House committee substitute to the 1st edition reorganizes the act in its entirety and makes the following changes.

Changes the act’s effective date to October 1, 2025 (unless otherwise provided), and applies to applications, approvals, and actions filed on or after that date. Specifies that any local government ordinance in effect on, or adopted subsequent to, October 1, 2025, that is inconsistent with the act is void and unenforceable. Removes differing effective dates from changes to GS 160D-101, GS 160D-108.1, GS 160D-403, GS 160D-703,GS 120-36.7, and GS 160D-1110, so that the general October 1, 2025, effective date applies.

Removes proposed new GS 162A-901 (reservation of water and sewer capacity for a proposed development).  

Section 1.

Amends GS 160D-601(d)-(e) (procedures for adopting, amending or repealing development regulations-down zoning) as follows. Changes the definition of down-zoning or down-zone so that it pertains zoning regulations (was, ordinances) that reduces the substantive permitted uses of the land (was, permitted uses) specified in a zoning ordinance (was, zoning ordinance or land development regulation) to fewer uses, as described. Removes definition’s component pertaining to nonconformity on land not in a residential zoning district. Narrows the down-zoning amendments prohibited by the statute without the property owners’ consent to those that only pertain to a zoning regulation (was, regulation and map) unless it is initiated by a local government. Applies retroactively to December 11, 2024. Provides that any development ordinance affected by Section 3K.1 of  SL 2024-57 will be treated as if it remained in effect from June 14, 2024, to December 11, 2024.

Section 3 (was, Section 10(a)).

Adds the following defined terms to GS 160D-102: acre, buffer yard, and nonconformity.

Section 4.

Specifies that GS 160D-108(h) (process to claim vested rights) applies to the claiming of vested rights in nonconformity under GS 160D-108.2. Removes provisions expiring the 24-month statutory vesting period for a nonconforming use of property as part of a development project if the use is intentionally and voluntarily discontinued. Automatically tolls the vesting period for the duration of any emergency declaration issued under GS 166A-19.20 or  GS 166A-19.22 for which the defined emergency area includes the property, in whole or in part.

Section 6.

Enacts GS 160D-108.2 which specifies that amendments in land development regulations are not applicable or enforceable without the written consent of the owner with regard to a nonconformity. Lists four criteria that apply to vested rights in a nonconformity established under the statute. Deems the 24-month statutory vesting period for a nonconformity expired if the use is intentionally and voluntarily discontinued for a period of not less than 24 months. Automatically tolls the vesting period for three listed reasons, including the duration of any emergency declaration issued under GS 166A-19.20 or  GS 166A-19.22 for which the defined emergency area includes the property, in whole or in part. Exempts GS 160D-912 and GS 160-912.1 from GS 160D-108.2. Directs that the reconstruction, re-establishment, repair, and maintenance of a nonconformity is allowed by right provided the nonconformity is not extended, expanded, enlarged, increased, or intensified by the reconstruction, re-establishment, repair, or maintenance.

Section 7 (was, Section 4).

Makes organizational and clarifying changes to GS 160D-109(c).

Section 8 (was, Section 5).

Makes organizational changes. Removes provisions authorizing local governments by mutual agreement and with the landowner’s written consent, to assign exclusive planning and development regulation jurisdiction for the entire parcel to any one of the local governments when a parcel of land lies within the planning and development regulation jurisdiction of more than one local government. Makes conforming changes.

Section 9 (was, Section 6).

Clarifies that the act amends GS 160D-402 as it was amended by SL 2024-49 (was, just GS 160D-402).  Requires local governments to designate at least one staff member charged with making determinations under the local government’s development regulations for purposes of GS 160D-703. Specifies that the contract or designation of staff under joint local government agreements must specify at least one individual designated as charged with making determinations under each local government's development regulations for purposes of GS 160D-703. Specifies that local governments contracting with an individual, company, council of governments, regional planning agency, metropolitan planning  organization, or rural planning agency to designate an individual who is not a city or county employee to work under the supervision of the local government to exercise the functions under GS 160D-402 must specify at least one individual as charged with making determinations under each local government's development regulations for purposes of GS 160D-703. Makes technical and clarifying changes.

