General Assembly Leaves Raleigh with Much Still Unfinished

nc-state-legislature-building-legislative-branch

The North Carolina General Assembly has entered the seventh-inning stretch.

Contrary to popular belief, the legislative session isn’t over, but on an extended break until May 14, 2014, when it returns to Raleigh for the 2014 Short Session. And while the past seven months saw legislators step out ambitiously on Tax Reform, Elections law and a host of social issues, many real estate industry priorities were left on the sidelines. Key bills that would limit residential design controls, promote redevelopment and eliminate inequitable neighborhood leverage in rezoning cases made it through the NC House, only to get shelved when they reached the Senate.

Here’s a summary of where our key industry bills sit at the end of session:

  • HB 74 (Regulatory Reform Act of 2013):  What began life as a bill to require the periodic expiration and review of existing state laws eventually morphed into the NCGA’s primary vehicle for regulatory reform in 2013. The House added language eliminating the use of Protest Petitions in local rezonings and a section that pre-empted any local environmental regulations exceeding state or federal law. Regrettably, these critical provisions were stripped out by Senate leadership, which also refused to include them in the Conference Committee substitute (a compromise bill agreed to by members of both chambers).Nevertheless, the bill still has some valuable provisions for the real estate industry, including the rule review language mentioned above, the removal of gravel and wooden decks from the state definition of ‘Built-Upon Area’, clarification of the process for appealing an Erosion/Sedimentation violation, and a 10-year statute of limitations for local enforcement actions against a grandfathered land use that violates a local zoning ordinance or comp plan. In addition, for the next year, local governments are prohibited from adopting any new environmental regulations that exceed state or federal law, unless they do by unanimous vote.Where It Stands: On Governor’s Desk.

    Where We Stand: REBIC is disappointed that the NC Senate chose not to include the Protest Petition and Pre-Emption language in this year’s Reg Reform legislation, and will continue to advocate for the passage of these provisions in the 2014 Short Session.

  • HB 120 (Building Inspections / Local Consistency): Extends the existing building code revision cycle for residential construction from 3 to 6 years, requires state code interpretations to be published online, and prevents local building code departments from requiring any more than the 8 inspections currently authorized under the state’s Administrative Code.Where It Stands: Signed into Law.

    Where We Stand: Kudos to the General Assembly for passing legislation that will better streamline the building code across the state, and to Representative Tricia Cotham (D-Mecklenburg) for leading the charge.

  • HB 150 (Zoning Design/Aesthetic Controls): Would prohibit local governments from regulating the appearance and architectural design of single-family homes and townhomes.

    Where It Stands: Passed House, now sitting in Senate Rules.

    Where We Stand: REBIC’s top priority was regrettably shelved in the Senate, which ironically passed a nearly identical bill in 2012. We’ll continue to advocate for it’s passage in 2014.

  • HB 192 (Allow ROW Usage in Central Business Districts):  Allows NCDOT to enter into agreements allowing local governments to enact ordinances permitting sidewalk dining in state ROW.

    Where It Stands: Signed into Law.

    Where We Stand: A good piece of legislation that will make it easier for commercial property owners along state roadways to offer curbside dining.

  • HB 201 (Reinstate 2009 Energy Conservation Code):  Would repeal the 2012 North Carolina Energy Conservation Code for commercial buildings, and reinstate the 2009 Energy Code.

    Where It Stands: Passed House, now in Senate Rules.

    Where We Stand: A good bill that will help reduce construction costs for commercial and industrial developers. Will advocate for passage in 2014.

  • HB 276 (Zoning/Board of Adjustment Changes): Gives property owners and land developers better standing when they bring a case before their local Zoning Board of Adjustment (ZBA) by giving the board latitude to hear any appeal of a development or land use administrative decision, and removing any need for an appellant to prove loss of any ‘reasonable use’ of the property.

    Where It Stands: Signed into Law.

    Where We Stand: A win for property owners and developers.

