The Trouble with Allowing “No Down-Zoning”

SB382 tries to protect property rights, but broad preemption could freeze smart local planning.

At CITYBUILDER, we believe growth is good and even better when we build it together. We support policies that make it easier to build homes and unlock opportunity. That’s why we’re paying close attention to SB382’s down-zoning provision.

The provision in SB382 aims to prevent local governments from reducing the development rights on a property without the owner's consent. At first glance, that sounds great! Protecting property rights and limiting the ability of local governments to arbitrarily reduce housing density is exactly the kind of zoning reform we need right now.

But a slew of public staff and planning consultants see it differently.

Already, municipal leaders across the state are sounding the alarm. Some are even filing bills to revise or retract the provision, citing the uncertainty it creates for ongoing planning work. The law is barely in effect, and staff and attorneys, seeking clarity on what they can and cannot do, are already scrambling to determine what exactly counts as down-zoning.

Wait - planners - are you saying you wanted to down-zone something?

That's where things get complicated. Because not all local zoning changes are created equal. And not every reduction in allowable uses or intensity is designed to restrict housing. Sometimes, it’s the opposite.

To get clarity, we need to define our terms.

What exactly is down-zoning?

It’s a term that gets thrown around a lot, especially in housing policy circles. Down-zoning generally means reducing what can be built on a property, and that includes lowering density, changing uses, or removing development rights that previously existed. Historically, and as recent as your town's last ordinance rewrite effort, local politicians have sought to actively down-zone large areas to slow growth. Famously, New York City downzoned large parts of Manhattan in 1961 (and again in the 1980s and 1990s). Historian and pro-housing advocate Nolan Gray breaks this down in his book Arbitrary Lines.

Simply put, down-zoning can and has been weaponized to block new housing and discourage change. This is a matter of historical fact.

For a clear legal breakdown of how SB382 defines down-zoning and what’s at stake, we recommend planning law expert Adam Lovelady’s recent article from UNC’s School of Government. He explains how the bill’s definition may capture a wide range of local planning actions, not all of which are the intended targets.

We’ll be unpacking these in greater detail at this month’s Carolina Policy Talk.

Still, SB382’s no down-zoning provision is rooted in a principle we support.

CITYBUILDER cautiously supports the intent behind this provision.

Protecting property rights from repeating historical shenanigans and political gamesmanship makes sense. But rules have to be written carefully to ensure that a state full of builders, developers, mom-and-pop store owners, planners, and housing advocates have clear expectations. No one wants to invest in a property only to have those property rights stripped halfway through.

SB382's down-zoning definition is so broadly interpretable it risks freezing markets, which require regulatory certainty. The nature of the broad state-level pre-emption means it doesn’t distinguish residential from commercial zoning, or small-scale use restrictions from large-scale entitlement changes, or thoughtful planning from politically-motivated obstruction. That lack of clarity creates legal uncertainty that is preventing local governments from trying to plan for growth.

It’s also worth noting how this provision came about. The down-zoning language appears deep within a hurricane relief and refunding bill, on page 131 of 132. Rumor has it, an owner of a convenience store gas station that was down-zoned last year asked his legislator specifically for this change.

Whether or not that’s the full story, it is a window into the reality of current NC politics, where decisions about what kinds of development are good or bad get made through backdoor legislative maneuvers rather than transparent public debate. Those are the moments when cities lose the ability to guide growth intentionally. And when the process fails, even good intentions can produce bad outcomes.

SB382 is law right now.

While lawyers and planners scramble to determine if recent and upcoming local code changes count as down-zonings under the new law, some good reforms are being slowed down.