Section 10 (was, Section 7).

Clarifies that the authority granted by GS Chapter 160D is development regulation authority (was, regulatory authority). Lays out a time period for approval of an application for a development approval. Specifies that failure of a local government or its designated administrative staff to act before the expiration of the time period allowed for review shall constitute an approval of the application, and the local government must issue a written approval upon demand by the applicant. Expands the vested rights that are not limited by the statute to include those in GS 160D-108.2.

Removes provisions from GS 160D-403 that required that approvals concerning an application for a development project that is a permitted use in the zoning district where the project is located be made by the city's administrative staff if the city has a population of at least 125,000 people.

Section 12 (was, Section 9).

Amends GS 160D-702, concerning grants of power to local government to adopt zoning regulations as follows. Makes technical and organizational changes. Amends the things that a zoning or development regulation cannot do to now include the following:

• Require or otherwise specify the size of parking spaces, placement of parking spaces, configuration of parking spaces, or allocation of parking spaces than those required by the Americans with Disabilities Act (was, within a particular development).
• Specifies that the prohibition on setting limits on driveways within a development does not alter the Department of Transportation’s (DOT) authority to regulate driveways adjacent to public roads owned by the State (was, just adjacent to roads owned by the State).
• Except as provided, set design standards for public roads within a development in excess of those required by DOT. Specifies that a city may set design standards for public roads within a development in excess of those required by DOT if the city is financially responsible for the cost of the excess and accepts ownership and maintenance responsibility for the public road prior to, or in conjunction with, site plan approval. Confirmation of conformity of the improvements consistent with city's design standards will be conducted consistent with GS 160D-804.1(1c). Upon confirmation that the improvements have been made consistent with GS 160D-804.1(1c), directs the city to record with the register of deeds a plat evidencing the city's ownership of the public road (was, prohibition against setting design standards for roads with a development in excess of those required by DOT, with an exception for a city that accepts ownership and maintenance responsibility for the road prior to or in conjunction with site plan approval, subject to confirmation of conformity requirements).
• Expands the type of property subject to site plan approval as part of the exception against requiring the installation of sidewalks or improvement of existing sidewalks for any commercial or school property, to include residential property.
• Clarifies that the population requirements must be according to the most recent decennial federal census in order for the setback prohibitions to apply.

Requires a local government to support its determinations by demonstrating there is a rational and substantial relationship between the  zoning map, zoning regulations, or zoning amendment and the health, safety, and welfare of the public through finding of facts and information, other than mere personal preferences or speculation, that a reasonable person would accept in support of a conclusion.

Section 13 (was, Section 10).

Amends GS 160D-703 (zoning districts), as follows. Modifies the permitted use in city areas zoned for non-agricultural commercial, business, or industrial use with a population of 125,000 or more according to the most recent decennial federal census to allow the siting of building and structures subject to the North Carolina Residential Code (NCRC) and multifamily housing structures with more than four residential dwelling units, with a maximum height restriction of not less than 60 feet (was, just 125,000 or more and also allowed duplexes, triplexes, and quadraplexes, with no reference to the NCRC). Clarifies throughout the statute that the population estimate must be according to the most recent decennial federal census. Makes clarifying change to the exemption from local design standards and buffer yards. Removes provisions specifying which parts of the statute apply to structures subject to the NCRC and apply regardless of whether it is a single lot or multiple lots. Applies the statute’s provisions on conditional districts to the approval of any site plan, development agreement, conditional zoning permit, or any other instrument under GS Chapter 160D. Requires development approvals for a development that is a permitted use in the zoning district where the development is located to be made only by the designated staff  member as described in GS 160D-402. Requires a local government, in exercising its authority on conditional districts, to support its determinations with facts and information, other than mere personal preferences or speculation, as described. Removes defined term acre. Makes organizational changes.  

Section 15 (was, Section 11).

Amends GS 160D-803 (review process, filing, and recording of subdivision plats) to require, within 10 days after approving a preliminary or final plat, an authorized representative of the local government to enter the approval on the face of the preliminary or final plat. Specifies, that notwithstanding GS 160D-403, once approval has been entered on the face of the plat, the approval is valid and does not expire unless the landowner applies for, and receives, a subsequent development approval.

