LOCAL GOVERNMENT AUTHORITY TO ENACT INCLUSIONARY ZONING IN NORTH CAROLINA - By the Staff Attorneys of Pisgah Legal Services. September 19, 2016

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LOCAL GOVERNMENT AUTHORITY TO ENACT INCLUSIONARY ZONING
IN NORTH CAROLINA
By the Staff Attorneys of Pisgah Legal Services
I. INTRODUCTION
In Lindsey v. Normet,1
The Supreme Court of the United States
held that access to decent housing is not a right protected by the
Constitution of the United States of America. States, cities and
counties have struggled with ways to make certain that affordable and
decent housing are available to its citizens while not running afoul
of constitutional and legislative mandates.
The term inclusionary zoning encompasses a variety of strategies
that refer to governmental compulsion or incentive that leads to the
production of affordable residential units in a given area. For the
purposes of this document, the term will generally refer to local
legislation that mandates developers to produce affordable units to
satisfy the requirements of their permit.
In such a system, ordinances mandate that a certain percentage of
units be made affordable for a certain amount of time and are
available to families that meet certain income requirements.
Different municipalities have experimented with a variety of formulas
to find one that fits their needs. While the formula chosen by a
local government might be legally significant in terms of avoiding
litigation and with regards to regulatory takings, the formula is
generally not legally significant in determining whether a local
government has authority to enact a comprehensive and mandatory
inclusionary zoning ordinance. The proper mixture of percentage
affordable units, years affordable, etc. is a question of governance
and this document will not make any recommendations related to it
other than to say that it is advisable for local governments to work
with developers to create a cocktail that will be palatable to
developers to avoid litigation where possible yet effective in
creating the housing that our people so desperately need.
This document will not answer all of the questions that surround
the legality of a mandatory inclusionary zoning scheme. That is
because there simply are not concrete answers to most of these
questions. This issue has not been litigated in North Carolina. When
the judiciary of other states has spoken on related issues, only
limited guidance is provided for lawmakers, lawyers, and judges in
1
405 U.S. 56 (1972)

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North Carolina because those decisions grew out of years of
jurisprudence that, while at times are similar to our own, have
evolved in their own unique ways. Some areas of law are very similar
from state to state. Some are highly state specific. The authority
of a municipality to act, especially given North Carolina’s unique
history in this area, is highly state specific.
While the hope is that this document will be something that non-
lawyers can understand, the document contains the result of legal
research. What everyone can understand is that there are many
pitfalls on the way to inclusionary zoning. This document tries to
point out those pitfalls and examine potential ways around them.2
The
overall recommendation is that the City Council should be very careful
if and or when it moves forward. Council should listen to its
attorneys, listen to the developers it works with frequently, and try
to learn lessons where possible from other jurisdictions. If the city
chooses to enact a mandatory inclusionary zoning ordinance, this
document might be used as a resource for Council and the City
Attorney’s office when making decisions or defending litigation should
that become necessary.
II. STATUTES
Chapter §160A of the North Carolina General Statutes controls the
extent of powers of city governments in North Carolina. Similarly,
Chapter §153A governs counties. While there are a number of
differences between the two chapters, there are also a number of
parallel provisions, often with the exact same language. Courts will
interpret parallel provisions in pari materia. This means that courts
will interpret statutes with similar purposes in light of each other.
Cases with holdings under §153A will typically be binding on cases
interpreting statutes under §160A provided that the statutes share
enough similarities or language. This report focuses primarily on
§160A, but reference will be made to cases interpreting cases under
§153A. Typically, in regards to police power and zoning, the two
chapters run parallel and cases decided under §153A will be binding on
cities and vice versa. What follows is a list of the operative
statutes with parallel provisions in footnote. Note that other
2
C. Tyler Mulligan and James L. Joyce’s book Inclusionary Zoning: A Guide to
Ordinances and the Law, School of Government, The University of North
Carolina at Chapel Hill (2010) is the most comprehensive resource on
inclusionary zoning in North Carolina. This document attempts to provide
Council something more than simply a book report of that excellent work. The
discussion in their book regarding takings could be considered a conclusive
statement on the issue and as such, takings will not be discussed in this
document.

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important statutes are not listed here as they will be considered more
fully in other sections of this report.3
NCGS § 160A- 174. General ordinance making power delegates the
General Assembly’s police power to the municipality to “define,
prohibit, regulate, or abate acts, omissions, or conditions,
detrimental to the health, safety, or welfare of its citizens and the
peace and dignity of the city.”4
The General Assembly gives guidance as
to what may be included in a zoning ordinance enacted pursuant to this
police power in NCGS § 160A-381(a) which states:
For the purpose of promoting health, safety, morals,
or the general welfare of the community, any city may adopt
zoning and development regulation ordinances. These
ordinances may be adopted as part of a unified development
ordinance or as a separate ordinance. A zoning ordinance
may regulate and restrict the height, number of stories and
size of buildings and other structures, the percentage of
lots that may be occupied, the size of yards, courts and
other open spaces, the density of population, the location
and use of buildings, structures and land. The ordinance
may provide density credits or severable development rights
for dedicated rights-of-way pursuant to G.S. 136-66.10 or
G.S. 136-66.11.5
NCGS§ §160A-383,6
titled Purposes in view, mandates that zoning
regulations must be enacted in accordance with the comprehensive
plan and sets out certain procedural requirements related to that
issue. The final paragraph expands on the enumerated list in
NCGS §160A-381 and states:
Zoning regulations shall be designed to promote the public
health, safety, and general welfare. To that end, the
regulations may address, among other things, the following
public purposes: to provide adequate light and air; to
prevent the overcrowding of land; to avoid undue
concentration of population; to lessen congestion in the
streets; to secure safety from fire, panic, and dangers;
and to facilitate the efficient and adequate provision of
transportation, water, sewerage, schools, parks, and other
3
For example NCGS §160A-4, its county parallel, NCGS §153A-4, and NCGS §42-
14.1, prohibition against rent control.
4
NCGS §160A-174(1971), parallel county provision NCGS §153A-121(a)
5
NCGS§ 160A-381(a)(1971) (Emphasis added), parallel county provision NCGS
§153A-340(a)
6
Parallel county provision NCGS§ 153A-341

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public requirements. The regulations shall be made with
reasonable consideration, among other things, as to the
character of the district and its peculiar suitability for
particular uses, and with a view to conserving the value of
buildings and encouraging the most appropriate use of land
throughout such city.
NCGS§ §160A-177, titled Enumeration not exclusive gives the
courts guidance on how they should interpret the General
Assembly’s intent when constructing this chapter.7
It states:
The enumeration in this Article or other portions of this
Chapter of specific powers to regulate, restrict or
prohibit acts, omissions, and conditions shall not be
deemed to be exclusive or a limiting factor upon the
general authority to adopt ordinances conferred on cities
by G.S. 160A-174.
NCGS § 6-21.7 Attorney’s fees: cities or counties acting outside
the scope of their authority, allows a prevailing challenger to
be awarded attorney’s fees by the court. The statute states:
In any action in which a city or county is a party, upon a
finding by the court that the city or county acted outside
the scope of its legal authority, the court may award
reasonable attorneys' fees and costs to the party who
successfully challenged the city's or county's action,
provided that if the court also finds that the city's or
county's action was an abuse of its discretion, the court
shall award attorneys' fees and costs.
III. INTRODUCTION TO HOME RULE IN NORTH CAROLINA
Although no municipality in the United States has any
Constitutional Authority to exist under the Federal Constitution and
all are considered creatures or agencies of the State,8
the majority of
states have chosen to acknowledge the municipality’s existence and
power to govern in their state’s respective constitutions.9
These
States are often called “home rule” states whereas North Carolina is
often referred to as a Dillon’s Rule state. These distinctions are
useful in understanding the overall concepts at play, but prove
legally specious in determining the actual extent of municipal power.
7
Parallel county provision NCGS §153A-124
8
Hunter v. City of Pittsburgh, 207 U.S. 161, 178-179 (1907)
9
David W. Owens, Article: Local Government Authority to Implement Smart
Growth Programs: Dillon's Rule, Legislative Reform, and the Current State of
Affairs in North Carolina, 35 Wake Forest L. Rev. 671(2000)

