The Pinehurst Hot Mess: Nationally-renowned property-rights defense group warns Pinehurst council on proposed vacation rental ban

 

The very same group that got The City of Wilmington’s short-term rentals regulations tossed out in court appears to be turning its attention to Pinehurst and its current efforts to ban vacation rentals.  Here’s a letter currently circulating in and around village hall:

[…] RE: Pinehurst Village’s Amortization of Short-Term Rental Properties

Dear Mayor Strickland and Pinehurst Village Council Members,

It has come to my attention that the town of Pinehurst is considering reclassifying the

town’s short-term rental properties as non-conforming uses and ordering their eventual

elimination through the use of amortization. I have been contacted by concerned residents and

property owners who see this as an affront to their property rights. I am writing to you

because I believe they are correct.

The Institute for Justice (“IJ”) is the nation’s leading law firm for liberty and a nationally

recognized advocate for property rights. In addition to successes at the state and federal level,

including the United States Supreme Court, IJ also successfully represented Peg and David

Schroeder in their challenge to Wilmington’s short-term rental amortization scheme.1 Pinehurst’s

proposal shares several similarities with the Wilmington restriction, which, it should be noted at

the outset, was deemed unlawful under North Carolina law and was struck down as such by the

North Carolina Court of Appeals. Given many of those similarities, the town’s proposal is

deeply concerning, both practically and legally.

First, practically speaking, forcing property owners to eliminate a use that was lawful

when it began is problematic to say the least. Most obviously, it offends the settled

expectations of property owners, many of whom purchased their property and made

improvements—often incurring substantial expense—based on their reasonable belief that their

intended use was (and would continue to be) legal. This is objectively unfair.

From a legal perspective, there are other problems. My suspicion is that the town

council may be under the impression that amortization of non-conforming uses—a

controversial land-use tool to say the least—has already been approved by the North

Carolina Supreme Court. Given this understanding, I suspect that the town council further

expects that it will be successful in a potential legal challenge to the town’s use of

amortization here. I recommend caution. The North Carolina Supreme Court has

addressed amortization only once, nearly 50 years ago. See State v. Joyner, 286 N.C. 366,

211 S.E. 2d 320 (1975). And Joyner hardly involved property interests like those at issue

here.For one thing, the challenging party in Joyner did not even own the land; he was

a lessee. Nor did the case involve the elimination of a common, low-intensity use like

a residence. To the contrary, Joyner dealt with a nonconforming industrial scrap-yard

in  a business district.That is nothing like what the town is considering here—the elimination

of undesirable residential uses within an area zoned residential.

Again, Joyner marked the first and only time the North Carolina Supreme Court

addressed amortization. And in the intervening time since Joyner was decided,

amortization decisions (in the North Carolina intermediate court of appeal) have

uniformly dealt with the elimination of billboards and signs, not residences. See Naegele

Outdoor Advert., Inc. v. City of Winston-Salem, 113 N.C. App. 758, 760–61, 440 S.E.2d

842, 843–44 (1994) (billboards); Summey Outdoor Advert., Inc. v. Cty. of Henderson, 96

N.C. App. 533, 544, 386 S.E.2d 439, 446 (1989) (outdoor advertising signs); Goodman

Toyota, Inc. v. City of Raleigh, 63 N.C. App. 660, 664–66, 306 S.E.2d 192, 195 (1983)

(billboards); R. O. Givens, Inc. v. Town of Nags Head, 58 N.C. App. 697, 702, 294

S.E.2d 388, 391 (1982) (outdoor advertising); Cumberland County v. E. Fed. Corp., 48

N.C. App. 518, 521, 269 S.E.2d 672, 675 (1980) (signs). In other words, amortization has

been upheld where it has been used to eliminate typical nuisance-like uses. As in, not

homes.  This understanding makes sense, given that Joyner is itself rooted in North

Carolina nuisance jurisprudence. Joyner, 286 N.C. at 373, 211 S.E. 2d at 324–25 (relying

on Town of Wake Forest v. Medlin, 199 N.C. 83, 154 S.E. 29 (1930); State v. Moye, 200

N.C. 11, 156 S.E. 130 (1930)).

