When property shifts from one jurisdiction to another, whether by annexation, deannexation, or a change in extraterritorial jurisdiction (ETJ), it usually becomes subject to a different set of regulations. The method by which the old regulations make way for the new is not always obvious and questions arise frequently in these circumstances. These questions surround what happens to the zoning of the property, when and how the regulations change, what happens to projects that are underway, and what happens to developed properties. This blog addresses those questions.

What happens to zoning when property changes jurisdiction

When property shifts from one zoning jurisdiction to another, no zoning designation follows automatically. To illustrate, imagine the site of a new planned development that has just been annexed into a neighboring municipality. Let’s say that the property is outside of the municipality’s ETJ (otherwise it would already have city zoning), and the county has zoned the property into a Rural / Agricultural district. Since it is outside of the municipality’s ETJ, it does not appear on the municipality’s zoning map. As a consequence, it has no municipal zoning until the municipality’s zoning map is amended to include it. The same situation would apply to deannexed property or property that has just been added to or removed from a municipality’s ETJ. This creates a potential problem: is there some time in which NO zoning will apply to the property?

To resolve the potentially sticky situation of having no zoning at all apply to these properties, N.C. General Statute 160D-202(g) provides a  transition period during which the former jurisdiction’s rules can still apply. It provides that the former jurisdiction’s development regulations apply to the property until the sooner of 60 days from the date of jurisdiction change or when the property is zoned by the receiving jurisdiction. This way, there is not what insurers would call a “gap in coverage”: the old jurisdiction’s rules will still apply until the new jurisdiction gets through the work of adding the new property to its zoning map.

If, after 60 days, the new jurisdiction has not added the property to its zoning map, then we do enter the arena where no zoning district applies. Some generally applicable rules from the zoning ordinance arguably might apply to the property (e.g., if all solar farms or large office buildings require special use permits), but no regulation tied to a zoning district would apply until the property is added to the zoning map of the receiving jurisdiction.

When and how regulations become effective

Zoning map amendments (or rezonings) frequently take more than 60 days, however. Before a final decision can be made, proposals for zoning amendments must be reviewed by the receiving jurisdiction’s planning board, and the receiving jurisdiction’s governing board must hold a public hearing with 10-25 days’ prior notice. Furthermore, sometimes a single board meeting is not enough to resolve a zoning question, so it could be several months before the new jurisdiction’s zoning applies.

If the zoning process for a tract of land could not begin until the change in jurisdiction is finalized, the 60-day transition period might expire before many newly-annexed, newly-deannexed, or new-to-ETJ properties could be added to the zoning map. That would leave these properties for a time with no zoning district designation, and thus little to no zoning regulation.

In part to avoid this inefficiency and the potential problems that it might cause, N.C. General Statute 160D-204 allows the local government gaining jurisdiction to receive and process proposals for development regulations and allows “adoption of development regulations” to happen concurrently with acceptance of jurisdiction.

As a consequence, the process of planning board review, notice, and even public hearing to zone the property can begin before the change in jurisdiction is complete. In the case of extensions of ETJ, N.C. General Statute 160D-602(a) even allows the hearings for ETJ extension and zoning map amendment to be combined. The key is that no zoning amendment affecting new jurisdiction can be final before the change in jurisdiction is complete.

For example, imagine that Andrei owns property just outside of the Town of Lacrosse that he would like to develop and to connect to Lacrosse’s utilities. Andrei could submit a petition for annexation on March 9, then submit a petition to add his property to Lacrosse’s zoning map on March 10. Note that the annexation must have been formally proposed (by Andrei submitting his petition) before the zoning petition can be processed. At the same time that the clerk is certifying Andrei’s annexation petition, the Lacrosse planning board could be reviewing his proposed zoning map amendment. When both proposals are ready to go before the Lacrosse Town Council—perhaps in time for a May 3 Council meeting—the hearing to annex Andrei’s property can be on the same agenda, right before his zoning petition. If Town Council approves both measures, they can make both the annexation and the zoning amendment effective on, say, May 20. Alternatively, let’s say that Andrei discovers at the planning board meeting that his zoning petition is going to be controversial. Perhaps the Town puts the zoning question earlier on the agenda, so that if the zoning decision goes against Andrei he can opt to withdraw his annexation petition.

As one can see from this example, the statute affords both the applicant and the municipality some flexibility in pairing zoning proceedings with changes in jurisdiction. This provision also addresses the reality that annexation rarely happens in a vacuum, and often there is a larger development project underway. In these situations, the owner rarely wants the annexation to happen unless the zoning can go forward. Having the two processes run in parallel can give the owner some greater degree of certainty. Again, the important consideration is to make sure that the zoning amendment does not have an effective date that precedes the local government acquiring jurisdiction.

What happens to projects already underway

A development purchaser likely will not want to buy a project unless all of the other development approvals—be they subdivision plat approvals, site plans, special use permits, or otherwise—are in place. However, the current landowner often will not want its property to be annexed into the city—and have to pay city taxes—unless it gets developed.

Here again, N.C. General Statute 160D-204 allows a local government to receive and process applications for development approvals (such as special use permits or preliminary subdivision plats) before a pending change in jurisdiction (usually annexation or ETJ extension) is complete.

This process can begin as soon as the annexation or extension of ETJ “has been formally proposed,” but a decision cannot be final until the effective date of the annexation or ETJ extension. As with zoning amendments, the key is that the effective date of any development approval should be the same or after the effective date of the annexation.

