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HB 273 (Modify Builders Inventory Tax Exclusion) [Representative(s) Larry Potts (R-Davidson), John Bradford (R-Mecklenburg), Jeff Zenger (R-Forsyth), and Ashton Clemmons (D-Guilford)] received a favorable report in the House Local Government Land Use, Planning and Development Committee on Thursday. The bill expands the builders inventory tax exclusion which passed in 2015 to specifically include townhouses. Despite the original intent of the bill, the Department of Revenue concluded that townhouses were not included. The original bill exempts from property tax the increase in value of real property held for sale by a builder to the extent the increase is attributable to subdivision or other improvement. The definition of “builder” is a taxpayer engaged in the business of buying real property, making improvements to it and then reselling it. Thus, both developers and home builders would qualify for this tax exclusion. The NCHBA lobbying team was successful in working the committee and the bill received a unanimous vote. The bill now heads to the House Finance Committee.

Another NCHBA important agenda item is finding the right people to serve on state commissions and boards. NCHBA helped lead the business community in support of the confirmation of the Governor’s nomination of Wanda Taylor to the North Carolina Industrial Commission. The House confirmed her nomination by a vote of 118-0 on Thursday, see: HB 469 (Wanda Taylor/Industrial Commission). NCHBA strongly supports Taylor as she is highly qualified for this position having extensive experience over her career representing both employers and injured employees. She spent over twenty years with the commission as a deputy commissioner, the last seven of which as Chief Deputy. The Industrial Commission is vital in maintaining a healthy workers compensation system in North Carolina and is important to sustaining reasonable workers compensation premiums. Next up is Senate consideration.

HB 220 (Assuring Choice of Energy Service) passed the House Wednesday by a vote of 78-41 and was sent to the Senate. The bill would preserve builder and consumer choice by limiting cities and counties from prohibiting particular types of energy servicing homes or businesses. Local governments in some places in the country have limited energy choice to all-electric and banned natural gas and propane products. Building permits in some of those jurisdictions have been withheld unless builders agreed to install only electric heating pumps and electric appliances. In committee, NCHBA General Counsel Mike Carpenter spoke on the merits of the legislation. Even though this bill was not originally initiated by NCHBA, your association’s support was critical to its successful passage in the House.

On the Senate side, (Senate Bill 308 Building Code Inspection Reform) introduced by Senator Todd Johnson (R-Union), passed the Senate Agriculture, Energy and Environment Committee and the Rules Committee earlier this week. This legislation would prevent a local government from denying a temporary certificate of occupancy for a reinspection of an item that had already been passed by the inspections department. NCHBA staff worked closely with Senator Johnson on the language and assisted Senator Steve Jarvis (R-Davidson) with a floor amendment to clarify that a reinspection fee could not be charged for an item passed by an earlier inspection. The amendment, and the bill, passed the Senate by a vote of 48-0.

Flying directly in the face of NCHBA’s efforts to increase housing opportunities in North Carolina, four bills were introduced this week which, if passed, would make an already difficult housing affordability crisis even worse.

SB 426 (Inclusionary Zoning/Affordable Housing) introduced by Senators Julie Mayfield (D-Buncombe), Deandrea Salvador (D-Mecklenburg) and Natalie Murdock (D-Durham) would allow any local government the ability to enact an ordinance to allow inclusionary zoning or a fee in lieu to pay for affordable housing. Inclusionary zoning is a controversial procedure touted by its proponents as a “solution” to the affordable housing crisis present in many fast-growing communities. As implemented in other states, it requires builders to set aside a percentage of units below market rate as a condition of zoning approval. This scheme does not make housing more affordable; instead, it makes the problem worse by driving up cost on market-rate housing to cover the below-market rate exaction. NCHBA has defeated local legislation seeking this authority in the past. We will vigorously fight this effort to authorize inclusionary zoning for every jurisdiction in the state.

SB 428 (Local Government Autonomy/Building Standards) introduced by Senators Julie Mayfield (D-Buncombe) and Mike Woodard (D-Durham) would allow local governments the ability to adopt their own energy code standards. This would result in an unimaginable patchwork of hundreds of different building code energy standards across the state. This bill would make it nearly impossible for builders to keep up with the codes in each jurisdiction. NCHBA will also vigorously fight this bill.

SB 436 (Local Tree Ordinances Authorized) would authorize every county and city in North Carolina to enact a tree protection ordinance. In the handful of local governments that have legally obtained local authority which authorize tree protection ordinances, most of them exempt their application to residential construction due to past efforts of NCHBA. However, some local governments have adopted tree protection ordinances without specific legislative authority and those have often been so restrictive to make it nearly impossible to build on lots. Senators Julie Mayfield (D-Buncombe) and Mike Woodard (D-Durham) introduced this unwise legislation. Bills like this do nothing but harm the ability to provide an affordable product.

If the last three bills were not enough, Senators Julie Mayfield (D-Buncombe) and Ernestine Bazemore (D-Bertie) introduced a bill that would grant EVERY city and county the authority to impose impact fees. SB 437 (Local Government/Impact Fees Authorized) would allow any local government the ability to levy a separate impact fee for up to eight separate things including schools, roads, fire and police stations and even cultural facilities such as libraries.

While our state has a few jurisdictions which obtained impact fee authority by local act between 1985 and 1989, NCHBA has successfully thwarted legislative attempts to extend impact fee authority to other local governments for more than 30 years. Impact fees pose the most serious threat to housing affordability of any issue and NCHBA will continue to protect our state from this scourge.

On the bright side, one of our top legislative priorities was introduced in the Senate and House on Thursday. HB 489/SB 478 (Building Code and Development Regulatory Reform) is our annual omnibus bill that reforms many regulations builders face on the jobsite. Perhaps the most important provision in this year’s bill will seek to create a consistent sedimentation control program for each jurisdiction. Currently, the state permits local jurisdictions to implement a locally delegated program if the state approves their local plan. Some local jurisdictions have raised fees to exorbitant levels and increased the paperwork well beyond what is required from the state program. This initiative is designed to provide builders with consistency, no matter where they are building new homes.

A few jurisdictions have recently begun to enforce an antiquated provision of the state building code which requires that a subdivision constructed with 30 or more houses be outfitted with a fire sprinkler system where the subdivision has only a single entrance. This bill would raise the household number triggering this requirement from 30 to 100 houses in single-entrance subdivisions.

Other provisions in the bill include clarifying where the sight triangle is calculated on a DOT roadway; changes that will allow for greater options for contractors obtaining continuing education; and authorizing the North Carolina Licensing Board for General Contractors to conduct a background check on new applicants.

This bill was introduced by Senators Steve Jarvis (R-Davidson), Tom McInnis (R-Richmond), and Mike Woodard (D-Durham) in the Senate and the House sponsors are Representatives Mark Brody (R-Union), Destin Hall (R-Caldwell), Dennis Riddell (R-Alamance) and Howard Hunter (D-Hertford). NCHBA’s legislative team anticipates moving the bill through the House first.

Please email Steven Webb at swebb@nchba.org should you have any questions about this report.