Can the North Carolina Zoological Park build or lease out a hotel or convention center on zoo property, or does the Umstead Act block it?

Plain-English summary

In January 1996, Zoo Director David Jones sent a memorandum to Richard Whisnant, the General Counsel for the Department of Environment, Health and Natural Resources (DEHNR, the predecessor to today's DEQ for many of these functions), describing a proposed conference center and hotel complex at the Zoological Park in Asheboro. Whisnant asked the AG whether the Umstead Act, § 66-58, would allow it.

Senior Deputy Attorney General Daniel C. Oakley and Assistant Attorney General David W. Berry answered no. The Umstead Act prohibits certain state agencies from competing with the private sector in defined commercial activities. The Act generally does not apply to DEHNR, with one carved-out exception: § 66-58(b)(9) provided that the Department "shall not construct, maintain, operate, or lease a hotel or tourist inn in any park over which it has jurisdiction." The question was whether the N.C. Zoological Park was a "park" within the meaning of that exception.

The Zoo is not formally designated a state park. It does not appear in the Division of Parks and Recreation's State Parks System directory. But the AG read § 66-58(b)(9)'s text broadly: it speaks of "any park" over which the Department has jurisdiction, not just designated state parks. The Zoo qualified for several reasons:

• It is called the N.C. Zoological Park. Its formal name carries the word "park."
• Its purpose and operation are consistent with the ordinary meaning of "park" as land set aside for public visitation and recreation.
• The Department has clear jurisdiction over the Zoo's lands. In 1975, the Department of Administration allocated the 998.514-acre Randolph County tract to DEHNR's predecessor agency expressly for "the operation and development of the N.C. Zoological Park."
• Under § 113-264, the Department exercises regulatory authority over zoo lands and may charge admission fees.
• DEHNR's own administrative rules at 15A NCAC 22A .0001(5) define "zoo," "park," and "zoological parks" as lands and facilities "owned, controlled or operated by the department [DEHNR] for the use of the North Carolina Zoological Park."
• The Department controls the Special Zoo Fund under § 143B-336.1 and is advised by the N.C. Zoological Park Council under § 143B-335.

Taken together, the Zoo was plainly a park and was plainly under the Department's jurisdiction. The hotel and conference center proposal therefore ran into the Umstead Act's prohibition, and the only way forward was a statutory amendment from the General Assembly.

Currency note

This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Umstead Act has been amended several times. State agency reorganizations have moved the Zoo across different parent departments (DEHNR became DENR, then DEQ for environmental quality, with various pieces moving to other agencies; oversight of the Zoological Park has shifted accordingly). The N.C. Zoological Park has also developed commercial partnerships and on-site amenities. Anyone evaluating a similar hotel or commercial-development proposal today should work from the current text of § 66-58 and the current agency structure.

Background and statutory framework

The Umstead Act, named for Governor William B. Umstead, was the General Assembly's mid-century answer to concerns that state agencies were drifting into commercial activity that competed with private business. § 66-58 lays down a broad rule barring certain state agencies from engaging in defined kinds of commerce, with a long list of exceptions that carve out activities the legislature wants to allow. The structure is "rule plus exceptions plus exceptions to the exceptions."

DEHNR's general position under the Act was favorable: the statute did not apply to the Department for most of its activities. § 66-58(b)(9) was a single carve-out from that exemption, addressing one specific concern: that the Department might commercialize state park lands by partnering with private hospitality operators. The legislative judgment was that state parks should remain park-like, not hotel-like.

The Zoological Park presented an interesting application question because the Zoo is not part of the State Parks System administered by the Division of Parks and Recreation. It is a separate institution with its own statutory home (§ 143B-335 et seq.), its own Council, and its own funding mechanism. But it is still on Department-controlled land, still operated by the Department, and still publicly called a park.

The AG opinion's reading is straightforward textualism: "any park" means any park, not just designated state parks. The Zoo's name, purpose, and operational reality all pointed in the same direction.

