Major Amendments to Approved Developments

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Adam Lovelady

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Several years ago the town council approved a major development. Part of the development is complete, but several phases remain. The developer wants to substantially alter the approved plans for the remaining phases.

Can the developer change the original approval? What is the process to do so? And who has to consent to the change? This blog explores those questions.

Overview

This scenario—a developer seeking to amend a previously-approved project—may arise in all kinds of developments. The developer of a residential subdivision may want to alter late phases of the subdivision to adjust to changing market preferences. The developer of a mixed-use project may need to adjust the layout of a building to accommodate site conditions that were not known at the time of application. The quarry operator may desire to alter the phasing of the mining operation in light of new equipment or changed economic circumstances.

A change to a development approval requires additional approval. G.S. 160D-403(d) states that “[a]fter a development approval has been issued, no deviations from the terms of the application or the development approval shall be made until written approval of proposed changes or deviations has been obtained.”

The options and procedures for amending the original approval will depend on the details of the project: What is the nature of the change? What type of decision was the original approval? Are multiple owners involved? What’s the role of vested rights? Are there elements of the approval that span the entire development site?  And, was the development approval subject to conditions?

These scenarios highlight short-term quandaries and long-term policy considerations. For the short-term, developers, property owners, and local governments must navigate procedural hurdles as they rework prior development approvals. More broadly, these scenarios point to the tension between flexibility and predictability—between the formality of large-scale approvals and practical realities of incremental development.

 What is the Nature of the Change?

What change is proposed? Is it a slight adjustment to the layout of a building or configuration of a parking lot? Or is it a substantial change to the land use, design, or conditions of the original approval?

Minor Modifications. State law allows minor modifications to be approved administratively by staff if specified in the local ordinance. Certain administrative modifications are authorized for conditional zoning (G.S. 160D-703(b)), special use permits (G.S. 160D-705(c)), and development approvals generally (G.S. 160D-403(d)). For development agreements, G.S. 160D-1006(e) states that major amendments must go through the standard approval process, implying that minor modifications to development agreements could be handled similar to other minor modifications.

There are procedural and substantive limits to these minor modifications. They must be defined in the ordinance, constrained by clear limitations, and adhere to substantive limits (no change to use or density, for example). In addition to statutory limits, the authority for administrative modification is limited by caselaw. For more details on minor modifications, check out the blog on Administrative Modifications.

Major Amendment. A change that does not qualify as a minor modification is a major amendment to the original approval. The remainder of this blog is focused on the substance and procedures for major amendments to development approvals.

New Approval or Zoning. Beyond modifications and amendments to existing approvals, there may be situations where an owner or a local government opts for a totally new approval or zoning. The developer may find it beneficial to scrap the old approval and petition for a wholly new rezoning, special use permit, or other approval. A local government may initiate a rezoning to establish new standards for a property (as a small-scale rezoning or as part of a broader map amendment). Such actions must follow the applicable procedures for the type of decision and may raise issues of vested rights and nonconforming situations.

What type of decision was the original approval?

A major amendment must go through the same development review and approval process as the original approval process. So, for example, a major amendment to a special use permit must go through the full notice and evidentiary hearing process for quasi-judicial decisions and be approved by the same decision-making board that approved the original special use permit.

As specified at G.S. 160D-403(d), any significant change or amendment to a development approval “shall follow the same development review and approval process required for issuance of the [original] development approval.” For conditional zoning, G.S. 160D-703(b) states “Any other modification of the conditions and standards in a conditional district shall follow the same process for approval as are applicable to zoning map amendments.” For special use permits, G.S. 160D-705(c) states “Any other modification or revocation of a special use permit shall follow the same process for approval as is applicable to the approval of a special use permit.” Finally, for development agreements G.S. 160D-1006(e) states that “[c]onsideration of a proposed major modification of the agreement shall follow the same procedures as required for initial approval of a development agreement.” G.S. 160D-1009 further adds that “[s]ubject to the provisions of G.S. 160D-1006(e), a development agreement may be amended or terminated by mutual consent of the parties.”

Are multiple owners involved?

If the project site is owned by one owner, the questions of vetoes and vested rights are relatively simple. But, if a project has multiple owners, then things get more complex. Ownership questions could come up in various ways. The developer may have sold early phases to other developers or homebuyers. The developer could have taken on partners in the development, such that there are new owners for future phases. Or, a bank may be involved due to foreclosure. For these and other multi-owner scenarios, there will be questions of veto and vested rights: Who has to consent to the change and who can challenge the change?

Generally, as outlined at G.S. 160D-403(a), an application for a development approval must come from the landowner or an authorized agent of the landowner. An amendment to a development approval similarly would need to have approval from each of the landowners. That said, if an amendment would affect only a portion of the original project, then it may be possible to move forward with only permission from the owner of the affected property.

Indeed, the statutory provisions for amendment to conditional zonings and special use permits specifically allow for limited-scope amendments “so long as the modification would not result in other properties failing to meet the terms of the conditions.” For conditional zoning, G.S. 160D-703(b) provides “If multiple parcels of land are subject to a conditional zoning, the owners of individual parcels may apply for modification of the conditions so long as the modification would not result in other properties failing to meet the terms of the conditions. Any modifications approved apply only to those properties whose owners petition for the modification.” Similarly, for special use permits, G.S. 160D-705(c) states “If multiple parcels of land are subject to a special use permit, the owners of individual parcels may apply for permit modification so long as the modification would not result in other properties failing to meet the terms of the special use permit or regulations. Any modifications approved apply only to those properties whose owners apply for the modification.”