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Home rule is better described as a spectrum with states having broad
constitutional protections for a municipality’s ability to govern
itself on one end and states like North Carolina where municipalities
govern, or even exist10
at the whim of the state’s legislative body on
the other.11
The higher courts of North Carolina have never ruled on the
validity of a mandatory inclusionary zoning scheme and the cases that
would most likely be cited were the case to be argued are inconsistent
at best. The only certainty is that local governments’ powers are
derivative of the State’s.
It is possible that the General Assembly could convene and
specifically overturn any ordinance enacted by a municipality. The
current General Assembly has given reason to believe that this is a
strong possibility, especially with regard to measures considered too
progressive or otherwise controversial. However, it could also be
argued that the General Assembly has acquiesced to the existence of
other inclusionary zoning programs across the state and may continue
to do so. In any case, if the General Assembly decisively acts to end
inclusionary zoning in North Carolina, they have the Constitutional
authority to do so. Absent an unprecedented, arguably activist and
very unlikely ruling by our courts, similar to the ruling by the New
Jersey Supreme Court in South Burlington County NAACP v. Mt Laurel12
10
See Lilly v. Taylor, 88 N.C. 489 (1883), where the General Assembly put the
future existence of the town of Fayetteville to voters and the town was
ultimately disbanded after vote of the electorate; Ward v. Elizabeth City,121
N.C. 1(1897), Where the Court found that the Plaintiff/City Attorney could
not recover wages for the entirety of his one year term because the City had
been abolished during the middle of that term by action of the General
Assembly.
11
SEE N.C. Const. art. VII, § 1 (1971):” The General Assembly shall provide
for the organization and government and the fixing of boundaries of counties,
cities and towns, and other governmental subdivisions, and, except as
otherwise prohibited by this Constitution, may give such powers and duties to
counties, cities and towns, and other governmental subdivisions as it may
deem advisable;” N.C. Const. art. VIII, § 1,”No corporation shall be created,
nor shall its charter be extended, altered, or amended by special act, except
corporations for charitable, educational, penal, or reformatory purposes that
are to be and remain under the patronage and control of the State; but the
General Assembly shall provide by general laws for the chartering,
organization, and powers of all corporations, and for the amending,
extending, and forfeiture of all charters, except those above permitted by
special act. All such general acts may be altered from time to time or
repealed. The General Assembly may at any time by special act repeal the
charter of any corporation;”
12
67 N.J. 151, 336 A.2d 713 (1974). In Mount Laurel, The New Jersey Supreme
Court resting on growing precedent in New Jersey, not only ruled that any
zoning schemes with an exclusionary purpose were invalid, but placed an
affirmative duty on a municipality to use its zoning power to create

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curtailing this Constitutional authority, the concern expressed by
affordable housing advocates that enacting an inclusionary zoning
ordinance in this climate will “ruin it for everybody else” could be
realized.13
IV. SUBSTANTIVE DUE PROCESS ISSUES
In determining whether municipalities have acted in accordance
with the state statutes that enable municipalities to act in one way
or another, written opinions provided by North Carolina’s appellate
courts have struggled to produce a consistent body of law. This is
not unexpected given that the courts are called upon to rule on a wide
array of issues, regulated by hundreds of statutes. Often any case
pursuant to Chapter §160A will be a case of first impression.
Furthermore, many of the existing cases are highly fact specific and
therefore distinguishable from other cases that may arise. In light
of this, often no clear direction has been given as to the outer
limits of the police power. Given this, the courts have wide latitude
to rule either in favor of or against the existence of authority to
enact an inclusionary zoning ordinance without running grossly afoul
of precedent.
affordable housing. The Mount Laurel Court, wisely relying on the New Jersey
Constitution’s equal protection clause rather than the Federal equal
protection clause, recognized that in exercising the state’s police power
through zoning, the equal protection rights of citizens outside of the
municipality’s reach are infringed upon by exclusionary practices of a
municipality.
For discussion on the Mount Laurel opinion and the direction of rulings by
Federal Courts facing similar challenges, see 13 Wake Forest Law Review 107,
Mark Stanton Thomas, Comment: Exclusionary Zoning and a Reluctant Supreme
Court (1977).
Also see Donald R. Daines, “How to Determine the Maximum Potential Builder’s
Remedy the Court has Constitutional Power and Obligation to Award” for a
discussion of the evolution of Mount Laurel opinion and the remedies
available to citizens.
13
For an excellent summary of various powers granted to municipalities, see
David W. Owens, 35 Wake Forest L. Rev. at 676-677 (2000) “A variety of
additional general enabling authority has been granted in ensuing years. This
includes authority to establish minimum housing codes, adopt airport zoning,
regulate development in floodplains, regulate subdivision of land, carry out
building inspections, regulate historic districts and landmarks, create
community appearance programs, undertake community development, urban
homesteading, and downtown development programs, adopt a variety of resource
protections measures, and adopt official maps to protect transportation
corridors.” (internal citations omitted)

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Generally, when a challenge is made to a piece of legislation
based on its alleged incompatibility with constitutional guarantees or
mandates, this is called a substantive due process challenge. While a
challenge to a municipal ordinance would generally be testing its
compatibility with the enabling statute rather than Constitutional
mandates, North Carolina Courts have, at times, cited Federal
Substantive Due Process cases in rendering their opinions. These
cases generally give deference to the legislative body’s judgment on a
particular issue.
In 1926, the Supreme Court of the United States handed down its
ruling in Euclid v. Ambler Realty.14
Euclid stands for the proposition
that where a state has delegated its general police power to the
municipality, there is no Federal Constitutional impairment to that
authority. The Court held that zoning laws are presumed valid if
their validity were even “fairly debatable”.15
The municipality has the
authority to protect the public welfare even if private landowners
were subjected to restrictions on the use of their own land without
compensation.16
This authority is not without limits. The municipality must use
the zoning power in a way that is not “unreasonable, arbitrary, or
capricious and bears a rational relationship” to safeguard the health,
safety, morals, and general welfare of the public.17
In Raleigh v. Morand, The North Carolina Supreme Court held that a
presumption exists that zoning ordinances are valid exercises of the
police power18
. The party asserting the invalidity of the ordinance
has the burden of establishing its invalidity.19
Echoing Euclid, the
Court in Helms v. Charlotte, stated:
When the most that can be said against such ordinances is
that whether it was an unreasonable, arbitrary or unequal
exercise of power is fairly debatable, the courts will not
14
272 U.S. 365 (1926)
15
Id. at 386
16
Id. at 386
17
Id. at 395
18
247 N.C. 363, 367(1957)
19
Helms v. Charlotte, 255 N.C. 647(1961). Also see Schloss v. Jamison, 262
N.C. 108, 115 (1964), where the North Carolina Supreme Court, citing this
passage of Helms, held that the Plaintiff/sign owners failed to meet the
burden of proving that the Charlotte zoning ordinance was not a proper
exercise of the city's police power, and the Court refused to interfere
because there was not even a debatable showing of arbitrary, unreasonable, or
unequal exercise of power.