The opinion's practical implication was real money. A conference center and hotel complex at the Zoo would have generated revenue, attracted overnight visitors, and supported the Zoo's broader development plans. The Umstead Act foreclosed that path absent statutory action. The opinion functionally told DEHNR: take this to the legislature if you want it.

Common questions

Is the N.C. Zoological Park a state park?

Not in the formal sense. It is not listed in the Division of Parks and Recreation's State Parks System directory. But the AG opinion held that for purposes of § 66-58(b)(9), the Zoo is a "park over which the Department has jurisdiction" and therefore subject to the hotel prohibition.

What did the General Assembly mean by "any park"?

The AG read "any park" as broader than "any designated state park." The statutory text used "any," and the Zoo fit the ordinary meaning of "park" both by name and by purpose. Reading the statute to apply only to State Parks System units would have read "any" out of the statute.

What sources gave DEHNR "jurisdiction" over the Zoo?

The 1975 land allocation from the Department of Administration to DEHNR's predecessor agency was the foundational fact. Subsequent statutory grants (§ 113-264, § 143B-335, § 143B-336.1) and the Department's own administrative rules (15A NCAC 22A .0001(5), defining "zoo" and "park" in terms of Department-owned and operated lands) all reinforced it.

Could the Zoo build a hotel today?

Only if § 66-58(b)(9) has since been amended or if the relevant jurisdiction has shifted. The 1996 opinion read the prohibition as absolute under then-current law and pointed to legislation as the only way around it.

What about a private partner leasing zoo land for a hotel?

§ 66-58(b)(9) covers leasing as well as constructing and operating. The AG opinion's reading would have covered a private-partner lease the same way it covered direct DEHNR construction.

Source

• Landing page: https://ncdoj.gov/opinions/zoological-park/

Citations

• N.C.G.S. § 66-58 (Umstead Act)
• N.C.G.S. § 66-58(b)(9) (hotel prohibition in DEHNR parks)
• N.C.G.S. § 113-264 (Department regulatory authority over zoo lands)
• N.C.G.S. § 143B-335 (Zoological Park Council)
• N.C.G.S. § 143B-336.1 (Special Zoo Fund)
• 15A NCAC 22A .0001(5) (administrative definition of "park" and "zoo")
• Turlington v. McLeod, 323 N.C. 591, 374 S.E.2d 394 (1988)
• Woodson v. Rowland, 329 N.C. 330, 407 S.E.2d 222 (1991)

Original opinion text

April 24, 1996

Mr. Richard B. Whisnant, General Counsel N.C. Department of Environment, Health and Natural Resources 512 N. Salisbury Street Raleigh, N.C. 27604

Re: Advisory Opinion: Application of N.C. Gen. Stat. § 66-58(b)(9) to N.C. Zoological Park

Dear Mr. Whisnant:

By memorandum received March 4, 1996, you requested an advisory opinion as to whether the N.C. Zoological Park constitutes a "park" for purposes of N.C. Gen. Stat. § 66-58(b)(9).

SUMMARY We have consistently advised the N.C. Division of Parks and Recreation that N.C. Gen. Stat. § 66-58(b)(9) prohibits the Division from leasing state park lands to a private party for the purpose of operating a hotel or similar facility. Although the N.C. Zoological Park ("Zoo") is not a state park listed on the Division of Parks and Recreation's State Parks System, for the reasons discussed below, it is a "park over which the Department has jurisdiction" for purposes of N.C. Gen. Stat. § 66-58(b)(9). Therefore, if the Department wishes to pursue development of a hotel or convention center upon zoo property, amendment of N.C. Gen. Stat. § 66-58(b)(9) would be required.

ANALYSIS

N.C. Gen. Stat. § 66-58, commonly referred to as the Umstead Act, prohibits certain state agencies from engaging in various forms of business in competition with the private sector. The statute does not apply to the Department of Environment, Health and Natural Resources ("Department"), save one exception. The exception, codified in N.C. Gen. Stat. § 66-58(b)(9), states that the Department "shall not construct, maintain, operate, or lease a hotel or tourist inn in any park over which it has jurisdiction." In construing this statute, the first rule is to determine legislative intent while giving the language of the statute its natural and ordinary meaning. Turlington v. McLeod, 323 N.C. 591, 374 S.E.2d 394 (1988). Words undefined in a statute are accorded their plain meaning as long as it is reasonable to do so. Woodson v. Rowland, 329 N.C. 330, 407 S.E.2d 222 (1991). Here, the statute's plain language demonstrates that the Legislature intended that N.C. Gen. Stat. § 66-58(b)(9) apply to any "park over which the Department has jurisdiction."

