PHG Asheville, LLC v. City of Asheville

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA18-251
Filed: 6 November 2018
Buncombe County, No. 17 CVS 01188
PHG ASHEVILLE, LLC, Petitioner,
v.
CITY OF ASHEVILLE, Respondent.
Appeal by respondent from order entered 2 November 2017 by Judge William
H. Coward in Buncombe County Superior Court. Heard in the Court of Appeals 20
September 2018.
Smith Moore Leatherwood LLP, by Kip D. Nelson and Thomas E. Terrell, Jr.,
for petitioner-appellee.
City of Asheville City Attorney’s Office, by City Attorney Robin Tatum Currin
and Assistant City Attorney Catherine A. Hofmann, for respondent-appellant.
TYSON, Judge.
The City of Asheville (“the City”) appeals from an order of the superior court
reversing the City’s denial of a conditional use permit to PHG Asheville, LLC for the
construction of a hotel. We affirm.
I. Background
PHG Asheville, LLC (“Petitioner”), a North Carolina business entity,
submitted an application to the City for a conditional use permit (“CUP”) on 27 July
2016. Petitioner planned to construct an eight-story, 178,412 square foot Embassy
PHG ASHEVILLE, LLC V. CITY OF ASHEVILLE
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Suites hotel, with 185 rooms and on-site parking structure, to be built upon a 2.05
acre parcel located in downtown Asheville at 192 Haywood Street (the “Project”). The
property is zoned “Central Business District,” (“CBD”), which includes hotels as a
permitted use. The property is also located within the “Downtown Design Review
Overlay District” (“DDROD’’) under the City’s Uniform Development Ordinance
(“UDO”). Asheville, N.C., Code of Ordinances, § 7-5-9.1(a)(1) (2016).
Development projects designed to contain a gross floor area greater than
175,000 square feet to be built on parcels zoned CBD and located in the DDROD are
subject to the City’s “Level III site plan” review. This multi-level review includes a
quasi-judicial hearing for issuance of a CUP from the Asheville City Council.
Asheville, N.C., Code of Ordinances, § 7-5-9.1(a)(1),(7) (2016).
The UDO provides the following criteria for issuance of a CUP:
Conditional use standards. The Asheville City Council
shall not approve the conditional use application and site
plan unless and until it makes the following findings, based
on the evidence and testimony received at the public
hearing or otherwise appearing in the record of the case:
(1) That the proposed use or development of the land will
not materially endanger the public health or safety;
(2) That the proposed use or development of the land is
reasonably compatible with significant natural and
topographic features on the site and within the immediate
vicinity of the site given the proposed site design and any
mitigation techniques or measures proposed by the
applicant;
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(3) That the proposed use or development of the land will
not substantially injure the value of adjoining or abutting
property;
(4) That the proposed use or development of the land will
be in harmony with the scale, bulk, coverage, density, and
character of the area or neighborhood in which it is located;
(5) That the proposed use or development of the land will
generally conform with the comprehensive plan, smart
growth policies, sustainable economic development
strategic plan, and other official plans adopted by the city;
(6) That the proposed use is appropriately located with
respect to transportation facilities, water supply, fire and
police protection, waste disposal, and similar facilities; and
(7) That the proposed use will not cause undue traffic
congestion or create a traffic hazard.
Asheville, N.C., Code of Ordinances, § 7-16-2(c) (2016).
Petitioner’s Project was reviewed by, and received recommendations for
approval from, the City’s planning department staff, the Technical Review
Committee, the Downtown Commission, and the Asheville Planning & Zoning
Commission. All of these recommendations were submitted to the City Council. The
City Council conducted a quasi-judicial public hearing on Petitioner’s CUP
application on 24 January 2017.
Petitioner presented three expert witnesses, who testified and were questioned
and who submitted detailed reports at the hearing. No evidence was offered in
opposition to Petitioner’s CUP application. One area resident present at the hearing
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questioned whether the hotel could possibly create a sight line issue that could affect
traffic safety.
At the close of the hearing, the City Council voted to deny Petitioner’s
application for a CUP. Three weeks later on 14 February 2017, the City issued an
order containing 44 written findings of fact and 2 conclusions of law, detailing why it
denied Petitioner’s requested CUP. The City concluded the CUP should be denied
because Petitioner did not produce competent, material and substantial evidence
establishing criteria 1, 2, 3, 4, 5 or 7 of § 7-16-2(c) of the UDO. Aside from its
additional 44 findings of fact, the City ultimately found:
2. In this case, the City Council finds that the CUP should
be denied, for the following reasons, pursuant to UDO
Section 7-16-2(c):
(1) The Applicant failed to produce competent,
material and substantial evidence that the Hotel
will not materially endanger the public health or
safety;
(2) The Applicant failed to produce competent,
material and substantial evidence that the Hotel is
reasonably compatible with significant topographic
features of the site and within the immediate
vicinity of the site given the proposed site design and
any mitigation techniques or measures proposed by
the applicant;
(3) The Applicant failed to produce competent,
material and substantial evidence that the Hotel
will not substantially injure the value of the
adjoining or abutting property;
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(4) The Applicant failed to produce competent,
material and substantial evidence that the Hotel
will be in harmony with the scale, bulk, coverage,
density, and character of the area or neighborhood
in which it is located and, moreover, the evidence
instead showed the Hotel would not be in harmony
with the scale, bulk, coverage and character of the
area and neighborhood.