  • HB 480 (Environmental Permitting Reform): Requires NC DENR to create a fast-track process for approving storm water permits, with minimum design criteria that can be certified by a private engineer without the need for technical review.

    Where It Stands: Signed into Law.

    Where We Stand: Good legislation that will reduce time and cost for the development industry.

  • HB 773 (Local Gvmts/Buildings/Structures/Inspections):  Would tighten restrictions on local Rental Registration programs, including mandatory universal registration of rental properties, posting requirements and misdemeanor penalties. It would effectively rollback most of Charlotte’s expansive Rental Registration program.

    Where It Stands: Passed the House on May 14th, now awaiting a hearing in Senate Commerce.

    Where We Stand: We support and will continue to advocate for passage by the Senate in 2013.

  • SB 81 (Charlotte Douglas International Airport): If we have to explain this, you’ve been living under a rock.

    Where It Stands: Signed into Law, but Court injunction prevents it from being enacted … we think.

    Where We Stand: REBIC took no position.

  • SB 159 (Require Certain General Reappraisals):  Requires Mecklenburg County to conduct a full revaluation of properties in its tax digest and issue refunds to property owners when necessary.

    Where It Stands: Signed into Law.

    Where We Stand: A good law that will ensure Mecklenburg County property owners are fairly refunded from a seriously flawed revaluation process in 2011.

  • SB 545 (Master Meters/Landlord-Tenant Agreement):  Provides for the use of a master meter for electric and natural gas service when the tenant and landlord have agreed in the lease that the cost of services shall be included in the rental payments and the service shall be in the landlord’s name.

    Where It Stands: Signed into Law.

    Where We Stand: A victory for rental property owners.

General Assembly Approves Tax Reform Plan as End of Session Nears

AccountingEarly last week, leaders in the North Carolina House and Senate joined Governor McCrory in Raleigh to announce an agreement on legislation they termed “historic and meaningful Tax Reform” that will spur economic development and ensure enough money is available to provide for public services. Republicans said implementing the plan would move the state’s overall business tax climate from 44th in the U.S to 17th, as determined by the Washington, D.C.-based Tax Foundation.

Here are the details of the approved plan:

Personal Income Tax:

  • Reduces and simplifies the 3-tiered state personal income tax from the current maximum rate of 7.75% and minimum rate of 6% to 5.8% in 2014 and 5.75% in 2015.
  • Increases the standard deduction for all taxpayers, applied to the:
    • ​First $15,000 of income for those married filing jointly;
    • First $12,000 of income for heads of household;
    • First $7,500 of income for single filers;
  • Retains the state child tax credit and increases it for families making less than $40,000;
  • Offers a $20,000 combined maximum deduction for mortgage interest and property taxes;
  • Makes charitable contributions fully deductible;
  • Protects all Social Security income from state taxes.

Corporate Income Tax:

  • Reduces the corporate income tax from 6.9% to 6% in 2014 and then to 5% in 2015 a 29% rate reduction.
  • If the state meets revenue targets (i.e. if tax revenue grows due to a growing economy), the corporate income tax will drop to 4% in 2016 and 3% in 2017.

Other Highlights:

  • Makes no changes to franchise tax laws – that issue and others will be studied during the interim between sessions;
  • Extend the state sales tax to certain service contracts and tickets to certain attractions (movies, live shows, etc.) beginning Jan. 1;
  • Caps the state gas tax;
  • Eliminates North Carolina’s death tax;
  • Caps sales tax refund for Nonprofits at $45 million per year

With Tax Reform done and a deal on the budget wrapped over this past weekend, the General Assembly is heading into what is almost certainly its final week. REBIC and our partner associations are continuing to press for the passage of key regulatory reform legislation, and will keep you appraised of any progress as the session nears its conclusion.

You can download the Tax Reform legislation HERE.

Here’s a summary of the plan’s fiscal impact.

Here’s a summary on the impact on taxpayers at various income levels.

