NO. COA NORTH CAROLINA COURT OF APPEALS. Filed: 16 October 2012

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1 An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. NO. COA NORTH CAROLINA COURT OF APPEALS Filed: 16 October 2012 THE AFFORDABLE HOUSING GROUP OF NORTH CAROLINA, INC., AND BLUEFIELD PARTNERS 1, LLC, Petitioners, v. Iredell County No. 11 CVS 1274 THE TOWN OF MOORESVILLE, NORTH CAROLINA, and Respondent, MORLAKE EXECUTIVE SUITES, LLC, AND MORLAKE EXECUTIVE SUITES CONDOMINIUM ASSOCIATION, INC., Intervenors. Appeal by intervenors from judgment entered 15 December 2011 by Judge Theodore S. Royster, Jr. in Iredell County Superior Court. Heard in the Court of Appeals 12 September Robinson Bradshaw & Hinson, P.A., by John H. Carmichael and Ty E. Shaffer for petitioners. No respondent brief filed.

2 -2- Eisele, Ashburn, Greene & Chapman, PA, by Douglas G. Eisele for intervenors.

3 -3- STEELMAN, Judge. Where petitioners made a prima facie showing of all four requirements necessary for the issuance of a Conditional Use Permit, and that showing was not rebutted by competent, material, and substantial evidence, the trial court did not err in reversing the decision of the Town Board denying petitioners application for a Conditional Use Permit. I. Factual and Procedural Background On 25 January 2011, Affordable Housing Group of North Carolina, Inc., and Bluefield Partners 1, LLC (collectively petitioners ) filed with the Town of Mooresville ( respondent ) an Application for a Conditional Use Permit ( application ) for the construction of a 41-unit apartment complex on Bluefield Road within the corporate limits of Mooresville. The application identified the proposed site as a 4.17 acre tract adjacent to a bowling alley, an assisted living facility, office buildings, and near another apartment complex. The 4.17 acre tract was zoned HB. The Mooresville Zoning Ordinance defines HB as Highway Business District, which permits Live/work dwellings with a maximum density of 10 units per acre subject to the issuance of a Conditional Use Permit. Town of Mooresville Zoning Ordinance 3.2.2(10) (2008). Under

4 -4- the ordinance, a Live/work dwelling is [a] structure or portion of a structure combining a residential living space for one or more persons with an integrated work space principally used by one or more of the residents. Town of Mooresville Zoning Ordinance, All residential uses other than Live/work dwellings are prohibited, according to the text of the ordinance. Town of Mooresville Zoning Ordinance, 3.2.2(10). The ordinance also includes a Table of Allowed Uses, which indicates that multi-family dwellings are permitted in HB-zoned areas subject to a Conditional Use Permit. Town of Mooresville Zoning Ordinance, Table On this table, while multifamily dwellings are permitted, Live/work dwellings are not. The table contradicts the text of the ordinance. The ordinance provides that a Conditional Use Permit shall be approved by respondent only upon a finding by respondent that the proposed project (A) Does not materially endanger the public health or safety. (B) Complies with all relevant Town laws and ordinances, state and federal laws, and regulations, and any regulations imposed by the Town Board and agreed to by the applicant; (C) Would not substantially injure the value of adjoining property or is a public necessity, and;

5 -5- (D) Will be in harmony with the area in which it is located and be in general conformity with the comprehensive land use plan. Town of Mooresville Zoning Ordinance 2.3.3(4) (2009). On 7 March 2011, respondent held a quasi-judicial public hearing on the application. Following the public hearing, respondent found that the application met conditions 1, 2, and 3, but did not meet condition 4, harmony with the area in which the project was to be located and conformity with the comprehensive land use plan. The application was denied. The hearing was attended by, among others, John Kindley, spokesman for Morlake Executive Suites, LLC, and Morlake Executive Suites Condominium Association, LLC, and by James Royce, spokesman for petitioners. On 2 May 2011, petitioners filed a Petition for Writ of Certiorari in the Superior Court of Iredell County, seeking review of respondent s denial of their application. On 15 December 2011, the court entered its order and judgment. The court found that petitioners had established a prima facie case that the project would be in harmony with the area in which it was to be located and in general conformity with the comprehensive land use plan. It then held that respondent s

6 -6- denial of the application was not supported by competent, material, and substantial evidence. The court reversed respondent s denial of the application, and ordered that respondent issue the Conditional Use Permit. On 9 January 2012, Morlake Executive Suites, LLC, and Morlake Executive Suites Condominium Association, LLC (collectively, intervenors ) learned that respondent did not intend to appeal the trial court s order and judgment, and filed a motion to intervene on 13 January Judge Christopher W. Bragg granted this motion on 14 February 2012, and intervenors filed notice of appeal on 28 February On 12 March 2012, petitioners filed a cross-appeal, appealing the order granting intervenors motion to intervene. II. Intervenors Appeal Intervenors contend that the trial court erred in reversing the decision of respondent denying petitioners application. We disagree. A. Standard of Review In general, the superior court s task when reviewing the grant or denial by a county board of a special use permit includes: (1) Reviewing the record for errors in law, (2) Insuring that procedures specified by law in both statute and ordinance are

