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Debate Swirls Around Film, Historic Rehabilitation Tax Credits

The House budget passed this week now includes an extension of a modified version of the historic rehabilitation tax credit. The provision, which is substantially similar to a proposal that Governor Pat McCrory included in his budget plan, was added during a House Appropriations Committee meeting before the bill hit the House floor. Once there, another amendment was approved that would replace current film tax credits with a grant program for TV and film productions. The amendment was similar -- minus the money -- to a Senate-backed measure that passed that chamber on Monday. Both of the existing tax credits are now scheduled to expire on Jan. 1, 2015. Extension of the tax credits was a top priority that League members discussed with legislators on Town Hall Day.

The House would replace existing historic rehabilitation tax credits with new credits that include some limits based on the investment, the development tier of the community and, for non-income producing properties, the value of the structure. For income-producing properties, the tax credit in many communities may stay the same depending on the amount of the investment. The amendment was offered by Rep. Dean Arp and supported by a number of his colleagues. Rep. Steve Ross, former mayor of Burlington, said, "We have pushed here in the General Assembly to try to force local governments to come up with their own sources of revenue. I'd just like to point out that when you take an old building and are able to bring it back to life, there are many benefits that come from that."

Rep. Tim Moore, echoing comments he had made to attendees of the League's Town Hall Day last week, said, "This type of tax credit is something that helps rural areas and urban areas." And Rep. Bob Steinburg, who lives in the Town of Edenton, said, "This is a vehicle that we need desperately. My people are very much behind this, and I'm behind this." The League thanks Rep. Arp for bringing this amendment forward, as well as all those who spoke in its favor -- including Rep. Pat Hurley, Rep. Susan Martin, Rep. Joe Sam Queen, Rep. Michael Speciale, Rep. Evelyn Terry, and Rep. John Torbett -- and all those who voted for its inclusion in the budget.

A day earlier, efforts to restore the tax credit looked uncertain. During a hearing of the House Appropriations Subcommittee on General Government, several amendments were ruled out of order, including one addressing the historic rehabilitation tax credit. The prospects for any film-related inducements appeared even bleaker after the full House Appropriations Committee rejected an attempt to add a replacement for the expiring tax credits. On the floor, though, an amendment from Rep. Ted Davis to create a grant program for film and TV production passed overwhelmingly. The provision includes only a $5 appropriation, but Davis said it keeps the idea alive in negotiations.

The Senate proposal to replace the film tax credits, which was passed by that chamber on Monday night, would put $20 million toward the grants. Extension of both the historic rehab tax credit and the film tax credit were chosen by League members as one of their advocacy goals for the 2014 legislative session. League members' efforts have been critical to the successful movement of the legislation to date. Thank you all for those efforts. Contact: Chris Nida


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Back-up PSAP Legislation Clears Senate Committee

The Senate Finance Committee voted on Tuesday to pass a reworked version of legislation that will require back-up capabilities for all primary Public Safety Answering Points in North Carolina. The latest version of SB 797 911 Board/Back-up PSAP will delay the enforcement date of the back-up PSAP requirement until July 1, 2016. If enacted in its current form, the bill would require all primary PSAPs in North Carolina to construct a back-up PSAP facility or equip an existing PSAP with the necessary technology to accept its calls in the event of an emergency.

During the debate, Senator Chad Barefoot asked his fellow committee members if requiring a separate back-up PSAP for each of the state's 126 primary PSAPs was the best approach, or if constructing 3-4 regional back-up PSAPs to serve the state would be more efficient. With 60 collective hours of outages between all North Carolina PSAPs combined last year, the 126 separate back-ups the bill is calling for would be in use less than 30 minutes each per year. The costs of constructing a new PSAP or equipping an existing PSAP with the right technology to serve as another PSAP's back-up could prove very costly. The North Carolina 911 Board provides funding for certain eligible PSAP expenses, but receiving the funding is never guaranteed. It is unlikely that the Board's funds would be able to accommodate funding requests from the majority of the state's PSAPs within the two-year compliance time frame.

The bill was pulled from the Senate's Wednesday afternoon calendar in order to allow time to work on the legislation before it moves to the House. The League is working very closely with key legislators, municipal leaders and the State CIO's office to make sure an efficient, sensible means of improving PSAP emergency preparedness is reflected in the legislation. Contact: Whitney Christensen.

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House Passes Budget Plan, Sets Stage for Negotiations

The House passed its $21.1 billion state budget plan Friday, legislation that includes priorities and spending proposals very different than those that the Senate adopted in its version of the budget a little more than two weeks ago. House approval of a budget plan sets the stage for House and Senate negotiators to now work out differences in the two plans. House Speaker Thom Tillis predicted that those negotiations might run only a week, but the settling of differences have typically taken longer.

