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

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.

NAIOP North Carolina Voices Support for HB2 Repeal Bill


Charlotte, North Carolina (March 30, 2017) – NAIOP North Carolina, representing commercial real estate developers, brokers and other industry professionals in Charlotte, Raleigh-Durham, and the Triad, strongly urge members of the North Carolina General Assembly to pass HB 142 today as a bipartisan compromise that repeals HB2 and allows our state to recover from the economic damage suffered over the past year.

Since the passage of HB2 last March, North Carolina and its commercial real estate industry has suffered millions in lost revenue from taxes, leases and fees, as dozens of economic development prospects have passed over our state because of this law. The office and industrial sectors have been most strongly hit, and with millions of square feet coming on line over the next few quarters, net absorption will be insufficient to keep up with deliveries in Charlotte, the Triangle and the Triad. As a result, many of our state’s developers and real estate professionals are at financial risk once again, just a few years after the end of the Great Recession.

 Economic development recruiters increasingly tell our brokers that North Carolina is ‘off the list’ when it comes to company relocations. Despite the outstanding tax and regulatory climate the General Assembly has created over the past four years, the intended economic benefits will not be fully realized until HB2 is repealed and the economic boycott of our state is lifted.

NAIOP urges legislators to vote YES on HB 142, and repeal HB2 before more damage is done to our state’s economy and reputation.

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ABOUT NAIOP

NAIOP is the nation’s leading trade organization dedicated to representing industrial, office, retail and related commercial real estate. NAIOP is also one of the largest owner-driven commercial real estate associations the country, with more than 50% of its Principal members serving as CEO’s of commercial real estate. For more information, visit http://www.naiop.org.

Huntersville Planning Board Reconsiders Traffic Impact Analysis Ordinance

Last evening the Huntersville Planning Board heard from Town Engineer Max Buchanan about recently approved amendments to a Traffic Impact Analysis (TIA) Ordinance.  Despite the fact that the new ordinance had been approved unanimously by the Town Board on February 6th, a few members of the Planning Board expressed concerns about the changes, which provide more options for a developer to make infrastructure improvements to address traffic impacts caused by their project.

At last night’s called workshop, Planning Board Chair Hal Bankirer and other board members questioned Buchanan about how the new language may allow developers to pay less for infrastructure improvements than the original ordinance — implying the development community was not paying its fair share.  Buchanan defended the changes, arguing that they allowed for more flexibility for both developers and the Town, while established for a more common-sense solution to addressing traffic improvements.  Instead of tying the improvements to a direct dollar amount, they are now tied to an actual percentage based on improvement in traffic flow.

REBIC supported the recently adopted TIA amendments as a win-win for developers and the Town of Huntersville.  And while we recognize that the Planning Board serves a vital advisory role to the Town Board, we’re concerned that they’re overstepping that role in questioning an ordinance that was supported by staff and unanimously approved by the elected Town Board.

 

Town of Mooresville Implementing Comprehensive Housing Strategy

Following a nearly year-long data gathering effort which was followed by another year of additional research on how its strategy may be implemented, the Town of Mooresville appears ready to move ahead with some ambitious plans.  Working with some non-profit groups, as well as private developers, the Town is pulling the trigger on agreements to provide several hundred additional workforce housing units to members of the community in the coming months.  Final details are not yet available, but Mooresville seems to be moving in the right direction in terms of implementing the recommendations of the “Mooresville Comprehensive Housing Strategy–Housing Needs Assessment (Final Report)”.

Conducted as a collaboration between the Town of Mooresville and the Centralina Council of Governments (the Carolina Regional Realtors® Association and North Carolina Association of Realtors® provided some of the funding for the study and REBIC was represented on the Steering Committee), the assessment lays out several recommendations to insure the Town has the types and amounts of housing stock to meet future needs as residents age in place and as growth continues at a steady pace.  The two main recommendations were as follows:

  • Conduct Rehabilitation and Redevelopment
  • Encourage Low to Moderate Income Housing

In recent years, Mooresville has seen a number of new housing developments built with price points at the higher end of the spectrum, but seems to be lagging in housing stock available for those earning at or slightly below the Area Median Income (AMI).  The report also suggested offering developers density bonuses and fee waivers to encourage this type of development.

We look forward to continuing to work with the Town Commission and members of the staff as they seek to meet the Town’s future housing needs.