Hurdles to Enforcing Vested Property Rights Based on Site Plan and Conditional Use Permit Approvals

In North Carolina, legally enforceable property rights can vest with a landowner upon the approval of site plans and/or conditional use permits. In the zoning and use approval area of law, generally speaking, a vested property right, once granted, cannot be taken away by subsequent decisions by the relevant zoning/land use decision makers. However, there are often procedural hurdles to creating vested property rights and there are procedural hurdles to legally enforcing those rights in court. We will use the case of Jubilee Carolina, LLC v. Town of Carolina Beach, Case No. COA18-1108 (Court of Appeals of North Carolina, October 15, 2019) as an example. These hurdles occur very early in the zoning/land use process and this is among the many reasons that experienced North Carolina land use attorneys should be retained at the START of the process.

Typically, a local zoning ordinance will specify the method by which vested property rights can be created based on the approval of a site plan or condition use permit. For example, as quoted in the Jubilee Carolina case, the Town of Carolina Beach has this provision in its zoning Ordinance:

"Any property owner wishing to establish [a] vested right shall make their intentions known in writing to the town at the time of submittal of the site-specific development plan" with proper notation that "approval of this site-specific development plan establishes a vested right under [North Carolina General Statutes]160A-385.1" Carolina Beach, N.C., CODE § 40-397(b)(4), (c)(7)-(8) (2018)

Failure to abide by this provision will result in the failure to acquire a vested property right that cannot be taken away by subsequent decision.

In the Jubilee Carolina case, one landowner failed to follow these procedural requirements and, as such, was deemed to have no vested property rights. The case involved two site-specific development plans. The first was filed by Jubilee Carolina, LLC., to build and operate a Harris Teeter store. As everyone knows, Harris Teeter is a grocery supermarket chain based here in North Carolina. Harris Teeter operates about 260 stores in several the southeast Atlantic states. In April 2017, Harris Teeter's site plan and conditional use permit was approved and provided interconnectivity for vehicular traffic between the Harris Teeter property and an adjacent parcel (which, at that time, was vacant). Essentially, "interconnectivity" allows for customers to drive from one parking lot to the parking lot next door.

The second site-specific plan was filed in November 2017 by Carolina Beach Development Company 1, LLC, for the purpose of building and operating a Publix. As everyone also knows, Publix is a well-known grocery supermarket chain that operates about 1,300 stores in the southeast United States including about 50 stores in North Carolina. Publix's site plan and conditional use permit specifically requested that interconnectivity with the adjacent property be excluded. Indeed, the applicant indicated that the application would be withdrawn if interconnectivity was required. This is not too surprising since Harris Teeter is a competitor of Publix. The Town acquiesced and approved the Publix application in early 2018 without interconnectivity to the Teeter Harris property.

Harris Teeter sued in the local North Carolina Superior Court. Harris Teeter argued, among other things, that it had a vested right to interconnectivity between its property and Publix’s property. However, when the case reached the North Carolina Court of Appeal, Harris Teeter lost because it failed to overcome two hurdles.

First, as noted above, Harris Teeter failed to properly seek a vested property right when it filed its original site plan and conditional use applications in February 2017. As noted, the Town's Ordinance requires that, if an application is seeking a vested property right, that intent must be set out in writing with the original submittal. That was not done. Thus, in a footnote, the North Carolina Court of Appeals stated that it would not have overruled the Town's decision to approve the Publix site plan that excluded interconnectivity.

Second, Harris Teeter faced a procedural hurdle when it reached the North Carolina courts because Harris Teeter had not raised the issue of its vested property rights at the permit hearing before the Town Council when the Publix application was being heard. For the first time, Harris Teeter raised the issue of its vested property right to interconnectivity when it filed its lawsuit with the Superior Court. That is not allowed under North Carolina law. In general, all legal and factual issues must be raised at the Zoning Board or Town Council level in order to have those issues preserved for appeal. Failure to do so means that a North Carolina court will not have jurisdiction to hear and resolve those issues. Since Harris Teeter had not raised the issue of its vested right, that part of Harris Teeter's lawsuit was dismissed by the Court of Appeals.

As can be seen, local zoning and land use is legally complex. Mistakes at the beginning of the process will result in failure at later parts of the process.

For more information, and to schedule a confidential consultation with experienced and dedicated zoning and land use attorneys in Charlotte, contact Arnold & Smith, PLLC. Use our “Contact” page or give us a call at 704-370-2828. We handle land use, zoning and condemnation legal matters in Mecklenburg County and elsewhere in North Carolina. We have offices in Charlotte, Lake Norman, and Union County.