Let us take another example: Erin owns property in Matson County that she would like to subdivide and develop, and she wants to make sure that she can get access to utilities from the City of Shelton. N.C. General Statute 160D-204 says that Erin can petition for annexation, petition for City zoning, and even submit her preliminary subdivision plat application to the City, all at the same time. The City can review and comment on the plat concurrently with the zoning and annexation, and then approve the plat effective once the annexation and zoning are effective.

The special case of vested rights

What if permits have already been issued for the project when the change in jurisdiction occurs? Whenever a property owner or developer has obtained a development approval, or if a property owner or developer relies in good faith on a valid government-issued approval, that owner or developer has a vested right to proceed under the terms of that development approval. This means that no changes to the local development regulations that occur after the approval is issued will apply to the approved work for as long as the vested right lasts. Vested rights are a subject unto themselves, and readers seeking more information are encouraged to refer to Benjamin Hitchings & Adam Lovelady, Chapter 160D Guidance #4: Permit Choice & Vested Rights (Sept 2020), at 2, or David Owens, Land Use Law in North Carolina (UNC School of Government, 3d Ed. 2020 / 4^th Ed. 2023), Chapter 19.

If a project already has a vested right, General Statute 160D-202(k) provides that the vested right continues after the change in jurisdiction. This results in the potentially awkward situation where the new jurisdiction is enforcing the old jurisdiction’s rules. However, this rule preserves the applicant’s right to go forward with approved work on the terms on which that work was approved.

For example, let’s say that Andrei, the landowner above who seeks to have his property annexed into the Town of Lacrosse, already obtained a preliminary subdivision plat approval from Albemarle County, where his property currently sits. The plat approval gives Andrei a vested right to clear and grade the property and to install roads and other infrastructure in accordance with the approved plat and applicable Albemarle County regulations. Even if his property is annexed into Lacrosse before the work is complete, Andrei retains this right to continue under the rules in Albemarle County that were in effect when the preliminary plat was approved. Town of Lacrosse staff would need to assure compliance with Albemarle County’s rules, but Andrei’s vested rights (and the investments he has made dependent on those rights) are protected.

Here’s the thing, though: how is the Town of Lacrosse supposed to know about Andrei’s vested rights from Albemarle County? The annexation statutes address this question by allowing municipalities to require that property owners submit a signed statement declaring any vested rights they wish to retain. N.C. General Statutes 160A-31(h) (for contiguous annexation) and 160A-58.1 (for satellite annexation) allow municipalities to require that owners petitioning for annexation file a signed statement declaring whether or not their property is subject to vested rights under General Statutes 160D-108 or -108.1. If the statement declares that vested rights apply to the property, the municipality can require proof of those rights. Moreover, if the statement declares that no vested rights have been established under the statutes, that declaration is binding on the landowner. Any statutory vested rights that might have applied to the property but are not declared are terminated.

In this way, the municipality can obtain some degree of certainty regarding the vested rights that might apply to property before the municipality annexes that property. At the same time, this provision places some risk on property owners petitioning for annexation, as failure to file the statement could strip them of a hard-won approval on which their project depends. Since local governments have the option to require or not to require vested rights statements, municipalities will need to weigh the certainty of identifying all relevant vested rights against the added regulatory burden and risk placed on permit holders.

There are two important limitations to this rule:

• First, the waiver only explicitly applies to statutory vested rights – those granted by G.S. 160D-108 and -108.1. The law does not clearly indicate that it would apply to common law vested rights (which generally are gained when a property owner or developer makes significant expenditures in good faith reliance on a valid government-issued approval).
• Second, the rule only applies to annexations, and not to extensions of ETJ. Unlike the 60-day transition period, these notice and waiver provisions do not refer to a change in jurisdiction; they only refer to annexation. As a result, there is no process for requiring a statement to preserve vested rights when ETJ changes. The vested right remains valid to the same extent in the ETJ as it was in the county.

What happens to completed development

Sometimes all or a portion of the area being annexed, deannexed, added to ETJ, or removed from ETJ is already developed. We have the rules above for dealing with development in process. But what about that already-developed portion? Does it become a non-conformity? What happens to any development agreements?

Property can, but does not automatically, become nonconforming when the jurisdiction changes. To determine whether it represents a nonconformity, we look to what the new jurisdiction’s ordinances currently allow and at its nonconformity rules. If the property complies with the new jurisdiction’s regulations, it is allowed and there is no question of nonconformity. On the other hand, if the property does not comply with the new jurisdiction’s regulations, then it is nonconforming and the receiving jurisdiction’s nonconformity rules apply. Usually this will result in the use being allowed to continue (with some limitations), but nonconformity rules do differ from one local government to the next.

Finally, if a development agreement is in place, General Statute 160D-1010 adds the local government assuming jurisdiction to the parties under the development agreement. Still, the receiving jurisdiction may modify or suspend the development agreement if necessary to protect either the residents of the area covered by the development agreement or the residents of the local government’s jurisdiction from a dangerous condition.

Conclusion

So there you have it. When property changes jurisdictions, no change in zoning occurs automatically. However, requests for rezoning or for development approvals can be submitted and reviewed before the change in jurisdiction is complete. If property is not immediately added to the receiving jurisdiction’s zoning map, there is a period of up to 60 days during which the former jurisdiction’s rules still apply. Vested rights remain when property changes jurisdiction, unless (in an annexation) a city has requested a statement of vested rights from a petitioner and the petitioner has not declared its vested rights. Finally, nonconformities may be created, but are not automatically created, when a completed development project changes jurisdictions.