Dismas Charities

IN THE COURT OF APPEALS OF NORTH CAROLINA
2022-NCCOA-124
No. COA20-914
Filed 1 March 2022
Cumberland County, No. 20 CVS 2879
DISMAS CHARITIES, INC., Petitioner,
v.
THE CITY OF FAYETTEVILLE, NORTH CAROLINA, Respondent, and CYNTHIA
DOVE and husband, EARLEST DOVE, Respondent-Intervenor.
Appeal by Petitioner from order entered 3 August 2020 by Judge Mary Ann
Tally in Cumberland County Superior Court. Heard in the Court of Appeals 22
September 2021.
Womble Bond Dickinson (US) LLP, by Amy C. Crout and John C. Cooke, and
The Michael Porter Law Firm, by Michael R. Porter, for the Petitioner-
Appellant.
Poyner Spruill LLP, by Chad W. Essick and Nicolas E. Tosco, and Fayetteville
City Attorney’s Office, by Karen M. McDonald, for the Respondent-Appellee.
Ragsdale Liggett PLLC, by Amie C. Sivon and Benjamin R. Kuhn, for the
Respondent-Intervenor-Appellee.
DILLON, Judge.
¶1 Petitioner Dismas Charities, Inc. (“Dismas”) appeals an order of the superior
court affirming the decision of Respondent City of Fayetteville (the “City”) denying
the issuance of a special use permit for the construction of a halfway house in
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downtown Fayetteville. The City denied the permit based on its conclusion that
Dismas did not meet its burden of production to show that its use met a certain
standard in the City’s ordinance (hereinafter “Standard 7”), which requires a showing
that the special use sought “allows for the protection of property values and the ability
of neighboring lands to develop the uses permitted in the zoning district.” We
conclude that (1) the superior court should have conducted a de novo review, rather
than applying the whole record test, to determine whether Dismas met its burden of
production; (2) based on our de novo review, Dismas did meet its burden of production;
(3) there was no competent, material, substantial evidence offered to counter Dismas’
evidence; and (4) therefore, the City Council was required to approve Dismas’ permit
application. Accordingly, we reverse the decision of the superior court and remand
with instructions to remand to the City Council to approve Dismas’ permit request.
I. Background
¶2 Like most cities, the City is divided into zoning districts. Its zoning ordinance
dictates the land uses allowed in each zoning district. For each district, the ordinance
spells out which uses are permitted as of right; which uses are explicitly prohibited;
and which uses, called “special uses”, might be permitted. As our Supreme Court has
described, a use deemed a “special use” is permitted in a zoning district “upon proof
that certain facts and conditions detailed in the ordinance exist.” PHG Asheville v.
City of Asheville, 374 N.C. 133, 158, 839 S.E.2d 755, 771 (2020). That is, the zoning
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ordinance spells out the conditions which must be met for a special use to be
permitted. Relevant to this case, under the City’s zoning ordinance, the issuance of
a special use permit requires a showing that the proposed special use meets eight
specific standards. See Fayetteville, N.C., Code of Ordinances, UDO § 30-2.C.7.e.7.
¶3 Dismas owns a vacant lot in the City in an area designated as an “Office and
Industrial” (“O&I”) zoning district. Dismas desires to construct a halfway house (the
“Facility”) on its lot. A halfway house is a residential facility for recently released
prisoners transitioning back into society and is considered a “special use” in an O&I
district. Accordingly, Dismas applied to the City for a special use permit.
¶4 The City’s zoning commission recommended approval of the permit. The
matter was then brought before the elected City Council for a final determination.
¶5 After the public hearing on the matter concluded, the City Council voted to
deny Dismas a special use permit, by a 5-4 vote, concluding that Dismas failed to
present sufficient evidence that the Facility satisfied one of the eight standards,
specifically Standard 7. The denial was memorialized in a written Order.
¶6 Dismas appealed the City’s Order to the superior court. That court affirmed
the City’s Order denying the permit. Dismas timely appealed to our Court.
II. Analysis
¶7 In this appeal, we review whether the superior court erred in affirming the
City’s denial of Dismas’ application for a special use permit. The issue on appeal
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concerns whether Dismas put forth sufficient evidence to show that its use satisfies
Standard 7.