Section 16.

Amends GS 160D-912 (outdoor advertising), as follows. Clarifies that “off-premises outdoor advertising” includes the described signs. Replaces references to signs (both conforming and nonconforming) with “off-premises outdoor advertising” throughout the statute. Now authorizes removal of an off-premises outdoor advertising if it is not in compliance with a development regulation (was, local ordinance). Makes organizational, conforming and clarifying changes. Specifies that nothing in GS 160D-912 should be construed to diminish the rights given to owners or operators of nonconformities as set forth in GS 160D-108 and GS 160D-108.2 or the rights of owners or operators of outdoor advertising signs set forth in Article 11 of GS Chapter 136.

Section 17.

Modifies the calculation of monetary compensation under GS 160D-912.1 (on-premises advertising) so that it refers to an on-premises advertising sign that is not in compliance with a development regulations (was, nonconforming on-premises advertising sign). Now directs that the statute cannot be construed to diminish rights given to owners and operators of nonconformities, including those set out in GS 160D-108.2. Make technical, clarifying, and conforming changes.

Section 18 (was, Section 13).

Clarifies that the local government can periodically amend historic districts subject to development regulations under GS 160D-944 (was, just regulation). Replaces references to zoning regulations with development regulations throughout the statute. Makes conforming changes.

Section 19 (was, Section 12).

Amends new GS 160D-974, as follows. Replaces references to “small housing” with “tiny housing.” Clarifies: (1) that the population estimate must be according to the most recent decennial federal census and (2) that the regulations authorized under the statute are development regulations.  Makes organizational and technical changes to GS 160D-975.

Section 20.

Now requires local governments, in GS 160D-1102, to annually publish a report on how it used fees from the prior fiscal year for the support, administration, and implementation of its building code enforcement program by October 1.

Section 22.

Specifies, in GS 160D-1403, that any administrative decision implementing a subdivision regulation is subject to appeal as provided in GS 160D-405. (Currently, different appeal rights depending on the type of decision at issue.)

Section 23 (was, Section 15).

Replaces references to “ordinance” with “development regulation” in GS 160D-1403.1 (civil actions pertaining to development regulations or approval).  Changes the types of actions that can be challenged under the statute to development regulations or development approvals (was, local land development regulations or decisions). Makes organizational, conforming changes. Removes defined term local government official and adds development permit.

Section 24 (was, Section 16).

Incorporates the standing provisions of GS 160D-1403.1 into GS 160D-1403.3 (private remedies) (was, standing conferred to any person, association, organization, society, or entity).

Section 25 (was, Section 17(b)).

Expands the conduct upon which suit can be brought under new GS 160D-1406 to include gross negligence or wrongful conduct. Provides that the suit must name the board member(s) of the decision making entity individually. Makes clarifying change.

Section 26.

Specifies, in GS 63-31, that airport zoning regulations cannot interfere with the continuance of any nonconformity as defined in GS 160D-101 (was, non-conforming use).

Section 27.

Amends GS 63-36 (acquisition of air rights), as follows. Replaces references to “nonconforming use” with “nonconformity” (as defined in GS 160D-102).

Section 28 (was, Section 1).

Limits GS 120-36.7’s (NCGA bill) and GS 159-42.2’s (local government ordinance) fiscal note requirement so that it pertains to home affordability to bills and resolutions that could increase the described costs for buildings or structures subject to the NCRC (was, single-family residence). Makes conforming changes. Expands the scope of the authorized civil action against a local government under GS 159-42.2 to include failure to have an accurate or sufficient fiscal note. Gives the court authority to determine the sufficiency of the fiscal note in such actions.

Section 30 (was, Section 18).

Now requires under GS 136-102.6, that the Division of Highways of DOT accept a performance guarantee as provided under GS 160D-804.1 to ensure completion of streets that are required by a development regulation under GS Chapter 160D (was, municipal or county subdivision control ordinance). Removes technical changes to the statute.

Section 31.

