[Adapted from Owens, Land Use Law in North Carolina (4th ed. 2023)]
Persons making land use regulatory decisions have an obligation to act in the public interest. Both the Due Process Clause and statutory provisions address the question of when a conflict exists between a decision maker’s personal interpersons serving on boards making land use regulatory decisions are directly involved in development issues.
Since the early days of zoning, it has been common for developers, builders, real-estate agents, surveyors, engineers, architects, and lawyers to be disproportionately represented on boards making legislative and quasi-judicial land use decisions.[1] More recently neighborhood activists, conservationists, and others have joined these boards. Given the strong impact development regulations have on their interests, it is hardly surprising that those most directly affected by the decisions actively seek out membership on these boards. They bring expertise and well-informed perspectives to the crafting and implementation of development regulation. But the participation in decision-making by so many persons who may be personally affected by the decisions presents the need for safeguards to assure that these decisions are being made in the public interest, not the personal interests of board members.
In County of Lancaster v. Mecklenburg County, the North Carolina Supreme Court summarized the limitations on self-interest in land use regulatory decisions:
Due process requires an impartial decisionmaker. An elected official with a direct and substantial financial interest in a legislative zoning decision may not participate in making that decision. Where there is a specific, substantial, and readily identifiable financial impact on a board member, nonparticipation is required. Additional considerations beyond these financial interests require nonparticipation in quasi-judicial zoning decisions. A fixed opinion that is not susceptible to change may well constitute impermissible bias, as will undisclosed ex parte communication or a close familial or business relationship with an applicant.[2]
Legislative Decisions
Legislative decisions require policy judgment by elected officials. These officials’ personal knowledge, positions on issues of importance to the community, and judgment about the preferred course for the community are important and valid components of the decision-making process. As a general rule, the individual or personal motives of governing board members are not examined in the judicial review of legislative decisions.[3] If the voters disagree with the judgment being exercised, the appropriate remedy is the ballot box. However, the judgment being exercised must be on behalf of the public interest, not the narrow self-interest of an individual board member. Thus, the courts and state statutes have imposed important conflict-of-interest limitations on land-development-regulatory policy decisions.
The matter of financial interests occasionally poses difficult questions in land-development-regulatory policy decisions.[4] Although board members should certainly not participate in voting on a small-scale rezoning of their own property, they must participate in adopting initial zoning for the entire jurisdiction, which affects their property. The difficult question is, at what point does the financial interest become significant enough to warrant nonparticipation? The general rule is that if a member is affected no more significantly than all other members of the community, nonparticipation is not required. However, if there is a specific, substantial, and readily identifiable financial impact on a member, nonparticipation is required even if there are others who are similarly affected.
State statutes specifically speak to the issue of conflicts of interest in legislative decisions. In 2005, the zoning statutes were amended to specifically address conflicts of interest in both legislative[5] and quasi-judicial settings. G.S. 160D-109 codifies the standard set out in County of Lancaster.
The statute provides that members of city councils and county boards of commissioners “shall not vote on any zoning map or text amendment where the outcome of the matter being considered is reasonably likely to have a direct, substantial, and readily identifiable financial impact on the member.”[6] The statute applies the same prohibition to advisory boards making recommendations on zoning amendments. In 2019, the General Assembly added a requirement that governing-board and planning-board members not vote on any zoning amendment if the owner of property proposed for rezoning or the applicant for a text amendment is a person with whom the member has a close family, business, or associational relationship.[7] G.S. 160D-109(f) defines a close family relationship to be a spouse, parent, child, brother, sister, grandparent, or grandchild, including step, half, and in-law relationships.
In the legislative arena, public policies are openly debated and resolved in decisions on zoning and rezoning. Bias, expression of opinions, and contacts with citizens about a matter before a hearing or a vote do not disqualify a member from voting on a legislative decision.[8]
Quasi-judicial Decisions
For quasi-judicial land use decisions, the constitutional demand for impartiality extends beyond financial conflicts to include bias, close family or associational relationships, and undisclosed ex parte communications.[9] A board member whose opinion is fixed and not susceptible to change has an impermissible bias.[10] While even the appearance of bias must be avoided,[11] a board member simply expressing a view as to the outcome after the evidence is presented but before the board votes does not constitute impermissible bias.[12]
G.S. 160D-109(d) codifies County of Lancaster’s heightened standard for quasi-judicial decisions, providing that members of boards making quasi-judicial land use decisions:
shall not participate in or vote on any quasi-judicial matter in a manner that would violate affected persons’ constitutional rights to an impartial decision maker. Impermissible violations of due process include, but are not limited to, a member having a fixed opinion prior to hearing the matter that is not susceptible to change, undisclosed ex parte communications, a close familial, business, or other associational relationship with an affected person, or a financial interest in the outcome of the matter.
