Quasi-judicial zoning decisions can be confusing creatures: They are zoning decisions, but they function in some ways like court cases. They require an elected or appointed board to make a decision about a proposed development project, but the board’s discretion is constrained by specific standards. On March 1, 2022, the N.C. Court of Appeals provided a reminder of the kinds of evidence necessary to approve or deny a special use permit request, and the lessons or reminders of this case apply similarly to other quasi-judicial approval procedures. This blog will review those lessons and reminders.
What makes these permits different from all other permits?
First, it is important to remind oneself what special use permits are designed to do. A zoning ordinance can treat a given use in one of several ways: it can prohibit the use entirely in a given district; it can allow the use “by right,” meaning that only administrative approvals such as certificates of zoning compliance or building permits are required, and no discretionary zoning approval such as a rezoning or variance is required; it can allow the use under specific objective limitations such as an increased setback; or it can allow the use as a “special” use, which is permitted under certain conditions.
When a land use is permitted as a special use, the governing board has already made a legislative decision to allow the special use, provided the applicant shows the standards for that approval set by the ordinance will be met. Some or all of the standards that apply to a special use will require the application of judgment and some limited discretion; for example, the conditions may include a requirement that the use be “in harmony with” surrounding uses or “not substantially injure” the use or value of adjoining property. Because these standards require some analysis and judgment to apply, the decision to approve a special use is a quasi-judicial one. A hearing must be held to gather the evidence and judge whether the conditions have been met. For more on the different kinds of development decisions and their respective procedural requirements, this blog post from Adam Lovelady on the types of development decisions local governments make.
The N.C. Court of Appeals reinforced this definition of a special use in its March 1 decision in Dismas Charities v. City of Fayetteville, __ N.C. App. ___, ___ S.E.2d __, case no. COA20-914 (March 1, 2022).
In its opinion, the court described special uses as those “permitted in a zoning district upon proof that certain facts and conditions detailed in the ordinance exist.” Id. ¶2. Similarly, the N.C. Supreme Court described special uses as those “which the ordinance expressly permits in a designated zone upon proof that certain facts and conditions detailed in the ordinance exist” in its 2020 decision in PHG Asheville v. City of Asheville, 374 N.C. 133, 148, 839 S.E.2d 755, 765 (2020) (citations and internal quotations omitted).
How much evidence is enough?
Because a quasi-judicial hearing is—as the name implies—like a court trial, the board’s role is to review the evidence provided and assess that evidence against the legal requirements. In the case of a special use permit, the legal requirements are those conditions the ordinance prescribes for a particular special use. Similarly, the legal requirements for a variance are those outlined in statute (at G.S. 160D-705(d)).
How much evidence is required to approve or deny was at issue in both Dismas and PHG Asheville. Here are the rules for the sort of reverse-tug-of-war game that plays out in a quasi-judicial hearing:
- The burden is first on the applicant. They must produce competent, material, and substantial evidence tending to show that they meet the conditions that the ordinance requires. Note that the standard is that the evidence “tends to show,” not “proves.” As the Court of Appeals confirmed in its Dismas decision, all that is needed to “tend to show” that a condition is met is something more than a “scintilla” (in other words, a tiny trace) of evidence.
- Once the applicant has met this burden of production, the burden shifts to any opponents of the proposal. If no evidence is presented to counter the applicant’s evidence, then the applicant is entitled to the permit and the local government lacks the authority to deny it.
What happened in Dismas?
The Dismas case related to a special use permit application for a halfway house in Fayetteville’s downtown area. The property at issue was located in an “Office and Industrial” zoning district that allowed halfway houses as a special use. The City Council denied the applicant’s request for a special use permit, finding that the applicant had failed to satisfy one of the standards for allowing the special use. Specifically, the standard at issue required the special use to “allow[] for the protection of property values and the ability of neighboring lands to develop the uses permitted in the zoning district.” The applicant did not present expert testimony regarding the effect on surrounding properties, and residents spoke against the proposed halfway house. However, no competent, material, and substantial evidence was provided to counter the applicant’s evidence.
The Court of Appeals, overturning a superior court decision affirming the City’s denial of the special use permit, held that the language of the relevant standard did not require expert analysis, and since the applicant “produced more than ‘a scintilla’ of evidence” that they satisfied the relevant standard, the board lacked discretion to deny the special use permit.
The court also provided some insight into what kinds of evidence would have been sufficient to counter the applicant’s evidence: “testimony or evidence tending to show that Dismas’ evidence was not credible; that there were other reasonable steps Dismas could take to protect property values generally; or that the Facility would limit the way they could use their properties.” Dismas ¶ 24. In the absence of such evidence, the City did not have authority to deny the special use permit. The court remanded the case to the City to issue the permit.
