HNC Attorney Presentation to Town Board (August 2022)

Good evening and thank you for the opportunity to speak to you about why amortization of short term rentals is a perfectly legal zoning action available to the Town.

I want to make three points:

  1. The amortization draft before you does not violate the holdings of the Wilmington case.
  2. Amortization is settled law in North Carolina and may be applied by you to the use of single family homes as short term rentals in specified zones. And
  3. If the Town is sued, the likelihood of an award of attorneys’ fees to a plaintiff is very remote.

The first point: the amortization draft before you doesn’t violate the holdings of the NC Court of Appeals in the Wilmington case.

Your ordinance proposal was drafted by the very law firm that represented the City of Wilmington in that Short Term Rental case. If anyone in the state knows how to draft an ordinance that complies with the holdings in that case its Bob Hagemann, your consulting attorney on this matter. Of particular note is the fact that the court in the Wilmington case didn’t rule on the amortization question: the case was decided on the simple question of whether Wilmington had enacted a registration system that the statutes prohibited. Your amortization draft does not contain a prohibited registration system.
The second point: Amortization is settled law in North Carolina and may be used by you to amortize short term rentals out of R-1 and R-2 zones. Amortization has been considered by the appellate courts of our state at least 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 junk yard use over a three year period.

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 nonconforming signs (1980)

In R. O. Givens v Town of Nags Head the court upheld a 5 ½ year amortization removing non-conforming billboards (1982)

In Goodman Toyota v the City of Raleigh the court upheld a 90 day amortization 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 free standing signs (1990)
And in Maynor v Onslow County the court upheld a two year amortization on the location of sexually oriented businesses (1997).

Here’s the most important thing about each of these 5 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 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.

The third 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 extremely unlikely.

The conclusion is that you have the authority to enact the amortization proposal before you, and it is a well drafted proposal.

Thanks for your consideration.

Presented by Mac McCarley, Highlands Neighborhood Coalition outside counsel, on August 25, 2022. Verbal comments may not be identical to the presentation script.

Updated UDO
As of September, 14, 2022

Town of Highlands
Short Term Rentals
Legal Analysis


The Town of Highlands Uniform Development Ordinance (UDO or Code) in Sections 6.1, 6.2 and 6.3 intentionally and clearly classifies “Overnight Accommodations” as a “Commercial Use.”


All Commercial Uses are specifically prohibited in R-1 Single Family Neighborhoods. This is sufficient for the town to enforce the Code by not allowing overnight accommodations (short-term rentals) in R-1 Single Family neighborhoods.


Tourist Homes are not allowed in R-1 Single Family Neighborhoods. Renting a home as a short-term rental is a Tourist Home, which is defined in the UDO as:

Tourist Home: A building or any part thereof, other than a motel or hotel, where sleeping accommodations of not more than four rooms are provided for occasional transient paying guests with daily charge, tourist homes shall include bed and breakfast homes or inns.”
(Note that it does not say that Tourist Homes are defined only as bed and breakfast homes or inns, but that it shall include them.)

Once a building meets the definition of tourist home, Section 6.5.10 lists out all the regulatory requirements that must be fulfilled. It is not correct to conclude that because someone doesn’t follow the regulatory checklist they therefore aren’t defined as such and can avoid the mandatory requirements.

It strains any rational reading of the UDO to conclude that because a person is offering a home in a Residential zoning district for overnight accommodations via an online platform that they somehow escape the existing restrictions on commercial uses in a residential area because it is offered in such a manner. There are fundamentally sound reasons that zoning regulation in the Town of Highlands has historically and consistently kept the renting of overnight accommodations out of residential neighborhoods.

As a result, offering overnight accommodations is prohibited because they are a specifically defined as a “commercial use” which is not allowed in R1 Single Family neighborhoods. Additionally, turning a home into sleeping accommodations for transient guests is the very definition of a tourist home, which is also prohibited in R1 Single Family neighborhoods.


Tourist Homes are permitted in R-2 Single Family Neighborhoods, but only if a Special Use Permit is obtained and the requirements of Section 6.5.10 of the UDO are met.

Among the requirements that must be met for operation of a Tourist Home in the R-2 zoning district is that the Tourist Home shall serve as the residence of the owner or operator, and only one (1) tourist home may be operated by any one (1) person – thus, whole house short term rentals are also prohibited in the R-2 zoning district.