This post was authored by Sebastian Perez, J.D.
A homeless shelter sued the town and their board of adjustment, alleging a violation of the Equal Protection Clause of the Fourteenth Amendment when the town required that the shelter obtain a conditional use permit, and alleging a violation of state law governing the conditional use permit approval process.
In 2018, Catherine H. Barber Memorial Shelter, Inc. (“Shelter”) was looking for a new location in Wilkes County, North Carolina to meet its needs. That same year, the Town of North Wilkerson (“Town”) added a homeless -shelter provision to its local zoning ordinance (the “Zoning Ordinance”) which set strict limitations on where homeless shelters could have been located, required homeless shelters to be in the highway-business district; be at least 250 feet away from residences, parks, and schools; provide supervision; have at least 50 heated square feet per client; be in harmony with the area, and obtain a conditional use permit (“CUP”). There were six criteria that the Town considered when deciding whether to grant a CUP: public safety; zoning compliance; no substantial injury to property values; area harmony; water and sewer availability; and conformity with the Town’s general plan. The applicant bore the burden of producing sufficient evidence at a hearing to demonstrate that the desired use complied with the Town’s Ordinance.
In 2020, office space in North Wilkesboro was donated to the Shelter which then filed a CUP application (”CUP Application”) to move in. The North Wilkesboro Board of Adjustment (the “Board”) held a quasi-judicial hearing to discuss the Shelter’s CUP application. Testimony in support of the application included: that it met all zoning requirements; operating hours were overnight; central location; and no previous complaints from neighbors. In response, neighboring property owners and renters testified in opposition to the CUP Application alleging: a safety hazard created by Shelter’s sidewalk in close proximity to the highway and local business parking lots; negative impacts on local property values; and reports by property owners from Shelter’s previous location of a regular nuisance. After the hearing testimony, the Board deliberated for ten minutes and denied Shelter’s CUP application for three alleged reasons: (1) public health and safety; (2) substantial injury to nearby property values; and (3) lack of harmony. After the denial, the Shelter filed this action arguing that the requirement a homeless shelter obtain a CUP violated the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution and that the CUP denial violated North Carolina law governing the CUP approval process. In its complaint, the Shelter sought an order from the Court remanding the matter to the Board with instructions to issue the CUP or a permanent injunction ordering the Town and the Board to allow the Shelter to operate in the new location. Before the Court were the parties cross-motions for summary judgment.
The Shelter argued that the Board violated North Carolina law by denying its CUP application which required local governing boards to follow a two-step decision-making process in granting or denying a CUP application that included the establishment of prima facie evidence by the moving party and a finding “contra” supported by competent, material, and substantial evidence appearing in the record. The trial sitting in appellate capacity only found it undisputed that the Shelter’s application satisfied the basic zoning ordinance criteria for a homeless shelter other than the CUP. The Shelter had established its prima facie case by presenting sufficient evidence to show it had satisfied the applicable ordinance standard which then created a presumption the Shelter was entitled to the permit. Based on the Shelter’s contention that the Board’s decision was arbitrary and capricious, the Court was required to perform a whole record review after striking any incompetent evidence. The Board asked the Court to ignore a clear error made when it denied the Shelter the ability to cross-examine neighboring property owners, arguing that the error was harmless and did not affect the outcome of the proceeding. However, the Court determined that the Board’s refusal to allow the Shelter to cross-examine the testifying witnesses was prejudicial to the Shelter and in violation of North Carolina law which required a plaintiff to show not only an error existed, but it also affected the outcome of the proceeding. The Supreme Court of North Carolina prescribed the remedy in such situations by deeming uncrossed testimony as incompetent and inadmissible. Excluding all the incompetent evidence, the Court proceeded to evaluate the Board’s reasoning for denying the CUP based on the remaining competent evidence.
First, the Court considered the impact the Shelter would have on neighboring property values. The Board had found that the Shelter would negatively impact property values and the Shelter contended that there was no competent evidence to support that finding. The Court determined that the testimony offered to support the Board’s decision was uncrossed witness testimony and therefore incompetent evidence which could not be considered. Second, the Court considered whether the Shelter would be in harmony with the area. The Board had denied the Shelter on that point because it determined that the Shelter would not be harmonious with nearby retail businesses. The Shelter argued that the Board’s ruling was arbitrary and capricious because it effectively barred the Shelter from operating anywhere in the town. The Court determined that an analysis incapable in all circumstances of a favorable ruling for the Shelter could not satisfy the Board’s burden to provide substantial competent evidence in support of its position and was therefore arbitrary and capricious. Last, the Court considered whether the Shelter posed a threat to the local public health and safety. The Board had concluded that the proposed use of the property would have created a danger to public health and safety because of the Shelter’s rules and hours of operation. The Board highlighted the Shelter’s proximity to the highway as a concern for safety which was contradicted by the local zoning ordinance which required a homeless shelter to be in the highway business district. Another contradiction regarding safety by the highway was the Board’s criticism of a sidewalk in front of the proposed property and alleged Shelter residents could easily fall from the sidewalk onto the highway which went against a Board’s prior denial of a CUP to the Shelter on a different proposed property for the location’s failure to have a sidewalk. The Court, therefore, concluded that the Board’s finding on public safety was unreasonable and arbitrary, and capricious. The Court found that the Board’s denial of the CUP violated North Carolina law and was required to reverse the Board’s denial and remanded with instructions to issue the CUP. The Court then reviewed the Shelter’s constitutional claim that the CUP requirement was both facially unconstitutional and unconstitutional as applied to it. The Shelter argued it was treated differently than similarly situated businesses and uses when it noted that North Wilkesboro did not require a CUP in the highway business district for the other specified uses in the zoning ordinance. The Town argued that there were meaningful differences between the Shelter and the uses cited as similar. The Court distinguished identical uses and similarly situated which depended on the legislative aim. CUPs were required for the intensity of the land use and the potential impact on adjoining property owners. Since the focus was on the intensity of the land use, the Shelter satisfied its initial burden when it showed it was intentionally treated differently than similarly situated uses. The Shelter next needed to show that the disparate treatment could not have been justified under rational basis review. The Court concluded that the Board relied on several factors to deny the CUP to the Shelter and each one failed the rational basis test. First, the public concern factor failed because mere negative attitudes, or fear, not supported by factors that were properly cognizable in a zoning proceeding, were not permissible bases to treat one group differently than another similarly situated one. Second, the traffic and safety and harmony factors also failed because the Town failed to sufficiently distinguish the Shelter from other permitted uses that would similarly generate traffic late at night and create a potential risk for pedestrians that used the required sidewalk in proximity to the highway. In the Court’s view, these failed arguments were instead an attempt by the Town to improperly use a land use regulation to regulate people. The Court held that although courts correctly show deference to state zoning regulations, such deference could not be an excuse for the Court to abdicate its duty to protect the constitutional rights of all people and that North Wilkesboro intentionally treated the Shelter differently from other similarly situated uses which failed the rational basis test.
In conclusion, the Court found the CUP requirement violated the Equal Protection Clause as applied to the Shelter and granted the Shelter’s motion for summary judgment while denying the Town’s and remanded to the Board with instructions to grant the Shelter the CUP.
Catherine H. Barber Memorial Shelter, Inc. v Town of North Wilkesboro Board of Adjustment of the Town of North Wilkesboro, 576 F. Supp. 3d 318 (WD NC 12/20/2021)
LAW OF THE LAND 
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