(5) The Applicant failed to produce competent,
material and substantial evidence that the Hotel
will generally conform to the comprehensive plan,
smart growth policies, sustainable economic
development strategic plan and other official plans
adopted by the City and, moreover, the evidence
instead showed the Hotel would not generally
conform to the City’s 2036 Vision Plan; and
(7) The Applicant failed to produce competent,
material and substantial evidence that the Hotel
will not cause undue traffic congestion or create a
traffic hazard.
On 16 March 2017, Petitioner filed a petition for writ of certiorari in superior
court to seek review of the City’s decision. The superior court entered an order after
determining de novo Petitioner had established a prima facie case for entitlement to
a CUP. The court concluded the City’s decision to deny Petitioner a CUP was
arbitrary and capricious, and it reversed and remanded the matter with an order to
the City Council to grant Petitioner’s requested CUP on 2 November 2017. The City
timely appealed from the superior court’s order.
II. Jurisdiction
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Jurisdiction lies in this Court from an appeal of right from a final judgment of
the superior court. N.C. Gen. Stat. § 7A-27(b) (2017).
III. Standard of Review
“Judicial review of town decisions to grant or deny conditional use permits is
provided for in G.S. 160A-388(e), which states, inter alia, ‘Every decision of the board
shall be subject to review by the superior court by proceedings in the nature of
certiorari.’” Coastal Ready-Mix Concrete Co. v. Bd. Of Comm’rs, 299 N.C. 620, 623,
265 S.E.2d 379, 381 (1980).
[T]he task of a court reviewing a decision on an application
for a conditional use permit made by a town board sitting
as a quasi-judicial body includes:
(1) [r]eviewing the record for errors in law,
(2) [i]nsuring that procedures specified by law in both
statute and ordinance are followed,
(3) [i]nsuring that appropriate due process rights of a
petitioner are protected including the right to offer
evidence, cross-examine witnesses, and inspect documents,
(4) [i]nsuring that decisions of town boards are supported
by competent, material and substantial evidence in the
whole record, and
(5) [i]nsuring that decisions are not arbitrary and
capricious.
Id. at 626, 265 S.E.2d at 383.
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“The standard of review of the superior court depends upon the purported
error.” Little River, LLC v. Lee Cty., __ N.C. App. __, __, 809 S.E.2d 42, 46 (2017)
(citing Morris Commc’ns Corp. v. Bd. of Adjustment of Gastonia, 159 N.C. App. 598,
600, 583 S.E.2d 419, 421 (2003)). “When a party alleges the [decision-marking
board’s] decision was based upon an error of law, both the superior court, sitting as
an appellate court, and this Court reviews the matter de novo, considering the matter
anew.” Dellinger v. Lincoln Cty., __ N.C. App. __, __, 789 S.E.2d 21, 26 (2016) (citation
omitted).
“When the petitioner questions (1) whether the agency’s decision was
supported by the evidence or (2) whether the decision was arbitrary or capricious,
then the reviewing court must apply the whole record test.” ACT-UP Triangle v.
Comm’n for Health Servs. of the State of N.C., 345 N.C. 699, 706, 483 S.E.2d 388, 392
(1997) (citation and quotation marks omitted). “The whole record test requires that
the [superior] court examine all competent evidence to determine whether the
decision was supported by substantial evidence.” Morris Commc’ns, 159 N.C. App. at
600, 583 S.E.2d at 421. The initial issue of whether a petitioner has presented
competent, material, and substantial evidence to obtain a special use permit is
subject to de novo review. Am. Towers, Inc. v. Town of Morrisville, 222 N.C. App. 638,
641, 731 S.E.2d 698, 701 (2012).
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“[T]he terms ‘special use’ and ‘conditional use’ are used interchangeably[.] . . .
[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.’” Concrete Co., 299 N.C. at 623, 265 S.E.2d at 381
(quoting Humble Oil & Ref. Co. v. Bd. of Aldermen, 284 N.C. 458, 467, 202 S.E.2d
129, 136 (1974) (other citation omitted)).
A particular standard of review applies at each of the three
levels of this proceeding—the [council], the superior court,
and this Court. First, the [council] is the finder of fact in its
consideration of the application for a special use permit.
The [council] is required, as the finder of fact, to follow a
two-step decision-making process in granting or denying
an application for a special use permit. If an applicant has
produced competent, material, and substantial evidence
tending to establish the existence of the facts and
conditions which the ordinance requires for the issuance of
a special use permit, prima facie he is entitled to it. If a
prima facie case is established, [a] denial of the permit
[then] should be based upon findings contra which are
supported by competent, material, and substantial evidence
appearing in the record.
