General Assembly Passes Legislation to Clarify Taxation of Property Management Contracts

legislative_building_5The North Carolina General Assembly last week passed legislation supported by REBIC, the North Carolina Association of Realtors® (NCR), NAIOP Charlotte, and other industry trade groups that would clarify that residential and commercial Property Management agreements are largely not subject to the state’s Repair, Maintenance & Installation (RMI) sales tax.

SB 523 — Revenue Laws Clarifying & Administrative Changes, passed the Senate on Thursday with an amendment that requires Property Management companies to charge and remit RMI sales tax only in the following circumstances:

  1. They provide repair, maintenance, installation services for an additional charge above what is stated in the management contract.
  2. They arrange for a third party to provide the repair, maintenance, and installation services and impose an additional charge for arranging these services.
  3. More than twenty-five percent (25%) of the time spent managing an individual real property during a billing or invoice period is attributable to taxable repair, maintenance, and installation services. The property manager can voluntarily provide a written affidavit to attest that no more than 25% of their services on a given property constitute taxable RMI services, which would clear them of liability for taxation on any portion of the contract amount.

The legislation also provides specific exclusions to RMI services, which help ensure much of the work done by property management companies is not subject to taxation. They are:

  1. To troubleshoot, identify, or attempt to identify the source of a problem for the purpose of determining what is needed to restore the real property to working order or good condition.
  2. To inspect or monitor the real property, including the normal operation of all systems that are part of the real property.

State law has always excluded Property Management agreements from the retail sales tax, but the language in this amendment helps clarify how incidental RMI, or ‘handyman’ services, will be treated when provided as part of the agreement. The 25% threshold is particularly critical, as it allows property management companies to avoid hourly tracking of the work done by their team on a given property to ensure compliance with state tax law. The amendment says the substantiation for this claim must be ‘based on a reasonable approximation of the real property management services provided and supported by the person’s business records kept in the ordinary course of business.

The bill language also provides a two-year grace period, ending January 1, 2021, during which time the Department of Revenue shall assess no taxes or penalties on property management companies that fail to collect sales tax on RMI services provided under a service contract.

SB 523 is now awaiting Governor Cooper’s signature.

Charlotte Sign Ordinance Amendments Appear to Ban Real Estate Directional Signs

Proposed amendments to the Charlotte Sign Ordinance appear to ban weekend directional signs for new home construction and real estate open houses — a change with potentially devastating impacts for home builders and Realtors®, and one which REBIC will strongly oppose.

Weekend directional signs are one of the most effective tools buyers use to find homes for sale. Particularly in Charlotte, where most new home communities are in hard-to-find, infill locations (and often not yet identified on GPS), a ban on temporary directional signs would severely impact home sales, which are already falling due a lack of inventory.

The proposed Sign Ordinance amendments were presented at a community informational meeting last week, but no mention was made of the ban on temporary signs. The ban, however, is included on page 40 of the draft text, under ‘Prohibited Signs’:

Off-premise advertising signs — temporary. Also known as snipe or bandit signs.

REBIC has reached out to senior officials in the planning department to schedule a meeting and discuss the proposed change, which is expected to come before Council this fall. We intend to vigorously oppose this change.

 

 

Council Approves Construction of New Development Permitting Center

Charlotte

The Charlotte City Council voted last week to approve construction of the first floor of the Charlotte-Mecklenburg Government Center for a collaborative, multi-departmental development permitting facility.

Known as the CLT Development Center, the space will provide developers and design teams access to city review staff in a single location for city development permitting services. This initiative brings together staff from all departments involved in permitting to create a more collaborative culture with new services to better meet customer needs.

“The CLT Development Center is the product of our efforts to have collaborative partnerships with the development community,” said City Manager Marcus D. Jones. “We are excited to bring new, innovative ways to work together to create great projects for Charlotte.”

Development service teams from the Charlotte Department of Transportation (CDOT), Engineering, Urban Forestry, Construction Inspection, Charlotte Water, Erosion Control, Subdivision, Zoning, Fire, and Plan Review Coordination will be located in the CLT Development Center.

The city will also debut a series of new Expedited and Enhanced Review programs to streamline development reviews. For an additional fee, these programs will provide increased speed, singularity of feedback, dedicated review resources and close integration of reviewing departments for time-sensitive projects. Reviews will be completed with decisions issued in as little as four to six weeks.

The new CLT Development Center is scheduled to be open for business in December 2019.

Source: City of Charlotte

City Council Defers Vote on Minimum Housing Code Amendments

ssi002.ilookabout.comA City Council Committee has deferred a scheduled vote on proposed amendments to Charlotte’s Minimum Housing Code to allow REBIC, the Greater Charlotte Apartment Association (GCAA) and other stakeholder groups to meet with staff and try and find ways to improve the draft language.

REBIC and GCAA have expressed concern that the proposed changes Ordinance could negatively impact housing affordability by raising the cost of property management and code compliance for landlords. We have also described how the costly and ambiguously worded amendments could reduce the City’s already dwindling supply of Naturally Occurring Affordable Housing.