A project with multiple owners may raise questions of vested rights as discussed more below.

This blog is focused on the public roles and responsibilities for reviewing and deciding changes to development approvals, but there are also private rights and obligations that may come into play. The full range of those private issues is beyond the scope of this blog, but it is worthwhile to note that when a developer plats a subdivision and then sells lots in reference to that plat, the lot purchasers have rights in development depicted on the plat. Similar rights might arise from a site plan or conditional zoning approval if used to promote a real estate transaction. Such private rights cannot be altered except by agreement of the owners or estoppel.

What’s the role of vested rights?

The concept of vested rights is a topic that deserves some clarity here. Statutory and common law vested rights protect a permit holder from subsequent changes to the regulations or permit. These rights are typically asserted when the owner opposes new regulations imposed by the local government. Vested rights are rights to develop pursuant to the original approval. If the owner is seeking a change, though, that is a different scenario. If the owner requests an amendment to the original approval, that may open the development for required compliance with updated rules.

The question of vested rights gets squirrelly for a project with multiple owners. One owner may request a change and another owner may oppose that change. And in some circumstances, the opponent may assert vested rights in the project as approved. As is always the case, any claim of vested rights will depend on the details of the approval and the details of the project—a subject for other blogs.

Are there elements of the approval that span the entire development site?

Some changes to a development approval are limited in scope. Redrawing a few lot lines or slightly altering the permissible uses in a later phase of a development will have minimum (or no) impact on the rest of the development. Some elements, however, are project-wide and a seemingly small change may have broad impacts. Stormwater facility needs may be calculated at the development-scale and stormwater infrastructure may be planned for the entire development (not just for individual sites or phases). Thus, a change to the stormwater impacts or stormwater infrastructure may affect the overall development approval. Other topics also may be handled at the development-scale: access and transportation improvements, recreation facilities, open space and density balancing, and more.

When there is a proposal to amend a development approval, careful consideration should be given to whether and how that may affect the overall development. If the property is owned by one owner, then the amendment may be broad enough to address any issues (for example, increasing open space in phase 3 to accommodate for reduced open space in phase 2). For developments with multiple owners, however, such balancing may not be an option. The statutory language for amendments to conditional zoning approvals (G.S. 160D-703(b)) and special use permits (G.S. 160D-705(c)) specifically state that the amendment must not result in other properties failing to meet the terms of the original approval. A comparable rule likely applies to other decision types.

Was the development approval subject to certain conditions?

If a development was approved originally with conditions, the local government is not obligated to change or amend those conditions. Certainly, the local government may choose to relax or adjust the conditions, but there is no requirement to do so.

The North Carolina Supreme Court addressed this issue in River Birch Associates v. City of Raleigh, 326 N.C. 100, 388 S.E.2d 538 (1990). A developer sought and obtained preliminary subdivision plat and site plan approval for a 144-unit townhome development, including areas identified on the plat and plan as open space. After the initial phases sold quickly, the developer sought plat approval for a 24-unit townhouse development on a three-acre parcel previously identified as open space. Although the overall development met the minimum open space requirements of the zoning ordinance, the city refused to process the application for the three-acre parcel and requested that the developer convey the open space to the homeowners association. The N.C. Supreme Court found that the General Statutes do authorize local ordinances to require conveyance of an open space recreation area to a homeowners association and that when a development creates a need for parks it is reasonable to require the developer to bear that cost. Moreover, the court found that once a developer substantially undertakes a project according to an approved plan, the developer has assented to the conditions of the plan. Failure to comply with those conditions is grounds for revocation. A city may grant an amendment to such conditions but is not obligated to do so.

Similarly, in Wake Forest Golf & Country Club, Inc. v. Town of Wake Forest, 212 N.C. App. 632, 711 S.E.2d 816 (2011) (rev. denied), the North Carolina Court of Appeals upheld a local board’s refusal to relieve a developer of promised open space.  In 1999, an existing golf course was designated as open space in a planned unit development as part of a special use permit (the open space was in excess of minimum open space standards). The developer developed the property in accordance with the SUP. In 2009, after the golf course lost economic viability, the developer sought modification of the 1999 SUP to reduce the open space requirement to comply with minimum standards. The Board of Commissioners refused to conduct a hearing to consider the request, and the court affirmed that decision by the local board.

To be sure, a local government may choose to revisit prior approvals. Given the many planned unit developments, special use permits, and conditional rezoning developments that are already on the ground in North Carolina, there will be many situations where a local government may desire to amend a prior-approved plan and allow for updated standards, increased density, or other amendments. Under the caselaw, though, a local government is not obligated to do so. Once the developer enjoys the benefits of an approval, the developer also has an obligation to adhere to the conditions and requirements.

Conclusion

North Carolina has several decades of complex development approvals behind her and many communities have significant growth and development dynamics ahead. This combination—lots of conditional approvals already approved and the likelihood of increasing growth and change—will be fertile ground for project amendments. The amendment of prior-approved developments necessarily includes many variables and complex considerations. The issues are especially complicated for projects that are partially developed, held by multiple owners, or subject to approvals from many years ago.

These scenarios reflect the challenge of zoning approvals for large-scale, long-term development projects. Conditions change, markets change, and development models change. Development approvals must be flexible enough to accommodate this inevitable change, while still enforcing the necessary conditions and assurances for homebuyers, neighbors, and the community at-large. Communities must strive to find that balance between predictability and flexibility—between large-scale development and increments of construction.

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