Davidson Cty. Broad., Inc. v. Rowan Cty. Bd. of Comm’rs, 186 N.C. App. 81, 86, 649
S.E.2d 904, 909 (2007) (emphasis supplied) (citation and internal quotation marks
omitted), disc. review denied, 362 N.C. 470, 666 S.E.2d 119 (2008).
“When this Court reviews a superior court’s order regarding a zoning decision
by a [decision-making board], we examine the order to: ‘(1) determin[e] whether the
[superior] court exercised the appropriate scope of review and, if appropriate, (2)
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decid[e] whether the court did so properly.’” Id. at 87, 649 S.E.2d at 910 (citations
omitted).
IV. Analysis
A petitioner’s burden on an application for a CUP is well established. An
applicant for a CUP must establish a prima facie case, by competent, material, and
substantial evidence, meeting all the conditions in the zoning ordinance. Humble Oil
284 N.C. at 467, 202 S.E.2d at 136. “Material evidence” has been recognized by this
Court to mean “[e]vidence having some logical connection with the facts of
consequence or issues.” Innovative 55, LLC v. Robeson Cty., __ N.C. App. __, __, 801
S.E.2d 671, 676 (2017) (citing Black’s Law Dictionary 638 (9th ed. 2009)).
“Substantial evidence” has been defined to mean such relevant “evidence as a
reasonable mind might accept as adequate to support a conclusion.” Id. (citation
omitted).
It must do more than create the suspicion of the existence
of the fact to be established. . . . [I]t must be enough to
justify, if the trial were to a jury, a refusal to direct a
verdict when the conclusion sought to be drawn from it is
one of fact for the jury.
Humble Oil, 284 N.C. at 471, 202 S.E.2d at 137 (citations and quotation marks
omitted).
It is well established that:
When an applicant has produced competent, material, and
substantial evidence tending to establish the existence of
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the facts and conditions which the ordinance requires for
the issuance of a special use permit, prima facie he is
entitled to it. A denial of the permit should be based upon
findings contra which are supported by competent,
material, and substantial evidence appearing in the record.
Dellinger, __ N.C. App. at __, 789 S.E.2d at 27 (citing Humble Oil, 284 N.C. at 468,
202 S.E.2d at 136).
“[G]overnmental restrictions on the use of land are construed strictly in favor
of the free use of real property.” Morris Commc’ns v. City of Bessemer Zoning Bd. of
Adjustment, 365 N.C. 152, 157, 712 S.E.2d 868, 871 (2011).
Council members sitting in a quasi-judicial capacity must base their decision
to grant or deny a CUP on objective factors, which are based upon the evidence
presented, and not upon their subjective preferences or ideas. See id. “A city council
may not deny a conditional use permit in their unguided discretion or because, in
their view, it would adversely affect the public interest.” Howard v. City of Kinston,
148 N.C. App. 238, 246, 558 S.E.2d 221, 227 (2002). “[T]he denial of a conditional use
permit may not be based on conclusions which are speculative, sentimental, personal,
vague or merely an excuse to prohibit the requested use.” Id.
Petitioner is not seeking a rezoning, but rather a CUP to conduct a use that is
expressly permitted in the CBD zoning district by the UDO. See Asheville, N.C., Code
of Ordinances, § 7-5-9.1(a)(1). The legislative and policy decision of whether to allow
a hotel use in a CBD zoning district has already been made by the City Council in
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adopting the UDO ordinance. “A conditional 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.” Woodhouse v. Bd. of Comm’rs of the
Town of Nags Head, 299 N.C. 211, 215, 261 S.E.2d 882, 886 (1980) (citation and
quotation marks omitted).
Governing bodies sitting in a quasi-judicial capacity are performing as judges
and must be neutral, impartial, and base their decisions solely upon the evidence
submitted. See Handy v. PPG Indus., 154 N.C. App. 311, 321, 571 S.E.2d 853, 860
(2002) (“Neutrality and the appearance of neutrality are equally critical in
maintaining the integrity of our judicial and quasi-judicial processes”). The property
rights of CUP applicants must be respected and protected and the due process
procedures must be followed.
A quasi-judicial hearing is a judicial proceeding and not a legislative function.
See Butterworth v. City of Asheville, 247 N.C. App. 508, 511, 786 S.E.2d 101, 105
(2016) (“In making quasi-judicial decisions, the decision-maker must exercise
discretion of a judicial nature.” (citation and quotations omitted)). It is not an
occasion to revisit the zoning or permitted uses of a property. Council members’
personal or policy preferences are irrelevant and immaterial. See Sun Suites
Holdings, LLC v. Bd. of Aldermen of Town of Garner, 139 N.C. App. 269, 276, 533
S.E.2d 525, 530 (2000) (“speculative assertions or mere expression of opinion about
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the possible effects of granting a permit are insufficient to support the findings of a
quasi-judicial body”).
