General Assembly Begins to Address Local Impact Fee Authority

The North Carolina General Assembly is starting to take a close — and skeptical — look at the development Impact Fees charged by local governments across the state, and some big changes could be on the way in the months ahead.

Last week, the House State and Local Government I Committee heard two bills dealing with impact fees.  Representative Sarah Stevens (R-Surry) introduced two bills in March regarding impact fees which were authorized by the General Assembly more than 30 years ago.  The first, HB 406 Repeal Orange County Impact Fee, would strip Orange County of its ability to impose impact fees. Stevens noted that Orange County recently modified its impact fee structure causing the fee for a multi-family project to increase from $302,000 to $1,593,000. Impact fees for single family residences built in Orange County have been in excess of $10,000 per house.

The second bill, HB 436 Local Government/Regulatory Fees, would prohibit the future imposition of impact fees by cities and counties, and would repeal all existing authority for the twenty municipalities and three counties who were granted this authority pursuant to local acts passed primarily between 1985 and 1989. Continue reading

State House Passes Road Maintenance Bond Legislation

The North Carolina House last week passed legislation to establish a new performance guarantee process for subdivision roads, while also requiring the state Department of Transportation (NCDOT) to develop a comprehensive roads database and improve the process by which roads are accepted into the state system for maintenance.

HB 457, ‘Performance Guarantees/Subdivision Streets’  would authorize counties to be able to require “residual performance guarantees” from developers, but, in return, requires NCDOT to expedite the acceptance of county subdivision roads.  Despite the fact that these roads are constructed to DOT standards and are given to the state at no cost, the NCDOT has historically been slow to accept them into its system.

The legislation also requires the state to accept subdivision roads approved on or after October 1, 2010, which meet DOT standards and which have been open to public travel for the last 6 years.

Finally, the legislation would direct NCDOT to work with counties to create a database that would convey the status of roads within each county (i.e., “public” or “private”).  This database would provide Realtors® and property owners much-needed information about the maintenance responsibilities associated with many of the state’s orphan roads, as well as establish a greater understanding for road ownership for properties across the state.

HB 457 passed the House by a unanimous vote of 112-0, and now moves on to the Senate. It is supported by both the North Carolina Association of Realtors® (NCAR) and the North Carolina Home Builders Association (NCHBA)

Source: NCAR & NCHBA

With National Flood Insurance Program Expiring in Six Months, Realtors® Sound the Alarm

img_0100On September 30 — just six short months from now — the National Flood Insurance Program (NFIP) will expire. The National Association of Realtors® (NAR) is working closely with federal regulators and members of Congress to strengthen the program and clear the way for a private market to take hold; NAR has also issued a series of principles to improve access and affordability for consumers. But Realtors® warn the program’s September 30 reauthorization deadline is a threat to consumers. Continue reading

State House Passes Regulatory Reform Bill

The NC House of Representatives today gave final approval to a 44-page Regulatory Reform bill that contains several critical provisions for residential and commercial developers.

SB 131, ‘Regulatory Reform Act of 2016-2017’, was approved by the House on Thursday by a vote of 84-27, and now heads back to the Senate for a concurrence vote. Among the dozens of reforms it contains, two are of particular interest to developers:

Energy Efficiency Code Exemptions – Section 1.4 of the bill excludes from state Energy Efficiency Code requirements any buildings with the following use classifications:

  • Factory Group F
  • Storage Group S
  • Utility & Miscellaneous Group U

Furthermore, an amendment suggested by REBIC and introduced by Representative Bill Brawley ensures that the energy code exclusion ‘shall apply to the entire floor area of any structure’ included in the provision. This language was intended to prevent the office or showroom portion of a warehouse, industrial or manufacturing building from having to meet energy efficiency code requirements, when the majority of the structure does not.

Stream Mitigation Requirements – Section 3.13 of the bill amends stream mitigation requirements to allow developers to disturb up to 300′ of stream bed before mitigation is required, unless otherwise prohibited by federal law. Current law requires mitigation whenever 150′ or more is disturbed. This provision would bring North Carolina in line with stream mitigation requirements in neighboring states.

REBIC is continuing to review additional provisions in the Regulatory Reform bill, and will provide additional updates in the coming weeks on how this important piece of legislation affects your business.

Department Of Revenue Releases Notice Clarifying Sales Tax on Labor for RMI

The North Carolina Department of Revenue (DOR) has issued a new notice that provides guidance on activities related to repair, maintenance and installation (RMI). The memo outlines whether these various activities are subject to sales tax on labor.

The intent of the guidance is to address increasing confusion over the application of 2016 statutory changes that modify the taxation of repair, maintenance and installation (RMI) services, which took effect January 1 of this year. 

The RMI sales tax law required subcontractors who met the definition of ‘retailer’ to charge sales tax on their labor. For a number of North Carolina subs who offer turn-key services to builders in both new construction and remodeling activities, this created confusion over what services are subject to taxation and which are not. The question often turned on who was performing the service rather than the service itself, creating an uneven playing field.

Amendments approved last year clarify that labor pursuant to a “real property contract” (which is between a real property contractor and another person to perform construction, reconstruction, or remodeling with respect to a capital improvement) is now exempt from taxation. A “capital improvement” is defined as “an alteration to real property that is new construction, reconstruction, or remodeling of a building, structure, or fixture on land that becomes part of the real property or is permanently installed in the real property”.

The new guidance issued by DOR clarifies which transactions would generally constitute a real property contract with respect to a capital improvement to real property, when performed for new construction, reconstruction, or remodeling. REBIC believes additional statutory changes are needed to exempt fees collected through property management contracts, and will continue to work with our state associations to ensure these changes are adopted by the General Assembly.

You can download the DOR guidance memo HERE.