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League Bulletin

April 13, 2017

Cities and towns are noting their concern over a proposal filed in the House this week that would prohibit publicly owned water and sewer systems from charging differential rates to customers outside of municipal boundaries without approval from the Local Government Commission. It would also generally restrict transfers of funds from a public enterprise fund to a local government's general fund, listing a few specific exceptions where transfers may be allowed. HB 718 Rates and Transfers by Public Enterprises surfaced Tuesday and, additionally, would direct the Legislative Research Commission to study certain aspects of system rates, operations and needs and to make recommendations to the General Assembly. The bill names the League among consulting parties in the study.

The League is attempting to address members' concerns, working with the bill's sponsor, Rep. Chuck McGrady, whose intent to place best-practices into state law is appreciated and supported. However, making it difficult for cities and towns to charge different utility rates to customers outside of corporate limits could have the effect of discouraging cities and towns from extending service to these areas. Meanwhile, the League is stressing to legislators and the public that it is important to consider that water lines, pumps and treatment plants are assets owned by the city and their taxpaying residents. It is their residents who have made the investments -- in many cases through general obligation bond issues -- to make these systems possible. They have equity in the system that non-residents do not, and deserve to be considered differently by the local officials whom they elect. Regarding rates, noteworthy is the fact that cities and towns are already using sophisticated rate-setting practices. Municipalities thank Representative McGrady for his time in the process and his inclusion of the League in consulting on the bill. Click here for more on the conversation.

Two proposals with significant changes in land-use policy have moved forward in the General Assembly. SB 131 Regulatory Reform Act of 2016-2017 received an initial concurrence vote in the Senate following House amendments to the bill and is slated for final approval from the Senate on Wednesday. That would send this bill to the governor for signing. One recent House amendment to the bill softened Section 2.15, which as currently written would insitute a seven-year statute of limitations for enforcement of any local or state land-use regulations, beginning when a violation is "apparent" from a public right-of-way or in plain view from a place to which the public is invited. Within those seven years, the measure shortens the time frame for code enforcement to five years once the local government actually knows of the violation. The proposal contains one exclusion to this limitation, in the cases of enforcement of dangers to public health or safety. Click here for more background.

Meanwhile, HB 507 Land-Use Regulatory Changes cleared the House Regulatory Reform Committee and is scheduled for a Wednesday hearing in the House Judiciary III Committee. The bill proposes substantial changes in law that among other things could incentivize land-use litigation and burden taxpayers with the costs. It brings back proposed measures that failed to pass into law last session, thanks to intense advocacy from League members. It also adds several brand-new provisions related to development permitting. Click here for more background. The League appreciates the willingness of bill primary sponsor Rep. Jonathan Jordan to take into account the concerns of local governments as this bill moves through the House in advance of the April 27 crossover deadline.

Working off a new draft of HB 68 BRIGHT Futures Act, House members discussed a broadband proposal Wednesday that would for the first time clearly authorize public-private partnerships for broadband service. Following this discussion, the House Energy and Public Utilities Committee plans to vote on a revised version of that draft next Wednesday. As described by primary bill sponsor Rep. John Szoka, these partnerships would involve a local government leasing excess fiber capacity in a broadband network the local government built for its own internal purposes. Local governments build these high-speed broadband networks to enhance public services, such as public safety communications, disaster relief, traffic signalization, and electric- or water-meter reading. In these simple broadband partnerships, the private sector partner utilizes the local government's infrastructure for its own purposes, which could include selling retail broadband services to homes and businesses within the local government's jurisdiction. Representative Szoka emphasized that this proposal represented a fiscally conservative approach to providing these services, with the private sector retaining the ability to profit by utilizing government infrastructure in areas where the economics do not make sense for the private sector to invest in that level of infrastructure.

Questions posed by committee members during the discussion gave Representative Szoka and legislative staff the opportunity to further explain how these partnerships would work. For example, the new draft would authorize cities and counties to lease excess fiber for a period of 25 years. Because fiber is a technology expected to last for generations, this lease term provides assurance to the private partner that there is time to recoup any investments made in reliance on the government's infrastructure. Experts suggest that without these public-private partnerships, many urban and rural areas of the state will fall behind economically because private-sector business models alone are not able to meet demand for this 21st century infrastructure. Cities and towns commend Representative Szoka for recognizing the challenging issue of providing broadband access in underserved and unserved areas of the state, and for taking steps to solve the problem by leveraging the strengths of both the public and private sectors. Contact: Erin Wynia

Four House members filed a proposal this week that seeks to standardize and provide statewide consistency across local jurisdictions for reviewing development-related plans and issuing permits. HB 794 NC Permitting Efficiency Act of 2017, filed by Reps. Scott Stone, Jason Saine, John Bradford, and John Torbett, for the first time provides state-level guidelines for cities and counties to follow when conducting primary land use regulatory functions. For example, it addresses how a city or county must formalize its local processes (by ordinance) and how often it must report on permit approvals (quarterly). The bill also addresses state development approvals, such as those related to roads, by allowing the N.C. Department of Transportation to delegate to cities the authority to issue construction permits and create standards for state-maintained roads located within a municipality; to review and approve encroachment applications for state-maintained roads located within a municipality; and to establish a fee for review of a transportation-related or right-of-way encroachment plan.

