Insight by Morningstar Law Group Partner Molly Stuart

There has been some confusion about whether the City of Raleigh has halted annexations. In short: Raleigh has not enacted a moratorium. But the City has temporarily narrowed eligibility for certain annexation requests.

What’s Changed?

Raleigh’s annexation policy generally allows annexation eligibility based on several factors—such as whether the property is in the City’s extraterritorial jurisdiction (the “ETJ”), within an annexation agreement area, or directly touches city limits.

However, effective October 26, 2025, and for a 12-month period, Raleigh adopted a temporary freeze on one path to eligibility. Properties can no longer qualify for annexation solely because they become newly contiguous to the city limits. In other words, when the City annexes a parcel, that action will not make additional adjacent parcels automatically eligible during the freeze period. This appears in Resolution No. (2025) 717, which contains a map of the eligible area, called the “Priority Annexation Area.”

Why Did the City Do This?

The City wants to stabilize boundary changes while staff reviews broader policies related to growth, annexation, and water/sewer service. Possible policy revisions may follow, but none have been announced yet.

What This Means for Developers

• Annexations are still happening, including for properties within the ETJ and adjacent to city limits as of October 25, 2025.
• Projects relying on new contiguity-only eligibility will be ineligible for the term of this policy.
• Projects qualifying under other criteria—such as ETJ status, pre-existing contiguity, or annexation agreement areas—may still move forward.
• Look out for potential changes to Raleigh’s long-term growth and utility extension policies once staff completes its evaluation.

This policy does make it less clear when annexation is available for a property. If you’re ready to dig in, let’s talk. mstuart@morningstarlawgroup.com; 919.890.3318.

The post Raleigh’s Annexation Policy – What Developers Need to Know appeared first on Morningstar Law Group.

Ann joins us as Counsel in our Real Estate and Land Use practice, bringing extensive experience in land use, planning, zoning, and civil litigation.

Before joining Morningstar, Ann served as Town Attorney for Chapel Hill and as a tenured professor at the UNC School of Government, where she taught and advised North Carolina judges. Her background gives her a unique perspective on the legal challenges faced by real estate developers, municipalities, and property owners.

“Ann’s expertise in land use, municipal law, and civil litigation makes her an exceptional addition to our team,” said Jason Barron, Partner and Integrator at Morningstar. “Her insight and guidance will be invaluable to clients navigating planning, zoning, and land use issues.”

Our Real Estate and Land Use group continues to grow — now 12 attorneys strong — helping clients move projects forward across North Carolina.

We’re thrilled to have Ann on board and look forward to the experience and perspective she brings to the team.

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The exhibit celebrates the visionaries who helped establish Research Triangle Park — including insights from Mack’s forthcoming book, MIRACLE ROAD: The Story of Research Triangle Park, co-authored with Allen Paul.

Join the celebration tonight at 6:00 PM (500 W. Main St.) — the event is free and open to the public!

Visit https://loom.ly/8sRfZ8I for more information.

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Yesterday, attorneys Molly Stuart, Tish Shapiro, and staff member Branden Foster participated in the program’s Real Estate Week, engaging with undergraduate and MBA students interested in careers in real estate.

We’re honored to help foster the next generation of real estate professionals and to continue our partnership with NCCU’s outstanding program.

The post Morningstar Law Group is proud to support the MBA Real Estate Program at North Carolina Central University! appeared first on Morningstar Law Group.

Eric Braun is the current vice-chair of the Raleigh Housing Authority. Additionally, he is the founder of RaleighForward, a group dedicated to addressing housing and community issues in the City of Raleigh.

Prior to retirement, Mr. Braun was a partner at K&L Gates where his practice was centered on land use, zoning and municipal law. In addition to practicing law, he taught municipal law and land use planning for NC State’s Master of Public Administration program.

Tell us about your early years. What sparked an interest in your professional pursuits?

My interest in local government started because of a project I had in high school. We were assigned to be on the “for,’ the “against” or the “City Council” sides of a hypothetical local government proposal to develop a large greenfield tract into an active public park. Part of the project included a budget. I was assigned to be on the “against” side. My mom worked in the Virginia Beach Commissioner of Revenue office and she suggested I call the parks department and get actual maintenance and other budget information from Virginia Beach to help figure out if the proposal was reasonable.

The city staff sent me a large amount of information. As I was looking at it, it became very clear that the teacher just made up a budget number and it was so woefully low. When we presented the actual numbers to the “City Council”, they did not hesitate in voting down the park proposal because of the drastic impact it would have on the city’s finances.

