PHG Asheville, LLC v. City of Asheville

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA18-251

Filed: 6 November 2018

Buncombe County, No. 17 CVS 01188

PHG ASHEVILLE, LLC, Petitioner,

v.

CITY OF ASHEVILLE, Respondent.

Appeal by respondent from order entered 2 November 2017 by Judge William

H. Coward in Buncombe County Superior Court. Heard in the Court of Appeals 20

September 2018.

Smith Moore Leatherwood LLP, by Kip D. Nelson and Thomas E. Terrell, Jr.,
for petitioner-appellee.

City of Asheville City Attorney’s Office, by City Attorney Robin Tatum Currin
and Assistant City Attorney Catherine A. Hofmann, for respondent-appellant.

TYSON, Judge.

The City of Asheville (“the City”) appeals from an order of the superior court

reversing the City’s denial of a conditional use permit to PHG Asheville, LLC for the

construction of a hotel. We affirm.

I. Background

PHG Asheville, LLC (“Petitioner”), a North Carolina business entity,

submitted an application to the City for a conditional use permit (“CUP”) on 27 July

2016. Petitioner planned to construct an eight-story, 178,412 square foot Embassy
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Suites hotel, with 185 rooms and on-site parking structure, to be built upon a 2.05

acre parcel located in downtown Asheville at 192 Haywood Street (the “Project”). The

property is zoned “Central Business District,” (“CBD”), which includes hotels as a

permitted use. The property is also located within the “Downtown Design Review

Overlay District” (“DDROD’’) under the City’s Uniform Development Ordinance

(“UDO”). Asheville, N.C., Code of Ordinances, § 7-5-9.1(a)(1) (2016).

Development projects designed to contain a gross floor area greater than

175,000 square feet to be built on parcels zoned CBD and located in the DDROD are

subject to the City’s “Level III site plan” review. This multi-level review includes a

quasi-judicial hearing for issuance of a CUP from the Asheville City Council.

Asheville, N.C., Code of Ordinances, § 7-5-9.1(a)(1),(7) (2016).

The UDO provides the following criteria for issuance of a CUP:

Conditional use standards. The Asheville City Council
shall not approve the conditional use application and site
plan unless and until it makes the following findings, based
on the evidence and testimony received at the public
hearing or otherwise appearing in the record of the case:

(1) That the proposed use or development of the land will
not materially endanger the public health or safety;

(2) That the proposed use or development of the land is
reasonably compatible with significant natural and
topographic features on the site and within the immediate
vicinity of the site given the proposed site design and any
mitigation techniques or measures proposed by the
applicant;

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(3) That the proposed use or development of the land will
not substantially injure the value of adjoining or abutting
property;

(4) That the proposed use or development of the land will
be in harmony with the scale, bulk, coverage, density, and
character of the area or neighborhood in which it is located;

(5) That the proposed use or development of the land will
generally conform with the comprehensive plan, smart
growth policies, sustainable economic development
strategic plan, and other official plans adopted by the city;

(6) That the proposed use is appropriately located with
respect to transportation facilities, water supply, fire and
police protection, waste disposal, and similar facilities; and

(7) That the proposed use will not cause undue traffic
congestion or create a traffic hazard.

Asheville, N.C., Code of Ordinances, § 7-16-2(c) (2016).

Petitioner’s Project was reviewed by, and received recommendations for

approval from, the City’s planning department staff, the Technical Review

Committee, the Downtown Commission, and the Asheville Planning & Zoning

Commission. All of these recommendations were submitted to the City Council. The

City Council conducted a quasi-judicial public hearing on Petitioner’s CUP

application on 24 January 2017.

Petitioner presented three expert witnesses, who testified and were questioned

and who submitted detailed reports at the hearing. No evidence was offered in

opposition to Petitioner’s CUP application. One area resident present at the hearing

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questioned whether the hotel could possibly create a sight line issue that could affect

traffic safety.

At the close of the hearing, the City Council voted to deny Petitioner’s

application for a CUP. Three weeks later on 14 February 2017, the City issued an

order containing 44 written findings of fact and 2 conclusions of law, detailing why it

denied Petitioner’s requested CUP. The City concluded the CUP should be denied

because Petitioner did not produce competent, material and substantial evidence

establishing criteria 1, 2, 3, 4, 5 or 7 of § 7-16-2(c) of the UDO. Aside from its

additional 44 findings of fact, the City ultimately found:

2. In this case, the City Council finds that the CUP should
be denied, for the following reasons, pursuant to UDO
Section 7-16-2(c):

(1) The Applicant failed to produce competent,
material and substantial evidence that the Hotel
will not materially endanger the public health or
safety;

(2) The Applicant failed to produce competent,
material and substantial evidence that the Hotel is
reasonably compatible with significant topographic
features of the site and within the immediate
vicinity of the site given the proposed site design and
any mitigation techniques or measures proposed by
the applicant;

(3) The Applicant failed to produce competent,
material and substantial evidence that the Hotel
will not substantially injure the value of the
adjoining or abutting property;

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(4) The Applicant failed to produce competent,
material and substantial evidence that the Hotel
will be in harmony with the scale, bulk, coverage,
density, and character of the area or neighborhood
in which it is located and, moreover, the evidence
instead showed the Hotel would not be in harmony
with the scale, bulk, coverage and character of the
area and neighborhood.