Helpful guidance on addressing impartiality in quasi-judicial decision-making is provided by Canon 3(C)(1) of the North Carolina Code of Judicial Conduct. It provides:
(1) On motion of any party, a judge shall disqualify himself/herself in a proceeding in which the judge’s impartiality might reasonably be questioned, including but not limited to instances where:
(a) the judge has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceedings;
(b) the judge served as lawyer in the matter in controversy, or a lawyer with whom the judge previously practiced law served during such association as a lawyer concerning the matter, or the judge or such lawyer has been a material witness concerning it;
(c) the judge knows that he/she, individually or as a fiduciary, or the judge’s spouse or minor child residing in the judge’s household, has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding;
(d) the judge or the judge’s spouse, or a person within the third degree of relationship to either of them, or the spouse of such a person:
(i) Is a party to the proceeding, or an officer, director, or trustee of a party;
(ii) Is acting as a lawyer in the proceeding;
(iii) Is known by the judge to have an interest that could be substantially affected by the outcome of the proceeding; or
(iv) Is to the judge’s knowledge likely to be a material witness in the proceeding.
A person contending that a board member has an impermissible bias may move for recusal of that member, and the objecting party has the burden of demonstrating that grounds for disqualification actually exist.[13] When a permit may not, as a matter of law, be issued, improper participation will not invalidate the decision.[14]
The statutes also address the procedure for resolving disputes regarding board-member participation in quasi-judicial matters. If an objection is raised to a member’s participation and that member does not agree to recusal, the remaining members of the board rule on the objection by majority vote.[15]
Administrative Decisions
Prior to the enactment of Chapter 160D there was not an express statutory provision on conflicts of interest for administrative land use decisions, only the general provision that a staff member could not be financially interested in a firm doing regulated work within the jurisdiction and that staff members not engage in any work inconsistent with their duties.[16]
G.S. 160D-109(c) extends a conflict-of-interest standard to staff making administrative decisions that is similar to that required for board members making legislative decisions. A staff member is prohibited from making a final decision on an administrative decision if the outcome would have a direct, substantial, and readily identifiable financial impact on the staff member or if the staff member has a close family, business, or associational relationship with the applicant. In these situations, the decision is to be assigned to the supervisor of the affected staff member or to such other staff person as may be designated by the development regulation.
Voting Statutes and Codes of Ethics
G.S. 153A-44 and 160A-75, which address voting on legislative matters by county commissioners and city council members, respectively, were also amended in 2005 to incorporate the statutes noted above as grounds for members’ abstentions.
The General Assembly in 2009 mandated adoption of local codes of ethics. G.S. 160A-83 requires the governing boards of cities and counties to adopt a code of ethics, and G.S. 160A-84 requires these boards to receive two hours of ethics training within a year of being elected or reelected. Even prior to this mandate, some city and county codes had ethics provisions regarding the disclosure of financial interests in matters coming before elected officials as well as requirements for nonparticipation in such matters.[17] Many of the local code provisions apply to advisory boards as well as to elected officials.
[1]. A 1937 national survey of planning-commission members in large cities noted that some 80 percent of commission members came from professions with a stake in the development business. Robert A. Walker, The Planning Function in Urban Government 150–52 (1950).
[2]. 334 N.C. 496, 511, 434 S.E.2d 604, 614 (1993). See also Caperton v. A.T. Massey Coal Co., 556 U.S. 868 (2009) (state supreme court justice may not participate in case involving substantial contributor to his campaign); Mayberry v. Pennsylvania, 400 U.S. 455 (1971) (judge who had been repeatedly insulted by defendant was disqualified for bias in deciding criminal-contempt charge); In re Murchinson, 349 U.S. 133 (1955) (judge who charged defendant with perjury and contempt in prior proceeding disqualified from hearing present matter).
[3]. In Barger v. Smith, 156 N.C. 323, 72 S.E. 376 (1911), the state high court held that generally the motivations behind adoption of an ordinance are irrelevant. However, the facts alleged to have been the foundation of an improper motivation can be considered in determining whether the ordinance is arbitrary.