In quasi-judicial proceedings, no board or council member should appear to be
an advocate for nor adopt an adversarial position to a party, bring in extraneous or
incompetent evidence, or rely upon ex parte communications when making their
decision. It is incumbent upon city and county attorneys to advise and inform
decision-making boards of their proper roles and procedures required in quasi-
judicial proceedings.
A. Superior Court Applied the Correct Standard of Review
The City argues the superior court misapplied the standards of review in
assessing the City’s written decision to deny Petitioner a CUP. The City contends
the superior court “expressly and erroneously applied de novo review in evaluating
whether the evidence was ‘sufficient’” based upon the court’s conclusion 4:
4. Exercising de novo review, the Court concludes as a
matter of law that the evidence presented by PHG and
other supporting witnesses was competent, material and
substantial and sufficient to establish a prima facie case of
entitlement to a conditional use permit. In deciding
otherwise, the Council made an error of law. A court
reviews “de novo the initial issue of whether the evidence
presented by a petitioner met the requirement of being
competent, material, and substantial.” Blair Investments,
LLC v. Roanoke Rapids City Council, 231 N.C. App. 318,
321, 752 S.E.2d 524, 527 (2013).
This conclusion 4, and the superior court’s citation to this Court’s decision in
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Blair Investments, clearly shows the superior court appropriately applied de novo
review in determining whether Petitioner had presented “competent, material, and
substantial” evidence to establish a prima facie case. When a petitioner meets its
initial burden to present competent, material, and substantial evidence that it is
entitled to a CUP, petitioner has established a prima facie case to issuance of the
CUP. See Am. Towers, 222 N.C. App. at 641, 731 S.E.2d at 701 (“We must determine
whether petitioner presented competent, material, and substantial evidence. If so,
then petitioner has made out a prima facie case”).
Presuming arguendo, the superior court correctly determined Petitioner’s
evidence was competent, material, and substantial, then Petitioner’s evidence was
necessarily “sufficient” to make out a prima facie case. See id. The superior court’s
order shows it did not weigh evidence, but properly applied de novo review to
determine the initial legal issue of whether Petitioner had presented competent,
material, and substantial evidence. The City’s argument is overruled.
The City also argues the superior court improperly made a de novo review of
the evidence without applying whole record review to the City Council’s 44 findings
of fact. The City asserts Petitioner was required to specifically challenge the City
Council’s 44 findings of fact before the superior court. We disagree.
In Little River, the Lee County Board of Adjustment made 15 findings of fact
to support its denial of the petitioner’s requested special-use permit. __ N.C. App. __,
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809 S.E.2d at 42. This Court determined the Petitioner had met its prima facie
showing of entitlement to the SUP under de novo review. Id. at __, 809 S.E.2d at 52.
Rather than specifically addressing each of the Board of Adjustment’s findings of fact,
this Court stated: “Many of the Board’s findings of fact to support its conclusions are
based solely upon opponents’ evidence and wholly ignore the evidence presented to
make a prima facie showing by Petitioner.” Id. at __, 809 S.E.2d at 50.
This Court then held: “The Board’s findings are unsupported by competent,
material, and substantial evidence, and its conclusions thereon are, as a matter of
law, erroneous. Respondent-Intervenors did not present substantial, material, and
competent evidence to rebut Petitioner’s prima facie showing of entitlement to a
SUP.” Id. at __, 809 S.E.2d at 51. Here, as in Little River, it was unnecessary for the
superior court, and is unnecessary for this Court, to specifically address each of the
City Council’s 44 findings of fact, because no “competent, material, and substantial
evidence” contra was presented to rebut Petitioner’s prima facie showing. Id.
“[F]indings of fact are not necessary when the record sufficiently reveals the
basis for the decision below or when the material facts are undisputed and the case
presents only an issue of law.” N.C. Gen. Stat. § 160A-393(l)(2) (2017) (emphasis
supplied). The City Council’s 44 findings of fact were unnecessary, improper, and
irrelevant. No competent, material, and substantial evidence was presented to rebut
Petitioner’s prima facie case, and no conflicts in the evidence required the City
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Council to make findings to resolve any disputed issues of fact. See Dellinger, __ N.C.
App. at __, 789 S.E.2d at 27.
Under the terms of its own order, the City Council did not have to make 44
findings of fact to weigh or resolve conflicts in the evidence. The City Council made
the initial legal determination Petitioner had failed to present competent, material,
and substantial evidence to establish a prima facie case of entitlement to a CUP.
Once the City Council made this legal determination, it was unnecessary and
erroneous to make 44 findings of fact on unchallenged evidence beyond the required
ultimate findings on the 7 criteria specified by the UDO. Asheville, N.C., Code of
Ordinances, § 7-16-2(c).