(5) The Applicant failed to produce competent,
material and substantial evidence that the Hotel
will generally conform to the comprehensive plan,
smart growth policies, sustainable economic
development strategic plan and other official plans
adopted by the City and, moreover, the evidence
instead showed the Hotel would not generally
conform to the City’s 2036 Vision Plan; and

(7) The Applicant failed to produce competent,
material and substantial evidence that the Hotel
will not cause undue traffic congestion or create a
traffic hazard.

On 16 March 2017, Petitioner filed a petition for writ of certiorari in superior

court to seek review of the City’s decision. The superior court entered an order after

determining de novo Petitioner had established a prima facie case for entitlement to

a CUP. The court concluded the City’s decision to deny Petitioner a CUP was

arbitrary and capricious, and it reversed and remanded the matter with an order to

the City Council to grant Petitioner’s requested CUP on 2 November 2017. The City

timely appealed from the superior court’s order.

II. Jurisdiction

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Jurisdiction lies in this Court from an appeal of right from a final judgment of

the superior court. N.C. Gen. Stat. § 7A-27(b) (2017).

III. Standard of Review

“Judicial review of town decisions to grant or deny conditional use permits is

provided for in G.S. 160A-388(e), which states, inter alia, ‘Every decision of the board

shall be subject to review by the superior court by proceedings in the nature of

certiorari.’” Coastal Ready-Mix Concrete Co. v. Bd. Of Comm’rs, 299 N.C. 620, 623,

265 S.E.2d 379, 381 (1980).

[T]he task of a court reviewing a decision on an application
for a conditional use permit made by a town board sitting
as a quasi-judicial body includes:

(1) [r]eviewing the record for errors in law,

(2) [i]nsuring that procedures specified by law in both
statute and ordinance are followed,

(3) [i]nsuring that appropriate due process rights of a
petitioner are protected including the right to offer
evidence, cross-examine witnesses, and inspect documents,

(4) [i]nsuring that decisions of town boards are supported
by competent, material and substantial evidence in the
whole record, and

(5) [i]nsuring that decisions are not arbitrary and
capricious.

Id. at 626, 265 S.E.2d at 383.

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“The standard of review of the superior court depends upon the purported

error.” Little River, LLC v. Lee Cty., __ N.C. App. __, __, 809 S.E.2d 42, 46 (2017)

(citing Morris Commc’ns Corp. v. Bd. of Adjustment of Gastonia, 159 N.C. App. 598,

600, 583 S.E.2d 419, 421 (2003)). “When a party alleges the [decision-marking

board’s] decision was based upon an error of law, both the superior court, sitting as

an appellate court, and this Court reviews the matter de novo, considering the matter

anew.” Dellinger v. Lincoln Cty., __ N.C. App. __, __, 789 S.E.2d 21, 26 (2016) (citation

omitted).

“When the petitioner questions (1) whether the agency’s decision was

supported by the evidence or (2) whether the decision was arbitrary or capricious,

then the reviewing court must apply the whole record test.” ACT-UP Triangle v.

Comm’n for Health Servs. of the State of N.C., 345 N.C. 699, 706, 483 S.E.2d 388, 392

(1997) (citation and quotation marks omitted). “The whole record test requires that

the [superior] court examine all competent evidence to determine whether the

decision was supported by substantial evidence.” Morris Commc’ns, 159 N.C. App. at

600, 583 S.E.2d at 421. The initial issue of whether a petitioner has presented

competent, material, and substantial evidence to obtain a special use permit is

subject to de novo review. Am. Towers, Inc. v. Town of Morrisville, 222 N.C. App. 638,

641, 731 S.E.2d 698, 701 (2012).

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“[T]he terms ‘special use’ and ‘conditional use’ are used interchangeably[.] . . .

[A] conditional use or a special use permit ‘is one issued for a use which the ordinance

expressly permits in a designated zone upon proof that certain facts and conditions

detailed in the ordinance exist.’” Concrete Co., 299 N.C. at 623, 265 S.E.2d at 381

(quoting Humble Oil & Ref. Co. v. Bd. of Aldermen, 284 N.C. 458, 467, 202 S.E.2d

129, 136 (1974) (other citation omitted)).

A particular standard of review applies at each of the three
levels of this proceeding—the [council], the superior court,
and this Court. First, the [council] is the finder of fact in its
consideration of the application for a special use permit.
The [council] is required, as the finder of fact, to follow a
two-step decision-making process in granting or denying
an application for a special use permit. If an applicant has
produced competent, material, and substantial evidence
tending to establish the existence of the facts and
conditions which the ordinance requires for the issuance of
a special use permit, prima facie he is entitled to it. If a
prima facie case is established, [a] denial of the permit
[then] should be based upon findings contra which are
supported by competent, material, and substantial evidence
appearing in the record.

