July 2011
Practice Group:
Real Estate Land Use,
Planning and Zoning
North Carolina General Assembly Enacts
Sweeping Land Use Reforms
North Carolina Building Code Council Votes to Require Higher
Energy Efficiency Standards for New Construction
The North Carolina General Assembly temporarily adjourned on June 18, having enacted 186 laws
and sent 223 bills to Governor Bev Perdue to sign or veto by June 30th. Among these bills were
several that we profiled in an alert last month. This alert provides an update on which initiatives have
passed and which have not. It is important to note that, even if a bill did not pass the General
Assembly this session, that bill is not necessarily dead. Many kinds of bills can be revived in a rare
Special Session that has been called for this September, or in next year’s Short Session.
Extension of Statute of Limitations for Zoning Challenges
House Bill 806 passed the Senate on June 14 and was signed into law by Governor Perdue on June 27
as Session Law 2011-384. In addition to extending the statute of limitations for challenges to text
changes and newly-adopted ordinances from two months to a full year, the General Assembly took the
critical and long-overdue step of declaring that the limitations period begins when the plaintiff first
has standing to challenge the ordinance, rather than the date the ordinance is adopted. As we
discussed in our initial alert last month, this closes a long-standing loophole that allowed many zoning
changes to escape review.
Further, if the local government initiates an action to enforce a zoning ordinance, the defendant can
raise the invalidity of the ordinance as a defense even after the one-year period has expired.
Thanks to this law, illegal ordinances can no longer easily escape judicial scrutiny, as one of the main
obstacles to a property owner’s day in court has been removed. The new statute of limitation applies
to litigation filed on or after July 1.
Award of Attorneys’ Fees in Land Use Suits
Although the Property Owners’ Protection Act, House Bill 652, was converted into a transportation
bill, one of its most important provisions was passed as House Bill 687, signed into law by the
Governor on June 24 as Session Law 2011-299. Thanks to this law, beginning on October 1, a court
can award attorneys’ fees and costs to a party that successfully challenges a local government action.
Furthermore, the court must award attorneys’ fees if the court finds that the action was an abuse of the
government’s discretion.
This bill represents a huge shift in the balance of power between developers and land use regulators.
Formerly, regulators held the only real power and some would push that power to its limits and
sometimes beyond. Now, the often high cost of challenging an illegal action by the local government
will come down in some cases, and the threat of increased liability may make local regulators think
twice about some actions that are closer to the limit of public authority.
North Carolina General Assembly Enacts Sweeping Land
Use Reforms
Other provisions of the Property Owners’ Protection Act, including those that required that land use
statutes be read strictly against the government, that the court award attorneys’ fees when the
government fails to recognize a vested right, that the government not be able to enforce fines against a
landowner for an actions not actually committed by that landowner, and that applied the protest
petition process to zoning text changes, have not resurfaced.
Annexation Reform
The principal annexation reform bill, House Bill 845, was presented to Governor Perdue on June 20,
and passed into law without her signature on July 1, 2011 as Session Law 2011-396. Consequently,
landowners in an area to be annexed can now defeat annexation if 60% of the owners sign on to a
protest petition circulated by the tax assessor, and low-income areas can add themselves to
neighboring municipalities.
Several local annexation-related bills passed as well, including House Bill 358 (S.L. 2011-151), which
requires the Towns of Apex and Cary to obtain approval from Chatham County before annexing any
territory within that county; and House Bill 352 (S.L. 2011-124), which would delay by two years a
pending annexation by the City of Kannapolis.
Limitation on Moratoria
In addition to the above bills, the General Assembly passed House Bill 332, now Session Law 2011286, which clarifies that development moratoria may not be imposed for the purpose of developing or
amending ordinances “as to residential uses.” Whether this bill applies to moratoria that only involve
residential uses, as a strict reading of its language would suggest, or also to moratoria for plans and
ordinances that involve other uses as well, as recent judicial policy might suggest, is not clear.
Nevertheless, it adds a new limitation on the ability of local governments to halt new construction
while they develop new plans and ordinances.
No Residential Design Regulations
Senate Bill 731, which would have prevented local governments from regulating the design of private
homes, failed to pass the House this session.
However, since it did cross over from the Senate, it is eligible to be taken up during the Short Session
in 2012. This bill has been opposed by local government lobbying groups, so private landowners and
residential developers need to take action if this bill is to have a chance of passing in the Short
Session.
Limitation of Eminent Domain
House Bill 8 / Senate Bill 37, which would have limited the purposes for which a governmental body
can acquire property, passed the House but stalled in the Senate, despite powerful support. Still,
because it is a proposed constitutional amendment, this bill could be picked up in the Special Session
if there is enough support behind it.
Limits on Extra-Territorial Jurisdiction
Proposed limitations on a city’s or town’s exercise of extra-territorial jurisdiction failed to make it
through the General Assembly this session. Senate Bill 622 / House Bill 797 failed to make crossover,
but House Bill 281 did pass the House. The current version of House Bill 281 no longer prohibits the
2
North Carolina General Assembly Enacts Sweeping Land
Use Reforms
exercise of extra-territorial jurisdiction in areas where county zoning applies to unincorporated areas;
rather, the of the bill would merely create a select committee within the General Assembly to study
issues related to the exercise of extra-territorial jurisdiction. Because House Bill 281 passed one
house of the legislature, it can be taken up in the short session.
What’s Next
If one of the bills you had hoped would become law has not passed, there is still time to act. The
General Assembly will reconvene July 13 to address redistricting, election laws, veto overrides,
studies, and conference committee reports. Another special session in September will address
constitutional amendments, and the Short Session that begins in 2012 will address, among other
things, bills that were passed in one chamber and read but not passed in the other.
Your voice is important in determining the outcome of those issues that remain unresolved. Please
contact your local representatives or the Government Affairs team at K&L Gates to find out more
about particular bills and how to get involved.
Authors:
William J. Brian, Jr.
bill.brian@klgates.com
+1.919.466.1261
Amy H. Fullbright
amy.fullbright@klgates.com
919.743.7352
James L. Joyce
jim.joyce@klgates.com
919.743.7336
3