An amendment to the Unified Development Ordinance (UDO) that eliminates any Short-term Rental activity in zones R-1 and R-2* passed by a vote of 4-1 on September 19, 2024 at the regularly scheduled Board of Commissioners meeting.
Existing STRs have three years to cease operating. Providing a waiting period like this is called “amortization”.
The Board’s vote was held several days after the Board hosted a public hearing on the topic. The hearing was attended by well over 100 residents who clearly voiced that STRs should not be allowed in neighborhoods.
HNC made presentations at the public hearing. The transcript of one of them is printed below.
HNC PUBLIC HEARING REMARKS SEPTEMBER 5, 2024
Good evening Mayor and Commissioners, my name is Charlie Nalbone and I am here on behalf of the Highlands Neighborhood Coalition to provide some detailed comments on amortization as promised by HNC attorney Mac McCarley, who was unable to attend tonight.
Amortization is settled law in North Carolina and may be used by you to amortize short term rentals out of the R-1 and R-2 single family zones. Amortization has been considered by the appellate courts of North Carolina six times and upheld each time.
State v Joyner was a state Supreme Court case from 1974 that allowed Winston-Salem to amortize a construction debris salvage yard use over a three year period. The defendant appealed to the US Supreme Court and the appeal was dismissed.
Since then, the NC Court of Appeals has applied the law consistently in five cases applying State v Joyner.
In County of Cumberland v Eastern Federal Corporation the court upheld a 3-year amortization removing two nonconforming signs that exceeded the size limitation. The court upheld the 3-year amortization provision, dismissed a First Amendment claim, and ruled that the ordinance could be lawfully based on aesthetic concerns. (1980)
In R. O. Givens v Town of Nags Head the court upheld a 5 ½ year amortization removing non-conforming billboards, and specifically upheld the amortization period for removal as reasonable. (1982)
In Goodman Toyota v the City of Raleigh the court upheld the reasonableness of a 90 day amortization period prohibiting windblown signs (in that case a 14 foot advertising blimp) (1984)
In Summey Outdoor Advertising v County of Henderson the court upheld a five year amortization removing nonconforming off premise signs. The court held that the ordinance did not constitute a taking because it still allowed a reasonable use of the property and employed a reasonable amortization period before removal. (1990)
And in Maynor v Onslow County the court upheld a two-year amortization on the location of a sexually oriented business. (1997).
Here’s the most important thing about each of these five Court of Appeals cases: the state Supreme Court refused to review the rulings in any of them. They were petitioned to do so and refused all five times, allowing the Court of Appeals decisions to stand as good law in North Carolina.
The second thing I want to point out is that in the cases with lengthy amortization periods the ordinances required the structures to be removed, in addition to the cessation of the use. In the two-year amortization of the location of sexually oriented businesses the structures weren’t removed – just the use. That is the case in your amortization proposal, too. No single-family structure is to be removed. The owners of those structures will have three years to recoup their investment and may still make lawful use of the structure as a long-term rental, or they may sell it, or they may live in it. No property is taken from them; just one use is amortized and prohibited at a date certain in the future.
Consider this: if the appellate courts of North Carolina have upheld the complete removal of income producing property like signs on aesthetic grounds, why wouldn’t they allow simple cessation of a use that we all know can be a noise, traffic, litter and light pollution nuisance in a single family neighborhood?
One final point is that I know you’ve been threatened with attorneys’ fees should a plaintiffs group succeed in a lawsuit. GS 6-21.7 states that if a court finds “that the city or county violated a statute or case law setting forth unambiguous limits on its authority, the court shall award reasonable attorneys’ fees and costs”. But as I’ve just outlined, the case law in North Carolina unambiguously supports the appropriate use of amortization. The award of attorneys’ fees to any plaintiff challenging an amortization ordinance is unlikely.
The conclusion is that you have the authority to enact the amortization proposal before you, and it is a well drafted proposal.
Thank you for your consideration of the amortization proposal.
* A commercial business typically known as a “tourist” home or “bed and breakfast” is still allowed in R-2 with a special use permit approved by the Town.