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interfere. In such circumstances the settled rule seems to
be that the court will not substitute its judgment for that
of the legislative body charged with the primary duty and
responsibility of determining whether its action is in the
interest of the public health, safety, morals, or general
welfare.20
There is no reason to conclude that cases like Helms are in some
way inapplicable to the matter at hand and the language above is
encouraging. However, it is difficult to say with certainty that
a court will choose to apply this level of deference as other
options exist given the language of other cases. It should be of
note that cases like Helms have not been cited for the above
stated proposition in any of the more recent and very relevant
cases discussed below in Section V of this report. Smith v. New
Bern and Helms created two lines of cases, running side by side,
interpreting the same issues in completely different ways.
V. DILLON’S RULE
As mentioned above, North Carolina is often referred to as a
“Dillon’s rule state.” This is not a technically accurate statement,
but is not wholly inaccurate in regards to practical application. The
rule has held a powerful place in our jurisprudence and in the minds
of many attorneys and judges. For many, it is likely believed to be
the law of the land even in spite of very direct language in cases to
the contrary.
Judge John F. Dillon, in his Treatise on the Law of Municipal
Corporations wrote the following:
It is the general and undisputed proposition of law that a
municipal corporation possesses, and can exercise the
following powers, and no others: First, those granted in
express words; second, those necessarily or fairly implied
in, or incident to the powers expressly granted; third,
those essential to the declared objects and purposes of the
corporation- not simply convenient, but indispensable. Any
fair, reasonable doubt concerning the existence of power is
resolved by the courts against the corporation, and the
power is denied. 21
20
Id. at 651.
21
John F. Dillon, Commentaries on the Law of Municipal Corporations (1872)

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The above text is considered Dillon’s Rule and is quoted
repeatedly in North Carolina cases22
. It should be understood that
Dillon’s rule is not a substantive law at all, but a rule for
interpreting laws.
It might have appeared that Dillon’s rule was overturned in 1971
when the North Carolina General Assembly passed NCGS §160A-4 which
states:
It is the policy of the General Assembly that the cities of
this state should have adequate authority to execute the
powers, duties, privileges, and immunities conferred upon
them by law. To this end, the provisions of this Chapter
and of city charters shall be broadly construed and grants
of power shall be construed to include any additional and
supplementary powers that are reasonably necessary or
expedient to carry them into execution and effect:
Provided, that the exercise of such additional or
supplementary powers shall not be contrary to State or
federal law or to the public policy of this state. 23
Like Dillon’s rule, this statute is a rule of construction. In this
instance, the General Assembly has provided guidance to the courts of
North Carolina on how to interpret the enabling statutes found in
chapter §160A and §153A. Although from the language of the statute,
it might appear that there would no longer be a place for Dillon’s
rule, but the cases have shown otherwise.
VI. THE MAJOR CASES
Homebuilders, Porsch, Greene, and Bowers
In the landmark case of Homebuilders Association of Charlotte,
INC. v. The City of Charlotte,24
the Supreme Court of North Carolina
faced the question whether a resolution passed by the City Council of
Charlotte establishing a schedule of user fees for a variety of city
services was valid. The Court ruled that Charlotte ultimately had the
authority to impose regulatory fees provided that they are reasonable.
In this instance the fees were reasonable in that they were sufficient
only to cover the cost of the authorized regulation itself.25
The Court
found that all of the user fees charged were related to some express
22
See: Smith v. New Bern, 70 N.C. 14 (1874). This is likely the first such
Dillon ruling in North Carolina, handed down by the North Carolina Supreme
Court Just two years after the publication of Dillon’s Commentaries.
23
NCGS §160A-4 (1999)
24
336 N.C. 37 (1994)
25
Id. at 45

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authority to regulate a particular field which it had the authority to
regulate.26
The Court accepted the rule that if a municipal power
exists to regulate, then that grant of authority implies the grant to
charge fees to cover the cost of that regulation.27
In reaching its ruling the Court attempted to clarify the
relative positions of Dillon’s rule and §160A-4 in North Carolina
jurisprudence. The Court states that it must “treat the language as a
‘legislative mandate that we are to construe in a broad fashion the
provisions and grants of power contained in Chapter 160A.”28
The
Builders Association argued that the Court has used the narrow
construction found in Dillon’s rule in at least two cases since §160A-
4 passed and that a narrow construction of municipal power was
justified. The Homebuilders Court analyzed the two cases argued by the
Builders association in turn and while the Court did not overrule
these cases, it held that the proper rule of construction was §160A-
4.29
The first of these cases analyzed was Porsh Builders v. Winston
Salem30
. In that case, the Court addressed the issue whether pursuant
to §160A-514(d),did the municipality have the authority to consider
compatibility with its comprehensive plan when selling real estate or
did the phrase “highest responsible bidder” limit the municipality to
only consider the amount of the bid and whether the bidder had the
means to actually pay.31
Although Porsh was decided ten years after the passage of NCGS
§160A-4, neither the majority nor the dissent mention the statute.
The majority chose to follow a very narrow, Dillon-style construction
stating:
[I]t is generally held that statutory delegations of power
to municipalities should be strictly construed, resolving
any ambiguity against the corporation’s authority to
exercise the power. This Court has long held that “[a]ny
26
Id.
27
Id. It could be argued that this rule could be accepted even applying
Dillon’s rule. The Court cited a number of sources as authority for this
rule including a number of cases from other jurisdictions and two Legal
treatises, but did not cite any North Carolina case or statute.
28
Id. at 44
29
Id.
30
302 N.C. 550 (1981)
31
Id. at 555

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fair, reasonable doubt concerning the existence of the
power is resolved against the corporation.”32
While trying to determine legislative intent, the Court cited
definitions for “responsible” and “bidder” from Black’s Law Dictionary
and found that these terms were not ambiguous and the municipality
must sell the real estate to the bidder offering the most money. The
municipality was not allowed to consider factors such as future
economic impact and cohesion in the surrounding environment in making
its determination; the term “responsible” did not include these sorts
of considerations.
It is odd that the Majority went out of its way to express that
“responsible” was an unambiguous term given that it had already cited
a rule that ambiguities are interpreted against the grant of
authority. By this Court’s logic, the power could have been struck
down because the General Assembly spoke clearly on the issue OR
because the General Assembly had not spoken clearly.
Justice Carlton dissented in this case and argues that the term
“responsible” is not, as the majority believed, a clear and
unambiguous directive from the General Assembly33
. Quoting Stevenson v
Durham,34
he states that “in ascertaining legislative intent, courts
should consider the language of the statute, the spirit of the
statute, and what it seeks to accomplish.”35
He argues that the
Majority of the Court is not only ignoring the intention of the
General Assembly, but is limiting a municipality’s ability to use its
discretionary functions to effectively govern. Under the Majority’s
holding, making determinations of who the highest responsible bidder
is would become a “mechanical” act that could be performed by any
employee.
The other case given an in depth analysis by the Homebuilders
Court was Greene v. The City of Winston-Salem.36
The question in
Greene was whether builders were bound by a city ordinance that
purported to regulate sprinklers in certain buildings in a way that
varied from the requirements found in the State Building Code. In
overturning the ordinance, the Court cited Dillon’s rule, but
ultimately its decision was based on principles of preemption rather
than powers granted or not granted by an enabling statute. The Court
32
Id. at 554; citing Shaw v. City of Asheville, 269 N.C. 90,97 (1967)
33
Here we have Supreme Court Justices arguing about the ambiguity of a term;
it seems that the very existence of the argument suggests an ambiguity
exists.
34
281 N.C. 300,303 (1972)
35
302 N.C at 557
36
287 N.C. 66 (1975)