When you went to law school, not many students were aware of land use as a practice and few had planning degrees. What prompted you to go to graduate school and pursue land use?

Land use was not something I really thought about specifically. As my college career wound down, I started thinking about going to graduate school for public administration. However, a family friend that was an attorney suggested I go to law school because it would give me more career options. I took his advice and was fortunate to be accepted into Wake Forest. While law school provided a great education, I never lost my interest in local government, so I applied to the University of Georgia in its MPA program. I did my graduate thesis on annexation in North Carolina because I wanted to return to NC to either practice municipal law or work enter public service.

As luck would have it, while I was looking for jobs as graduation was approaching, I was invited to interview for a position with Clyde Holt and David York. They happened to just start representing a large group of Washington, NC, residents challenging an involuntary annexation. That was enough to get me in the door with his firm. This was my very first “big

case” and it also happened to be where I met [Morningstar Law Group partner] Bill Brian. He was opposing counsel in that case. If you know anything about Bill, it’s that he is a relentless litigator! While I may not have impressed him with my 6 months of legal experience, I think he saw in me someone who had the capacity to learn quickly, think on his feet and stay composed under extreme pressure. I’m sure that experience had something to do with him asking me to join his practice around 2000.

You eventually joined many of our colleagues who now are at Morningstar, working as part of a large land use practice. How did that experience shape your practice and perspective on land use?

Having started my career at a 4-person firm, I was lucky to have learned all aspects of practicing. I learned how to change the toner in copy machines in the middle of the night as I was preparing for my first trial to completing my first land use trial. I also learned how important being involved in the community was. That is a value and a skill that many new attorneys at large law firms don’t necessarily learn because they came in behind a partner that handed off a full plate of work. Building strong roots in a community is not only the right thing to do as a resident, but it also pays off in economic downturns because people know you and want to help in good times and the not-so-good times. That experience allowed me to develop a really strong foundation for my future practice.

At the height of your law career, you faced a health issue. It must have been an incredibly difficult and scary time. Were there resources that helped you navigate that transition?

To be honest, the NC Bar really did not have resources specific to my situation. They are really good with attorneys facing substance use disorders and attorneys that are aging out of the practice, but not so much when an attorney is forced to retire for health reasons at 42. I can say that I found the biggest support from my law firm (K&L Gates) and the attorneys I worked with closely. After the impact of Multiple Sclerosis forced me to retire early, the firm allowed me to keep my office for quite a while so I had a place to go instead of sitting in my home alone. They also continued including me in firm social functions. All of that made me feel like I was still part of something and that lessened the emotional toll it took on me. Another benefit of the land use practice is the way we treat each other even when we are on opposite sides of a case. We generally treat each other with respect and friendship, so when the news trickled out about my retirement, I had fellow land use lawyers reach out and stay in touch with me. All of that helped me transition into retirement.

Transitioning from law practice allowed you to enter public service for the first time. Tell us about some of your roles in public service.

As I mentioned earlier, I learned the value of community service and putting down roots as a citizen from Clyde Holt and David York. Because I took that advice to heart and made it

part of my practice from the start, I was comfortable shifting from that being a supplemental part of my professional life to it becoming the primary part of my life in retirement.

My first significant public service opportunity was the Raleigh Planning Commission. It was a natural fit since I was already quite familiar with its operation and the City’s development regulations. I served on the PC for 6 years, 2 as the Chair.

Very soon after I retired, someone recommended that I reach out to Triangle Family Services to see if there might be a place for me to contribute to its mission. My experience with TFS and its mission to help families struggling with domestic violence, mental health issues and housing insecurity is what piqued my interest in serving more recent roles serving on the Board of the Raleigh Housing Authority and the Board of Governors of the Wake County Continuum of Care, which acts as the conduit for directing HUD funding to various nonprofits that deliver services to people struggling with housing insecurity.

Given the struggles nearly every city in America is having with housing affordability, I feel privileged to have the time and a set of skills that I can devote to trying to improve upon the way our community is addressing the housing crisis.

How did you find those roles as compared to working on behalf of real estate clients? Did the experience change your views about local government, land use policy, or social change?

The main difference was the reduced amount of physical and mental strain I experienced on a daily basis. It is difficult to really appreciate how much your mind and body are impacted by stress until it is removed. As I adjusted to my new reality, I began to feel better and was happy to have volunteer opportunities to keep me connected to the community and keep my brain engaged.