Additionally, once the superior court made the initial de novo determination
that Petitioner had presented competent, material, and substantial evidence to
establish a prima facie case, and no competent, material, and substantial evidence
contra was presented in opposition or rebuttal to Petitioner’s evidence, Petitioner was
entitled to a CUP as a matter of law. See Dellinger, __ N.C. App. at __, 789 S.E.2d at
27. Further, any purported whole record review by the superior court of the City
Council’s extraneous and superfluous 44 “findings of fact” would have been
unnecessary.
The City’s argument that Petitioner was required to assign specific error to
any of the 44 extraneous and superfluous findings of fact is without merit. The City’s
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argument the trial court misapplied its standards of review by not conducting whole
record review of the City Council’s unnecessary 44 findings of fact on unchallenged
and unrebutted evidence is overruled.
B. Preservation of Arguments
Before this Court, the City only argues Petitioner has failed to establish 3 of
the 7 required criteria for issuance of a CUP under the UDO. These criteria are 3, 4,
and 7. Asheville, N.C., Code of Ordinances, § 7-16-2(c). The City Council denied the
requested CUP on the grounds Petitioner had failed to establish a prima facie case of
entitlement to the CUP under criteria 1, 2, 3, 4, 5, and 7. The City has abandoned
any arguments related to the superior court’s conclusion of Petitioner’s prima facie
satisfaction of criteria 1, 2, 5 and 6. N.C. R. App. P. 28(b)(6) (“Issues not presented
in a party’s brief, or in support of which no reason or argument is stated, will be taken
as abandoned”). Petitioner’s prima facie compliance with criteria 1, 2, 5 and 6 is
unchallenged and established as a matter of law. Id.
C. Criteria 3: Impact on Adjoining or Abutting Property
The City contends Petitioner has failed to meet its burden of establishing a
prima facie case of entitlement to a CUP, because it has not presented material
evidence. The City concedes Petitioner’s expert testimony and reports were properly
admitted without objection and this evidence was competent and substantial.
“Material evidence” is defined to mean “[e]vidence having some logical connection
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with the facts of consequence or the issues.” Innovative 55, __ N.C. App. at __, 801
S.E.2d at 676 (internal citation omitted).
The City argues the superior court erred by reversing the City Council’s
conclusion that Petitioner had failed to meet its burden of producing competent,
material, and substantial evidence that the Project “will not substantially injure the
value of adjoining or abutting property.” Asheville, N.C., Code of Ordinances, § 7-16-
2(c)(3).
The City contends Defendant’s expert witness’s uncontradicted testimony and
report were not material, because the City Council found inadequacies in the
methodologies employed by the expert. The City cites this Court’s opinions in
American Towers and SBA v. City of Asheville City Council to support its assertions
that the City Council could determine Petitioner failed to establish a prima facie case
under criteria 3 because of “perceived inadequacies” in Petitioner’s expert’s analysis.
We disagree.
In American Towers, an applicant applied to the Town of Morrisville for a
special use permit to erect a telecommunications tower. 222 N.C. App. at 642, 731
S.E.2d at 702. One of the criteria for obtaining a special use permit was “that the
proposed development or use will not substantially injure the value of adjoining
property.” Id. At a hearing before the town board, the applicant offered the testimony
and report of an appraiser, who had been admitted as an expert witness. Id. at 639,
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731 S.E.2d at 700. No expert testimony was presented to rebut the applicant’s expert
appraiser. Id.
The town board denied the applicant’s requested special use permit based, in
part, upon the applicant’s failure to establish a prima facie case that the tower “would
not substantially injure the value of adjoining properties.” Id. at 646, 731 S.E. 2d at
704. The superior court affirmed the town board’s decision to deny the special use
permit. Id. at 638, 731 S.E.2d at 700.
This Court affirmed the superior court’s order upholding the town board’s
denial of the special use permit. Id. This Court recited the town board’s reasons for
concluding the applicant had failed to establish a prima facie case that the tower
“would not substantially injure the value of adjoining properties[,]” as follows:
1) the report was not benchmarked against other
developments or against the market in general, 2) in the
two subdivisions studied by Mr. Smith the cell tower was
in place before the neighboring homes were built. (as
opposed to the case at hand here), 3) the report did not
attempt to study the effect of possible devaluation of
property, and 4) the report did not take into account any
potential loss of value due to the loss of “curb appeal” with
the tower rising above the adjoining residential
neighborhood.
Id. at 645, 731 S.E.2d at 703.
This Court in American Towers summarized the Court’s prior holding in SBA,
as follows:
This Court was faced with a virtually identical fact
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situation in the case of SBA v. City of Asheville City
Council. 141 N.C. App. 19, 539 S.E.2d 18 (2000). In SBA,
one of the bases for rejecting the application for a
conditional use permit to erect a telecommunications tower
was the failure of petitioner to establish a prima facie case
that the value of adjoining properties would not be
adversely affected. We noted that:
City Code § 7-16-2(c)(3) requires a showing that the
value of properties adjoining or abutting the subject
property would not be adversely affected by the
proposed land use. The City’s Staff Report submitted
to respondent expressed concern that petitioners’
Property Value Impact Study did not address
properties in the vicinity of the subject property, but
rather focused on towers and properties in other
parts of the City. Petitioners’ evidence was about
other neighborhoods and other towers in the City.
