Wednesday, February 8, 2023

Downtown residents file suit against Wilmington, claiming hotel approval violated due process rights

The approval of the Arrive Hotel in Wilmington did not sit well with neighbors; some have filed a lawsuit against the City of Wilmington. (Port City Daily/Michael Praats)

WILMINGTON — Earlier this year Wilmington’s City Council approved a special use permit modification that allowed the expansion of the number of guest rooms allowed on the property. The location in question is the home of the new Arrive Hotel at 117 South Second Street, and despite gaining approval from City Council, neighbors of the project were less than pleased with it.

Now, the city is facing a legal fight over the hotel.

The petitioners, Bruce Carrell and Sonya Carrell, claim the city denied petitioners due process during the approval process of the hotel and are asking for a writ of certiorari (that is, asking a higher court to review the decision made by a lower court or government body).

The Carrells are the neighbors of the property in question and were vocally opposed to the request when it was before City Council in February. But in order to understand the lawsuit, it is important to understand special use permits first.

Related: Hotel Riverwalk looking to expand in downtown Wilmington

Expert opinion and evidence only

Special use permits are a somewhat unique permit granted by local governments. They essentially allow projects that would normally not be permitted in a zoning district.

“Special Use Permits (SUP) add flexibility to the Land Development Code. Subject to high standards of planning and design, certain property uses may be allowed in several districts where these uses would not otherwise be acceptable. By means of controls exercised through the special use permit procedures, property uses which would otherwise be undesirable in certain districts can be developed to minimize any adverse effects they might have on surrounding properties,” according to the city’s own application for special use permits.

Getting an SUP is, however, a tricky process — and so is opposing one. Applicants must present evidence to the City Council that each project meets four specific criteria.

  • That the use will not materially endanger the public health or safety if located where proposed and developed according to the plan as submitted and approved by the issuance of the special use permit;
  • That the use meets all required conditions and specifications (See Article 6 of the Land Development Code for special use prerequisites that must be met before a special use permit may be granted);
  • That the use will not substantially injure the value of adjoining or abutting property, or that the use is a public necessity; and
  • That the location and character of the use if developed according to the plan as submitted and approved will be in harmony with the area in which it is to be located and in general conformity with the city’s Create Wilmington Compressive Plan and adopted special area plans (e.g., corridor plans, neighborhood plans).

But unlike a regular rezoning request, the public can only weigh in on the project if they offer expert testimony and have actual evidence. That means, simply claiming a project will injure the value of neighboring property (or properties) isn’t good enough, instead, opponents would need to provide true evidence to the claims.

And that is exactly what the Carrells did in February by hiring Brad White, MAI, a real estate appraiser to testify in front of City Council. But despite his testimony, the City Council ultimately approved the SUP.

More rooms, no on-site supervision

The SUP application claimed the only change was an increase in occupancy — however — the 2001 permit required on-premises management.

The property in question had already been operating as a hotel and was granted an SUP back in 2001, allowing eight guest rooms and an on-site residential apartment for management.

But the modified permit allowed the removal of the on-site apartment to allow for the expansion of the hotel.

One of the issues residents had with the proposed plan was the fact that despite claiming the only change to the 2001 SUP was the addition of more guest rooms, the Arrive Hotel would remove the condition of the on-site residential unit.

City Council did ultimately approved the SUP modification as previously mentioned, but the fight is not over.

It comes down to the fact that, according to the opposition, the owners of the hotel failed to produce a floorplan for the modifications in violation of city policy.

“One part of the four-part test under §18-85 is that the use meets all the required conditions and specifications. This includes the provisions in the Code for guest lodging. It is not limited to only the conditions listed on the 2001 SUP. All of the requirements for guest lodging exist and must be met. Section 18-277(b) requires that there shall be a floor plan showing the number of lodging units along with the residential unit provided as a principal residence,” Sonya Carrell said during the Feb. 19, 2019, public hearing.

No due process

The writ alleges the City Council never reviewed the site plans that were submitted months after the City Council hearing. (Port City Daily/Courtesy NHC Courts)

On April 12, 2019, the Carrells filed a writ of certiorari in Superior Court asking a judge to review the decision of City Council — the claim — that the city had denied the opposition due process.

According to the lawsuit, during the time of the SUP modification hearing, a quasi-judicial process, the applicant had not submitted a site or floor plan showing the number of lodging units along with the residential quarters as a primary residence. A ‘Revised Site Plan’ was submitted to the city and then later the petitioners, but not until months after the city approved the request.

The lawsuit claims that the “‘Revised Site Plan’ is crucial to the issuance of a modification to the SUP that is the subject matter of this proceeding, and its submission was necessary to comply with the City of Wilmington’s LDO.”

In fact, the lawsuit goes on to claim the approval of the SUP modification made in February stated: “The City Council found that the proposed site plan complies with the special use prerequisites.”

But at the time of the hearing, no such plan had been submitted to the city. This is further proven by the city’s own counsel responding to the petitioners claiming, “‘The Revised Site Plan’ was not included within the proposed record on appeal filed by the city because ‘we did not have it at the time of the hearings or at the time that we prepared the Record on Appeal,” according to the lawsuit.

Essentially, the ‘Revised Site Plan’ that was submitted later in the year was not the same thing that City Council approved in February and after the city finally did receive it, City Council never voted on the ‘Revised Site Plan.’

This failure to review the new plan was a violation of the petitioner’s rights to due process since they were never “afforded an opportunity to examine the ‘Revised Site Plan,’ nor the opportunity to provide additional testimony or evidence …” according to the court records.

The case is still pending in Superior Court and in June the City did respond to allegations asking the courts to dismiss the case, however, this motion was not successful and the latest filings took place in mid-September.

While the argument of the case is largely against the City of Wilmington, Dock and Second LLC (Arrive Hotel’s limited liability company for the location) is also named in the lawsuit. Reached for comment in June, Ezra Callahan, co-founder of Arrive Hotels & Restaurants, issued a brief statement.

“We are cooperating with the City Attorney’s office on the response to this appeal, but regardless of the outcome, we are confident we will forge a positive long-term relationship with our neighbors. We are thrilled with the response we have gotten from the community around the opening of our restaurant, Dram Yard, and we are excited to have the entire hotel open this month,” Callahan said.

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