is a dispute?

With regard to permit choice, applicants/owners get favorable treatment in courts. Legal action to resolve permit choice disputes “shall be set down for immediate hearing, and subsequent proceedings in those actions shall be accorded priority by the trial and appellate courts”( G.S. 143-755). Additionally, if the court finds that the local government “took action inconsistent with, or in violation of” permit choice rule, the court shall award attorneys’ fees to the prevailing private party (G.S. 6-21.7).

As noted before, if an applicant challenges a permit denial and, in that proceeding it is determined that the permit was wrongfully denied or a condition was illegally imposed, then the applicant may choose whether the application will be reviewed under the rules and ordinance in effect at the time of application or as subsequently amended.

What permits and rules are covered?

Permit choice applies to a broad range of “development[s]” “development permits,” and “land development regulations,” as defined at G.S. 143-755. Notably, the development permits are administrative and quasi-judicial permits; legislative zoning decisions do not trigger permit choice.

“Development” is defined as any of the following:

1. The construction, erection, alteration, enlargement, renovation, substantial repair, movement to another site, or demolition of any structure.
2. Excavation, grading, filling, clearing, or alteration of land.
3. The subdivision of land as defined in G.S. 160D-802.
4. The initiation of substantial change in the use of land or the intensity of the use of land.

“Development permit” is defined as an administrative or quasi-judicial development approval, including any of the following:

1. Zoning permits.
2. Site plan approvals.
3. Special use permits.
4. Variances.
5. Certificates of appropriateness.
6. Plat approvals.
7. Development agreements.
8. Building permits.
9. Subdivision of land.
10. State agency permits for development.
11. Driveway permits.
12. Erosion and sedimentation control permits.
13. Sign permit.

“Land development regulation” is defined as any “State statute, rule, or regulation, or local ordinance affecting the development or use of real property, including any of the following:”

1. Unified development ordinance.
2. Zoning regulation, including zoning maps.
3. Subdivision regulation.
4. Erosion and sedimentation control regulation.
5. Floodplain or flood damage prevention regulation.
6. Mountain ridge protection regulation.
7. Stormwater control regulation.
8. Wireless telecommunication facility regulation.
9. Historic preservation or landmark regulation.
10. Housing code.

Conclusion

So, getting back to the auto repair shop in downtown, can the owner proceed or is that use prohibited?  If the owner submitted the zoning permit application before the rules changed, then permit choice rule allows the owner to choose review under the original rules or review under the new rules. As mentioned, this is not a guaranteed approval. The application must still meet the standards of the chosen rules. Moreover, the option is not indefinite. If the applicant fails to act on the application for six months, the applicant waives permit choice and must comply with the new rules. But, if there is a dispute about permit choice, the local government must be mindful of the risk of paying the applicant’s attorneys’ fees if the local government loses in court.