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ruled that the state had created a “complete and integrated regulatory
scheme to the exclusion of local regulation” when it created the State
Building Code.37
It should be noted that the Homebuilders Court had the
opportunity to end the confusion by overruling those cases, but chose
to distinguish them from the case it had before it instead.
Presumably, Porsch and Greene are still valid precedent in North
Carolina. The language in these cases could be especially damaging if
followed by future courts. The Court in Greene stated:
In construing the extent of the powers of municipalities,
the fundamental and universal rule is, that while the
construction is to be just, seeking first of all for the
legislative intent in order to give it fair effect, yet any
fair, reasonable or substantial doubt as to the extent of
the power is to be determined in favor of the public and
against the municipality.38
This language is contradictory to the language from Euclid that has
been cited repeatedly by our Courts giving deference to the
municipality.39
None of these cases have been overturned and all are
valid precedent in North Carolina even though the direction they give
regarding interpretation of municipal powers goes in opposite
directions.
Shortly after deciding, Homebuilders, the Court issued its ruling
in Bowers v City of High Point.40
Bowers is a case where the City of
High Point was actually arguing that the actions of its city manager
were ultra vires in that he exceeded his authority while entering into
certain contracts with retiring police officers. The City argued that
since the manager’s actions exceeded statutory authority, the City
could not be bound by the contract. The Court cited §160A-4 and
Dillon’s rule in concluding that the plain meaning of “base pay”
should control rather than giving the municipal action broad
deference. The putative Contract was ultra vires and unenforceable.41
Smith Chapel
Five years later in Smith Chapel Baptist Church v. City of
Durham42
, the Supreme Court again chose to ignore the broad deference
37
Id. at 75
38
Id. at 72
39
see Discussion of Substantive Due Process supra
40
339 N.C. 413 (1994)
41
Id.
42
350 N.C. 822 (1999)

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provided to a municipality by NCGS §160A-4. It held that Durham had
exceeded its authority under NCGS §160A-311 and §160A-314 by charging
users stormwater fees that exceeded the actual cost of use. These
fees were also held to be invalid in that they exceeded actual cost of
“furnishing” a stormwater system, which this Court believed was a
clear legislative directive that fees may only be charged for the
actual cost of direct maintenance to the infrastructure. In order to
comply with federal stormwater regulation, the city was attempting to
charge these fees to fund educational programs, enforcement efforts
against illegal dumping, used oil recycling, that it believed would
over time support the physical infrastructure, but were not directly
related to the costs of physical repairs. Without any mention of
§160A-4, the Court determined that the City exceeded its authority
under the statutes and should have found ways to comply with the new
Federal law out of its general fund.43
Laurinburg and a summary of the preceding cases
In 2005,the North Carolina Court of Appeals issued its opinion in
Bellsouth Telecomms Inc. v. City of Laurinburg.44
This opinion
attempts to reconcile the varied holdings of Homebuilders, Porsh,
Greene, Bowers, and Smith Chapel. The Court, citing Homebuilders
states that since Porsh and Greene do not cite §160A-4, they are not
the proper authority for determining the rule of construction of
grants of power to municipalities in light of §160A-4. This bit of
dicta borders on the absurd since both opinions were issued after
§160A-4 and are squarely on the issue of municipal grants of power.
Given this, it is difficult to determine what these cases actually
stand for. The Laurinburg Court distinguishes Porsh and Greene from
Homebuilders, Bowers, and Smith Chapel (which like Porsh and Greene do
not mention §160A-4). The Court states that the latter three opinions
are consistent and stand for the following rules of statutory
interpretation: §160A-4 has replaced Dillon’s rule when there is
ambiguity in the statutory language authorizing municipal power OR
when the powers clearly authorized reasonably necessitate “additional
and supplementary powers to carry them into execution and effect.”45
“However, where the plain meaning of the statute is without ambiguity,
it must be enforced as written.”46
43
Justice Frye wrote a dissent focusing on the broad grant of powers in
§160A-4. Justice Frye argues that the term “system” encompassed ancillary
strategies and activities that are supportive of the physical infrastructure
and therefore within the scope of the municipality’s authority to act govern.
44
168 N.C. App. 75 (2005)
45
NCGS§160A-4; Homebuilders, 336 NC at 45
46
Lauringburg, 168 N.C. App. At 82 (emphasis added)

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The rule most succinctly stated in the Laurinburg case is likely
the current state of the law, but it has become obvious that ambiguity
is in the eye of the beholder. As we have seen in the cases, Supreme
Court Justices disagree about the meaning of terms: responsible,
furnishing, and base pay. This alone seems to raise the specter of
ambiguity in these terms.
The Courts rarely give guidance on how to determine ambiguity in
language. Courts have often used Webster’s Dictionary or Black’s Law
Dictionary in making this determination. Courts use prior canons of
interpretation or the title of laws for extra guidance.47
The truth is
that this rule provides a vast playground for jurists and attorneys to
use their most expansive and creative sophistry in arguing or ruling
either for or against deference to municipal discretion.
In Laurinburg, Bell South sued the City of Laurinburg and a
private internet service provider alleging that the city was operating
as a public enterprise in a way that was outside of the limits
provided in NCGS §160A-311 due to the fact that it was serving non-
city users. The case turned on highly technical issues surrounding
bundling of fiber optic cables and much discussion was made about
various types of hardware.
It is perhaps fortunate that Laurinburg involved the construction
of laws pertaining to highly technical systems that frequently are
updated by technological advancement. The Court found that the
statutory language of §160A-319 does not foreclose the statutory
authority of the city to bundle fiber optic cable and that since the
city has the authority to act as a Cable Television Service, the
ability to take advantage of this technology was a power that was
“reasonably necessary and expedient” to that power. The Court states
that the types of advancements to these technologies were not
something that the General Assembly could have contemplated in 1971
when §160A-4 was passed.48
The Court concludes with a powerful
statement of the General Assembly’s intent:
[T]he legislature’s intent in 1971 was to enable the
municipality’s public enterprise to grow in reasonable
stride with technological advancements as it is this
advancement which marks the ever-approaching horizon of
necessity.49
47
See Smith Chapel, discussed supra
48
Laurinburg 168 N.C. App. At 85
49
Id. at 85

15. 15
This ruling stands for the proposition that a municipality’s
ability to govern must be allowed to advance with the times. In
this case, to require the city to use 1971 technologies would be
to “elevate form over function” and would prevent the
municipality from “effectively operat[ing] in today’s market.”50
As we will see from later cases discussed below, ambiguity
might not be a saving grace for an inclusionary zoning ordinance
if the local government is relying on its power to zone its
territory alone.
IMPACT FEE CASES
Smith Chapel and Homebuilders represent the two major paths that
a court will follow in interpreting local ordinances. Both cases
involve the local government’s ability to charge fees in certain arena
of regulation, but apply the rule, most succinctly stated in
Laurinburg in opposite directions. The government will argue that
Homebuilders should apply and the challenger will argue that Smith
Chapel should be followed instead. The government wants the court to
apply the broad deference found in NCGS §160A-4 rather than reading
the statute narrowly. The current North Carolina Supreme Court has
shown a trend of finding statutes unambiguous, interpreting them
narrowly and striking down local ordinances. The following is a
discussion of recent cases that deal with government mandated impact
fees for certain types of government activity.
Historically, our courts will review taxes and fees with greater
scrutiny than general grants of authority. 51
This scrutiny is
exhibited in Smith Chapel and progeny. The majority of the impact fee
cases involve a local government attempting to fund one of its
endeavors by placing the burden improperly on the public. This often
takes the form of a county funding schools by requiring developers who
increase the population of an area through new residential
construction, to pay for the increased burden on the affected school.
The first of these cases, Durham Land Owners Ass’n v. Durnam,52
decided by the Court of Appeals one year after issuing an opinion very
deferential to municipal discretion in Laurinburg, stated that the
County exceeded its statutory authority by charging developers certain
fees for routine/ document-oriented tasks, which it had the sole duty
to provide. The county argued that it had authority to require these
fees pursuant to the general police power and zoning power. The
50
Id. at 85
51
The Lanvale Court quoting David Owens on general statutory construction
52
177 N.C. App. 629 (2006).

