Several of NCHBA’s Top Session Priorities Move Forward
NCHBA’s legislative team was successful in moving several of NCHBA’s top session priorities last week. HB 273 (Modify Builders Inventory Tax Exclusion), sponsored by Representatives Larry Potts (R-Davidson), John Bradford (R-Mecklenburg), Jeff Zenger (R-Forsyth), and Ashton Clemmons (D-Guilford), received a favorable report in the House Finance Committee on Thursday morning. The bill would expand the builders inventory exemption law which NCHBA sought and was passed in 2015. Despite the original intent, the Department of Revenue concluded that townhouses were not included in the exemption. This legislation corrects that interpretation.
The law exempts from local property tax the increase in value of real property held for sale by a builder to the extent the increase is attributable to subdivision of land, other improvements to the land or the erection of a single-family or duplex residence. This bill specifically adds townhomes to the law to eliminate any argument that townhouses are not included in the exclusion.
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 qualify for this tax exclusion. This bill is expected to be heard in the House Rules Committee next week and head to the House floor.
HB 344 (System Development Fees Update), sponsored by Representatives Dean Arp (R-Union), Bobby Hanig (R-Currituck), Jon Hardister (R-Guilford), Graig Meyer (D-Orange), also cleared the House Finance Committee on Thursday morning. The bill would place tighter perimeters around the formulas contained in a 2017 law, negotiated between NCHBA and NC League of Municipalities, which determines the fee charged to builders for future water and sewer capacity.
Since the passage of that law, it has come to NCHBA’s attention that several jurisdictions across the state have not calculated these fees correctly. This legislation, also negotiated with the League, is designed to provide more specific standards which we believe will help avoid these results.
After unanimous approval of this bill by the House Finance Committee, a subsequent referral to another committee was removed at the request of NCHBA and that committee chairman’s approval so the bill will now go directly to the House Rules Committee.
Also on Thursday, the Senate Commerce and Insurance Committee took up the confirmations of the Governor’s two nominees to the North Carolina Industrial Commission. HJR 469 (Confirm Wanda Taylor/Industrial Commission) and SJR 718 (Confirm Adrian Phillips/Industrial Commission) would fill the seats of two expiring terms on the Commission. Legislative confirmation of gubernatorial appointees to the Industrial Commission was an NCHBA suggestion which was included in the major workers compensation reform act of 2011. Since then, NCHBA, NC Retail Merchants and the Chamber have headed business efforts to ensure that the commission is composed of highly qualified individuals who will objectively apply the law and be fair to all parties. Over the past several years, we have worked cooperatively with the workers comp plaintiffs bar to arrive at consensus candidates.
Both Wanda Taylor and Adrian Phillips not only are highly qualified but they also have a long and proven track record as deputy commissioners. By all accounts, they have demonstrated their objective and fair consideration of cases. During the hearing, NCHBA General Counsel Mike Carpenter was thanked by Ms. Phillips for assisting in her introduction to key legislators in advance of the hearing.
SB 329 (Building Code Modifications), sponsored by Senators Steve Jarvis (R-Davidson), Todd Johnson (R-Union), and Don Davis (D-Pitt), also passed the Senate Commerce Committee on Thursday. This bill would increase the threshold requiring the services of an architect from $200,000 to $300,000 on commercial projects which are less than 3,000 square feet. Secondly, the bill raises the threshold for which a building permit is required for the construction, installation, repair, replacement or alteration to a commercial building to $20,000. The bill will next be heard in the Senate Rules Committee.
This week, the House Local Government-Land Use Committee is expected to hear HB 496 (Property Owners Rights/Tree Ordinances) introduced by Representatives Jamie Boles (R-Moore), Howard Hunter (D-Hertford), Mark Brody (R-Union), and Tim Moffitt (R-Henderson). The bill is inspired by a similar legislation which NCHBA sought in the 2019 Session.
HB 496 would simply clarify that a municipality or a county must obtain specific authority from the General Assembly in order to enact a valid tree ordinance. This is typically done by the passage of a local bill which nearly 50 jurisdictions have obtained over the past five decades. However, other jurisdictions have enacted restrictive tree ordinances without having obtained the authority to do so via a local act.
The bill is expected to meet opposition from local government advocates who claim broad police power to enact such ordinance. If enacted, this bill would void local ordinances which are not based on local acts. Consequently, this bill is likely to generate a great deal of controversy.
Speaking of controversy, NCHBA’s SB 349/HB 401 (Increase Housing Opportunities) has drawn its fair share as anticipated. The primary lightening rod for criticism is directed at the provision which seeks to restore the option of “middle housing” to our zoning laws. “Middle housing” is typically defined as duplex, triplex, quadplex and townhome dwellings. Zoning laws typically restrict dwellings in residential zones to single-family detached houses only. This legislation provides that a property owner could chose the construction of a “middle housing” dwelling in addition to a single family detached one.
NAHB statistics show that only 42% of North Carolina households can afford the average-priced single-family home ($301,000 in 2020). However, 65% of North Carolina households can afford a unit of a duplex dwelling ($173,500 in 2020). A million more North Carolina households (2.5 million NC residents) could afford to purchase a duplex unit but not a detached single-family house. Because the rising price of land significantly contributes to this problem, we must be able to construct more units on the same parcel that our citizens can qualify to purchase.
Several local governments across the state have adopted resolutions in opposition to the legislation as urged by the League of Municipalities. The League has falsely claimed that the legislation eliminates single-family zoning which, of course, it does not do; it merely gives property owners a choice. As anticipated, neighborhood groups are pressuring their local officials to oppose the bill. The bill exempts communities with covenants.
On the other hand, the legislation has garnered support from both sides of the political spectrum. Recently the conservative John Locke Foundation commended the legislation for squarely addressing the affordable housing crisis with a solid market-based solution. NCHBA’s primary objective in seeking legislative approval of this “middle housing” provision, and the accompanying one authorizing accessory dwelling units (ADUs), was to start a serious conversation about concrete solutions to the affordable housing crisis. Based on the reaction so far, we have accomplished that objective. Time will tell if there is sufficient current support for these provisions. However, at some point during this session, we do anticipate favorable action on other important, but less controversial provisions, of the bill.
As always if you have any questions about this report, please email Steven Webb at email@example.com.
Legislator of the Week
Representative Mark Brody (R-Union, Anson)
Representative Brody is a strong ally of North Carolina’s home building industry. As a builder member of NCHBA, he understands the issues facing our industry. At the General Assembly, Representative Brody is the chair of the Local Government – Land Use, Planning and Development committee. He has served as the sponsor for NCHBA’s Building Code Regulatory Reform bills. Thank you Representative Mark Brody for your dedication!