Their study did not even include information with
respect to an existing cellular tower a short distance
from the proposed site that potentially affected the
same neighborhoods. Petitioners simply did not
meet their burden of demonstrating the absence of
harm to property adjoining or abutting the proposed
tower as required by § 7-16-2(c)(3).
Id. at 27, 539 S.E.2d at 23.
Based upon the holding of SBA, respondent was permitted
to find that petitioner failed to present a prima facie case
based upon perceived inadequacies in the methodology of
its expert. We are bound by this ruling. In re Civil Penalty,
324 N.C. 373, 384, 379 S.E.2d 30, 36 (1989).
Id. at 645-46, 731 S.E.2d at 704.
Here, Petitioner presented the testimony and report of Tommy Crozier, who
was tendered and admitted as an expert witness in land appraisal and valuation
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without objection. Crozier certified that his report was prepared in conformity with
the “Uniform Standards of Professional Appraisal Practice” (“USPAP”). Crozier’s oral
testimony and report identified three properties, which directly adjoin or abut the
property comprising the Project, and two properties located directly across the street.
The adjoining and abutting properties are Carolina Apartments; First Church of
Christ, Scientist; and the Asheville Broad Center. The properties across the street
from the Project are a Hyatt Place hotel and an office building occupied by the
Salvation Army. The report states in relevant part:
The proposed hotel will consist of a new, ±$25M project
located amidst 50+ year old structures that have
historically been valued for tax purposes well below $3.0M.
The presence of the new hotel should meaningfully enhance
the values of surrounding properties. This Principle of
Progression has already materialized in the immediate
area, evidenced by record high transaction prices since the
nearby Hotel Indigo opened in 2009. (emphasis supplied).
...
There have been numerous examples of property value
enhancement as the result of revitalization (and as a result
of new hotel development specifically) in comparable
leisure markets like Charleston, Wilmington,
Chattanooga, Savannah and Greenville, SC[.]
Crozier’s report also contains an estimated value of $50.00 per square foot for
the implied land values of the properties adjoining the Project. Crozier’s estimate
was based upon the sale prices for “vacant sites or improved sites acquired for
redevelopment where the existing improvements were considered to have little to no
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Opinion of the Court
contributory value.” Crozier’s report compares the $50.00 per square foot implied
land values of the adjoining properties to the substantially lower assessed ad valorum
values from the Buncombe County tax assessment conducted prior to Petitioner’s
purchase of the subject property located at 192 Haywood Street.
The City’s reliance upon SBA and American Towers is misplaced. Neither of
these Court’s opinions in SBA nor American Towers contains any indication that the
expert reports at issue in those cases were prepared in accordance with the applicable
USPAP standards of the property appraisal licensure or other governing bodies. See
SBA, 141 N.C. App. at 27, 539 S.E.2d at 18; Am. Towers, 222 N.C. App. at 645-46,
731 S.E.2d 698, 703-04.
Additionally, the expert reports in SBA and American Towers were immaterial
to the issue of whether the telecommunications towers would adversely impact the
value of adjoining property. The expert witness’ report in American Towers was
based upon an analysis of the values of adjoining properties built later than
neighboring cell phone towers. Am. Towers, 222 N.C. App. at 645, 731 S.E.2d at 703
(“[I]n the two subdivisions studied by Mr. Smith the cell tower was in place before the
neighboring homes were built.”).
The expert witness’ report in SBA “did not address properties in the vicinity of
the subject property, but rather focused on towers and properties in other parts of the
City.” SBA, 141 N.C. App. at 27, 539 S.E.2d at 23. Unlike the report in SBA, Crozier’s
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Opinion of the Court
findings and conclusions specifically analyzes and addresses the values of properties
adjoining, abutting, and neighboring the Project in Asheville.
Crozier certified that “[t]he reported analyses, opinions, and conclusions were
developed, and this report has been prepared, in conformity with the requirements of
the Code of Professional Ethics & Standards of Professional Appraisal Practice of the
Appraisal Institute, which includes the Uniform Standards of Professional Appraisal
Practice.” No competent, material, and substantial expert evidence contra was
presented at the hearing to show Crozier’s analysis was unsound or utilized an
improper methodology.
Any competent, material, and substantial evidence to rebut Crozier’s admitted
expert testimony and report would have to have been presented by an expert witness
in land valuation. N.C. Gen. Stat. § 160A-393(k)(3)(a) (2017) (“The term ‘competent
evidence,’ as used in this subsection, shall not be deemed to include the opinion
testimony of lay witnesses as to . . . [t]he use of property in a particular way would
affect the value of other property”). The City Council’s lay notion that Crozier’s
analysis is based upon an inadequate methodology does not constitute competent
evidence under the statute to rebut his expert testimony and report. Innovative 55,
__ N.C. App. at __, 801 S.E.2d at 678 (“Speculative and general lay opinions and bare
or vague assertions do not constitute competent evidence before the [decision-making
body] to overcome the applicant’s prima facie entitlement to the CUP”).
