Real Estate Industry Wins Big in Longest General Assembly Session in Ten Years

The curtain finally came down this week on a 10-month General Assembly session that delivered the real estate industry some of its biggest legislative wins in decades.

When legislators adjourned shortly after 4 a.m. Wednesday morning, they concluded an historic session that saw the passage of key bills to spur economic development, cut regulation, and protect consumer choice. Here’s a summary of the biggest legislative wins for home builders, Realtors®, commercial and multifamily developers, and brokers:

  • Protest Petition Repealed: Signed into law July 23rd, HB 201, ‘Zoning Changes/Citizen Input’, repeals the North Carolina Protest Petition statute and eliminates a tool frequently used by neighborhood groups to force concessions from property owners and developers. The law is effective for any rezoning petitions filed August 1st or later. The law still allows residents to protest rezoning actions through a variety of methods, including delivering letters to the City or Town Clerk two days in advance of a rezoning vote. Neighbors can also make their voice heard at rezoning public hearings, or by directly contacting their elected officials.
  • Residential Aesthetic Design Law: Taking effect on June 19th, SB 25 (“Zoning/Design & Aesthetic Controls”) prohibits local governments from placing costly architectural and aesthetic design requirements on residential construction. A priority for NCHBA since it was first introduced in 2011 by then-Senator Dan Clodfelter, the law clarifies that zoning ordinance regulations on “building design elements” may not be applied to residential structures governed by the NC Residential Code (one and two family dwellings and townhomes). The law does not prohibit design requirements pertaining to local historic districts or areas listed on the National Register.  It does not interfere with neighborhood covenants or private contracts. And it DOES NOT prevent property owners from freely offering architectural conditions as part of a rezoning or development approval. It will, however, ensure that housing in North Carolina remains affordable, and preserve the rights of builders and consumers to decide what their home should look like.
  • Exempt Builders Inventory: HB 168, “Exempt Builder Inventory”, exempts from local property tax improvements the land being developed for residential purposes as well as the construction of single-family and duplex dwellings, as long as the land and these structures are being offered for sale. This exemption must be applied for annually and ends when the property is sold or after three years whichever occurs first. The Senate added a provision extending this exemption to improvements to land developed for commercial purposes, but not structures.
  • Bonding Reform: HB 721, ‘Subdivision Ordinances/Land Development Changes’, limits the ability of local governments to hold developer performance guarantees, such as bonds or letters of credit, for excessive periods before accepting the improvements. It  also prohibits the practice of putting holds on permits or COs in one portion of a subdivision as leverage to require improvements to other parts of the development.
  • Regulatory Reform: A pair of bills (HB 44 & HB 765) passed late in the session include a variety of important provisions for the real estate industry, such as:
    • Permit Choice: this provision removes the exclusion for zoning permits which was carved out of the permit choice provision that became law last session. Where a local government or the State changes the substance of a rule or ordinance between the time the applicant submits an application for any type of development, the permit applicant may choose which version of the rule or ordinance will apply to the permit.
    • Riparian Buffer Reform: This provision mandates the use of either the state or federal buffer standards, as applicable as the base standard, for all required riparian buffers. Any local government which seeks to impose a greater buffer than that provided under state rules may do so only upon specific approval of the NC Environmental Management Commission (EMC), based on local scientific evidence confirming that the larger buffer is scientifically justified. Local governments that currently have ordinances that exceed the base state or federal requirements may not continue to enforce those measures after January 1, 2017 unless approval has been granted by the EMC.
    • Isolated Wetlands: This provision allows for the disturbance of up to 1 acre of isolated wetlands east of I-95, ½ acre throughout the Piedmont, and 1/3 acre in the mountains without mitigating the losses.  The Environmental Management Commission will be responsible for drawing the lines for each geographic region by March 1, 2016. In addition, mitigation requirements will extend ONLY to the amount of impact which exceeds the thresholds set forth above. Finally, the impact to isolated wetlands shall not be combined with project impacts to federal jurisdictional wetlands (for which a federal 404 permit is required) or streams for the purpose of determining when impact thresholds are triggered.
    • Cluster Box Units: Extends by two years authority that clarifies that the addition of a cluster box unit to a single-family or duplex development permitted by a local government shall NOT require a modification to any stormwater permit for that development.
    • Prohibit Mitigating for Impacts to Intermittent Streams: Except as required by federal law, the state will no longer be allowed to require mitigation for impacts to intermittent streams (those with a flow for only part of the year).
    • Local Requirement of a Voluntary State Regulation: This language prohibits a local government from enforcing a regulation or rule which the state has declared to be voluntary as a condition of development approval.
  • Building Permit Reform: HB 255, ‘Building Code Regulatory Reform’ includes a number of important provisions that will benefit home builders and general contractors across the state, such as:
    • Prohibits “partial inspections” by requiring a code official to complete all parts of a builder-requested inspection, instead of the practice in some jurisdictions where inspectors end their inspection when a single item “fails.”
    • Clarifies that inspection fees must be spent only for activities of the inspections department and not for other purposes.
    • Clarifies code official misconduct by providing specific examples of actions subject to discipline by the Code Officials Qualification Board (e.g., enforcement of a code requirement more stringent than or otherwise exceeds Code requirements; the habitual failure to provide requested inspections in a timely manner).
    • Requires that all appeal decisions, interpretations and variations of the Code issued by the BCC and all commentaries and written interpretations made by the DOI staff be posted on the DOI/ Council’s website within ten (10) business days.
    • Provides that components or elements of in the construction of a building prepared under seal by an architect or engineer can be accepted without the need for further inspection by the county or city if the design professional performs a field inspection and certifies that the component or element meets the Code.

REBIC is grateful for the hard work of our industry trade associations in Raleigh, the North Carolina Home Builders Association (NCHBA) and the North Carolina Association of Realtors® (NCAR), for their phenomenal efforts this session! We also thank the leadership of the House and Senate, Governor Pat McCrory, and our hard-working Charlotte-area legislators, for all they do for our industry and for the people of North Carolina!

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