Davidson Cty. Broad., Inc. v. Rowan Cty. Bd. of Comm’rs, 186 N.C. App. 81, 86, 649

S.E.2d 904, 909 (2007) (emphasis supplied) (citation and internal quotation marks

omitted), disc. review denied, 362 N.C. 470, 666 S.E.2d 119 (2008).

“When this Court reviews a superior court’s order regarding a zoning decision

by a [decision-making board], we examine the order to: ‘(1) determin[e] whether the

[superior] court exercised the appropriate scope of review and, if appropriate, (2)

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decid[e] whether the court did so properly.’” Id. at 87, 649 S.E.2d at 910 (citations

omitted).

IV. Analysis

A petitioner’s burden on an application for a CUP is well established. An

applicant for a CUP must establish a prima facie case, by competent, material, and

substantial evidence, meeting all the conditions in the zoning ordinance. Humble Oil

284 N.C. at 467, 202 S.E.2d at 136. “Material evidence” has been recognized by this

Court to mean “[e]vidence having some logical connection with the facts of

consequence or issues.” Innovative 55, LLC v. Robeson Cty., __ N.C. App. __, __, 801

S.E.2d 671, 676 (2017) (citing Black’s Law Dictionary 638 (9th ed. 2009)).

“Substantial evidence” has been defined to mean such relevant “evidence as a

reasonable mind might accept as adequate to support a conclusion.” Id. (citation

omitted).

It must do more than create the suspicion of the existence
of the fact to be established. . . . [I]t must be enough to
justify, if the trial were to a jury, a refusal to direct a
verdict when the conclusion sought to be drawn from it is
one of fact for the jury.

Humble Oil, 284 N.C. at 471, 202 S.E.2d at 137 (citations and quotation marks

omitted).

It is well established that:

When an applicant has produced competent, material, and
substantial evidence tending to establish the existence of

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the facts and conditions which the ordinance requires for
the issuance of a special use permit, prima facie he is
entitled to it. A denial of the permit should be based upon
findings contra which are supported by competent,
material, and substantial evidence appearing in the record.

Dellinger, __ N.C. App. at __, 789 S.E.2d at 27 (citing Humble Oil, 284 N.C. at 468,

202 S.E.2d at 136).

“[G]overnmental restrictions on the use of land are construed strictly in favor

of the free use of real property.” Morris Commc’ns v. City of Bessemer Zoning Bd. of

Adjustment, 365 N.C. 152, 157, 712 S.E.2d 868, 871 (2011).

Council members sitting in a quasi-judicial capacity must base their decision

to grant or deny a CUP on objective factors, which are based upon the evidence

presented, and not upon their subjective preferences or ideas. See id. “A city council

may not deny a conditional use permit in their unguided discretion or because, in

their view, it would adversely affect the public interest.” Howard v. City of Kinston,

148 N.C. App. 238, 246, 558 S.E.2d 221, 227 (2002). “[T]he denial of a conditional use

permit may not be based on conclusions which are speculative, sentimental, personal,

vague or merely an excuse to prohibit the requested use.” Id.

Petitioner is not seeking a rezoning, but rather a CUP to conduct a use that is

expressly permitted in the CBD zoning district by the UDO. See Asheville, N.C., Code

of Ordinances, § 7-5-9.1(a)(1). The legislative and policy decision of whether to allow

a hotel use in a CBD zoning district has already been made by the City Council in

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adopting the UDO ordinance. “A conditional use permit is one issued for a use which

the ordinance expressly permits in a designated zone upon proof that certain facts

and conditions detailed in the ordinance exist.” Woodhouse v. Bd. of Comm’rs of the

Town of Nags Head, 299 N.C. 211, 215, 261 S.E.2d 882, 886 (1980) (citation and

quotation marks omitted).

Governing bodies sitting in a quasi-judicial capacity are performing as judges

and must be neutral, impartial, and base their decisions solely upon the evidence

submitted. See Handy v. PPG Indus., 154 N.C. App. 311, 321, 571 S.E.2d 853, 860

(2002) (“Neutrality and the appearance of neutrality are equally critical in

maintaining the integrity of our judicial and quasi-judicial processes”). The property

rights of CUP applicants must be respected and protected and the due process

procedures must be followed.

A quasi-judicial hearing is a judicial proceeding and not a legislative function.

See Butterworth v. City of Asheville, 247 N.C. App. 508, 511, 786 S.E.2d 101, 105

(2016) (“In making quasi-judicial decisions, the decision-maker must exercise

discretion of a judicial nature.” (citation and quotations omitted)). It is not an

occasion to revisit the zoning or permitted uses of a property. Council members’

personal or policy preferences are irrelevant and immaterial. See Sun Suites

Holdings, LLC v. Bd. of Aldermen of Town of Garner, 139 N.C. App. 269, 276, 533

S.E.2d 525, 530 (2000) (“speculative assertions or mere expression of opinion about

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the possible effects of granting a permit are insufficient to support the findings of a

quasi-judicial body”).