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Opinion of the Court
Crozier’s admitted and uncontroverted testimony and report meets the low
threshold of being “material evidence” as his analysis has a “logical connection” to
whether the Project “will impair the value of adjoining or abutting property.” Id. at
__, 801 S.E.2d at 676. Crozier’s analyses and conclusions that: (1) adjoining and
nearby property values in the neighborhood of the Project have increased since the
Hotel Indigo opened in 2009; (2) values of neighboring properties in other markets
have appreciated since the hotels were opened; and, (3) implied values of the
adjoining properties have substantially increased since the neighboring Hyatt Hotel
opened, all reinforce a “logical connection” to whether the Project will affect the value
of “adjoining or abutting property.” Crozier’s report and testimony constitutes
material, as well as competent and substantial, evidence to show prima facie
compliance with criteria 3. The City’s argument that Crozier’s testimony and report
are not “material” is contrary to the statute and controlling precedents, and is
overruled.
D. Criteria 4: Harmony with the Neighborhood
The City also argues Petitioner failed to present material evidence “[t]hat the
proposed use or development of the land will be in harmony with the scale, bulk,
coverage, density, and character of the area or neighborhood in which it is located.”
Asheville, N.C., Code of Ordinances, § 7-16-2(c)(4).
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Opinion of the Court
Under our binding precedents, “The inclusion of the particular use in the
ordinance as one which is permitted under certain conditions, is equivalent to a
legislative finding that the prescribed use is one which is in harmony with the other
uses permitted in the district.” Woodhouse, 299 N.C. at 216, 261 S.E.2d at 886.
“[W]here a use is included as a conditional use in a particular zoning district, a prima
facie case of harmony with the area is established.” Habitat for Humanity of Moore
Cty., Inc v. Bd. of Comm’rs, 187 N.C. App. 764, 768, 653 S.E.2d 886, 888 (2007).
Here, the City does not dispute that a hotel is a permitted “use” in the CBD
zoning district under the UDO. The City argues that even though the use of the
subject property as a hotel in the CBD is a permitted use, the development of a hotel
is not presumed to “be in harmony with the area.” The statute, long-established
precedents and the UDO contain no basis that “development” of a use is to be treated,
analyzed, or distinguished from the “use” itself for purposes of criteria 4. Asheville,
N.C., Code of Ordinances, § 7-16-2(c)(4) (“the proposed use or development . . . will be
in harmony”); see, e.g. Petersilie v. Town of Boone Bd. of Adjustment, 94 N.C. App.
764, 767, 381 S.E.2d 349, 351 (1989) (using “use” and “development” interchangeably
in discussing special-use permit ordinance similar to Asheville’s UDO); Habitat, 187
N.C. App. at 768, 653 S.E.2d at 888 (treating “use” the same as “development” in
applying presumption that use is in harmony with an area when it is included as a
permitted use in the zoning district).
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Opinion of the Court
In addition, Petitioner presented the testimony of an expert witness, Blake
Esselstyn. Esselstyn prepared a map showing the location of similar structures in
the area compared to the proposed Project. He testified that the “scale, bulk and
coverage” of the Project would be similar to a number of these similar structures. The
density of the Project would be similar to the Carolina Apartments, Vanderbilt
Apartments, and Battery Park Apartments located within the area of the Project.
Esselstyn also testified that the contemporary architectural style of the Project would
be harmonious with the area.
Petitioner’s “use or development” of the property for the conditional use of a
hotel in the permitted CBD zone establishes a prima facie case of harmony with the
area. Habitat, 187 N.C. App. at 768, 653 S.E.2d at 888. Although the City asserts
“use” should be distinguished from “development” in the UDO, Petitioner’s expert
witness, Esselstyn, established a prima facie case of harmony of the Project’s use and
development within the CBD area under criteria 4. The City’s argument is overruled.
E. Criteria 7: Undue Traffic Congestion or Traffic Hazard
The City also argues Petitioner failed to present material evidence to establish
a prima facie case under criteria 7. Criteria 7 requires: “That the proposed use will
not cause undue traffic congestion or create a traffic hazard.” Asheville, N.C., Code of
Ordinances, § 7-16-2(c)(7).
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Opinion of the Court
Petitioner presented the testimony and report of traffic engineer Kevin Dean,
who was accepted and admitted as an expert witness without objection at the City
Council hearing. Dean’s report contains the data and results from a traffic analysis
he conducted on the streets and intersections adjacent to the Project. Dean testified
he had “coordinated with the City’s traffic engineer, and [were] told that all we needed
to provide was the trip generation table . . . as well as our anticipated distribution of
those trips.” Both the trip generation table and trip distributions were included in
Dean’s report.
Dean performed a “capacity analysis” and “collected peak hour traffic counts
on [Thursday,] November 10th” 2016. Dean testified he performed the traffic analysis
on a Thursday to accord with industry standards, which specify traffic should be
analyzed on days between Tuesday and Thursday.
