The North Carolina General Assembly’s 2026 budget bill—the 2026 Appropriations Act, Session Law 2026-41 (Senate Bill 257)—was signed into law on July 7, 2026, and includes major amendments to the state’s zoning and development statutes that significantly reshape the legal landscape for local governments and developers alike.
Below is a summary of the most significant changes, which became effective on July 1, 2026, and their practical implications.
1. Direct Appeals to Superior Court—No More Mandatory Exhaustion
Previously, anyone challenging an administrative official’s decision generally had to first appeal to the local Board of Adjustment before seeking judicial review.
Under the amended G.S. 160D-1403.1(a1), a party challenging an administrative decision “may, but is not required to,” first bring the claim to the applicable Board of Adjustment. Importantly, the statute adds that “[f]ailure to appeal to the board of adjustment shall not be deemed a failure to exhaust administrative remedies for purposes of an action brought under this section.”
In other words, developers and property owners can now bypass their local Boards of Adjustment entirely and go directly to superior court (or federal court) for declaratory relief, injunctive relief, damages, or other remedies.
What this means for local governments: Expect more litigation landing directly in superior court, with less opportunity for local-level resolution.
2. Expanded Standing for Membership Associations
Session Law 2026-41 also broadens who may challenge development regulations.
New subsection (b)(4) of G.S. 160D-1403.1 grants standing to any “association, organization, society, or entity,” whose members include qualifying property owners, developers, or development permit applicants.
This means homebuilder associations, developer trade groups, and similar organizations can now challenge local regulations directly, provided their membership includes qualifying property owners, developers, or applicants and their purposes are germane to the matter in controversy. While they cannot seek damages that require individualized proof of injury, they may seek declaratory relief, including recovery of illegal taxes, fees, or monetary contributions on behalf of their members.
What this means for local governments: Anticipate coordinated challenges from well-resourced industry groups.
3. Extended Statute of Limitations—From One Year to Three Years
Session Law 2026-41 extends the time for bringing a civil action under G.S. 160D-1403.1 from one year to three years from when the cause of action accrues. The action accrues “when the party bringing the action first has standing to do so.” For claims seeking the recovery of a tax, fee, or monetary contribution, the cause of action instead accrues upon payment.
The legislation also extends the statute of limitations for challenging the validity of development regulation text, and defects in the ordinance adoption process, from one year to three years. Similarly, the former one-year limitations period in G.S. 1-54(10) has been repealed and replaced with a new three-year limitations period in G.S. 1-52(21) for actions challenging the validity of zoning and unified development ordinances. One important exception remains: the 60-day limitations period for challenging the adoption or amendment of a zoning map under G.S. 160D-1405(a) is unchanged, so map amendments remain subject to that shorter window.
What this means for local governments: Decisions and regulations/ordinances that previously became final after one year will now remain vulnerable to challenge for three full years, substantially increasing the window of legal exposure.
4. Mandatory Award of Attorneys’ Fees
Under new subsection (b) of G.S. 6-21.7, if a city or county is “found to be liable” in any action brought under G.S. 160D-1403.1, the court must award reasonable attorneys’ fees and costs to the successful challenger. This is mandatory, not discretionary.
New subsection (c) similarly mandates fee-shifting when a local government is found to have acted inconsistently with, or in violation of, the Permit Choice statute (G.S. 143-755) or vested rights protections (G.S. 160D-108(b)). These mandatory provisions supplement existing subsection (a), which already requires fee awards where a city or county violates unambiguous limits on its authority, while amended subsection (d) gives courts discretion to award fees to a prevailing private litigant in other matters.
What this means for local governments: These changes create significant financial incentives for property owners and developers to bring suit and increase the financial exposure local governments may face in litigating these types of matters.
5. Permit Choice Expanded to Cover Conditional Rezonings and Legislative Decisions
Session Law 2026-41 also amends the permit choice statute (G.S. 143-755) in two important ways.
First, new subsection (a1) of G.S. 143-755 extends permit choice protections to rezoning applications, including conditional rezonings. If land development regulations change between when a rezoning application is submitted and when a decision is made, the applicant may choose which version of the regulations applies.
Second, the definitions of “development permit” and “land development regulation” in subsection (e) are broadened. “Development permit” now covers legislative and quasi-judicial approvals (including conditional zoning and rezoning approvals), and “land development regulation” expressly includes unified development ordinances, zoning maps, subdivision regulations, and more.
What this means for local governments: Developers now have permit choice rights beginning at the rezoning application stage. This may create pressure for local governments to process amendments to development regulations and ordinances more promptly knowing that a conditional rezoning application may lock-in the current regulations and ordinance provisions.
6. New Right to Binding Interpretive Determinations
Session Law 2026-41 adds a new subsection (b1) to G.S. 160D-403 creating a formal interpretive-determination process. Upon written request by any person with standing under G.S. 160D-1403.1(b), the local government, acting through a designated administrative official or staff, must issue a written determination regarding the applicability or interpretation of a development regulation to a given set of facts.
Once issued, the determination is binding on both the local government and the requesting party unless it is altered or set aside by a decision-making board or a court, and the notice and posting requirements of G.S. 160D-403(b) apply. A determination under this subsection is itself a “decision implementing a local land development regulation” that can be challenged under G.S. 160D-1403.1.
What this means for local governments: Local governments must be prepared to respond to interpretation requests with written determinations that carry binding legal effect. Local governments should designate responsible officials, adopt a consistent process for issuing determinations, and recognize that each determination may be tested in court.
Looking Ahead
Taken together, these changes represent a significant shift in the balance of power between local governments and those subject to land development regulations in North Carolina. Local governments should review their land use procedures, train staff on the new requirements, and consult with counsel about the increased litigation risk. In particular, they should be aware of their longer exposure windows as a result of the longer limitations periods, establish a process for responding to binding interpretive-determination requests, and weigh the new fee-shifting risk when making close-call enforcement and permitting decisions.
If you have questions about how these amendments may affect your local government, please reach out.
Disclaimer: This thought leadership article is not legal advice.