Great Take on the Need to End the Protest Petition

Greensboro zoning and land-use attorney Tom Terrell has a great post on his NC Legal Landscapes blog today where he addresses language in S 112 eliminating the rezoning protest petition. Some quick takes:

The question is how we can justify allowing a single citizen, answerable and accountable to no one, to have unilateral power to commandeer a duly elected city government by allowing the citizen to control two of the government’s votes. It is a power without precedent or rationale in a democratic system based upon the bedrock principle of majority vote. And such power, of course, is patently unfair.

There is no other power extended to a single citizen by our statutes that is greater than the power allowing one person to alter the manner in which duly elected officials can transact the public’s business and deny an entire city its right to have a decision made by majority vote.

REBIC is working with the North Carolina Home Builders Association (NCHBA) to encourage Senate leadership to bring S 112 to the floor for concurrence early this week, and will keep you appraised of the bill’s progress. Should S 112 be signed by Governor McCrory, it will immediately make protest petitions a thing of the past, with the exception of those already filed.

Have Ideas on Electronic Permitting? Mecklenburg County Wants to Hear from You!

Mecklenburg County Code Enforcement will hold a Builder/Developer Focus Group early next month to consider ways to move most of its customers to a virtual plan submission and online review process in the months ahead. The meeting will be held on:

Tuesday, August 6,
9:00 to 10:30 a.m.
The Charlotte Chamber of Commerce
Belk Action Center
330 S Tryon St., Charlotte

In 2012, the County’s bi-annual survey of Code Enforcement customers revealed a growing gap between customers who are well versed in the permitting and plan approval process and those who are either new to it, or use it infrequently enough that understanding the process is not intuitive. The goal of the Focus Group is to help Code Enforcement officials better understand how to facilitate a smooth transition to an online plan approval and review system.

Some of the questions the group will consider include:

  • What drove your business to self service?
  • How do you think Code Enforcement could move 85% of its customers to a virtual business (electronic submittal) format?
  • How will the department handle the the remaining 15%?
  • At what point does even the novice customer pay for service by the hour, assisting them in navigating a fully electronic, self service P&I process?
  • What percent of your customers are online?

If you are interested in participating in the Focus Group, please submit your RSVP to Lourdes Zapata.

June Home Sales up 31 Percent Across Charlotte Region

House_FrontPreliminary data show CarolinaMLS June sales posted gains across the region with closings up 31.2 percent compared to June 2012.  June 2013 closed sales totaled 3,485 compared to 2,657 for the same period last year.  
 
Both the median and average sales prices continued to rise, marking 19 consecutive months of price gains across the region.  The median sales price ($184,000) was up 7.4 percent over June 2012 ($171,250), and the average sales price in June 2013 ($239,842) was 5.2 percent higher than June 2012 ($227,907).
 
The average list price in June 2013 ($259,086) increased 8.8 percent over June 2012 ($238,201), bringing the percent of original list price received measure to 95.1 percent compared to 92.7 percent last June.  Preliminary pending sales counts for the month totaled 3,534, a slight decrease of 3.1 percent over the previous period when contracts totaled 3,646.
 
New residential listings totaled 4,585, up 9.1 percent over June 2012.  Inventory declined 21.9 percent compared to June 2012, leaving the CarolinaMLS region with a 5.1-months’ supply of homes for sale.
 
2013 Association/CarolinaMLS President Eric Locher said, “We’re mid-way through the year and continue to see positive signs of a recovering market in our region. We will continue to watch home prices, which are gradually increasing, time on market, which has decreased substantially, and sellers returning to the marketplace.”
 
The average number of days a property was on the market from the time it was listed until it closed (List to Close) was 132 days, which is a decrease of 16 days compared to June 2012.  Days on Market (DOM), the metric that accrues for “Active” and “Under Contract-Show” statuses only, totaled 93 days compared to 111 days for the same period last year.  Foreclosures and short sales are down compared to last year, accounting for 7.6 percent of new listings and 9.5 percent of all closed sales in June.