I have learned so much about the part of Raleigh that many people are not aware of—residents who struggle financially and with housing insecurity. When people are lucky enough to have financial security in Raleigh, they often don’t come into contact with residents who are struggling. Unless you drive by one of the tent encampments that have become more visible around Raleigh in the last couple of years, many residents simply do not have personal connections with people outside of their immediate circle of friends and family. This tends to insulate most people from the reality that some less fortunate Raleigh residents experience every day.

I have connected with more people with diverse backgrounds than I would if I was still practicing law. This has given me a broader perspective of Raleigh’s population and the needs of people with more diverse socio-economic backgrounds. We need to find better ways to help people from more diverse backgrounds connect with the City and participate in the engagement process. Despite its best efforts to gather input from more people,

Raleigh’s older, wealthier residents are still over-represented when it comes to voicing opinions and providing input on many City initiatives.

My public service experience has given me a better appreciation of the complexity and challenges of governing the City. We are lucky to have a truly talented and dedicated professional administration running the City.

More recently, you started an organization called RaleighForward. Why did you form this organization and what is its focus?

I founded RaleighForward because I grew concerned by the way that a few loud voices in the community were starting to dominate the public discourse and debates. These voices tended to be quite dishonest with the narrative they were using to characterize many of the City’s initiatives. These same voices are also contributing to a growing level of divisiveness and anger directed at Raleigh’s elected officials and even its professional staff. This anger and manipulation were crowding out the voices of people that are interested in learning about what is going on in the City, as well as the voices of informed residents that are interested in working to improve how the City functions.

I decided that my background was suited to helping try to amplify the voices of those residents that want to work together to help make Raleigh the best City it can be for as many residents as possible. At RaleighForward, we are trying to help educate residents who are interested in learning about how the City operates, engaging with the City on important topics that will shape its future and informing residents with accurate facts, data and information.

What is your hope for the future of land use policy and local government?

While land use and urban policy in North Carolina are becoming quite complex, the General Assembly remains reluctant to empower local governments with broader legislative authority to keep pace with rapidly changing urban conditions. As a result, local governments must become more comfortable using public/private partnerships to deliver the kind of complex mixed-use developments, including public amenities and significant amounts of affordable housing, that residents of growing cities are demanding. Otherwise, North Carolina cities may become strangled by growth to the extent North Carolina becomes a less attractive business climate.

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Any good developer knows that it must find a way to coexist with the state and local governments. And, any well-run government entity knows that it must coexist with the development community, which ultimately is the founder of its feast and the source of nearly all its revenue through the increase in value of the tax based caused by development. But local governments are subject to pressures from the electorate who demand increasingly inconsistent outcomes in the form of increased services and lower taxes.

Elected officials, caught between the rock and the hard place naturally look for some way to relieve the pressure, and tend to turn to exactions from the development community. Exactions are fees, dedications of land and requirements to build sidewalks, roads and other infrastructure which are made conditions of development approvals. They are a way to shift the burden of public infrastructure onto the development community, rather than paying for them with tax revenues.

In Sheetz v. County of El Dorado, the US Supreme Court unanimously and clearly reaffirmed its existing regulatory takings precedent and made clear that a monetary exaction which is not rationally related to the impact a project is going to have on the public infrastructure is a taking, regardless of whether it is imposed as an administrative condition, or through a legislative enactment.

Mr. Sheetz wanted to build an 1800 square foot prefabricated home on a vacant lot and was charged a fee of over $23,000.00 for traffic impacts according to a schedule enacted by the County which made no effort to do a project specific analysis of the true impact that traffic generated by Mr. Sheetz’s small house would have upon the surrounding road network. The California Courts said that because the legislature had imposed that fee, rather than the administrative staff, the fee was lawful. The Supreme Court disagreed and overturned the California ruling.

This case is significant for two reasons. First, it makes clear that an unlawful exaction is an unlawful exaction, regardless of how the government imposes it. This is what the North Carolina Courts held in Anderson Creek Partners, L.P., et al v. County of Harnett (2022), and now it is the law of the land. Second, this unanimous decision is a strong reaffirmation of the Court’s existing takings precedent, especially relating to exactions, which are becoming more and more common in North Carolina. In short, a government regulation which destroys the value of a piece of property is a taking. Likewise, a fee or other exaction must be tailored to the actual impact a project will have upon the problem the exaction is designed to address, and be rationally related to that problem.