7 -7- followed, (3) Insuring that appropriate due process rights of a petitioner are protected including the right to offer evidence, cross-examine witnesses, and inspect documents, (4) Insuring that decisions of town boards are supported by competent, material and substantial evidence in the whole record, and (5) Insuring that decisions are not arbitrary and capricious. Mann Media, Inc. v. Randolph Cnty. Planning Bd., 356 N.C. 1, 13, 565 S.E.2d 9, 17 (2002) (citations omitted). 1 There are two standards of review that may apply to Conditional Use Permit decisions. Whole record review, a deferential standard, applies where we must determine if a decision was supported by the evidence or if it was arbitrary or capricious. Id. However, errors of law are reviewed de novo. Id. Further, [w]hen the issue before the court is whether the decision-making board erred in interpreting an ordinance, the 1 [T]he terms special use and conditional use are used interchangeably,... and a conditional use or a special use permit is one issued for a use which the ordinance expressly permits in a designated zone upon proof that certain facts and conditions detailed in the ordinance exist. Coastal Ready-Mix Concrete Co. v. Bd. of Comm rs of Town of Nags Head, 299 N.C. 620, 623, 265 S.E.2d 379, 381 (1980) (citations omitted).

8 -8- court shall review that issue de novo. N.C. Gen. Stat. 160A- 393(k)(2) (emphasis added). When utilizing the whole record test,... the reviewing court must examine all competent evidence (the whole record) in order to determine whether the agency decision is supported by substantial evidence. Mann Media, 356 N.C. at 14, 565 S.E.2d at 17 (citations omitted). The whole record test does not allow the reviewing court to replace the Board s judgment as between two reasonably conflicting views, even though the court could justifiably have reached a different result had the matter been before it de novo. Thompson v. Wake Cnty. Bd. of Educ., 292 N.C. 406, 410, 233 S.E.2d 538, 541 (1977) (citations omitted). Under de novo review a reviewing court considers the case anew and may freely substitute its own interpretation of an ordinance for a board of adjustment s conclusions of law. Morris Commc ns Corp. v. City of Bessemer City Zoning Bd. of Adjust., 365 N.C. 152, 156, 712 S.E.2d 868, 871 (2011) (citations omitted). B. Analysis At the hearing before respondent, respondent found that petitioners presented sufficient evidence of the first three requirements for issuance of a Conditional Use Permit under its

9 -9- zoning ordinance. Specifically, respondent found that petitioners proposed use would not materially endanger the public health or safety[,] complied with all relevant Town laws and ordinances, and would not substantially injure the value of adjoining property. Petitioners appealed respondent s finding that the proposed use would not be in harmony with the area in which it is located and be in general conformity with the comprehensive land use plan. The trial court reversed, holding that this finding was unsupported by competent, material, and substantial evidence. [A] reviewing court, in dealing with the determination... which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency. Guilford Fin. Services, LLC v. City of Brevard, 150 N.C. App. 1, 13, 563 S.E.2d 27, 35 (2002) rev'd on other grounds, 356 N.C. 655, 576 S.E.2d 325 (2003) (quoting Godfrey v. Zoning Bd. of Adjustment of Union County, 317 N.C. 51, 64, 344 S.E.2d 272, (1986)). The only issue that was presented to the trial court, and which the trial court ruled upon, was whether petitioners met the fourth condition, compliance with the comprehensive land use plan and harmony with the area. On appeal, intervenors attempt

10 -10- to argue that the proposed apartment complex was not allowed as a conditional use under the ordinance. This issue was not raised before respondent or the trial court, and cannot be raised for the first time on appeal; we may judge respondent s decision solely on the basis of conformity with the land use plan and harmony with the area. Id. Had intervenors wished to raise this issue, they should have sought to intervene at an early stage of the proceedings before the trial court, and not after the trial court had entered judgment. 1. Compliance with the Comprehensive Land Use Plan With regard to compliance with the comprehensive land use plan, our Supreme Court has held that the inclusion of a use in a zoning district, even where a Conditional Use Permit is required, establishes a prima facie case that the use conforms with the comprehensive plan. Woodhouse v. Bd. of Comm rs, 299 N.C. 211, 216, 261 S.E.2d 882, 886 (1980); see also Vulcan Materials Co. v. Guilford Cty. Bd. of Cty. Comm rs, 115 N.C. App. 319, 324, 444 S.E.2d 639, 643 (1994) (holding that the inclusion of a use as a conditional use established a prima facie case of harmony with the general zoning plan, but further holding that there was sufficient evidence to rebut the prima facie case).