In quasi-judicial proceedings, no board or council member should appear to be

an advocate for nor adopt an adversarial position to a party, bring in extraneous or

incompetent evidence, or rely upon ex parte communications when making their

decision. It is incumbent upon city and county attorneys to advise and inform

decision-making boards of their proper roles and procedures required in quasi-

judicial proceedings.

A. Superior Court Applied the Correct Standard of Review

The City argues the superior court misapplied the standards of review in

assessing the City’s written decision to deny Petitioner a CUP. The City contends

the superior court “expressly and erroneously applied de novo review in evaluating

whether the evidence was ‘sufficient’” based upon the court’s conclusion 4:

4. Exercising de novo review, the Court concludes as a
matter of law that the evidence presented by PHG and
other supporting witnesses was competent, material and
substantial and sufficient to establish a prima facie case of
entitlement to a conditional use permit. In deciding
otherwise, the Council made an error of law. A court
reviews “de novo the initial issue of whether the evidence
presented by a petitioner met the requirement of being
competent, material, and substantial.” Blair Investments,
LLC v. Roanoke Rapids City Council, 231 N.C. App. 318,
321, 752 S.E.2d 524, 527 (2013).

This conclusion 4, and the superior court’s citation to this Court’s decision in

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Blair Investments, clearly shows the superior court appropriately applied de novo

review in determining whether Petitioner had presented “competent, material, and

substantial” evidence to establish a prima facie case. When a petitioner meets its

initial burden to present competent, material, and substantial evidence that it is

entitled to a CUP, petitioner has established a prima facie case to issuance of the

CUP. See Am. Towers, 222 N.C. App. at 641, 731 S.E.2d at 701 (“We must determine

whether petitioner presented competent, material, and substantial evidence. If so,

then petitioner has made out a prima facie case”).

Presuming arguendo, the superior court correctly determined Petitioner’s

evidence was competent, material, and substantial, then Petitioner’s evidence was

necessarily “sufficient” to make out a prima facie case. See id. The superior court’s

order shows it did not weigh evidence, but properly applied de novo review to

determine the initial legal issue of whether Petitioner had presented competent,

material, and substantial evidence. The City’s argument is overruled.

The City also argues the superior court improperly made a de novo review of

the evidence without applying whole record review to the City Council’s 44 findings

of fact. The City asserts Petitioner was required to specifically challenge the City

Council’s 44 findings of fact before the superior court. We disagree.

In Little River, the Lee County Board of Adjustment made 15 findings of fact

to support its denial of the petitioner’s requested special-use permit. __ N.C. App. __,

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809 S.E.2d at 42. This Court determined the Petitioner had met its prima facie

showing of entitlement to the SUP under de novo review. Id. at __, 809 S.E.2d at 52.

Rather than specifically addressing each of the Board of Adjustment’s findings of fact,

this Court stated: “Many of the Board’s findings of fact to support its conclusions are

based solely upon opponents’ evidence and wholly ignore the evidence presented to

make a prima facie showing by Petitioner.” Id. at __, 809 S.E.2d at 50.

This Court then held: “The Board’s findings are unsupported by competent,

material, and substantial evidence, and its conclusions thereon are, as a matter of

law, erroneous. Respondent-Intervenors did not present substantial, material, and

competent evidence to rebut Petitioner’s prima facie showing of entitlement to a

SUP.” Id. at __, 809 S.E.2d at 51. Here, as in Little River, it was unnecessary for the

superior court, and is unnecessary for this Court, to specifically address each of the

City Council’s 44 findings of fact, because no “competent, material, and substantial

evidence” contra was presented to rebut Petitioner’s prima facie showing. Id.

“[F]indings of fact are not necessary when the record sufficiently reveals the

basis for the decision below or when the material facts are undisputed and the case

presents only an issue of law.” N.C. Gen. Stat. § 160A-393(l)(2) (2017) (emphasis

supplied). The City Council’s 44 findings of fact were unnecessary, improper, and

irrelevant. No competent, material, and substantial evidence was presented to rebut

Petitioner’s prima facie case, and no conflicts in the evidence required the City

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Council to make findings to resolve any disputed issues of fact. See Dellinger, __ N.C.

App. at __, 789 S.E.2d at 27.

Under the terms of its own order, the City Council did not have to make 44

findings of fact to weigh or resolve conflicts in the evidence. The City Council made

the initial legal determination Petitioner had failed to present competent, material,

and substantial evidence to establish a prima facie case of entitlement to a CUP.

Once the City Council made this legal determination, it was unnecessary and

erroneous to make 44 findings of fact on unchallenged evidence beyond the required

ultimate findings on the 7 criteria specified by the UDO. Asheville, N.C., Code of

Ordinances, § 7-16-2(c).