16. 16
county further argued that the under Homebuilders, the Court should
rule that charging these fees “as an additional and supplementary
power that is reasonably necessary or expedient to carry a regulatory
program into execution and effect.”53
The Court in Durham states that
it did not believe that the Supreme Court in Homebuilders did not
intended for the County to be able to displace the cost its own
services. 54
The Court in Durham Land Owners stated that it found no authority
to suggest that Durham County had the ability under the general police
power or power to zone to charge these fees. This Court did not
however expand on this analysis and did not make any holdings that
might alter future understanding as to the extent of police or zoning
powers beyond the context of the facts in the case before it.
The Court of Appeals, cited Durham Land Owners in the 2009 case
of Union Land Owners Association v. County of Union55
and the 2010 case
of Amward Homes, Inc v. Town of Cary.56
In both of these cases, the
respective counties were charging developers fees to pay for the
impact that proposed residential developments would have on schools as
a condition of receiving their permits. Like the Durham Land Owners
case, the counties argued that it had authority under the police power
and the power to zone to require these fees. The Court rejected those
arguments citing Durham Land Owners.
Also like Durham Land Owners, the Court in these cases did not
provide extensive analysis regarding the extent of the police power or
the power to zone. However, the growing precedent shows the direction
that the courts are heading. The Union Landowners Court, without
reference to NCGS §153A-4 or §153A-124 or further analysis, stated the
following:
Although defendant is entitled to use its zoning authority
to facilitate the efficient and adequate provision of
schools, it must achieve that this goal using the tools
authorized by the zoning statute. While defendant clearly
seeks to pursue the legislative objective of facilitating
the efficient and adequate provision of schools the
[ordinance] does not utilize any of the zoning powers
enumerated in section 153A-340. 57
53
Id. At 635, quoting Homebuilders at 45
54
Id at 635.
55
201 N.C. App. 374 (2009)
56
206 N.C. App. 38 (2010)
57
Union Land Owners, 201 N.C. App. At 379

17. 17
This holding seems at odds with §153A-124 or its parallel city statute
§160A-177, which state that enumerated powers in these respective
chapters are not exclusive. Those statute suggest that there is no
requirement that a local government any of those items enumerated.
Here we see the Court beginning to reign in expansive interpretations
of these powers.58
These impact fee cases all lead to the Supreme Court’s 2011
opinion in Lanvale Properties, LLC v. County of Cabarrus.59
The facts
of this case are very similar to those of the other school impact fee
cases discussed above. The County was attempting to mitigate
overcrowding in its public school systems by conditioning approval of
residential construction projects on developers paying a fee to
subsidize new school construction. The County argued that it had the
authority under the police power and zoning to power to charge these
fees. The Court disagreed and struck down the ordinance.
This opinion creates a variety of hurdles to any local government
attempting to use expansive interpretations of its zoning power and
the greatest hurdle to an inclusionary zoning ordinance. In Lanvale,
the Court states that the statutes enabling local governments to zone
are “clear and unambiguous articulations of county zoning powers” and
provide “clear guidance to counties regarding the extent of their
zoning powers.”60
The Court here has chosen to follow the line of
Smith Chapel cases and reasons that since the statutes are clear and
unambiguous, §153A-4, the parallel of §160A-4, is “inapposite in the
instant case”.61
58
The courts’ trend of striking down impact fees continued in its most recent
related case handed down in August of 2016 in Quality Built Homes
Incorporated and Stafford Land Company v. Town of Carthage,
____N.C.______(2016). In this case, the Supreme Court took the somewhat
unusual step of allowing discretionary review of a unanimous, unpublished
opinion of the Court of Appeals to decide whether the Town of Carthage
exceeded its authority to enact certain water and sewer impact fees. In this
case, the town was charging landowners seeking permits to subdivide their
property fees for connecting to water and sewer services, but also for the
impact on future services. The Court of Appeals employed the broad deference
of §160A-4 and ruled that the town could charge these fees. Overruling them,
the Supreme Court found that although the town could collect fees for
contemporaneous services, it could not collect fees for future discretionary
spending. The Court, citing Smith Chapel held that the statutes clearly and
unambiguously fail to give Carthage to power to assess prospective fees.
59
366 N.C. 142 (2011), It should be noted that much like the Town of Carthage
case discussed in footnote above, the Supreme Court once again took
discretionary review of a unanimous, unpublished opinion of the Court of
Appeals in Lanvale.
60
Id. At 156 and 154, respectively.
61
Id at 154

18. 18
The Court devotes most of its opinion arguing against the views
expressed by the dissenting Justice Hudson. The Majority holds that
local governments cannot use §153A-4 (broad deference) and §153A-124
(enumeration not exclusive) to classify any ordinance it chooses as a
zoning ordinance and expand municipal powers beyond what the General
Assembly intended. The Majority, in a somewhat tautological statement
agreed with the plaintiff/developers that the instant ordinance cannot
be classified as a zoning ordinance because “it simply does not
zone.”62
The Court states that doing so would “give counties virtual
carte blanche to enact an unlimited range of ordinances affecting the
use of real property no matter how tenuous the connection between the
ordinance and our zoning statutes.”63
Located in various places throughout the opinion, the Court lists
certain characteristics that are the essence of a zoning ordinance.
Zoning ordinances “divide the city or county’s land into districts
with a separate set of development regulations for each zone or
district.”64
They typically “divide the land within a county’s
territorial jurisdiction into broad use categories including for
example, agricultural, commercial, office-industrial, and
residential.”65
They “remain important before, during and after
development.”66
They “regulate land use activities over multiple
properties located within a distinct area of the county’s territorial
jurisdiction.”67
They divide geographically the territory “into
districts of any number, shape and area that [the county] may consider
best suited to carry out the purpose” of the enabling statute.68
Because the ordinance in Lanvale did “nothing to organize the County’s
territorial jurisdiction into districts or zones and it does not
govern specific categories of land use activities” it is not a zoning
ordinance.69
Rather the Court states that the County chose to create a
“carefully crafted revenue generating mechanism that effectively
establishes a ‘pay-to-build’ system for developers.”70
Although there are ways to distinguish the facts of this
case from the hallmarks of inclusionary zoning ordinances, the
Lanvale opinion is damaging and might prove fatal. In Lanvale the
local government is pushing onto developers the burden of
62
Id at 158
63
Id at 156
64
Id
65
Id
66
Id
67
Id at 158
68
Id at 159
69
Id.
70
Lanvale at 160

