PHG Asheville, LLC v. City of Asheville

262 N.C.App. 231

822 S.E.2d 79

PHG ASHEVILLE, LLC, Petitioner,

v.CITY OF ASHEVILLE, Respondent.

No. COA18-251

Court of Appeals of North Carolina.

Filed: November 6, 2018

Smith Moore Leatherwood LLP, Greensboro, 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 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;

(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 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;

(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

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.

"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).

"[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...