Proposed traffic to and from the Project was estimated based upon industry
standard data promulgated by “the Institute of Transportation Engineers.” Dean’s
analysis showed the Project would increase the delays caused by traffic at nearby
intersections by “five percent . . . or less.” Dean testified that if his analysis had been
performed on days when there was more traffic volume on the roads, the estimated
traffic impact generated from the Project would impact a smaller percentage of
overall traffic, due to higher traffic volumes at those intersections from sources other
than the Project.
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Opinion of the Court
Dean’s report indicates and concludes that “[w]ith the hotel in place, all of the
study intersections are expected to continue to operate at acceptable levels of service
with only minor increases in delay. Some of the intersections are expected to
experience a reduction in overall delay. . . .” Additionally, Dean concluded “traffic
entering the site should not conflict with traffic exiting the site.”
Based upon his analysis, Dean testified to his professional opinion that the
Project “will not cause undue traffic congestion or a hazard[.]”
Despite Dean’s expert testimony, and the absence of any expert testimony to
the contrary, the City Council found that Dean’s analysis was deficient, in part,
because: (1) Dean’s traffic analysis only included data for November 10th and not for
other times of the year; (2) Dean was not aware of whether environmental conditions
could have affected traffic volumes; (3) Dean did not conduct his traffic analysis
during the weekend; and (4) the traffic analysis “did not account for traffic that will
be generated by future hotels and apartments in the downtown area. . . .”
The City Council also found Dean’s analysis was deficient because a “sight
distance check” was not conducted to determine if a “blind hill with limited visibility
in the vicinity of the Hotel’s parking deck’s entrance and exit” would “endanger driver
or pedestrian safety.” This “finding” is apparently based upon a question posed by
Charles Rawls, a lay member of the public, at the City Council hearing. Rawls
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Opinion of the Court
questioned whether there was a potential sight distance problem for traffic coming
over a purportedly blind hill near the Project’s planned parking deck.
No competent, material, and substantial evidence was presented to refute
Dean’s traffic analysis. Dean testified his study was conducted in accordance with
industry standards and used standard industry data and methods. The speculations
of lay members of the public and unsubstantiated opinions of City Council members
do not constitute competent evidence contra under the statute or precedents to rebut
Dean’s traffic analysis. N.C. Gen. Stat. § 160A-393(k)(3)(b) (“‘competent evidence,’ as
used in this subsection, shall not be deemed to include the opinion testimony of lay
witnesses as to . . . [t]he increase in vehicular traffic resulting from a proposed
development would pose a danger to the public safety”); Howard, 148 N.C. App. at
246, 558 S.E.2d at 227 (“denial of a conditional use permit may not be based on
conclusions which are speculative, sentimental, personal, vague or merely an excuse
to prohibit the requested use”).
Dean’s expert testimony and admitted report clearly constitute “material
evidence” because they bear “a logical connection” to the issues of whether
Petitioner’s Project will impact traffic congestion or create a traffic hazard. Innovative
55, __ N.C. App. at __, 801 S.E.2d at 676. Although lay members of the City Council
may disagree with Petitioner’s experts’ testimony and reports, that does not rebut the
legal determination of whether the evidence is “material.” See id. at __, 801 S.E.2d at
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Opinion of the Court
675 (“Whether . . . material . . . evidence is present in the record is a conclusion of
law.” (citation omitted)). The City has failed to show that any of Petitioner’s experts’
testimony and evidence was incompetent, immaterial, unsubstantial, or rebutted by
contrary evidence meeting the same statutory and precedential standards to deny the
CUP. The City’s arguments are overruled.
V. Conclusion
Applying de novo review, the trial court properly concluded Petitioner had
presented a prima facie showing of entitlement to a CUP to construct their hotel as a
permitted use in the CBD zone. Petitioner satisfied its burden of production and, in
the absence of competent, material, and substantial evidence to the contrary, is
entitled to issuance of the CUP as a matter of law. See Dellinger, __ N.C. App. at __,
789 S.E.2d at 27. The City Council’s denial of the application was not based upon
any competent, material, and substantial evidence contra to rebut the Petitioner’s
prima facie showing.
Once the superior court made the initial de novo determination that Petitioner
had presented competent, material, and substantial evidence to establish a prima
facie case, and no competent, material, and substantial evidence contra was
presented in opposition or rebuttal to Petitioner’s evidence, the superior court
properly reversed and remanded for issuance of the CUP as a matter of law. See id.
Further, any purported whole record review by the superior court of the City Council’s
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Opinion of the Court
extraneous and superfluous 44 “findings of fact” was unnecessary.
The superior court’s order reversing the City’s denial of Petitioner’s application
and remanding for issuance of the CUP is affirmed. This cause is remanded to the
superior court for further remand to the City to issue the CUP to Petitioner. It is so
ordered.
AFFIRMED.
Judges INMAN and BERGER concur.
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