The North Carolina Legislature recently enacted SB 382, introducing significant changes to its zoning laws. These modifications were tucked into the final section of the Disaster Recovery Act of 2024, which was promoted as a relief package for communities affected by Hurricane Helene.

The zoning provisions of the bill expand the statutory definition of “down-zoning” and removes the ability of local governments to initiate down-zoning amendments without the written consent of all property owners affected by the change. While the full impact of this new law remains to be seen, local governments will now be required to go through a much more burdensome process to enact zoning changes.

Textual Changes:

Generally, “down-zoning” refers to the process of rezoning a property to a district allowing less intense use than the previous zoning. For example, changing a property’s zoning from commercial to residential is considered down-zoning. In 2019, the General Assembly established a statutory definition of down-zoning, which is now codified in NCGS 160D-601(d). Under the previous version of NCGS 160D-601(d), down-zoning was defined as a zoning change that either (1) reduces the development density allowed under the previous zoning, or (2) reduces the permitted uses of the land allowed under the prior zoning.

The new legislation broadens the statutory definition of “down-zoning” further by introducing a third part to that statutory definition. Under the updated law, a zoning amendment that creates “any type of nonconformity on land not in a residential zoning district” is also considered a form of down-zoning.

Any individual or entity can initiate a down-zoning request. However, North Carolina protects property owners from third-party initiated down-zoning requests, such as those by property developers, by requiring the written consent of owners of property that would be affected by such down-zoning. Under the former version of NCGS 160D-601(d), an exception allowed local governments to initiate down-zoning actions without obtaining property owners’ consent.

The new law eliminates this exception. With the enactment of SB 382, local governments are now required to also obtain written consent from property owners before initiating a down-zoning amendment. While eliminating the local government exception may initially seem beneficial – particularly to those concerned about government intrusion on their property – this change, coupled with the broader definition of down-zoning, substantially limits a local government’s ability to update zoning ordinances to accommodate community growth.

Impact:

It is important to note that the first two forms of down-zoning within the statutory definition already existed under the previous version of NCGS 160D-601(d). However, the removal of the exception allowing local governments to initiate down-zoning actions without property owner consent, will increase the impact the statutory definition has on how local governments process zoning changes.

Density:

As mentioned above, a zoning action which reduces the development density of land is considered a down-zoning. For example, if a zoning ordinance previously allowed 10 residential units per acre and was amended to permit only 7 units per acre, this would constitute a reduction in density. Under the new law, for such an amendment to be enacted, all property owners affected by this amendment must provide written consent, even if the amendment was initiated by the local government.

There are other land use actions a local government could take that are not intended to reduce a property’s development density but could still have that effect. Using the example above, if the local government were to initiate a zoning map change that increases setbacks for the same development, it could indirectly reduce density by limiting the space available for residential units per acre. There are many instances where a local government may need to increase setbacks or institute other development standards without intending to down-zone. As a result, local governments must now carefully consider how development standards affect density, as such changes could require written consent from property owners if they result in a reduction in density, thereby constituting down-zoning.

Uses:

The second form of down-zoning within the statutory definition will also create some ambiguity for local governments. According to this definition, a down-zoning occurs when a zoning amendment reduces the range of permitted uses compared to the previous zoning. While this seems to clearly apply to cases where the number of allowable uses is reduced, the application of such definition is less clear when a zoning amendment does not decrease the number of uses but instead alters which uses are allowed.

Zoning regulations are often organized by use tables within uniform development ordinances (UDOs), which outline the permitted uses for each zoning classification. While one zoning classification may permit the same number of uses as another, it could still be considered an up-zoning if the zoning is changed to that zoning classification. For example, a property zoned commercial and then amended to industrial would typically be seen as an up-zoning because industrial zoning allows for more intensive uses. However, under the statutory definition, it could be classified as a down-zoning, as certain uses permitted under the commercial zoning may no longer be allowed under the industrial zoning. Even though the total number of permitted uses may remain the same, this change could be viewed as a down-zoning due to the loss of specific uses previously allowed.

The statute is unclear whether such an amendment would constitute down-zoning requiring written consent from the affected property owners. As a result, local governments may now need to assess zoning amendments traditionally viewed as up-zonings to determine whether they could be classified as down-zonings due to changes in the permitted uses.

Nonconformities:

The new form of down-zoning under NCGS 160D-601(d) prohibits a zoning amendment in non-residential districts that create nonconformities without the written consent of the affected property owners. A nonconformity arises when a use permitted under the previous zoning is no longer permitted under the new zoning. While not mandatory, most jurisdictions have provisions in their local ordinances that allow nonconforming uses to continue with certain restrictions, such as prohibiting the intensification of the use or requiring compliance with the new zoning if the nonconforming use is discontinued for a certain period of time.

The new law clearly states that, other than in residential districts, a zoning amendment that creates a nonconformity is considered a down-zoning. This update effectively eliminates the common practice among many jurisdictions of allowing uses to continue as lawful nonconformities. In response to this change, local governments may become more creative in how they approach zoning amendments, as such changes often result in nonconformities for at least some property owners. For instance, they might consider structuring zoning amendments so that they apply only to new developments, rather than existing ones, to avoid creating nonconformities. However, this approach will present challenges in tracking which zoning laws apply to which properties, potentially creating significant administrative burdens for local governments.

Navigation:

Due to the expanded definition of down-zoning and the uncertainties surrounding what qualifies as a down-zoning, local governments will need to conduct a thorough analysis whenever they consider a zoning change to assess whether it could result in a down-zoning. This could make it difficult for local governments to implement comprehensive zoning updates, as these updates often involve both up-zonings and down-zonings. A single property owner may be able to block such an update by withholding consent if that owner’s property is subject to a down-zoning under the comprehensive zoning plan.

Applicability:

The new down-zoning laws take effect immediately upon enactment and apply to any down-zonings that occurred within 180 days prior to the law’s effective date. SB 382 was enacted on Dec. 11, 2024, making it retroactive to June 14, 2024. As a result, any zoning actions taken since June 14, 2024, that qualify as down-zoning will require local governments to obtain written consent from the affected property owners. Failing to do so could render the zoning action “void and unenforceable.”

Conclusion:

The revised version of NCGS 160D-601(d) expands the definition of down-zoning and eliminates the exception that previously allowed local governments to initiate down-zoning without obtaining written consent from all impacted property owners. This change is likely to make the zoning amendment process more complex and burdensome for local governments. In response, some local governments may adopt more creative approaches to drafting zoning laws, while others may become reluctant to initiate zoning changes altogether. This hesitation could hinder their ability to keep pace with community growth or respond to emerging property uses.

In the latest twist to the drama surrounding the new zoning law, House Bill 24, titled “Restore Down-Zoning Authority,” has been introduced in the General Assembly with the stated objective of restoring authority for local governments to initiate down-zoning.  For now, however, local governments must currently navigate the existing down-zoning laws as enacted.