A full list of the proposed changes is available here, along with the presentation made last month to City Council’s Neighborhood Development Committee. They include:

  • Requiring roof drains, gutters and downspouts be maintained in good repair and free from obstructions and designed to discharge rainwater away from
    the structure.
  • Requiring any existing air conditioning systems to be ‘in good working condition.’
  • Requiring that cabinet doors and drawers be ‘operating as intended and have functional hardware.’
  • Requiring that exhaust ducts for clothes dryers be equipped with a back-draft
    damper.
  • New fines of $500 per day for failure to correct any dangerous violations within 48 hours.
  • Enhanced penalties for Environmental Court convictions that include probation or up to 30 days in jail.

REBIC and GCAA will be convening a stakeholder meeting with City staff later this month to begin working through our concerns, which were outlined in a joint letter issued last week.  You can read the full list of our concerns here.

 

City Hosting Meeting Next Thursday on Upcoming TOD Corridor Rezonings

Meeting Flyer_July18PublicMtg_1-0

The City of Charlotte is hosting an Informational Open House this Thursday, July 18 to inform community members about the City’s plan to rezone parcels along the Blue Line light rail corridor to one of the new TOD zoning districts.

The parcel rezonings, which will begin this fall, will formally remap hundreds of individual properties along the LYNX light rail corridor to one of the four new TOD districts Council adopted in April:

  • TOD-UC Transit Urban Center
  • TOD-NC Transit Neighborhood Center
  • TOD-CC Transit Community Center
  • TOD-TR Transition

On June 30th, all districts zoned under one of the previous conventional TOD districts were automatically rezoned to the medium-density TOD-CC, but the remapping process will reassign many of these parcels to a higher- or lower-density district, depending on its proximity to a transit station, activity center, or existing neighborhood.

You can find out if your property is included in the TOD Alignment Rezoning by using the City’s online map. Simply enter the street address or nearest intersection into the map’s search feature to locate your parcel. If your property is included in the TOD Alignment Rezoning, it will be shown with the color that corresponds to the TOD zoning district for which it is recommended. If your parcel does not have a color, it will not be rezoned as part of this initiative.

Parcels with a previously approved URBAN conditional zoning will NOT be rezoned in the mapping process.

This Thursday’s community meeting will be held in the Fellowship Hall on the first floor of the Pritchard Building, Pritchard Memorial Baptist Church, 1117 South Boulevard. Drop-in times are 11:00 a.m. to 1:00 p.m. and 4:00 to 7:00 p.m.  Presentations are scheduled for 11:15 a.m., 12:15 p.m., 4:15 p.m., 5:15 p.m., and 6:15 p.m.

Free parking is available in the parking garage behind the church at Caldwell and Templeton. The church is also a short walk from the Carson Boulevard LYNX station.

Read more about the new TOD Ordinance here.

Mooresville Considers Zoning Changes at Tonight’s Meeting

MooresvilleThe Town of Mooresville will consider a text amendment to the Zoning Ordinance at tonight’s Board of Commissioners meeting that will provide more density options to builders. The proposal tonight will allow for townhouses to be built in the R2 and R3 zoning designations through the use of conditional zoning.

The proposal passed the Planning Board by a 5-3 vote at its June 13, 2019 meeting.

The Town Board of Commissioners will meet this evening at 6:00 p.m. at Mooresville Town Hall.

Charlotte Holding Additional Meetings this Week on Housing Code Changes

Housing Code Meetings

The City of Charlotte is hosting a second pair of community meetings this week to discuss proposed changes to its Minimum Housing Code, which are scheduled to be considered by a City Council committee on July 17th.

REBIC and other industry groups have expressed concern that the proposed changes Ordinance could negatively impact housing affordability by raising the cost of property management and code compliance for landlords.

A full list of the proposed changes is available here, along with the presentation made last month to City Council’s Neighborhood Development Committee. They include:

  • Requiring roof drains, gutters and downspouts be maintained in good repair and free from obstructions and designed to discharge rainwater away from
    the structure.
  • Requiring any existing air conditioning systems to be ‘in good working condition.’
  • Requiring that cabinet doors and drawers be ‘operating as intended and have functional hardware.’
  • Requiring that exhaust ducts for clothes dryers be equipped with a back-draft
    damper.
  • New fines of $500 per day for failure to correct any dangerous violations within 48 hours.
  • Enhanced penalties for Environmental Court convictions that include probation or up to 30 days in jail.

REBIC and the Greater Charlotte Apartment Association were successful in getting last week’s committee vote on the proposal deferred until Wednesday, July 17th, citing our concerns with the ambiguity and increased cost of many of the provisions, and the potential impact on the City’s dwindling supply of Naturally Occurring Affordable Housing. We will be meeting with City staff this week to discuss our concerns in more detail.

All interested landlords and property owners are strongly encouraged to review the proposed ordinance changes and attend one of the two community meetings scheduled for this week.