The N.C. Zoological Park is technically not a state park. The Zoo has not been designated a "state park," either by statute or rule. The Zoo is not listed in the "Directory of State Parks and Recreation Areas" adopted in 15A N.C. Admin. Code 12A .0004. However, the plain language of N.C. Gen. Stat. § 66-58(b)(9) indicates that the Umstead Act's exception is not limited simply to designated state parks, but "any park" over which the Department has jurisdiction. Thus, the Zoo, as evidenced by its purpose, operation, and formal name, is a park under the broader terms of this statute.

The term "jurisdiction" (apart from its use as a legal term of art describing a court's powers) commonly means the "extent of authority or control." The American Heritage Dictionary, (2nd College Ed. 1991). Given the Department's various forms of authority and control over the Zoo, particularly its regulatory authority over the Zoo's lands, the N.C. Zoological Park should be considered "a park over which the Department has jurisdiction" for purposes of N.C. Gen. Stat. § 66-58(b)(9). The Department's regulatory authority derives from the Department of Administration's previous allocation of the real property for the Zoo to the Department. After acquiring the real property for the N.C. Zoological Park, the N.C. Department of Administration, on November 10, 1975, allocated the 998.514 acre Randolph County tract to the Department's predecessor agency, the N.C. Department of Natural and Economic Resources. The express purpose of the allocation was "for the operation and development of the N.C. Zoological Park, Asheboro, Randolph County." (See attached copy of the Department of Administration's allocation letter, dated November 10, 1975).

Pursuant to N.C. Gen. Stat. § 113-264, the Department exercises regulatory authority over the Zoo's lands and possesses the legal authority to charge admission fees. Under this statutory grant of power, the Department has adopted various rules governing the Zoo's operation, which are codified in Title 15A Chapter 22 of the N.C. Administrative Code. For example, the Department has adopted rules governing the conduct and activities of Zoo visitors and rules governing the acquisition and disposition of animals. Aptly illustrating the Department's jurisdiction over the Zoo and its activities is 15A N.C. Admin. Code 22A .0001(5), which defines the terms "zoo", "park", and "zoological parks" as those "lands, facilities, programs, and other assets (including animals and plants) owned, controlled or operated by the department [DEHNR] for the use of the North Carolina Zoological Park."

The Legislature also vested the Department with control over expenditures from the Special Zoo Fund. The Fund, established in N.C. Gen. Stat. § 143B-336.1, is a nonreverting fund composed of unbudgeted receipts. The Department, on the advice of the N.C. Zoological Park Council and approval of the Office of State Budget and Management, must expend these funds for maintenance and repair of existing animal and visitor support facilities. The Council, created as part of the Department through N.C. Gen. Stat. § 143B-335, also advises the Secretary on a wide range of matters involving the Zoo, including building plans, furnishings, admission fees, programs for public appreciation, and soliciting financial and material support from private sources.

CONCLUSION Although not technically designated a state park, the N.C. Zoological Park is a park, based upon its purpose, operation, and formal name. After the Department was allocated the real property containing the Zoo in 1975, it has exercised regulatory and financial control over most all aspects of the Zoo's operation. Given this control, the N.C. Zoological Park constitutes a "park over which the Department has jurisdiction" for purposes of N.C. Gen. Stat. § 66-58(b)(9). Therefore, the Umstead Act, as now written, appears to prohibit the conference and hotel complex described in Director David Jones' January 31, 1996 memorandum to you.

If you have any questions or need additional assistance, please let us know.

Daniel C. Oakley Senior Deputy Attorney General

David W. Berry Assistant Attorney General