Additionally, once the superior court made the initial de novo determination

that Petitioner had presented competent, material, and substantial evidence to

establish a prima facie case, and no competent, material, and substantial evidence

contra was presented in opposition or rebuttal to Petitioner’s evidence, Petitioner was

entitled to a CUP as a matter of law. See Dellinger, __ N.C. App. at __, 789 S.E.2d at

27. Further, any purported whole record review by the superior court of the City

Council’s extraneous and superfluous 44 “findings of fact” would have been

unnecessary.

The City’s argument that Petitioner was required to assign specific error to

any of the 44 extraneous and superfluous findings of fact is without merit. The City’s

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argument the trial court misapplied its standards of review by not conducting whole

record review of the City Council’s unnecessary 44 findings of fact on unchallenged

and unrebutted evidence is overruled.

B. Preservation of Arguments

Before this Court, the City only argues Petitioner has failed to establish 3 of

the 7 required criteria for issuance of a CUP under the UDO. These criteria are 3, 4,

and 7. Asheville, N.C., Code of Ordinances, § 7-16-2(c). The City Council denied the

requested CUP on the grounds Petitioner had failed to establish a prima facie case of

entitlement to the CUP under criteria 1, 2, 3, 4, 5, and 7. The City has abandoned

any arguments related to the superior court’s conclusion of Petitioner’s prima facie

satisfaction of criteria 1, 2, 5 and 6. N.C. R. App. P. 28(b)(6) (“Issues not presented

in a party’s brief, or in support of which no reason or argument is stated, will be taken

as abandoned”). Petitioner’s prima facie compliance with criteria 1, 2, 5 and 6 is

unchallenged and established as a matter of law. Id.

C. Criteria 3: Impact on Adjoining or Abutting Property

The City contends Petitioner has failed to meet its burden of establishing a

prima facie case of entitlement to a CUP, because it has not presented material

evidence. The City concedes Petitioner’s expert testimony and reports were properly

admitted without objection and this evidence was competent and substantial.

“Material evidence” is defined to mean “[e]vidence having some logical connection

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with the facts of consequence or the issues.” Innovative 55, __ N.C. App. at __, 801

S.E.2d at 676 (internal citation omitted).

The City argues the superior court erred by reversing the City Council’s

conclusion that Petitioner had failed to meet its burden of producing competent,

material, and substantial evidence that the Project “will not substantially injure the

value of adjoining or abutting property.” Asheville, N.C., Code of Ordinances, § 7-16-

2(c)(3).

The City contends Defendant’s expert witness’s uncontradicted testimony and

report were not material, because the City Council found inadequacies in the

methodologies employed by the expert. The City cites this Court’s opinions in

American Towers and SBA v. City of Asheville City Council to support its assertions

that the City Council could determine Petitioner failed to establish a prima facie case

under criteria 3 because of “perceived inadequacies” in Petitioner’s expert’s analysis.

We disagree.

In American Towers, an applicant applied to the Town of Morrisville for a

special use permit to erect a telecommunications tower. 222 N.C. App. at 642, 731

S.E.2d at 702. One of the criteria for obtaining a special use permit was “that the

proposed development or use will not substantially injure the value of adjoining

property.” Id. At a hearing before the town board, the applicant offered the testimony

and report of an appraiser, who had been admitted as an expert witness. Id. at 639,

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731 S.E.2d at 700. No expert testimony was presented to rebut the applicant’s expert

appraiser. Id.

The town board denied the applicant’s requested special use permit based, in

part, upon the applicant’s failure to establish a prima facie case that the tower “would

not substantially injure the value of adjoining properties.” Id. at 646, 731 S.E. 2d at

704. The superior court affirmed the town board’s decision to deny the special use

permit. Id. at 638, 731 S.E.2d at 700.

This Court affirmed the superior court’s order upholding the town board’s

denial of the special use permit. Id. This Court recited the town board’s reasons for

concluding the applicant had failed to establish a prima facie case that the tower

“would not substantially injure the value of adjoining properties[,]” as follows:

1) the report was not benchmarked against other
developments or against the market in general, 2) in the
two subdivisions studied by Mr. Smith the cell tower was
in place before the neighboring homes were built. (as
opposed to the case at hand here), 3) the report did not
attempt to study the effect of possible devaluation of
property, and 4) the report did not take into account any
potential loss of value due to the loss of “curb appeal” with
the tower rising above the adjoining residential
neighborhood.

Id. at 645, 731 S.E.2d at 703.

