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The Morningstar – March 2024 Edition

March 9, 2024

Featured Article – The End of an Era: North Carolina Considers the Future of Extraterritorial Jurisdiction

Legislation currently pending in the North Carolina General Assembly is poised to eliminate the extraterritorial jurisdiction of North Carolina’s cities. The current bill has passed in the Senate, and, with the support of the State’s Republican lawmakers, is likely to pass in the House as well. If this legislation is enacted, for the first time in over 60 years, the State’s cities will lack the statutory authority to exert their planning and zoning powers outside of their corporate limits.

Background

It is a well-established principle of North Carolina law that a municipality only has the power conferred to it by the General Assembly. In State v. Eason, the North Carolina Supreme Court ruled that municipalities lack the authority to extend their regulatory or police powers beyond their corporate limits, unless it is granted by a specific legislative enactment by the General Assembly. However, N.C.G.S §160D-202 gives cities extraterritorial jurisdiction over land within a certain area outside of their limits for planning and zoning purposes.

Originally, extraterritorial jurisdiction worked in harmony with a city’s power to forcibly annex land into its boundaries. With North Carolina’s rapidly growing population, cities were able to use forced annexation as a tool to manage growth. Extraterritorial jurisdiction was part of this process—with it a city was able to guide the development of county land in anticipation of annexation.

The Impact of Extraterritorial Jurisdiction

In 2011, the General Assembly passed amendments to the General Statutes which all but eliminated city-initiated involuntary annexations. Yet, extraterritorial jurisdiction has, until now, remained largely unchanged. Without the subsequent annexation by a city, extraterritorial jurisdiction functions only to give a city the ability to control the use of land outside it boundaries, without those subject to the city’s power having any voice in the process, or receiving any benefit.

To address the lack of representation, the statute requires a municipality exerting extraterritorial jurisdiction to expand its planning and adjustment boards to include a representative appointed by the county commissioners of the affected county, but this limited representation is not the same as the direct election of local government officials.

There are a significant number of property owners in North Carolina who are subject to the extraterritorial jurisdiction of a city in which they do not live. Under the current statute, municipalities with populations of less than 10,000 may extend their jurisdiction up to one mile beyond the corporate limits; municipalities with populations of 10,000 to 25,000 up to two miles; and municipalities with populations greater than 25,000 up to three miles.

A 2018 survey by the University of North Carolina School of Government determined that 66% of the municipalities in the State had adopted extraterritorial jurisdiction under this enabling legislation. A 2012 School of Government report estimated that approximately 500,000 people resided in areas impacted by extraterritorial jurisdiction—the number certainly has increased greatly in the intervening years.

Yet, property owners who are subject to the extraterritorial jurisdiction of a city are not able to vote in that city’s elections and have no voice in the making of development policies affecting their land. This has been the primary argument of supporters of the pending legislation. Senator Michael Lee (R-New Hanover), one of the bill sponsors stated, “If I am on a board, a city council, and you are in the ETJ? You can’t vote for me. You can’t vote me in or out.”

Further, there is no requirement that a city wielding its extraterritorial jurisdiction provide any services—such as water or sewer—in the subject area. Where before extraterritorial jurisdiction control would be the precursor to annexation (and receiving a city’s services as a result), now it serves as little more than a neighboring municipality’s ability to block or control development outside of its boundaries. Property owners often face situations where they have land they want to develop, but because they are within three miles of a city, the city can veto their project or impose restrictions, without that owner receiving any benefit (such as water and sewer) from the city or having any electoral recourse.

As currently drafted, the proposed legislation would eliminate extraterritorial jurisdiction entirely, while protecting any vested rights obtained by property owners under existing land use regulations. This would mean that future development outside municipalities’ corporate limits becomes strictly a matter for regulation by the counties. Developers will now only have to work with county staff when planning a project, saving time and money. New development has the potential to become far freer and more flexible than it has been in the past, though in the near term will require a fair amount of attention and guidance as the new landscape is fully charted.

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