2025 Regulatory Omnibus Bill - Overview

HB 765 - Local Gov. Development Regulations Omnibus.

House Bill 765 is a regulatory reform omnibus bill targeting local development regulations, housing affordability, and municipal authority. The bill reflects a statewide push for uniformity, deregulation, and pro-housing development policy, with significant implications for local governments, developers, property owners, and civic associations.

Full Bill: https://house.ncleg.gov/Sessions/2025/Bills/House/PDF/H765v1.pdf
Bill Summary: https://lrs.sog.unc.edu/bill-summaries-lookup/H/765/2025-2026%20Session/H765
Download the PDF of version of this summary: Click Here

Section 1 – Fiscal Notes for Housing Impact

Requires fiscal notes estimating 5-year cost effects for state and local legislation impacting single-family home construction, purchase, ownership, or sale. Noncompliance by local governments can result in legal action from residents.

Applies to both state and local governments.
Fiscal notes must be based on detailed assumptions and cannot include policy opinions.
Notes must be available before legislative or ordinance adoption.
Residents can sue for failure to comply; courts can compel preparation of the note.

Section 2 – Limits on Local Authority

Prohibits local governments from enacting planning and development rules beyond those explicitly authorized in state law. Any ordinance that violates this will be void starting January 1, 2026.

Eliminates implied or expanded local powers in development regulation.
Bars more restrictive regulations than state law allows, except for floodplain management.
Repeals conflicting language in existing law.

Section 3 – Site-Specific Vesting Plans

Extends the duration of vested rights for development approvals from two to five years, with optional extensions up to eight years. Clarifies legal language and changes references to land development regulation.

Prevents local governments from reducing vested rights periods.
Developers can secure long-term certainty in site planning.
Reflects industry push for longer planning horizons.

Section 4 – Voting Conflicts & Plan Consistency

Bars board members from voting on development matters if they have fixed opinions or undisclosed ex parte communications. Makes plan consistency statements judicially reviewable.

Applies to both elected and appointed boards.
Promotes fairness and transparency in development decisions.
Courts can now review consistency statements during legal challenges.

Section 5 – Split Parcel Jurisdiction

Clarifies which local government has authority over parcels in multiple jurisdictions based on utility service or majority land area. Aims to simplify regulatory oversight on shared parcels.

Prioritizes utility service capacity and delivery.
Gives landowners limited choice if service is split between jurisdictions.
Ensures single authority oversees development of split parcels.

Section 6 – Development Fees

Local governments must ensure development-related fees do not exceed the actual cost of program administration. This limits fee overreach and promotes fiscal transparency.

Replaces vague “reasonable fee” standard with strict cost-based standard.
Prevents local governments from using fees as revenue generators.

Section 7 – Administrative Approvals in Large Cities

Cities with populations over 125,000 must delegate approvals for permitted developments to administrative staff. This streamlines routine development decisions.

Affects cities like Charlotte, Raleigh, and Durham.
Applies only to projects that are already permitted by zoning rules.

Section 8 – Application Timelines & Automatic Approvals

Establishes strict timelines for application completeness and review, with automatic approval if deadlines are missed. Protects developers from indefinite delays.

14 days to determine completeness, 90 days to decide.
Delays toll if requested by applicant.
Failure to act equals automatic approval by law.

Section 9 – Restrictions on Local Regulations

Prohibits local rules on building dimensions, driveway/parking specs, sidewalk installation, and certain setbacks for high-density housing. Limits overregulation, especially in larger cities.

Bans minimum size rules for homes, driveways, and parking (with ADA exceptions).
Limits sidewalk mandates for commercial/school uses.
Caps setbacks for high-density multifamily in large cities.

Section 10 – Density and Zoning Standards

Mandates residential zones be defined by units per acre, not lot size, and sets minimum density thresholds based on population. Encourages more housing options and higher density development.

Higher density required in larger cities and counties.
Legalizes small-scale multi-family housing (duplexes, triplexes, etc.) by right.
Exempts farmland and open space from these requirements.

Section 11 – Subdivision Review Process

Requires that final plat approvals be made administratively by staff, not boards. Eliminates quasi-judicial processes for subdivision approvals.

Applies to both preliminary and final plats.
Reduces politicization of subdivision decisions.

Section 12 – Tiny Homes & ADUs in Large Cities

Cities with 125,000+ people must allow tiny homes and at least one accessory dwelling unit per qualifying single-family lot. Restrictions and fees on these housing types are limited.

Cannot require ADU owners to live on site.
Fees and utility rules must be equal to those for single-family homes.
Allows ADUs to be built alongside or after primary homes.

Section 13 – Historic District Designation

Requires 75% of property owners to petition for historic district status and unanimous local board approval. Adds a layer of public and official consent to historic designations.

Increases difficulty of designating new historic districts.
Empowers property owners to block unwanted historic overlays.

Section 14 – Shell Permits for Multifamily Projects

Limits local governments to issuing “shell permits” for multifamily projects and requires unit-specific occupancy approvals as they’re completed. Simplifies phased construction approvals.

Allows occupancy of completed units in phased projects.
Reduces permit burdens for large developments.

Section 15 – Legal Challenges to Zoning Decisions

Expands legal grounds and standing for individuals and groups to challenge zoning regulations or decisions. Includes claims of arbitrariness, overreach, or procedural flaws.

Adds more challengeable grounds including abuse of discretion.
Organizations can sue on behalf of members.

Section 16 – Enforcement of Chapter 160D

Creates a new right to sue for violations of state land use laws and recover damages. Provides legal tools for individuals or organizations to enforce compliance.

Includes costs, disbursements, and equitable relief.
Encourages accountability among local governments.

Section 17 – Limitation on Statutory Interpretation

Prevents courts from using broad construction rules to expand local land use authority. Allows damages and attorney fees for unlawful development decisions.

Protects developers from arbitrary actions by local boards.
Allows recovery from individual board members in some cases.

Section 18 – Street Completion Guarantees

DOT must accept performance guarantees from developers to ensure street completion in new subdivisions. Simplifies infrastructure approval processes.

Helps avoid delays in getting final subdivision approval.
Ensures roads will be completed per standards.

Section 19 – Driveway Regulation Limits

Cities may only regulate driveways under GS 160D and must show substantial evidence for requirements. Prevents excessive or arbitrary restrictions on driveways.

Requires documented need tied to driveway traffic.
Narrows city authority over private access.

Section 20 – Utility Capacity Commitments

Public water/sewer systems must confirm service availability within 30 days and reserve capacity for 24 months. Protects developers from losing service guarantees mid-process.

Capacity plans required if service is denied.
Developers gain legal protection once costs are incurred.

Section 21 – Private Wastewater Systems

Property owners can install their own wastewater systems if public connections aren’t available. They can’t be forced to connect later if their system remains compliant.