This Court in American Towers summarized the Court’s prior holding in SBA,

as follows:

This Court was faced with a virtually identical fact

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situation in the case of SBA v. City of Asheville City
Council. 141 N.C. App. 19, 539 S.E.2d 18 (2000). In SBA,
one of the bases for rejecting the application for a
conditional use permit to erect a telecommunications tower
was the failure of petitioner to establish a prima facie case
that the value of adjoining properties would not be
adversely affected. We noted that:

City Code § 7-16-2(c)(3) requires a showing that the
value of properties adjoining or abutting the subject
property would not be adversely affected by the
proposed land use. The City’s Staff Report submitted
to respondent expressed concern that petitioners’
Property Value Impact Study did not address
properties in the vicinity of the subject property, but
rather focused on towers and properties in other
parts of the City. Petitioners’ evidence was about
other neighborhoods and other towers in the City.
Their study did not even include information with
respect to an existing cellular tower a short distance
from the proposed site that potentially affected the
same neighborhoods. Petitioners simply did not
meet their burden of demonstrating the absence of
harm to property adjoining or abutting the proposed
tower as required by § 7-16-2(c)(3).

Id. at 27, 539 S.E.2d at 23.

Based upon the holding of SBA, respondent was permitted
to find that petitioner failed to present a prima facie case
based upon perceived inadequacies in the methodology of
its expert. We are bound by this ruling. In re Civil Penalty,
324 N.C. 373, 384, 379 S.E.2d 30, 36 (1989).

Id. at 645-46, 731 S.E.2d at 704.

Here, Petitioner presented the testimony and report of Tommy Crozier, who

was tendered and admitted as an expert witness in land appraisal and valuation

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without objection. Crozier certified that his report was prepared in conformity with

the “Uniform Standards of Professional Appraisal Practice” (“USPAP”). Crozier’s oral

testimony and report identified three properties, which directly adjoin or abut the

property comprising the Project, and two properties located directly across the street.

The adjoining and abutting properties are Carolina Apartments; First Church of

Christ, Scientist; and the Asheville Broad Center. The properties across the street

from the Project are a Hyatt Place hotel and an office building occupied by the

Salvation Army. The report states in relevant part:

The proposed hotel will consist of a new, ±$25M project
located amidst 50+ year old structures that have
historically been valued for tax purposes well below $3.0M.
The presence of the new hotel should meaningfully enhance
the values of surrounding properties. This Principle of
Progression has already materialized in the immediate
area, evidenced by record high transaction prices since the
nearby Hotel Indigo opened in 2009. (emphasis supplied).
...

There have been numerous examples of property value
enhancement as the result of revitalization (and as a result
of new hotel development specifically) in comparable
leisure markets like Charleston, Wilmington,
Chattanooga, Savannah and Greenville, SC[.]

Crozier’s report also contains an estimated value of $50.00 per square foot for

the implied land values of the properties adjoining the Project. Crozier’s estimate

was based upon the sale prices for “vacant sites or improved sites acquired for

redevelopment where the existing improvements were considered to have little to no

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contributory value.” Crozier’s report compares the $50.00 per square foot implied

land values of the adjoining properties to the substantially lower assessed ad valorum

values from the Buncombe County tax assessment conducted prior to Petitioner’s

purchase of the subject property located at 192 Haywood Street.

The City’s reliance upon SBA and American Towers is misplaced. Neither of

these Court’s opinions in SBA nor American Towers contains any indication that the

expert reports at issue in those cases were prepared in accordance with the applicable

USPAP standards of the property appraisal licensure or other governing bodies. See

SBA, 141 N.C. App. at 27, 539 S.E.2d at 18; Am. Towers, 222 N.C. App. at 645-46,

731 S.E.2d 698, 703-04.

Additionally, the expert reports in SBA and American Towers were immaterial

to the issue of whether the telecommunications towers would adversely impact the

value of adjoining property. The expert witness’ report in American Towers was

based upon an analysis of the values of adjoining properties built later than

neighboring cell phone towers. Am. Towers, 222 N.C. App. at 645, 731 S.E.2d at 703

(“[I]n the two subdivisions studied by Mr. Smith the cell tower was in place before the

neighboring homes were built.”).

The expert witness’ report in SBA “did not address properties in the vicinity of

the subject property, but rather focused on towers and properties in other parts of the

City.” SBA, 141 N.C. App. at 27, 539 S.E.2d at 23. Unlike the report in SBA, Crozier’s

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findings and conclusions specifically analyzes and addresses the values of properties

adjoining, abutting, and neighboring the Project in Asheville.

Crozier certified that “[t]he reported analyses, opinions, and conclusions were

developed, and this report has been prepared, in conformity with the requirements of

the Code of Professional Ethics & Standards of Professional Appraisal Practice of the

Appraisal Institute, which includes the Uniform Standards of Professional Appraisal

Practice.” No competent, material, and substantial expert evidence contra was

presented at the hearing to show Crozier’s analysis was unsound or utilized an

improper methodology.

Any competent, material, and substantial evidence to rebut Crozier’s admitted

expert testimony and report would have to have been presented by an expert witness

in land valuation. N.C. Gen. Stat. § 160A-393(k)(3)(a) (2017) (“The term ‘competent

evidence,’ as used in this subsection, shall not be deemed to include the opinion

testimony of lay witnesses as to . . . [t]he use of property in a particular way would

affect the value of other property”). The City Council’s lay notion that Crozier’s

analysis is based upon an inadequate methodology does not constitute competent

evidence under the statute to rebut his expert testimony and report. Innovative 55,

__ N.C. App. at __, 801 S.E.2d at 678 (“Speculative and general lay opinions and bare

or vague assertions do not constitute competent evidence before the [decision-making

body] to overcome the applicant’s prima facie entitlement to the CUP”).