The Dismas decision refers several times to the N.C. Supreme Court’s opinion in PHG Asheville v. City of Asheville, 374 N.C. 133, 839 S.E.2d 755 (2020), issued just under two years ago. PHG Asheville also addressed the denial of a quasi-judicial permit in which the applicant for a special use permit presented its evidence, including expert testimony, at the quasi-judicial hearing. During the hearing, the City Council questioned the assumptions on which applicants’ experts based their opinions and the methodology used, and a member of the public expressed some general concern. No additional testimony or evidence was presented to counter the applicant’s evidence. As the Dismas court would do almost two years later, the PHG Asheville court held that, because PHG had produced competent, material, and substantial evidence to satisfy its burden of production and no competent, material, and substantial evidence was offered on the other side, the City Council lacked the authority to deny the permit.
Are there other takeaways?
Two other points are important to note from the Dismas case and its predecessor, PHG Asheville.
First, any standard to which an applicant is held must be reflected in or supported by relevant ordinance language. In the PHG Asheville case, the City Council raised concerns about the assumptions and methods of the applicant’s expert analyses. However, the Supreme Court held that the applicant’s experts had no reason (based on the relevant ordinance language) to think that they would need to address the concerns raised by the City Council at the hearing. As the court put it, applicants are not required to “negate every possible objection to the proposed use.” PHG Asheville, 374 N.C. at 155, 839 S.E.2d at 770 (quoting Woodhouse v. Nag’s Head, 299 N.C. 211, 215-16, 261 S.E.2d 882, 886 (1980).
Second, the Dismas decision highlights another way in which special use criteria should be carefully worded. The court differentiated between the language of Fayetteville’s ordinance, which among other criteria requires that the project “allows for the protection of property values,” and the language of the ordinances in PHG Asheville and the much earlier Kenan v. Board of Adjustments, 13 N.C. App. 688, 187 S.E.2d 496 (1972), which required that the proposed special use not “substantially injure” the value of surrounding property.
The Dismas court identified two key differences between these phrases:
- “substantially injure adjoining or abutting property” refers specifically to adjacent properties while “allows for the protection” is concerned with property value more generally; and
- “substantially injure” means that the evidence should reflect the impact on other properties, while “allows for the protection” only requires that an applicant show that it has incorporated reasonable elements into its plan to provide for the protection of property values generally.
This difference in ordinance language is part of why the Court of Appeals held the applicant’s evidence to be sufficient – the applicant provided information tending to show that they were taking steps to protect property values, but no specific appraisal of values. As evidence of the applicant’s steps toward protecting property values, the court pointed to information the applicant provided that tended to show that (1) pollution would be low, (2) the building height would be compatible with nearby structures, (3) the building complies with setback requirements, (4) landscape buffers would screen adjacent residential property, and (5) the parking area would be private, planted, and screened., which was enough under the “allows for the protection” language but might not be under the “substantially injure” language.
So what is a local government to do about such things?
The Dismas decision, and the PHG Asheville decision that preceded it, offer a couple of clear lessons for staff and boards working on quasi-judicial matters.
Know the decision type. Quasi-judicial decisions have different limitations compared to legislative decisions. It is important to remind staff, the public, and board members of these differences when approaching a quasi-judicial decision. This is especially important if a governing board also sits as the board of adjustment. Under those circumstances, the board makes both legislative decisions and quasi-judicial decisions, and has to keep the two processes separate. In these cases, one would be well advised to introduce any quasi-judicial hearing as such and to remind everyone present that state law requires that the quasi-judicial decision be made on the basis of the evidence offered and the standards provided in the ordinance.
It’s all about the evidence. Speaking of which, regardless of what board is making the quasi-judicial decision, boards and community members should be reminded that the decision must be made on the basis of the evidence. The board must not be swayed by popularity and public opinion; the question before them is solely whether there is sufficient evidence to show the standards will or will not be met. This kind of clarification can be particularly helpful in communities that do not often encounter quasi-judicial hearings, and may be disappointed by the approval of an unpopular use that nonetheless qualifies for a quasi-judicial entitlement.
Choose your words carefully. Check the wording of your standards carefully, and make sure that your standards ask for the conditions and community-specific circumstances you want an application to address. For example, make sure that your ordinance asks for the kind of evidence you want – should the applicant have to show that they will not “substantially injure the value of adjoining properties” or should they show that they are more generally taking steps “to provide for the protection of property values”? If there are circumstances in your community (such as traffic impacts at particular peak periods or seasons) that your decision-making board will want to see addressed, the conditions in the ordinance should address those circumstances.
Educate the public. Advise members of the public about the nature of quasi-judicial decision-making and the role of evidence in the process. This message can be spread in a number of ways, including on the local government’s website, in pamphlets that may be available on the website or in board meetings, or in letters providing notice of an upcoming quasi-judicial hearing. As my good buddy G.I. Joe used to say, knowing is half the battle.