The Sheetz case reminds us all that policies which require the payment of fees, and perhaps the reservation of a certain number of units for “affordable housing” still must be based upon a rational connection between a real need in the community and the impact the project is going to have upon that need. Given the Sheetz case and the precedent it reaffirms, even legislative bodies like City Councils and County Commissions must show that their policy enactments, fees and payments-in-lieu are tailored to address the actual impact that a project has upon the problem they are trying to address.

It remains to be seen how far these cases will go. For example, if a community cannot show that it lacks affordable housing, or that a particular project will affect the amount of affordable housing available in the community, can it accept a developer’s “voluntary donation” of money for affordable housing as a zoning condition? Can it turn down a zoning request because the developer did not make a voluntary commitment to reserve a portion of its project for “affordable housing?” We look forward to the next decision from either the state or Federal Courts to find out!

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In May of 2023 the U.S. Supreme Court decision in Sackett v. EPA significantly limited the scope of the Clean Water Act and reduced the number of our nation’s waterways that can be federally regulated. The result is a potential boon for developers and property owners.

Background

Sackett arose from a legal challenge by Idaho landowners against the EPA.  In short, the Sacketts sought to build a single-family home on wetland property. The EPA opposed the Sacketts’ unpermitted wetland removal on the basis of a broad reading of the Clean Water Act, arguing that the wetland’s connection to a ditch that feeds into a creek, which feeds into a navigable, intrastate lake, made the wetlands federally regulated “waters of the United States.”

The Sacketts sued the EPA, arguing that the wetlands on their property were not “waters of the United States” and thus not subject to EPA regulatory power. The District Court, applying the “significant nexus” test from Rapanos v. United States (2006), granted the EPA’s motion for summary judgment. In Rapanos, the Court, interpreting the Clean Water Act, held that “waters of the United States” were those that were connected in some way with navigable waters—not just in terms of continuously flowing surface waters. If the pollution of one water source resulted in damage to another, there was a “significant nexus” between the waters sufficient for the Clean Water Act to apply.

The Supreme Court unanimously ruled in favor of the Sacketts. The Court narrowed the definition of the “waters of the United States,” holding that the use of “waters” in the Clean Water Act refers only to streams, oceans, rivers, and lakes that are adjacent to wetlands such they are “indistinguishable” from those bodies of water due to their “continuous surface connection.” The Court further stated that such “waters of the United States are “relatively permanent, standing or continuously flowing” so that there is no “clear demarcation between waters and wetlands”. The Court stated that a statute must be “exceedingly clear” before an administrative agency, such as the EPA, could exert any jurisdiction over private property.

This ruling narrows the “significant nexus” standard from Rapanos and, as a result, the EPA’s jurisdiction over waters and wetlands significantly retracts. Where once nearly every wetland, stream, or other body of water was subject to EPA jurisdiction, now only those that have an “indistinguishable” surface connection are. As a result of this contraction, it will now be up to individual states to create rules to governing waterways and wetlands that are not “waters of the United States.”

In developing areas like the Triangle, this is a decision with potentially significant consequence as it relates to previously regulated waterbodies like farm ponds.

North Carolina Response

As a result of Sackett, it will now be up to the states to adopt regulations to protect any wetlands and waterways that fail the significant nexus standard. In North Carolina, state regulators will not be stepping in to fill the void left by the federal retreat. In the wake of Sackett, the North Carolina General Assembly overcame Governor Roy Cooper’s veto and successfully included a provision in the state’s 2023 Farm Act that limits the state’s regulatory authority to the wetlands and waterways already protected by the Federal Government. This ensures that only those water bodies satisfying the federal significant nexus standard will be regulated by the State of North Carolina.

The North Carolina Department of Environmental Quality estimates that nearly half of North Carolina’s wetlands–2.5 million acres–are impacted by Sackett and the new Farm Act provision. The waterways and wetlands that are most likely to lose protection include those that are isolated, ephemeral, or not clearly connected to a navigable lake or stream.

On February 12, 2024, Gov. Cooper issued Executive Order (EO) 305. The goals of the executive order include (1) the permanent preservation of 1,000,000 new acres of natural lands with special focus on wetlands, (2) the restoration or reforestation of 1,000,000 new acres of North Carolina’s forests and wetlands, and (3) planting 1,000,000 trees in urban areas across the state. To achieve these goals, the executive order, among other things, directs state agencies to study the social, economic, and environmental value of protecting North Carolina’s wetlands, particularly wetlands that recently lost state and federal protections, and directs the state to avoid or minimize new projects that would adversely impact vulnerable wetlands. However, ultimately, the executive order does not change jurisdictional wetlands definitions or permit requirements. 