¶8 Our Supreme Court recently discussed in detail the law relating to the
consideration of a special use permit in PHG, instructing as follows:
¶9 First, the city council (or other city board, as designated by the ordinance) must
determine whether the applicant has met its initial burden of production to show that
its proposed special use meets each standard in the ordinance. 374 N.C. at 149, 839
S.E.2d at 765-66 (stating that the city council first “must determine whether 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 use permit”). The Court equated the burden of production in this
context “to the making of the showing necessary [by a plaintiff in a civil trial] to
overcome a directed verdict motion[.]” Id. at 152, 839 S.E.2d at 767.
¶ 10 If the applicant meets its burden of production with respect to each standard
and if there is “the absence of competent, material, and substantial evidence tending
to support [a denial],” then the city council “lack[s] the authority to deny” the
application. Id. at 155, 839 S.E.2d at 769. That is, our Supreme Court instructs that
unlike a plaintiff in a civil trial, an applicant for a special use permit who has met its
burden of production automatically wins if no contrary evidence is offered.
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¶ 11 Accordingly, where no contrary evidence is presented, a city council’s decision
rests on whether an applicant has met its burden of production. In such case, the job
of a reviewing superior court is to determine whether the city council correctly
determined whether the applicant, indeed, met its burden. In making this
determination, the superior court reviews the record de novo, as this determination
is “directed toward the sufficiency of the evidence . . . and [therefore] involves a legal,
rather than a factual, determination.” Id. at 152, 839 S.E.2d at 767.
¶ 12 Where, however, contrary evidence is produced to rebut an applicant’s
evidence, the issuance of the special use permit is no longer automatic. In such case,
the city council must weigh the evidence to determine whether to grant the permit.
On appeal, the superior court does not review the matter de novo, but rather reviews
the “whole record” to determine whether the city council’s decision is supported by
“substantial evidence.” Id. at 150-51, 839 S.E.2d at 766-67.
¶ 13 Our Court’s duty, in either case, is to review the superior court’s order for
errors of law by first “determining whether the trial court exercised the appropriate
scope of review,” and next “deciding whether the court did so properly.” Id. at 151,
839 S.E.2d at 767.
¶ 14 In this case, the City concluded that Dismas did not meet its initial burden of
production regarding Standard 7 and, therefore, never considered whether any
contrary evidence was presented. Accordingly, it was the superior court’s job to
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conduct a de novo review to determine whether Dismas, in fact, did meet its burden
of production. The superior court, however, conducted a “whole record test” review.
This was error.
¶ 15 But since the issue regarding the sufficiency of Dismas’ evidence is a question
of law, we need not remand to the superior court to conduct a de novo review. We can
make this determination in the first instance. See Mann Media, Inc. v. Randolph
Cty. Planning Bd., 356 N.C. 1, 15, 565 S.E.2d 9, 18 (2002). And based on our review
of the record, we conclude that Dismas did meet its burden of production regarding
Standard 7 for the reasoning below.
¶ 16 In our analysis, we first consider the text of Standard 7. Standard 7 requires
a special use permit applicant to put forth sufficient evidence tending to show that
The special use allows for the protection of property values
and the ability of neighboring lands to develop the uses
permitted in the zoning district.
¶ 17 The City argues that the language in Standard 7 should be construed similarly
to ordinances construed in other cases, such as Kenan v. Board of Adjustments, 13
N.C. App. 688, 187 S.E.2d 496 (1972), which requires that the proposed special use
not “substantially injure the value of adjoining or abutting property.” Our Supreme
Court in PHG has instructed that this “substantially injure” language requires a
showing that the proposed use not cause the values of nearby properties to decrease
substantially. 374 N.C. at 155, 839 S.E.2d at 770.
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¶ 18 However, the phrase “allows for the protection of property values” found in
Standard 7 differs from the “substantially injure adjoining or abutting property”
language found in other ordinances in at least two ways. First, whereas Kenan-type
ordinances are concerned specifically with the impact on values of “adjoining or
abutting properties,” Standard 7 is concerned with “property values” generally. See,
e.g., State v. Jones, 305 N.C. 520, 530, 290 S.E.2d 675, 681 (1982) (stating that an
ordinance requiring a degree of aesthetics in a development may be valid where it
provides “corollary benefits to the general community such as protection of property
values” (emphasis added)). The only specific concern regarding nearby properties in
Standard 7 is the impact the proposed special use will have on the ability of the
nearby property owners to use their properties consistent with their zoning.
¶ 19 Second, Standard 7 does not contain the “substantially injure” language, but
merely requires the applicant to show that its use “allows for the protection of”
property values. Our Supreme Court has held that aesthetics-type development
ordinances, such as ordinances dealing with “environmental protection, control of
pollution, and prevention of unsightliness” provide for the “protection of property
values.” Id. at 529-30, 290 S.E.2d at 680. And our Court has held that an ordinance
prohibiting a certain type of lower quality construction allows for the “protection of
property values.” Duggins v. Walnut, 63 N.C. App. 684, 688, 306 S.E.2d 186, 189
(1983).