19. 19
financing an activity that the government itself has the burden
of and duty to provide. Similarly in Smith Chapel, the
government itself had the duty to find ways to comply with
federal storm water regulation. In both of these situations, the
local government had a variety of other means of fulfilling its
duty through taxes generally, but chose to create a “carefully
crafted revenue generating mechanism that effectively establishes
a ‘pay-to-build’ system for developers.” 71
It cannot be denied
that inclusionary zoning creates affordable housing at the
developers’ expense, but it is also true that it is not a revenue
creating mechanism for the local government to fund its other
obligations. Furthermore, developers often receive something in
return for compliance with inclusionary zoning ordinances and
through those incentives make inclusionary zoning ordinances look
much more like other zoning ordinances than the one at bar in
Lanvale which was merely tied to the land in that it involved the
approval of residential developments. That being said, it is
difficult to point to the enumerated list found in the zoning
enabling statute and say where exactly inclusionary zoning
ordinances fit in.
King
In 2014, the Supreme Court in King v. Chapel Hill72
found that the
Town of Chapel Hill had exceeded its authority by preventing towing
companies from charging credit card fees from individuals whose cars
had been towed and by capping the overall fee a towing company might
charge.73
The ordinance, in addition to the provisions above, required
tow truck drivers to respond to telephone calls by owners of vehicles
within a certain time frame and imposed signage requirements. The
Court upheld the signage and response requirements as valid exercises
of the Town’s police power and ordinance making authority under §160A-
174. 74
Although the Court strikes down the fees in this case as
inappropriately placing “the burden of increased costs incident to the
regulation solely on the towing companies,”75
the Court allows the Town
71
Lanvale at 160
72
367 N.C. 400 (2014)
73
The Town was also preempted by state law from regulating the use of mobile
phones on public highways.
74
The Town argued that it had authority to regulate the towing of vehicles
from private lots in addition to the police power and §160A-174 under NCGS
§20-219.2. Chapter §20 of the North Carolina General Statutes governs motor
vehicles. Oddly enough, this statute contains no enabling language. The
Court did not examine whether the Town had authority under Chapter §20.
75
Id at 408

20. 20
to regulate an area without any topically specific enabling
legislation. In very surprising language in light of the Lanvale
decision, the Court states that §160A-174 and the police power are:
By [their] very nature ambiguous, and its reach cannot be
fully defined in clear and definite terms. Since the
police power of the State has not been, and by its very
nature cannot be, placed within fixed definitive limits, it
may be extended or restricted to meet changing conditions,
economic as well as social. An examination of police power
will reveal the police power not as a fixed quantity, but
as the expression of social, economic and political
conditions. As long as these conditions vary, the police
power must continue to be elastic…Therefore, we are bound
to construe NCGS §160A-174 to include any additional and
supplementary powers that are reasonably necessary or
expedient to carry [the grant of power] into execution and
effect. 76
VII. RENT CONTROL
Like many states, North Carolina prohibits local
governments from enacting ordinances and regulations that would
control rent on residential rental property. NCGS §42-14.1
states:
No county or city as defined by G.S. 160A-1 may enact,
maintain, or enforce any ordinance or resolution which
regulates the amount of rent to be charged for privately
owned, single-family or multiple unit residential or
commercial rental property. This section shall not be
construed as prohibiting any county or city, or any
authority created by a county or city for that purpose,
from:
(1) Regulating in any way property belonging to that city,
county, or authority;
(2) Entering into agreements with private persons which
regulate the amount of rent charged for subsidized rental
properties; or
(3) Enacting ordinances or resolutions restricting rent
for properties assisted with Community Development Block
Grant Funds.
76
Id at 406

21. 21
There have been no cases in North Carolina interpreting any
part of this statute. This is common nationally. Twenty-five
states have laws very similar to §42-14.1 where local government
regulation is preempted from enacting any regulation controlling
rent. Often these state laws contain similar exceptions to those
found in our statute, allowing for control of rents when the
municipality has a property interest in the premises and/or a
contract has been formed between developer and government. There
are fourteen states that have no law either prohibiting or
authorizing rent control. There are eleven states that have
statutes authorizing some form of rent control. Of these eleven,
most have some limitation on when rent control is appropriate.
For example, Texas allows a governing body to enact an ordinance
controlling rent in the case of a housing emergency due to a
disaster.77
There is very little case law interpreting these statutes.
Of the twenty-five states with laws preempting rent control, only
Colorado, Mississippi,78
and Wisconsin have cases interpreting
these laws. These opinions are not binding on North Carolina
courts, but given the dearth of any legal authority, these cases
will likely be highly persuasive and unfortunately, damaging.
Colorado’s rent control statute79
is very similar to North
Carolina’s. Local governments in Colorado enjoy greater home
rule protections than do those in North Carolina, but the general
rules of preemption regarding matters of statewide concern appear
very similar.
Town of Telluride v. Lot Thirty-Four Ventrure, L.L.C
In Town of Telluride v. Lot Thirty-Four Ventrure, L.L.C.80
,
the Colorado court held that an ordinance81
requiring that
property owners create affordable housing constituted rent
control in violation of the Colorado statute. The Court noted
that rent control generally means setting a ceiling for maximum
market rents and regulating the allowable increases of that rent.
In this case, the Telluride Ordinance fit that definition because
77
Tex.Local.Gov’t Code §214.902
78
Crook v. City of Madison, 168 So. 3d 1169, 1171 (Miss. Ct. App. 2014). This
case discusses a local ordinance that requires a landlord to post a bond in
order to receive a license to rent residential property. The landlord argued
that this requirement was a form of rent control in that it increased his
costs. The Court quickly dismissed this argument quickly and without
analysis, stating that the ordinance in no way attempted to control rent.
79
Colo.Rev.Stat §38-12-301(1999)
80
3 P.3d 30 (Colo. 2000)
81
Town of Telluride Ordinance 1011

22. 22
it set a rental rate based on square footage and regulated any
increases in that rate.82
The Telluride ordinance directed that developers of
projects such as malls and hotels create generate affordable
housing for the new employees created by such development. The
Ordinance allowed developers to satisfy this requirement by
construction of new housing with fixed rental rates, by imposing
deed restrictions on free market units in order to fix rental
rates, by paying fees in lieu of housing, or by conveying land to
the town for affordable housing.
The Court found that the variety of ways in which a
developer may satisfy this requirement did not change the
character of the ordinance as one that “redistributes the value
of the rental property from landlord to tenant” and that this is
a “hallmark of rent control.”83
North Carolina local governments could find ways to
distinguish any ordinance it enacts from that of Ordinance 1011.
It should be noted that there was no mention in the Colorado case
that the developers received incentives for compliance, so
commonly associated with inclusionary zoning statutes. Also, the
Telluride ordinance places a burden on developers who never
intended to be in the residential rental business at all. This
seems more onerous than requiring a residential developer to set
aside certain units in an already planned residential development
as affordable in exchange for incentives.
The Colorado court, in a somewhat out of place piece of
dicta states that rent control laws “do not isolate particular
units for special treatment, but usually apply to a broad class
of rental properties.”84
No further analysis on this point is
provided by the Court, but there is an implication that had there
been units isolated for special treatment, the court could have
ruled differently. Whether a North Carolina court would find
that affordable units set aside for special treatment ameliorates
concerns of rent control is uncertain, but this factor certainly
makes an inclusionary zoning ordinance distinguishable at least
from the situation in Telluride.
Apartment Associant of South Central Wisconsin, Inc. v. City of
Madison
The only other relevant case in a state prohibiting rent
control, is Apartment Ass’n of South Cent. Wisconsin, Inc. v.
82
Id.
83
Id. at 36
84
Id. at 35