Makes technical and clarifying changes to GS 136-131.5 (relocation of lawfully existing outdoor advertising signs).

Section 32.

Changes the title of GS 136-131 from “removal of existing nonconforming advertising” to “removal of certain existing nonconforming signs.”

Section 33.

Replaces references to “signs” with “outdoor advertising signs” in GS 136-133.1. Makes conforming changes, including to the statute's title.

Section 34.

Expands the list of vested rights that must be addressed in a petition for annexation to a city under GS 160A-31 to include GS 160D-108.2.

Section 35.

Expands the list of vested rights that must be addressed in a petition for annexation of noncontiguous areas to a city under GS 160A-58.1 to include GS 160D-108.2.

Section 37.

Enacts Article 12, “Water and Sewer Regulation” to GS Chapter 162A to require all public water and sewer service providers to plan for future growth and allocate water and wastewater system capacity in a fair, transparent, and accountable manner. Specifies that the act may be cited as the “Water and Sewer Capacity Allocation and Planning Act.” Defines ten terms, including allocation or capacity allocation (a reservation of a specific quantity of water or sewer capacity for a particular project). Requires local governments to approve capacity allocation requests in line with the Article. Specifies that once approved, a capacity allocation guarantees the local governmental unit to provide water service or sewer service for that project up to the approved allocation amount. Provides for an application limited to the three listed prongs of information and only other information the local government unit determines is necessary for it to determine whether it has available capacity to serve the project. Sets forth a timeline for the local government unit’s process to approve the allocation (as described), if available capacity exists and the application is complete. Specifies that the initial reservation period will be for 24 months after the date the allocation is approved. Requires a local governmental unit to extend the initial reservation period or extension reservation period for additional 12-months provided the two specified conditions are satisfied. Directs that requests for allocations are to be granted in chronological order of submission, except for emergency allocations under the statute or requests to reserve capacity in line with GS 115C-521.

Requires an approved applicant to notify the local government unit if it determines that the allocation necessary to serve the project will increase or decrease by more than 10% of the approved allocation. Directs the local government to approve any deceases in allocation and adjust its capacity accordingly. Allows the local government to determine if it has capacity to approve increases and then to approve the request if so. Provides for notice if it does not have capacity and for termination procedures if any offer of the government does not meet the project capacity of the approved applicant. Provides for return of allocations upon expiration or termination of allocation, including allocations that are not used in full.

Specifies that approved allocations are deemed a vested element of the project for the duration of the reservation period, as described.  Prevents an approved applicant from transferring an unused allocation to a different project. However, if the project for which an allocation has been reserved is sold or the development rights are assigned to a successor in interest, the allocation will transfer to the successor in interest and the allocation and reservation period will be honored and may not be terminated or revoked by the local governmental unit. Requires notice to the local governmental unit if a project is sold or transferred.

Prevents a local governmental unit from unreasonably delaying an approved applicant's ability to connect the approved applicant's project to the local governmental unit's infrastructure. Directs a local governmental unit to begin providing water service or sewer service to an approved applicant within 90 days after receiving a request from the approved applicant to begin providing water service or sewer service, provided (1) the project is connected to the local governmental unit's infrastructure, and (2) the request is made within the reservation period under the statute.

Enacts GS 162A-1003, requiring each local government unit to prepare an annual report by October 1 documenting facility capacity and available capacity, to include at minimum, the eight described matters and to publish each report on its website. Specifies that the first annual report is due on October 1, 2026. Requires the Department of Environmental Quality (DEQ) to make the annual reports available to the public.

Provides for State enforcement authority by DEQ, as described, civil penalties, and judicial review by an application whose application was denied, in new GS 162A-1004.

Repeals GS 162A-900 (limits on allocating service for residential development).

For applicants that, on or after July 1, 2020, received a service  commitment from a public water system, public sewer system, or public water and sewer system confirming availability of capacity for the applicant's development project, but whose capacity needs have not been provided, requires the system to reserve, allocate, and provide those applicants with the capacity assured in the system's service commitment in the chronological order that the service commitment was issued before the system reserves, allocates, or provides capacity to another applicant.