allen stahl+kilbourne

VIA EMAIL

Jay Coward Craig Justus

1jkcoward@chspa.com ciustus@vwlawfirm.com

Re: May19, 2022 Adoption of Amendments to UDO

June 7, 2022

Dear Jay and Craig,

I write in a prelitigation attempt to resolve a procedural issue with the Town of Highlands’ adoption of the amended UDO on May 19, 2022. Notably, the Town failed to provide adequate notice of the ordinance changes per N.C. Gen. Stat. §

160D-601(a). That statute provides as follows:

Before adopting, amending, or repealing any ordinance or development regulation authorized by this Chapter, the governing board shall hold a legislative hearing. A notice of the hearing shall be given once a week for two successive calendar weeks in a newspaper having general circulation in the area. The notice shall be published the first time not less than 10 days nor more than 25 days before the date scheduled for the hearing. In computing such period, the day of publication is not to be included but the day of the hearing shall be included.

N.C. Gen. Stat. § 160D-601. See also, UDO Section 4.2.4. A “legislative hearing” is defined as “[a] hearing to solicit public comment on a proposed legislative decision.” N.C. Gen. Stat. § 160D-102(20). A “legislative decision” is “[t]he adoption, amendment, or repeal of a regulation under this Chapter or an applicable local act.” N.C. Gen. Stat. § 160D-102(19).

Furthermore, “the notice of public hearing required by G.S. 160A-364 [now N.C. Gen. Stat. § 160D-601] must fairly and sufficiently apprise those whose rights may be affected of the nature and character of the action proposed.” Sellers v.

bl

Letter to Jay and Craig June 7, 2022
Page 2

Asheville, 33 N.C. App. 544, 549, 236 S.E.2d 283, 286 (1977) (invalidating the City of Asheville zoning ordinance for failure to comply with publication requirement). Additionally, “[n]ot only must notice of a zoning ordinance or amendment adequately inform as to what changes are proposed, [but] the actual change must conform substantially to the proposed changes in the notice. Bd. of Adjustment v. Town of Swansboro, 108 N.C. App. 198, 204, 423 S.E.2d 498, 501 (1992).

The case of Molamphy v. Town of S. Pines, 2004 U.S. Dist. LEXIS 3594 (M.D.N.C. 2004), is instructive on this point. After a survey of North Carolina law on the topic, it stated this:

In the instant case, the public notice amounts to nothing less than cryptic shorthand that the meeting may take up the topic of zoning with respect to convenience stores. Neither the proposed action nor zoning districts affected are identified. This is the antithesis of the purpose behind the concept of public notice which is to inform.

Id. at *22-23. The District Court continued thusly:

Requiring the notice to be descriptive and informative beyond some vague, cryptic notation serves two important public purposes. First, it alerts the public in general of, and those affected by, the proposal in order to encourage and permit public discussion concerning the possible ramifications of the proposal to alter or enact a zoning ordinance.

Second, it enables a court to determine whether post-meeting changes substantially altered the original proposal...In the instant case, the problem is not one of generic notice, but notice so cryptic and vague that it amounted to no notice at all

Id. at *24-25. An ordinance enacted without proper notice per N.C. Gen. Stat. § 160D-601(a) is invalid. Vulcan Materials Co. v. Iredell Cty., 103 N.C. App. 779, 782 407 S.E.2d 283, 286 (1991).

Applying this law here, we think the Town has a problem. We have researched the local papers during the relevant time frames and found not a single Town notice concerning changes to the UDO. Unless we somehow missed a published notice, the Town failed to follow the notice provisions of N.C. Gen. Stat. §

160D-601(a) and its own UDO rendering the ordinance invalid. This lapse appears to be a rare black and white legal conclusion.

Letter to Jay and Craig June 7, 2022
Page 3

In short, the Town must follow the procedure mandated by the General Assembly and its own UDO before passing an amended zoning ordinance. It did not do so here. The Town therefore must rescind the new ordinance, refer the newly proposed ordinance to the Planning Board, and then follow the proper procedures for enactment. Until the Town does that, any actions in furtherance of the ordinance are illegal and should be ignored by owners and operators of vacation rentals.

Last year, the Town complied with N.C. Gen. Stat. § 160D-604(b) and Section 4.3.1 by submitting to the Planning Board its proposed draft amendments of the UDO. The Planning Board did its part, considered the proposed ordinance taking into account public comment, and submitted a revised ordinance to the Town on February 1,2022.

The Town, however, scrapped its originally proposed ordinance and the revised version the Planning Board recommended. Instead, the Town hired new legal counsel, had them draft a completely new ordinance, and only publicly revealed the new ordinance the evening of May 16, 2022, mere days before the hearing.

There are other issues as well. N.C. Gen. Stat. § 160D-604(b) states that, “all proposed amendments to the zoning regulation or zoning map shall be submitted to the planning board for review and comment.” Section 4.3.2 of the UDO requires the same.

Not only that, on the evening of May 19, the Town on the fly made the newly proposed ordinance substantially more restrictive by prohibiting — for the first time — vacation rentals in the R-2 zoning district. No previous draft ordinance contained this restriction. Property owners in R-2 had no notice that the Town planned to restrict their property. Because of these issues, the Town must resubmit the draft ordinance to the Planning Board per N.C. Gen. Stat. § 160D-604(b) and Section 4.3.2 before it can be validly adopted.

There are other issues with what the Town passed. For example, the zoning permit scheme is a flat-out registration requirement unambiguously contrary to the Vacation Rental Act and the Court of Appeals’ recent holding in Schroeder. Likewise, and contrary to the Mayor’s assertion otherwise, the new ordinance does not protect the vested rights of those who rent their property to visitors of Highlands. The whole ordinance is legally problematic unlike the ordinance recommended by the Planning Board, which came close to legal compliance.