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Crozier’s admitted and uncontroverted testimony and report meets the low

threshold of being “material evidence” as his analysis has a “logical connection” to

whether the Project “will impair the value of adjoining or abutting property.” Id. at

__, 801 S.E.2d at 676. Crozier’s analyses and conclusions that: (1) adjoining and

nearby property values in the neighborhood of the Project have increased since the

Hotel Indigo opened in 2009; (2) values of neighboring properties in other markets

have appreciated since the hotels were opened; and, (3) implied values of the

adjoining properties have substantially increased since the neighboring Hyatt Hotel

opened, all reinforce a “logical connection” to whether the Project will affect the value

of “adjoining or abutting property.” Crozier’s report and testimony constitutes

material, as well as competent and substantial, evidence to show prima facie

compliance with criteria 3. The City’s argument that Crozier’s testimony and report

are not “material” is contrary to the statute and controlling precedents, and is

overruled.

D. Criteria 4: Harmony with the Neighborhood

The City also argues Petitioner failed to present material evidence “[t]hat the

proposed use or development of the land will be in harmony with the scale, bulk,

coverage, density, and character of the area or neighborhood in which it is located.”

Asheville, N.C., Code of Ordinances, § 7-16-2(c)(4).

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Under our binding precedents, “The inclusion of the particular use in the

ordinance as one which is permitted under certain conditions, is equivalent to a

legislative finding that the prescribed use is one which is in harmony with the other

uses permitted in the district.” Woodhouse, 299 N.C. at 216, 261 S.E.2d at 886.

“[W]here a use is included as a conditional use in a particular zoning district, a prima

facie case of harmony with the area is established.” Habitat for Humanity of Moore

Cty., Inc v. Bd. of Comm’rs, 187 N.C. App. 764, 768, 653 S.E.2d 886, 888 (2007).

Here, the City does not dispute that a hotel is a permitted “use” in the CBD

zoning district under the UDO. The City argues that even though the use of the

subject property as a hotel in the CBD is a permitted use, the development of a hotel

is not presumed to “be in harmony with the area.” The statute, long-established

precedents and the UDO contain no basis that “development” of a use is to be treated,

analyzed, or distinguished from the “use” itself for purposes of criteria 4. Asheville,

N.C., Code of Ordinances, § 7-16-2(c)(4) (“the proposed use or development . . . will be

in harmony”); see, e.g. Petersilie v. Town of Boone Bd. of Adjustment, 94 N.C. App.

764, 767, 381 S.E.2d 349, 351 (1989) (using “use” and “development” interchangeably

in discussing special-use permit ordinance similar to Asheville’s UDO); Habitat, 187

N.C. App. at 768, 653 S.E.2d at 888 (treating “use” the same as “development” in

applying presumption that use is in harmony with an area when it is included as a

permitted use in the zoning district).

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In addition, Petitioner presented the testimony of an expert witness, Blake

Esselstyn. Esselstyn prepared a map showing the location of similar structures in

the area compared to the proposed Project. He testified that the “scale, bulk and

coverage” of the Project would be similar to a number of these similar structures. The

density of the Project would be similar to the Carolina Apartments, Vanderbilt

Apartments, and Battery Park Apartments located within the area of the Project.

Esselstyn also testified that the contemporary architectural style of the Project would

be harmonious with the area.

Petitioner’s “use or development” of the property for the conditional use of a

hotel in the permitted CBD zone establishes a prima facie case of harmony with the

area. Habitat, 187 N.C. App. at 768, 653 S.E.2d at 888. Although the City asserts

“use” should be distinguished from “development” in the UDO, Petitioner’s expert

witness, Esselstyn, established a prima facie case of harmony of the Project’s use and

development within the CBD area under criteria 4. The City’s argument is overruled.

E. Criteria 7: Undue Traffic Congestion or Traffic Hazard

The City also argues Petitioner failed to present material evidence to establish

a prima facie case under criteria 7. Criteria 7 requires: “That the proposed use will

not cause undue traffic congestion or create a traffic hazard.” Asheville, N.C., Code of

Ordinances, § 7-16-2(c)(7).

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Petitioner presented the testimony and report of traffic engineer Kevin Dean,

who was accepted and admitted as an expert witness without objection at the City

Council hearing. Dean’s report contains the data and results from a traffic analysis

he conducted on the streets and intersections adjacent to the Project. Dean testified

he had “coordinated with the City’s traffic engineer, and [were] told that all we needed

to provide was the trip generation table . . . as well as our anticipated distribution of

those trips.” Both the trip generation table and trip distributions were included in

Dean’s report.