23. 23
City of Madison,85
decided by the Wisconsin Court of Appeals six
years after the Telluride case without citing it. The Wisconsin
court found that the state statute prohibiting local regulation
of rent control86
was violated by a Madison inclusionary zoning
ordinance.87
The Madison Ordinance looks similar to what we think of
when referring to inclusionary zoning ordinances. It required a
development with ten or more units to provide no less than
fifteen percent as inclusionary units when the development
requires a zoning map amendment. The units were to be made
available to a family with an annual median income at or below
sixty percent of the area median income and were to cost no more
than thirty percent of the family’s monthly income. The
ordinance allowed the developer to choose from a list of
incentives such as density bonuses and reduction in parking
requirements. The developer could be excused from the
inclusionary zoning requirement upon a showing that the
development would be unfeasible were the ordinance’s mandates to
be adhered to.
The City of Madison argued that their ordinance fit into
one of the exceptions found in section (2)(b) of the statute
because rent would be regulated only where an agreement had taken
place between developer and the City. The City argued that the
mandates of the ordinance only apply when a developer is seeking
the benefits of rezoning or land division and did not affect by-
right building. The City argued that the developer was not
obligated to take part at all, but if they did, the City and the
developer have entered into an agreement where the developer
agreed to produce affordable units. The Court held that the
mandates of the ordinance did not result in an agreement but a
compulsion by the City.88
Were the City’s argument true, every
permit issued by the City would be a contract because the
applicant had the choice not to engage in the activity for which
conditions are imposed.
85
722 N.W.2d 614 (Wis. Ct. App. 2006)
86
Wis. Stat. Ann. §66.1015 (2003-2004): (1) No city, village, town or
county may regulate the amount of rent or fees charged for the use of a
residential rental dwelling unit.(2) This section does not prohibit a city,
village, town, county, or housing authority or the Wisconsin Housing and
Economic Development Authority from doing any of the following:(a) Entering
into a rental agreement which regulates rent or fees charged for the use of a
residential rental dwelling unit it owns or operates.(b) Entering into an
agreement with a private person who regulates rent or fees charged for a
residential rental dwelling unit.
87
Madison, Wis. Ordinance § 28.04(25)(e)
88
City of Madison, 722 N.W.2d at 190

24. 24
This case is damaging, but not conclusive. First, the City
of Madison did not raise an argument that the inclusionary zoning
program was not rent control at all; the point appears to be
conceded and the Court operates from the starting place that the
inclusionary zoning ordinance is rent control. Ultimate holdings
in a case might be persuasive to a North Carolina court, but
courts would also have to find the logic itself persuasive. There
is no analysis by the Wisconsin Court which an opponent of a
zoning ordinance could point to in arguing that inclusionary
zoning programs are in fact rent control. Similarly, the
Wisconsin Court notes that the developers conceded the point that
the City had authority to enact the zoning ordinance under
Wisconsin’s enabling statute. Local governments in North
Carolina could not use this concession to bolster the argument
that it has this power under North Carolina’s enabling statute.
It follows that the unanalyzed assumption that the zoning
ordinance was rent control in the Wisconsin case is of similar
precedential value.89
Furthermore, for good or bad, the language of NCGS §42-14.1
differs from that of section (2)(b) of the Wisconsin statute.
Our statute allows rent control by a local government by
agreement involving subsidized rental units. The Wisconsin
statute applies to agreements with any private citizen. During
oral argument in City of Madison, the Court asked the attorney
for the developer to give an example of what an allowable
agreement between developer and government controlling rent would
look like and he conceded that he could not. The Court did not
provide one in its opinion either. Given that, it could be
argued that it is uncertain what the (2)(b) provision of the
Wisconsin statute means at all. In any case, it is different
from our statute and inapplicable.
Although a North Carolina local government should argue
that inclusionary zoning is not rent control at all, that
locality should find ways to set up the alternative argument,
that even if inclusionary zoning is rent control under the
statute, it fits into the exception in §42-14.1(2). C. Tyler
Mulligan and James L. Joyce point out in their book90
that the
term “subsidized” is not defined in the North Carolina statute
and therefore density bonuses and other incentives might meet
that definition, allowing a North Carolina ordinance to fall
within the exception in §42-14.1(2). Mulligan and Joyce also
89
Of greater precedential value could be that Tennessee amended its statute
prohibiting rent control in early 2016. (Tenn.Code Ann.§66-35-102.) The
amendment added paragraphs that specifically prevent a local government from
enacting mandatory inclusionary zoning programs. The implication here is
that before the amendments, the term “rent control” did not include
inclusionary zoning. It could be argued that our General Assembly, aware of
this, has had the same opportunity, but has chosen not to do so.
90
Mulligan and Joyce, pages 151-153.

25. 25
wisely recommend that North Carolina local governments should
enter into a separate and distinct agreement with developers
outside of the permitting process to further be distinguishable
from the Wisconsin case.91
SUMMARY
NCGS§160A-174(b) sets out ways that a municipal action can
be inconsistent with State or Federal Law.92
The local government
could face a challenge pursuant to subsection (b)(5) of that
statute which would claim that the ordinance is void because the
state has preempted the field by enacting §NCGS 42-14.1. Although
information is scant on the interplay between inclusionary zoning
ordinances and rent control, it is advisable for a North Carolina
local government to find ways to further distinguish any
ordinance from those in Colorado and Wisconsin and to find ways
that the ordinance would look different from rent control as it
exists in other parts of the United States.
The Colorado Court repeatedly pointed out that rent control
involves the redistribution of wealth from Landlord to Tenant.
Rent control is typically thought of as a means of overall market
suppression because of a housing shortage or because of the
inability of the market to deal with an overabundance of
substandard housing93
.
In Washington D.C., the rent stabilization ordinance seeks
to assist certain landlords as much as tenants through market
suppression.94
An inclusionary zoning ordinance would seek to do
91
Id.
92
NCGS§160A-174(b)(1) The ordinance infringes a liberty guaranteed to the
people by the State or federal Constitution;(2) The ordinance makes unlawful
an act, omission or condition which is expressly made lawful by State or
federal law;(3) The ordinance makes lawful an act, omission, or condition
which is expressly made unlawful by State or federal law;(4) The ordinance
purports to regulate a subject that cities are expressly forbidden to
regulate by State or federal law;(5) The ordinance purports to regulate a
field for which a State or federal statute clearly shows a legislative intent
to provide a complete and integrated regulatory scheme to the exclusion of
local regulation;
93
See N.J. Stat. §§2A:42-74 through 84.6. The New Jersey statute allows for
rent abatements for substandard housing and creates a scheme for tenants to
pay fair rent as determined by an administrative office into the respective
clerk of court until the substandard conditions are ameliorated.
94
See D.C. Code § 42-3501.01 (7); “Many small housing providers are
experiencing financial difficulties and are in need of some special
mechanisms to assist them and their tenants.”

26. 26
nothing to alter the market value of other units and the City
should demand strict proof from any challenger that it has.
Typical statutes allowing rent control often set rent
ceilings based on sale prices of the premises or other
considerations95
, not based on the income of the putative tenant
in the way that an inclusionary zoning ordinance would.
Connecticut’s rent control statute96
creates a Fair Rent
Commission which a tenant may petition to have their rent abated
upon a showing after hearing that a rental amount or rental
increase is inequitable. The statute sets out penalties and
fines for landlords that violate that administrative body’s
determination as well as creating a variety of procedural
requirements for subsequent rent to be paid and accepted. An
inclusionary zoning ordinance would not seek to increase a
tenant’s rights under Chapter §42 of our statutes or increase the
procedural burden on the landlord in regards to the acceptance of
rent or eviction in the way that the New York,97
Connecticut and
other states’ statutes do98
.
Statutes authorizing rent control come in a variety of
forms across the country. This variety allows for a North
Carolina court faced with the question for the first time to
define what rent control means in North Carolina based on any
definition it finds most persuasive. Although rent control takes
on different shapes and sizes, a local government should attempt
to distinguish its ordinance from the hallmarks of rent control
that are clearly matters of state concern: the control of market
prices generally, adding or taking away rights, privileges and
obligations related to eviction, adding administrative hurdles to
the raising of rent, and generally focusing on anything other
than the very narrow purposes that an inclusionary zoning
ordinance is created for.
VIII. SUMMARY OF THE RULES
To sum up the rules at play:
95
See NY CLS Unconsol, Ch. 249. The New York statute allowing rent control
states as its purpose to allow regulation to prevent “abnormal conditions” in
their rental market. The statute further states that “the transition from
regulation to a normal market of free bargaining between landlord and tenant,
while still the objective of state policy, must be administered with due
regard.” Id. § 1
96
Conn.Gen.Stat. §§7-148b through 7-148f
97
See NY CLS Unconso, Ch. 249
98
See HRS §666-20 which prohibits the eviction of tenants in Hawaii that are
contrary to any local government rent control ordinance. This allows
Hawaiian municipalities the ability to abrogate the normal procedures found
at state law through local rent control ordinances.