The Takeaway

Moving forward, property owners and developers in North Carolina may now find it easier to build on properties with water features. However, in the short-term there undoubtedly will be significant confusion regarding what is considered a regulated wetland or waterway while agencies adapt to the new regulatory landscape.

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Separately, Raleigh is working to ensure its land use policies and regulations along the BRT corridors – and other transit-rich areas – support the density and diversity of jobs, housing, and services needed to maximize returns on this public investment. In short, Raleigh has undertaken two separate but related efforts:

Frequent Transit Area

The City has recently increased density and height entitlement in areas well-served by transit, known as the Frequent Transit Area (FTA).

Rezoning (New Base Zoning Districts + Transit Overlay District)

The City has undertaken the process of rezoning around the BRT lines to increase height, permit additional uses, prohibit auto-oriented uses, and provide a height bonus where jobs or affordable housing are provided through its Transit Overlay District (TOD).

These two separate efforts are the subject of much confusion, since both aim to create transit-supportive land use regulations, and they overlap in both their geographic reach and impacts on entitlements. Base zoning districts exist throughout the city, so the focus here is on the FTA versus the TOD only.

I’ve put together a high-level cheat sheet to answer some of the most common questions I’ve received on these topics.

FTA and TOD: The Big Picture

1. What is its purpose?
   • FTA: To prioritize uses, densities, and building forms supportive of transit, and to incentivize affordable housing.
   • TOD: To prohibit uses and building types incompatible with transit and incentivize density, jobs, and affordable housing.
     
2. How does it control development?
   • FTA: The FTA provides a development option – a property owner may elect to use the provisions of the FTA option, or it may elect another development option, such as the “Conventional,” “Compact,” or “Conservation” options. A property owner is never required to utilize the FTA provisions, even if the property is located in the FTA.
   • TOD: As its name suggests, the TOD is a zoning overlay district – a layer of rules on top of those in the base zoning district.  Where the TOD rules conflict with the base zoning district, the TOD controls. While most of its rules are mandatory, an optional height bonus connected with affordable housing is also provided.
     
3. Where does it apply, generally?
   • FTA: Within ½ mile of a planned BRT line AND within ¼ mile of any frequent (i.e. 15-minute or less wait time) bus service.
   • TOD: Along the BRT lines, though with many exceptions and quite a bit of variation. The rezoning process to apply TOD in these corridors has been completed by the City along the Western, Southern, and Eastern BRT lines.
     
4. Where can I find its exact location?
   • FTA: Raleigh’s Urban Form Map (available on Wake County iMaps), which is part of the Comprehensive Plan
   • TOD: Raleigh’s Zoning Map (available on Wake County iMaps)
     
5. Can I request it for my property?
   • FTA: Not really. Theoretically, a Comprehensive Plan amendment could be requested to expand or contract the FTA. This has not been done to date, and the clear definition of its location in the Comprehensive Plan makes this change unlikely to be approved – though it is not, strictly speaking, impossible. If the FTA applies to the parcel, then the owner may or may not elect to apply its provisions.
   • TOD: A qualified yes. While any property owner can request this overlay, the process is a rezoning – a legislative (i.e. political) process. Approval will be more likely within a short distance of a proposed BRT line, and less likely – or out of the question – in other locations.
     
6. What are its pros and cons?
   • FTA: The FTA provides increased height and/or density with some strings attached, which vary by district, but use of the FTA provisions is entirely optional – other development options remain available. Note also one additional risk: The City’s adoption of the FTA has been challenged in court, and judicial review is underway – introducing the risk that the development option will be invalidated at some point.
   • TOD: The TOD provides the possibility of a height bonus (tied to commercial space or affordable housing), together with relaxing certain development standards, in exchange for restricting certain uses and applying urban frontage requirements (i.e. prohibiting parking between a building and the street, among other requirements).

What exactly are its restrictions and bonus height/density on my property?

The only answer that will fit here is, “it depends.” Whether your property is in a Residential or Mixed-Use District, and other factors, will determine exactly how FTA or TOD affect your property. If you’re ready to dig in, let’s talk. mstuart@morningstarlawgroup.com; 919.890.3318.

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Congratulations to our colleagues selected by their peers to Business North Carolina’s Legal Elite 2024! Pictured left to right, top to bottom: Chris Graebe, Litigation; Will Graebe, Young Guns; Shannon Joseph, Litigation; Gene Jones, Business; John Kivus, Intellectual; Molly Stuart, Real Estate; and Jennifer Van Doren, Intellectual.

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