The biggest differences in the plan, and those that garnered most of the attention, dealt with Medicaid and teacher pay. The House would use higher lottery proceeds to fund teacher raises. But House members also included and debated provisions important to municipalities. During a House Appropriations Committee meeting, Republicans and Democrats defended historic rehabilitation tax credits and decided to restore them after the original House plan would have allowed the tax credits to expire. On the House floor, an amendment to replace expiring film tax credits with a film grant program was approved. 

Like the Senate budget, the House plan projects total Powell Bill funds of $146.3 million for FY2014-15. An additional $67,993,140 would go to the Strategic Transportation Investments program, which is about $5.7 million less than the Senate proposed. The House plan would also set aside $1 million from the Clean Water Management Trust Fund, on a one-time basis, for remediation of stormwater effects on lakes subject to certain nutrient management rules. Other provisions in the House plan that may affect cities and municipalities:

  • The ABC Commission would be transferred to the Department of Public Safety.
  • Communities could use money from the Rural Infrastructure Development Authority to demolish buildings. (Also in the Senate budget plan.)
  • Unencumbered cash balances in the Main Street program would revert to the Commerce Department to pay for administrative costs, but $1 million in supplemental funding would be transferred to the program.
  • Earned interest from the Clean Water Management Trust Fund and Parks and Recreation Trust Fund would not revert to the state General Fund, as it would in the Senate plan.     
  • Money for the Economic Development Competitive Grant Program for Underserved and Limited Resource Communities would be cut from $2,543,021 to $1,250,000, but the money would be made recurring.

The budget negotiations begin with 17 days remaining before the start of the new fiscal year. Contact: Scott Mooneyham. 



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Excess Tag & Tax Together Funds Returned to Cities, Counties

The State Budget Office and the Office of State Controller informed the League this week that they would be returning interest funds left over following the implementation of the Tag and Tax Together program to local governments. The total amount being returned is more than $16.6 million, and counties should receive their share of the funds in a deposit from the State Controller either today (June 13) or Monday (June 16). The amount each county is receiving can be found here, and counties will be responsible for distributing to cities their portion of the funds. We do not have an estimate of how much of that $16.6 million will be distributed to municipalities. The funds are distributed based on the location in which they were collected, and your county's fiscal officer will likely be able to tell you what amount your city is expected to receive. Contact: Chris Nida
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Brevard Meals Tax Bill Advances in Senate

Members of the Senate Finance Committee voted Wednesday to grant the City of Brevard the authority to levy a prepared meals tax of 1.5 percent. SB 876 Brevard Meals Tax would allow the City to spend locally-levied meals tax proceeds on public infrastructure and facilities, including historic downtown projects, recreation-based infrastructure and facilities, and gateways to tourism destinations in the City. Generally, the proceeds of prepared meals taxes pay for tourism-related projects. Bill sponsor Sen. Tom Apodaca stated that the City and local restaurant owners made the request, though a representative from the N.C. Restaurant and Lodging Association spoke against the bill during public comment. Only a handful of N.C. local governments levy a prepared meals tax; the only tax currently imposed by a city is by the Town of Hillsborough, which began its levy twenty years ago. The City of Monroe also received the authority to assess a prepared meals tax, but it has not exercised that authority. The Brevard bill moves next to the Senate floor and is calendared for debate Monday. Contact: Chris Nida
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Senate Approves New Legislation in Charlotte Airport Dispute

Legislation approved by the Senate this week attempts to clarify the status of Charlotte Douglas International Airport, but it is not supported by the City of Charlotte. Legislation passed last year that would have transferred control of the airport away from the City of Charlotte to a newly established commission was challenged in court, but a judge has declined to rule on the lawsuit until the Federal Aviation Administration (FAA) issues an operating certificate. The FAA has said it will not issue that certificate until it is clear who is operating the airport. HB 133 Charlotte Airport Commission Clarifications attempts to answer that question by specifying that the Charlotte Douglas International Airport Commission is an agency of the City of Charlotte. However, in a statement, Charlotte Mayor Dan Clodfelter said, "I am disappointed that this new piece of legislation has been introduced today. I think the airport and the community are all better served if we can first find a resolution of this dispute among interests here in Charlotte and then decide how to put that solution into legislation." HB 133 has been placed on the House calendar for next Tuesday, June 17. More on this legislation can be found via Time Warner Cable News, the Charlotte Observer, and WRAL. Contact: Chris Nida 
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Local ETJ Repeal, Deannexation Bills Advance

Two bills that would affect local communities' extraterritorial jurisdiction (ETJ) authority advanced out of the Senate this week. SB 865 Town of Boone/Extraterritorial Jurisdiction, sponsored by Sen. Dan Soucek, passed the Senate on Thursday. The bill will remove the Town of Boone's ETJ authority as of Jan. 1. ETJ is an important planning tool for cities and towns, and particularly so for the Town of Boone, as the surrounding county does not have county-wide zoning. HB 531 Weaverville, Buncombe and Henderson, which also passed the Senate this week, removes the ETJ authority of both the City of Asheville and the Town of Weaverville as of July 1, 2014. The League opposes these and other legislative efforts to repeal local authorities. 