27. 27
Local governments are creatures of the State and derive their
power to regulate anything from the State. The General Assembly
has the authority to remove any power it has given to local
governments at any time. The Supreme Court of North Carolina
could hold that mandatory inclusionary zoning ordinances are
perfectly legal and the General Assembly could overturn that
ruling by statute immediately thereafter. If the City wants to
push forward, it should understand that all of its efforts might
be immediately for naught and subject to the whim of the General
Assembly.
§160A-174 grants the municipality the authority to
legislate pursuant to the State’s police power and the King case
tells us that the legislative judgment of the local government is
given broad deference in this regard. This echoes the due process
cases that tell us that when a municipality is acting in valid
exercise of its police power, that is, for the health and safety
of its citizens, deference is given and the courts will not
displace the legislative judgment with its own. Additionally,
since §160A-174 are inherently ambiguous, §160A-4’s directive to
allow broad deference applies.
When a statute is without ambiguity, the Court’s will
enforce the statute as written; there being no need to defer to
the local government’s belief about the meaning of the statute
because the General Assembly has spoken.
§NCGS 160A-381 creates an enumerated list of various
actions the municipality might use under its power to zone.
§NCGS 160A-177 stands for the proposition that when an enumerated
list, as found in §160A-381 is found in Chapter 160A, that list
is not exclusive and the powers listed are not the only powers
that the municipality might have.
§NCGS 160A-4 likely does not apply when interpreting §160A-
381 and §160A-383. This is a significant roadblock and may be a
decisive one. The Lanvale Court states that the parallel county
statutes unambiguously state that a local government has the
power to zone and define the extent of the zoning power. That
case stands for the proposition that local governments cannot
take any action they want and simply refer to it as a zoning
ordinance because it affects real property. §160A-4(broad
deference) and §160A-177(enumeration not exclusive) were not
intended to give local governments that type of latitude. For
lack of a better way to state it: a zoning ordinance must be a
zoning ordinance.

28. 28
In Court, the City will have the burden of producing
competent evidence that its actions are not arbitrary and are in
fact to promote the values expressed in the delegation of police
power. This may include information found in the Bowen Report
and other studies that show the extreme circumstances found in
Asheville and the surrounding area regarding the inflated rent
prices and the extreme dearth of available housing for
individuals of low, modest or even higher incomes. There is no
guarantee that this will satisfy any court and will likely
require additional and expensive expert testimony at the trial
level. 99
Similarly, the City should be prepared to show the
research relied upon to prove that smart growth measures such as
inclusionary zoning it chooses to enact are effective in
alleviating the problems we are faced with. The City should
understand that the Consequences of losing could be very costly.
The City might be required to pay the challenger’s attorneys’
fees which could be significant. The City could also be required
to pay any actual damages incurred by aggrieved builders were
their challenge successful. The City Attorney’s office should be
consulted
IX. PROCEDURAL ISSUES
It is also crucial that a municipality makes sure that all
parts of the required legislative process are followed. Were there to
be a misstep, an inclusionary zoning ordinance could fail on a
challenge based on procedural due process. Detailing every step
involved in properly drafting and enacting an inclusionary zoning
ordinance is beyond the scope of this report. However, the City
Attorney’s office is expert in these areas and Council should
fastidiously follow their advice. What follows is a few points about
the importance of doing so.
Normally, when the legislature passes a law that affects a
general class of the public, those constituents have received the
process that is due to them. In relation to zoning in North Carolina,
the General Assembly has set out a laundry list of other procedural
requirements that must be satisfied before an otherwise statutorily
and constitutionally compliant ordinance will be held to be valid. “A
municipality’s authority to enact and amend zoning ordinances is
‘subject to the limitations imposed by the enabling statute and by the
Constitution. These limitations forbid arbitrary and unduly
discriminating interference with property rights in the exercise of

29. 29
such power…thus a zoning ordinance…which is not adopted in accordance
with the enabling statue is invalid and ineffective.”100
Appellate courts are generally inclined to dispose of a case,
where possible, on procedural grounds without ruling on the merits (in
this case, whether or not a municipality has authority under the
enabling statute to pass a mandatory inclusionary zoning program)101
.
While an adverse ruling due to procedural missteps would not end a
city’s ability to enact an inclusionary zoning ordinance, the city
would have to start the process again expending time and resources.
X. CONCLUSION
The conclusion is not a satisfying one. It remains impossible to know
what a North Carolina court will do when it is faced with a challenge
to an inclusionary zoning scheme. More information is needed
regarding the way a court will define rent control even though it is
likely that a local government can distinguish its ordinance from what
is typically thought of as rent control. More information is needed
to predict whether a North Carolina court will determine that a local
government has the authority to enact a mandatory inclusionary zoning
ordinance under the enabling statute.
100
Heaton v. City of Charlotte, 277 N.C. 506, 513 (1970). See: Sellers v.
Asheville, 33 N.C. App. 544(1977); where the city of Asheville tried to zone
area outside of its city limits, but had failed to provide a timely notice of
public hearing and the notice did not state that any area outside of the city
limits was to be zoned. The Court also found that the ordinance itself did
not properly define the extraterritorial that would be affected. For Similar
rulings related to counties, See: Thrash L.P. v County of Buncombe,673 S.E.2d
698(2009). The North Carolina Court of Appeals found that Buncombe County
had not complied with N.C.G.S. §153A-323 because a public hearing on
consideration of the ordinance was not advertised in accordance with
statutory requirements. Due to this procedural failure, the Court held that
the ordinance was invalid.
101
see Keiger v. Winston-Salem Board of Adjustment, 281 N.C. 715,(1972). Where
the Plaintiff/Property owner was denied a special use permit to build a
mobile-home park on a parcel owned by them challenged the board of
adjustment’s ruling. The Court found that a rezoning ordinance passed within
3 days after the planning board filed its recommendation with the board of
aldermen did not comply with the notice provisions of N.C.G.S §160-175. The
Court stated: “In this case we do not reach the questions of what effects a
validly enacted rezoning ordinance would have had on petitioner’s right to
construct the mobile home park. For decision here it suffices to say that an
applicant’s right to a permit, denied under an existing valid ordinance which
entitled him to it, may not be defeated by a purported amendment which was
void ab initio because it was not adopted as required by the enabling
statute.”

30. 30
There may be best practices available for local governments when
enacting its inclusionary zoning ordinance, but there is certainly no
magic formula. The courts will have broad discretion to rule for or
against the local government on either of these issues. The only
certainty is that the General Assembly may enact a statement if it
chooses to do so either allowing the practice or prohibiting it.
Given the uncertainty, not only should local governments attempt
to pursue political solutions to this problem, but local governments
should enact these type of ordinances with great caution.