Few other cities have attempted what Pinehurst is considering. Outside of

Wilmington’s doomed attempt to amortize its short-term rentals through licensing

and registration, I am aware of only one fully litigated legal action involving an

approach like what the town is contemplating.That case, Zaatari v. Austin, 615 S.W. 3d

172 (Tex. App. 2019), involved a six-year amortization of short-term rentals in Austin, Texas.

Austin lost. And significantly, in its decision, the Texas Court of Appeals ruled that Austin’s

amortization ordinance was an unconstitutional disruption of the property owners’ settled

expectations—the very same reason the town’s proposal is legally problematic here.[…] 

This guy, Mr. Bargil, and his team at The Institute of Justice are going to tear Mike Newman a new one if this goes to court.  Methinks Messrs.  Strickland, Pizzella, Newman and Sanborn are punching WAAAAAAAAAAAAY over their weight class, here. 

MORE:

[…] None of this, of course, addresses the issue of attorneys’ fees—which Pinehurst,

by law, will likely be responsible for paying should someone mount a successful legal

challenge to the proposed ordinance. Indeed, North Carolina law, rather unequivocally,

provides for attorneys’ fees:

[i]n any action in which a city or county is a party, upon a finding that the city or

county violated a statute or case law setting forth unambiguous limits on its

authority, the court shall award reasonable attorneys’ fees and costs to the party

who successfully challenged the city’s or county’s action.

N.C.G.S. § 6-21.7 (emphasis added). Here, this attorneys’ fees statute will likely be

triggered because the town’s proposal inherently involves a permitting scheme—

something that is unambiguously foreclosed by state law. See N.C.G.S. § 160D-1207(c)

(“In no event may a local government . . . adopt or enforce any ordinance that would

require . . . any permit or permission . . . from the local government to lease or rent

residential real property or to register rental property with the local government.”).

Indeed, there is no other way to keep track of which uses enjoy lawful, non-conforming

status during the amortization period than to require that they be registered and permitted.

Importantly, this is precisely the statute that was at issue in the Schroeder v. Wilmington

matter.2 And Wilmington’s error in legal judgment in construing that statute has since

cost it over $305,000 in attorneys’ fees and costs.3

In sum, the town’s proposal deploys legally dubious land-use tools to eviscerate

the settled expectations of property owners. And the supposed legitimacy of the

town’s approach rests on a half-century old legal decision upholding, unremarkably,

the power of government to moderate nuisances. Finally, the town’s implementation

of the proposed ordinance necessarily demands the creation of a permitting or

registration system—something the North Carolina Court of Appeals struck down as

unlawful earlier this year.  Accordingly, the proposed ordinance also exposes the town to

substantial financial liability in the form of attorneys’ fees, if (or, more likely, when) it must defend

its unlawful permitting/amortization scheme in court.

I urge you to reconsider your proposal in light of this information.

Ari Bargil

Attorney

INSTITUTE FOR JUSTICE

This guy makes a LOT of good points.  The amateur authoritarians at Pinehurst Village Hall should really sit up and take notice here. (They might actually learn something.)

Personally, I think the Strickland-Pizzella-Sanborn team will press forward on the ban of vacation rentals, despite what gets said at the public hearing on the 27th. (Would they be so stubbornly determined if they personally had to pay the legal bills for all this?  I doubt it.)

WHY would you so stubbornly press forward on something like this when ALL of the facts and evidence are against your POV? It either has something to do with out-of-control elitism or arrogance, ignorance, or corruption.  ALL of those options are really bad for those of us who call Pinehurst home.

These pompous, vile, elitist Yankees running things at village hall (and their equally loony followers) are really going to cost all of us a pretty penny by the time all is said and done.