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¶ 20 Merriam Webster defines the phrase “to allow for” as “to think about” or “to
consider (something) when one makes a calculation.” Merriam-Webster,
https://www.merriam-webster.com/dictionary/allow%20for (visited Jan. 11, 2022).
¶ 21 We, therefore, conclude that the language in Standard 7 does not require an
applicant to show that its special use will not cause nearby property values to
decrease significantly. Rather, Standard 7 requires that an applicant show that it
has incorporated “reasonable” elements in its planned special use which provide the
benefit of the protection of property values generally. See Jones, 305 N.C. at 530-31,
290 S.E.2d at 681 (holding an ordinance requiring certain aesthetics considerations
to be satisfied is valid where the ordinance is “reasonable”).
¶ 22 We have reviewed the record and conclude that Dismas did meet its burden of
production regarding Standard 7. It is true that Dismas did not offer expert
testimony from appraisers (or any other expert) regarding the effect its Facility would
have on adjacent property values. However, unlike a Kenan-type ordinance,
Standard 7 does not speak to the effect of a special use on nearby property values.
¶ 23 And in this matter, the record before the City Council did contain evidence of
elements that will be incorporated in the Facility which our courts have stated
provide for the protection of property values. In its application, which was before the
City Council, Dismas stated as follows:
Dismas Charities constructs attractive, high-quality
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commercial grade buildings and maintains them to the
highest standards. The facilities are operated 24 hours per
day/7 days per week by professional, well-trained staff.
Residents are closely monitored & supervised and are
classified as “community custody level” which is the lowest
custody level in the Federal Corrections system. The
Dismas Charities facility would be an asset to the
community and would not negatively affect values or
development potential of neighboring properties as
permitted within the zoning district. See Exhibit F-3D
Rendering of Proposed Facility Design.
Other portions of the application and other evidence provided pertinent information
tending to show as follows: (1) environmental pollution will be low; (2) the building
will be only one-story, to make it compatible with adjacent structures; (3) the building
is located behind the building setback lines; (4) the building will be screened from
adjacent residential zones with landscape buffers; and (5) the parking area will be
fenced and private and will be planted and screened with a commercial screening
buffer. The evidence also tended to show that the Facility would not limit how
neighboring property owners could legally use their property.
¶ 24 We further conclude that no contrary competent, material, substantial
evidence came before the City Council to counter Dismas’ evidence. It is true that
citizens came before the City Council expressing their desire not to have a halfway
house in their neighborhood. However, none produced testimony or evidence tending
to show that Dismas’ evidence was not credible; that there were other reasonable
steps Dismas could take to protect property values generally; or that the Facility
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would limit the way they could use their properties. And there is nothing in the
record tending to show that a member of the City Council had specialized knowledge
to counter Dismas’ evidence. See PHG, 374 N.C. at 156-57, 839 S.E.2d at 770
(recognizing that the city council members may “rely upon [their] special knowledge”).
¶ 25 Dismas produced more than “a scintilla” of evidence that they satisfied
Standard 7. See id. at 152, 839 S.E.2d at 767 (“substantial evidence is more than a
mere scintilla”).
III. Conclusion
¶ 26 The City’s zoning ordinance allows Dismas to use its O&I tract as a hospital, a
community center, a fraternity house, a motel, a fire station, or a police station,
among other uses without a special use permit. The neighboring property owners
were on notice of these use rights. The ordinance also allows Dismas to use its
property as a halfway house, provided that Dismas shows that this use meets eight
standards set forth in the ordinance.
¶ 27 The City Council denied Dismas a special use permit to develop the Facility,
solely on the basis that Dismas did not meet its burden of production regarding
Standard 7. The superior court erred in applying the whole record test in evaluating
the City Council’s determination and should have reviewed the matter de novo.
Based on our de novo review, we conclude that Dismas did meet its burden of
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production. We further conclude that no competent, material, substantial evidence
was offered to counter Dismas’ evidence.
¶ 28 We, therefore, conclude that the City Council was required to issue Dismas’
permit. Accordingly, we reverse the order of the superior court and remand with
instructions to remand the matter to the City Council for the issuance of the special
use permit.
REVERSED AND REMANDED.
Judges COLLINS and WOOD concur.