Governor Signs Two NCHBA Priorities Into Law
Governor Cooper signed into law another top NCHBA legislative priority recently. HB 492 (Simplify Builder Inventory Exclusion), sponsored by Representatives Mark Brody (R-Union), Julia Howard (R-Davie), and Brian Turner (D-Buncombe), will eliminate the need for a builder to file annually in order to take advantage of an important property tax exclusion.
The new law permits a builder to file a one-time application to claim an exemption from higher property taxes on land and houses held for sale by a builder to the extent that the tax increase is attributable to subdivision of the property or improvements made such as the installation of infrastructure or the construction of a single-family or duplex house on the property.
HB 492 improves upon the 2015 effort where NCHBA’s legislative team successfully worked with House and Senate members for the passage of HB 168 (Exempt Builders’ Inventory). That legislation required annual filing before the end of January for the following tax year.
The exclusion for improvements to residential property is available for up to three years as long as the property remains for sale in the builder’s inventory. A similar exclusion for land improved for commercial purposes lasts for up to five years but ends for the improved parcel when it is sold or when a commercial building is constructed.
“The prior procedure was burdensome both for the builder and for the county tax office,” said Mike Carpenter, NCHBA’s General Counsel. “This change will make claiming the exemption easier for everyone involved.”
This exclusion has allowed those builders who have taken advantage of it to save hundreds of thousands of dollars which, in turn, has led to the construction of more homes thereby fueling job creation and expansion of the local tax base.
HB 620 (Street Database/Manual/Public Record Exemption), sponsored by Representatives John Szoka (R-Cumberland), Dana Bumgardner (R-Gaston), Zach Hawkins (D-Durham), and Frank Iler (R-Brunswick), became law on Monday. The law requires the North Carolina Department of Transportation to create a “Public Street Information Database”, by 01/10/20 and update it regularly, for the purpose of conveying the status of roads within the State. This publicly-available database will indicate whether the road is (1) federally owned, (2) State-owned with State road number assigned, or (3) State-maintained with a State road number assigned.
Furthermore, it requires NCDOT to update its Subdivision Roads Minimum Construction Standards Manual by July 1, 2020, and on a regular basis thereafter, to reflect changes in federal and state laws and any relevant judicial rulings.
This law will provide builders and home buyers with a tool that will allow them to easily identify the entity that is responsible for the maintenance of the road on which the home is located.
HB 675 (2019 Building Code Regulatory Reform), sponsored by Representatives Mark Brody (R-Union), Dennis Riddell (R-Alamance), Jon Hardister (R-Guilford), and Billy Richardson (D-Cumberland) was signed into law by the Governor on Friday.
This is NCHBA’s fifth successful “building code regulatory reform bill” over the past several sessions. This year’s version includes these provisions:
- Requires the North Carolina Building Code Council to create an inspection form to be used by engineers and architects and clarifies that they can inspect foundations and underslabs.
- Adds a new level of inspector, residential changeout inspector, to assist with minor inspections.
- Prohibits local governments from requiring developers/builders to bury existing power lines or bury relocated power lines that are located outside the subdivision. It also prohibits local governments from setting minimum square footage requirements for residential structures. This section becomes law effective immediately.
- Requires the North Carolina Building Code Council to conduct a cost/benefit analysis for all proposed changes to the North Carolina Energy Conservation Code since January 1, 2018. It also creates an exclusion from the NC Building Code for the inspection of temporary motion picture, television or theatre stage sets.
- Requires that a local government can issue a temporary certificate of occupancy if the requirements of the NC Building Code are met.
- Clarifies that it is illegal for someone to falsely claim to be a North Carolina licensed general contractor or suggests in connection with any business activities regulated by the NC General Contractors Licensing Board.
- Requires that a local government chooses to have plan review that the initial review for residential building plans must be performed within fifteen (15) business days after submission. It also clarifies that a local government cannot require residential building plans to be sealed by an engineer or architect unless required under the NC State Building Code.
- Requires the Plumbing Board to establish and issue a Residential Fire Sprinkler Design license for use by persons who hold the appropriate Residential Fire Sprinkler Contractor license to design and install the proper multipurpose fire sprinkler system required by the North Carolina Building Code.
- Extends the time period for reporting fifteen or more framing violations to the North Carolina Department of Insurance to October 1, 2021.
- Instructs the North Carolina Department of Insurance to create an interpretation on the requirements for residential plan review.
- Requires the North Carolina Building Code Council to study options to dispose of dirt, sand, gravel, rock, concrete or other nonhazardous material at the site of construction including porch fill to decrease the volume to solid waste disposal facilities.
- This act becomes law effective October 1, 2019 unless otherwise provided.
Members of the House and Senate are expected back in Raleigh on Monday for a voting session. Budget discussions continue between legislative leaders and the Governor with little evidence that a compromise is on the horizon. The Governor previously vetoed the legislatively approved budget but the legislative leadership lacks the 3/5 majority in each body to override the veto without votes from Democrats (i.e., one in the Senate and seven in the House if all members are present and voting).
The primary obstacle continues to be Medicaid expansion which the Governor favors and the legislative leadership does not. It appears that the Governor is insisting on Medicaid expansion as a pre-condition to his consideration of the budget.
Unlike the potential result when federal budget disagreements occur, there is no fear of a state government shutdown. The law provides that, in the absence of a budget, funding for state government continues at the same level as the prior fiscal year. However, new items (e.g., pay raises for teachers and state employees, new programs, increased/decreased spending for existing program, etc.) cannot occur without a budget becoming law. It is uncertain when or if this impasse will end.
In the meantime, there are few substantive bills currently being considered. With our pro-active legislative agenda already accomplished, your legislative team nevertheless remains on duty to ensure that nothing harmful arises before this year’s session ends.