11 -11- [A]mbiguous zoning statutes should be interpreted to permit the free use of land[.] Westminster Homes, Inc. v. Town of Cary Zoning Bd. of Adjustment, 354 N.C. 298, 308, 554 S.E.2d 634, (2001); see also Yancey v. Heafner, 268 N.C. 263, 266, 150 S.E.2d 440, 443 (1966) (holding that [i]t has been held that well-founded doubts as to the meaning of obscure provisions of a Zoning Ordinance should be resolved in favor of the free use of property. ). In the instant case, respondent s ordinance contradicts itself. The text of states that Live/work dwellings are the only residential structures permitted in an HB zone. Table permits multi-family dwellings, such as those proposed by petitioners, to be built in HB-zoned areas subject to the issuance of a Conditional Use Permit. Given that the two provisions are in contradiction of each other, this ambiguity should be resolved in favor of the free use of property. We construe the ordinance, as a whole, to permit petitioners proposed use, subject to the issuance of a Conditional Use Permit. This position is supported by the determination of respondent s Planning Department that the proposed use complied with all ordinances, and by respondent s unanimous finding that

12 -12- the proposed use [c]omplies with all relevant Town laws and ordinances[.] Because the proposed use complied with the zoning ordinance, petitioners established a prima facie case that the proposed use conformed with the comprehensive land use plan. See Woodhouse, 299 N.C. at 216, 261 S.E.2d at 886. No evidence was offered to rebut that prima facie showing. 2. Harmony with the Surrounding Area Harmony with the area is also a component of the fourth condition distinct from conformity with the zoning plan. See Mann Media, 356 N.C. at 19, 565 S.E.2d at (affirming that a proposed use conformed with the general zoning plan, but reversing due to petitioners failure to establish prima facie harmony with the surrounding area). In the instant case, testimony was offered at the hearing before respondent. A map of the proposed site was presented at the hearing and was the subject of sworn testimony. This map showed that there was a restaurant and bowling alley to the north of the proposed site, an assisted living facility to the west, business offices and residences to the east, and undeveloped land to the south. Petitioners proposed use, a 41- unit apartment complex, was in harmony with the existing uses in

13 -13- the area. Petitioners established a prima facie case that the proposed use was in harmony with the area. The only testimony offered in opposition to petitioners application was the testimony of George Pappas and Kindley. Pappas testified that the height of petitioners proposed use would obscure the visibility of his bowling alley from the public road. Obscuring the visibility of a business, however, does not establish that a use is not in harmony with the area. Kindley testified that the proposed apartment complex was not the highest and best use of the property. He further noted that Pappas bowling alley was open until two o clock in the morning, and that the bowling alley customers left beer bottles in the parking lot. He felt that this would hurt the property values of the proposed apartments. Kindley speculated that the undeveloped land across the street would eventually be developed for retail or office use. Finally he expressed concern that people could leave the apartments and be meandering through the office buildings and those are private property... We are presented with the question of whether the testimony of Kindley constituted competent, material, and substantial evidence sufficient to rebut petitioners prima facie case. We

14 -14- hold that it did not. The highest and best use of the property is not part of the harmony requirement of the fourth condition. Similarly, whether the proximity of the proposed project to the bowling alley would hurt the value of the proposed project was not relevant. We note that respondent found that the proposed use would not substantially injure the value of adjoining property, and that finding has not been appealed, and is not before this Court. Under the fourth condition, the issue is whether the proposed use is in harmony with the area as it presently exists, not as one might speculate that it will become. Therefore, Kindley s speculation concerning how the undeveloped land might be used in the future was not relevant to the harmony condition. Finally, the proposed use was for a 41-unit apartment complex, the rents for which would be affordable. Whether the future residents of that complex would meander through adjacent office buildings is pure speculation, and irrelevant to the harmony requirement. Kindley s testimony did not constitute competent, material, and substantial evidence that rebutted petitioners prima facie case.

15 Conclusion Petitioners made out a prima facie showing of conformity with the comprehensive land use plan and harmony with the area. This prima facie showing was not rebutted by competent, material, and substantial evidence. The trial court did not err in reversing respondent s denial of petitioners application for a Conditional Use Permit. This argument is without merit. III. Standing to Intervene Because the trial court did not err in reversing respondent s decision, we need not address petitioners crossappeal. IV. Conclusion The trial court did not err in reversing the decision of respondent denying petitioners application for a Conditional Use Permit. AFFIRMED. Judges HUNTER and BRYANT concur. Report per Rule 30(e).

NO. COA Filed: 20 November Zoning special use permit adjoining property owners not aggrieved parties with standing

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