[4]. A 2008 UNC School of Government survey explored how often financial conflicts of interest arise in legislative zoning decisions. Responding jurisdictions reported that this was an infrequent occurrence for both the planning board and governing board. Three-quarters of the responding jurisdictions reported that a member of the planning board never or only rarely abstained or was excused from voting because of a financial conflict of interest, with a quarter of the respondents indicating this happened only occasionally. Only 2 percent of the responding jurisdictions reported that this happened frequently or more often. Financial conflicts were reported to arise even less frequently for governing board members: 81 percent of the jurisdictions surveyed reported that a city-council or county-board member either never or only rarely had to be excused from voting on a zoning-amendment matter due to a financial conflict, and 17 percent reported that this happened only occasionally. Only 2 percent of the responding jurisdictions reported that this happened frequently or more often. David W. Owens, Zoning Amendments in North Carolina 17 (UNC School of Government, Special Series No. 24, 2008).
[5]. The U.S. Supreme Court upheld the constitutionality of state legislation prohibiting elected officials from voting on or advocating passage or failure of matters that would materially affect the personal interests of the official. Nev. Comm’n on Ethics v. Carrigan, 564 U.S. 117 (2011).
[6]. G.S. 160D-109.
[7]. Prior to the enactment of Chapter 160D, this restriction was only applicable for quasi-judicial decisions. G.S. 160D-109(a) and (b) extend it to legislative and advisory decisions.
[8]. Brown v. Town of Davidson, 113 N.C. App. 553, 556, 439 S.E.2d 206, 208 (1994); Bd. of Adjustment v. Town of Swansboro, 108 N.C. App. 198, 206, 423 S.E.2d 498, 503, aff’d, 334 N.C. 421, 432 S.E.2d 310 (1993).
[9]. See Cox v. Hancock, 160 N.C. App. 473, 586 S.E.2d 500 (2003) (distant family relation not a conflict); JWL Invs., Inc. v. Guilford Cnty. Bd. of Adjustment, 133 N.C. App. 426, 515 S.E.2d 715 (1999), review denied, 251 N.C. 357 (2000) (participation by former county staff member on board not a per se conflict); Vulcan Materials Co. v. Guilford Cnty. Bd. of Cnty. Comm’rs, 115 N.C. App. 319, 444 S.E.2d 639, review denied, 337 N.C. 807, 449 S.E.2d 758 (1994) (not bias to announce intentions on decision after evidence submitted but prior to deliberation); Rice Assocs. of the S. Highlands, Inc. v. Town of Weaverville Zoning Bd. of Adjustment, 108 N.C. App. 346, 423 S.E.2d 519 (1992) (potential bias irrelevant if board has no discretion on permit outcome); In re City of Raleigh (Parks & Recreation Dep’t) v. City of Raleigh, 107 N.C. App. 505, 421 S.E.2d 179 (1992) (governing-board decision on application by city agency not per se conflict).
[10]. Crump v. Bd. of Educ., 326 N.C. 603, 392 S.E.2d 579 (1990); In re City of Raleigh (Parks & Recreation Dep’t) v. City of Raleigh, 107 N.C. App. 505, 421 S.E.2d 179 (1992).
[11]. Ponder v. Davis, 233 N.C. 699, 706, 65 S.E.2d 356, 360 (1951) (quoting Haslam v. Morrison, 113 Utah 14, 20, 190 P.2d 520, 523 (1948).
[12]. Vulcan Materials Co. v. Guilford Cnty. Bd. of Cnty. Comm’rs, 115 N.C. App. 319, 444 S.E.2d 639, review denied, 337 N.C. 807, 449 S.E.2d 758 (1994).
[13]. In re Ezzell, 113 N.C. App. 388, 394, 438 S.E.2d 482, 485 (1994). If no objection is made at the hearing and there is no showing of prejudice as a result of improper participation, appellate courts will not set aside the decision. JWL Invs., Inc. v. Guilford Cnty. Bd. of Adjustment, 133 N.C. App. 426, 515 S.E.2d 715, review denied, 251 N.C. 715, 540 S.E.2d 349 (2000) (upholding board member’s participation in a hearing contesting a notice of violation where this board member was a former staff member in the county’s planning department and had been consulted in that capacity about a rezoning of the property in question).
[14]. Rice Assocs. of the S. Highlands, Inc. v. Town of Weaverville Zoning Bd. of Adjustment, 108 N.C. App. 346, 423 S.E.2d 519 (1992).
[15]. G.S. 160D-109(e). This process of the rest of the board voting on an objection applies to legislative, quasi-judicial, and advisory decisions.
[16]. G.S. 160D-109.
[17]. For example, the Chapel Hill code provides that the mayor and members of the town council may be required to disclose their financial interests related to those applying for permits or approvals from the town and to refrain from voting where conflicts are present. Chapel Hill, N.C., Code of Ordinances ch. 2, §§ 2-49 to -52 (2022).