Source: Charlotte Regional Realtor® Association

Consultant Recommends Comprehensive Changes to Charlotte’s Zoning Ordinance

Charlotte Skyline

Charlotte planners may be getting ready to undertake what could become a comprehensive revision to its Zoning Ordinancefollowing a nine-month assessment of the existing code by Denver-based consulting firm Clarion Partners.

In its assessment, the Clarion team says the current 830-page zoning ordinance “has become outdated and is not user-friendly.” Describing the feedback they received last fall from builders, developers, zoning attorneys and neighborhood representatives, they said, “many believe (the ordinance) is not well aligned with the City’s planning and development goals. adopted plans and policies, and modern best practices.”

Some of the other highlights of the report:

  • The zoning code is inconsistent in many ways with the city’s Small Area Plans, and lacks many of the tools needed to bring about the community vision called for in the plans.
  • The consultants praise the flexibility provided by the TOD, PED and MUDD districts, but says they’re not broadly enough utilized to make an impact citywide.
  • The report encourages the City to consider adopting Residential Design Standards to protect the character of existing neighborhoods. It acknowledges that the legal authority for these standards is “unclear.”
  • The mixed-use districts in the ordinance are inadequate to accommodate the broad range of uses and higher-intensity development envisioned by the area plans.
  • The report criticizes the organization of the zoning ordinance, calling it “challenging to use.” It recommends Charlotte consider consolidating its zoning and development regulations (a Unified Development Ordinance) for greater clarity.

REBIC has been engaged in this effort since its launch last fall, and will continue to work with the City in the months ahead to revise the ordinance in a way that better protects property rights and promotes economic development. Look for a more detailed analysis of the consultant’s reports in the coming weeks.

Both reports, the Zoning Ordinance Assessment Report and Zoning Ordinance Approach Report, are now available for download HERE.

House Passes Landmark Regulatory Reform Package

legbuildingThe North Carolina House of Representatives approved legislation on Thursday that would bring big changes to the rezoning process and could roll back portions of local regulations that exceed state mandates, including Charlotte’s Post- Construction Controls Storm Water Ordinance (PCCO).

SB 112, “Create Jobs Through Regulatory Reform”, was approved 84 – 28 in a late afternoon vote, and now heads back to the Senate, where it will hopefully be concurred with early next week. This legislation would provide regulatory relief to the North Carolina real estate industry by:

  • Prohibiting cities and counties from enacting environmental regulations that are more stringent that existing state or federal regulations;
  • Repealing the authority of counties and cities to allow for protest petitions in rezoning cases; and,
  • Establishing a process for the review and expiration of existing state agency rules, and clarifying the definition of what constitutes a “policy”.

One such local ordinance that could be impacted by the passage of SB 112 would be the Charlotte PCCO, which was adopted with a Tree Save requirement that doesn’t exist in either state or federal law. While the existing federal NPDES permit would likely keep most of the PCCO intact, REBIC believes this provision could be challenged under the new law.

But it’s the elimination of the Protest Petition process that would have the greatest impact on property owners and developers, by removing a burdensome and costly process that effectively allows a small minority of citizens to hold a rezoning case hostage by forcing a supermajority vote. Should S 112 be signed by Governor McCrory, it will immediately make protest petitions a thing of the past, with the exception of those already filed.

Special thanks to House bill sponsors Rep. Tim Moffitt (R-Buncombe), Rep. Tom Murray (R-Wake) and Rep. Bill Brawley (R-Mecklenburg) who ensured that the provisions important to the real estate industry stayed in the bill, despite numerous amendments to remove them. Thanks also to Representatives Rob Bryan, Tricia Cotham, Becky Carney, Charles Jeter, Rodney Moore, Ruth Samuelson, Jacqueline Schaffer, who voted “YES” on the bill.

REBIC is working with the North Carolina Home Builders Association (NCHBA) to encourage Senate leadership to bring S 112 to the floor for concurrence as soon as possible, and will keep you appraised of the bill’s progress.