Dean performed a “capacity analysis” and “collected peak hour traffic counts

on [Thursday,] November 10th” 2016. Dean testified he performed the traffic analysis

on a Thursday to accord with industry standards, which specify traffic should be

analyzed on days between Tuesday and Thursday.

Proposed traffic to and from the Project was estimated based upon industry

standard data promulgated by “the Institute of Transportation Engineers.” Dean’s

analysis showed the Project would increase the delays caused by traffic at nearby

intersections by “five percent . . . or less.” Dean testified that if his analysis had been

performed on days when there was more traffic volume on the roads, the estimated

traffic impact generated from the Project would impact a smaller percentage of

overall traffic, due to higher traffic volumes at those intersections from sources other

than the Project.

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Dean’s report indicates and concludes that “[w]ith the hotel in place, all of the

study intersections are expected to continue to operate at acceptable levels of service

with only minor increases in delay. Some of the intersections are expected to

experience a reduction in overall delay. . . .” Additionally, Dean concluded “traffic

entering the site should not conflict with traffic exiting the site.”

Based upon his analysis, Dean testified to his professional opinion that the

Project “will not cause undue traffic congestion or a hazard[.]”

Despite Dean’s expert testimony, and the absence of any expert testimony to

the contrary, the City Council found that Dean’s analysis was deficient, in part,

because: (1) Dean’s traffic analysis only included data for November 10th and not for

other times of the year; (2) Dean was not aware of whether environmental conditions

could have affected traffic volumes; (3) Dean did not conduct his traffic analysis

during the weekend; and (4) the traffic analysis “did not account for traffic that will

be generated by future hotels and apartments in the downtown area. . . .”

The City Council also found Dean’s analysis was deficient because a “sight

distance check” was not conducted to determine if a “blind hill with limited visibility

in the vicinity of the Hotel’s parking deck’s entrance and exit” would “endanger driver

or pedestrian safety.” This “finding” is apparently based upon a question posed by

Charles Rawls, a lay member of the public, at the City Council hearing. Rawls

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questioned whether there was a potential sight distance problem for traffic coming

over a purportedly blind hill near the Project’s planned parking deck.

No competent, material, and substantial evidence was presented to refute

Dean’s traffic analysis. Dean testified his study was conducted in accordance with

industry standards and used standard industry data and methods. The speculations

of lay members of the public and unsubstantiated opinions of City Council members

do not constitute competent evidence contra under the statute or precedents to rebut

Dean’s traffic analysis. N.C. Gen. Stat. § 160A-393(k)(3)(b) (“‘competent evidence,’ as

used in this subsection, shall not be deemed to include the opinion testimony of lay

witnesses as to . . . [t]he increase in vehicular traffic resulting from a proposed

development would pose a danger to the public safety”); Howard, 148 N.C. App. at

246, 558 S.E.2d at 227 (“denial of a conditional use permit may not be based on

conclusions which are speculative, sentimental, personal, vague or merely an excuse

to prohibit the requested use”).

Dean’s expert testimony and admitted report clearly constitute “material

evidence” because they bear “a logical connection” to the issues of whether

Petitioner’s Project will impact traffic congestion or create a traffic hazard. Innovative

55, __ N.C. App. at __, 801 S.E.2d at 676. Although lay members of the City Council

may disagree with Petitioner’s experts’ testimony and reports, that does not rebut the

legal determination of whether the evidence is “material.” See id. at __, 801 S.E.2d at

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675 (“Whether . . . material . . . evidence is present in the record is a conclusion of

law.” (citation omitted)). The City has failed to show that any of Petitioner’s experts’

testimony and evidence was incompetent, immaterial, unsubstantial, or rebutted by

contrary evidence meeting the same statutory and precedential standards to deny the

CUP. The City’s arguments are overruled.

V. Conclusion

Applying de novo review, the trial court properly concluded Petitioner had

presented a prima facie showing of entitlement to a CUP to construct their hotel as a

permitted use in the CBD zone. Petitioner satisfied its burden of production and, in

the absence of competent, material, and substantial evidence to the contrary, is

entitled to issuance of the CUP as a matter of law. See Dellinger, __ N.C. App. at __,

789 S.E.2d at 27. The City Council’s denial of the application was not based upon

any competent, material, and substantial evidence contra to rebut the Petitioner’s

prima facie showing.

Once the superior court made the initial de novo determination that Petitioner

had presented competent, material, and substantial evidence to establish a prima

facie case, and no competent, material, and substantial evidence contra was

presented in opposition or rebuttal to Petitioner’s evidence, the superior court

properly reversed and remanded for issuance of the CUP as a matter of law. See id.

Further, any purported whole record review by the superior court of the City Council’s

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extraneous and superfluous 44 “findings of fact” was unnecessary.

The superior court’s order reversing the City’s denial of Petitioner’s application

and remanding for issuance of the CUP is affirmed. This cause is remanded to the

superior court for further remand to the City to issue the CUP to Petitioner. It is so

ordered.

AFFIRMED.

Judges INMAN and BERGER concur.

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