The following local, non-controversial deannexation bills were given initial approval this week. However, the bills still need either an additional vote or are required to be sent to the other chamber for final approval before becoming law.

HB 1080 Watha Deannexation was sent to the Senate State and Local Government Committee. If it receives a favorable report there then it will be re-referred to the Senate Finance Committee. Contact: Chris Nida

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City-Related Measures Move in Several Bills

Lawmakers took action on several bills with municipal impacts this week. Below is a brief summary of those actions.

  • HB 346 Governing Bodies/Collect Unpaid Judgments was given a favorable report by the Senate State and Local Government Committee and now moves to the Senate Finance Committee. This bill would allow local governments to garnish the wages of an elected official if that official owes the government monetary damages.
  • HB 348 Public Safety Technology/State ROW was given a favorable report by the Senate Transportation Committee and placed on the Senate calendar for Monday. HB 348 would allow the N.C. Department of Transportation to enter into agreements with local governments to install public safety technology in the rights-of-way of the State highway system.
  • HB 698 Background Checks for Firefighters passed the Senate yesterday and now will head back to the House for final approval. This bill extends the authority to conduct background checks on firefighters and emergency medical services personnel to those current employees, and establishes an urban search and rescue team.
  • HB 1043 Prequalification Update passed the House unanimously and has been referred to the Senate Commerce Committee. The League has worked with Rep. Dean Arp on this bill extensively. Previous coverage of those efforts can be found here. Contact: Chris Nida

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Judge Says Asheville Water Transfer Unconstitutional

A Superior Court judge has struck down as unconstitutional a 2013 law that would transfer Asheville's water system to a regional authority. Judge Howard Manning issued a decision Monday that said the law amounted to a unconstitutional local act. He also concluded that the city would be owed just compensation even if the law cleared other constitutional hurdles. The law provided for no compensation for the city. The ruling is expected to be appealed, although Asheville Mayor Esther Manheimer told The Asheville Citizen-Times that she believes it will prove difficult for the N.C. Court of Appeals to overturn the decision after Manning agreed with the city on four of the six legal points it raised. More coverage of the ruling can be found here. Contact: Kim Hibbard
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Legislation Would Add Penalties for MPO, RPO Ethics Violations

Language was added to HB 1025 DOT/DMV Changes in the Senate Transportation Committee on Wednesday that would outline penalties for violation of existing ethics requirements for those who serve on Metropolitan Planning Authorities (MPO) and Rural Planning Authorities (RPO) and are not Department of Transportation board members. If enacted, the legislation would authorize a $250 fine and a Class 1 misdemeanor charge as a penalty for MPO and RPO members failing to complete their required statements of economic interest and real estate ownership disclosures. The penalties could come only if members of the authorities failed to act 30 days after receiving a warning from the State Ethics Commission. The same language was also added to the final version of the Senate's budget in Section 34.25, but does not appear in the House budget. Contact: Whitney Christensen
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Lejeune Water Contamination Bill Sweeps in Cities

Moving quickly following a vote yesterday by a House judiciary committee, the House approved a bill today responding to a U.S. Supreme Court groundwater contamination liability case decided Monday. While legislators aimed the bill at contamination on Camp Lejeune, the broad language swept in cities and other private facilities as potential defendants as well. The legal issues decided in the Supreme Court case prevented Camp Lejeune water contamination plaintiffs from seeking damages from the federal government for health problems caused by contaminated drinking water on the military base. In trying to revive a cause of action for those plaintiffs, however, the House bill also targeted all other past owners of sites that had contaminated groundwater. Potentially, municipal facilities formerly used as fleet management garages and fuel stations would no longer benefit from the state's statute of repose that was at issue in the Supreme Court case. The statute of repose in current law prevents suits against former site owners when they have not taken any actions that contributed to contamination on the site for more than ten years. Because the measure already passed the Senate last year (as a completely different bill), and has now passed the House, it only requires a  concurrence vote by the Senate to win legislative approval. Contact: Erin Wynia
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Senate Resolution Calls for Legislature to Adjourn June 27

A resolution filed in the Senate on Wednesday would have the legislature adjourning for the year on June 27. Senate Rules Committee Chairman Tom Apodaca, who filed the resolution, told media outlets that he believes the date is realistic and that the legislature ought to be able to complete its business by then. Leaders in the House and Senate made clear in the spring that they wanted to see an early adjournment. In the past, though, adjournment resolutions have often been amended so that the date could be extended, with legislators requiring additional time to address a final crush of bills. Contact: Scott Mooneyham