The omnibus development approval reform bill contains more than just guidelines for procedures a government must follow. Specific substantive items include limitations on off-site improvements — such as those related to utilities or traffic — a local government may require of a developer to those improvements directly related to the impact of the permittee’s development, or a fee in lieu of payment that does not exceed 20 percent of the estimated actual costs associated with those impacts. Another substantive section of the bill encourages both the state and local government agencies that engage in these plan review and permitting activities to publish certain information regarding performance metrics, and to facilitate information-sharing and collaboration across governmental units. Finally, the proposal requires state agencies that review construction documents and issue permits to create an online system for submittal, review, and approval of plans by 2020. This bill had yet to be assigned to a committee at the time of this writing. Contact: Erin Wynia

An unprecedented attempt to restrict a class of property from utility fees passed the House Transportation Committee on Tuesday without an opportunity for public input. HB 275 No Stormwater Fees on Taxiways or Runways would exempt airports from paying the stormwater utility fee for the impervious surface from runways and taxis. To qualify for the exemption, the airport must use the amount of savings for attracting business to the airport. The remainder of the airport that is comprised of an impervious surface (such as a parking area) would still be taken into account.

Stormwater utilities use collected fees to implement stormwater management programs, which are required by their NPDES MS4 permits -- an unfunded federal mandate to control and treat stormwater runoff. Unlike other enterprise fees, stormwater fees are subject to the rigorous requirements to be charged uniformly across similarly situated classes of customers and to be used only for stormwater purposes.

Revenues collected assist in flood prevention efforts, upkeep of the city's stormwater infrastructure components, and other measures that protect private property. The cost of the utility fees lost from airports will be borne by other ratepayers -- which are all other property owners. Not apparent is any rationale in exempting airports over other ratepayers, since taxiways and runways are paved surfaces just like rooftops and parking lots; water runs off of them like it does any other impervious surface, creating the potential to cause flooding.

The League thanks bill sponsor Rep. Debra Conrad for expressing in committee that cities and towns have concerns for the precedent the bill would set. The bill will next be heard by the House Finance Committee. Contact: Sarah Collins

Legislators took a new approach this session to reining in the public safety problems associated with video sweepstakes operations, filing a bill Tuesday that would legalize machines under the auspices of the state lottery. This legalization would come with significant statewide regulation of the video terminals and establishments where they were located, likely to the exclusion of local licensing and regulation of terminals that has occurred in the past. HB 750 Gaming Commission/VLTs, sponsored by Reps. Harry Warren and Jon Hardister, sets up a state licensing system that tracks and regulates each machine, but restricts the machines only to locations with certain alcohol beverage permits that are more than 50 feet from a church or school. Further, the proposal prohibits terminals in locations where the establishment is engaged exclusively in the business of housing such video sweepstakes machines. Over the years, enforcement of state laws pertaining to video sweepstakes operations has fallen to local law enforcement officials. But under this bill, enforcement authority lies instead with a state-level agency, the Department of Public Safety’s Alcohol Law Enforcement Branch. The bill had yet to be assigned to a committee at the time of this writing. Contact: Erin Wynia

A bill to penalize so-called "sanctuary cities" in North Carolina cleared the Senate Judiciary Committee this week in a split vote. SB 145 Government Immigration Compliance would lay out a process by which a local government could be stripped of certain, important revenues if the state attorney general's office, after receiving a complaint or tip, finds that a local government has violated a 2015 state law related to local enforcement of federal immigration laws. The revenues eyed in the bill include Powell Bill funds and beer and wine tax revenues, among others, which cities and towns have noted are completely unrelated to any potential violations the bill seeks to address. The League offered committee comments the previous week expressing concern that a municipality could lose significant revenue for an inadvertent action.

As before, the committee discussion included no evidence of any municipality that has violated the law, and the League remains unaware of any. National reports and lists of possible sanctuary cities do not mention North Carolina. Click here and here for media coverage of the committee meeting, which included a variety of perspectives on the bill's merits, including the view that the bill if passed into law would create a substantial drain of resources at the attorney general's office following dubious complaints or tips. The League has also reported on a separate House proposal, HB 63 Citizens Protection Act of 2017, that is narrower in detail but has a similar approach and basis. Withholding these types of funds as an enforcement mechanism is unprecedented in North Carolina. SB 145 will next be heard by the Senate Finance Committee.

Economic development; public safety; transportation; taxation and finance; municipal goals -- just a few of the categories of legislation you can follow with our easy and clear bill-tracker. We're logging new bills -- note: April 11 was the House's deadline for filing bills unrelated to appropriations or finance -- as well as those migrating through the legislative process. An important one to cities and towns, and with huge backing in the General Assembly, is HB 243 Strengthen Opioid Misuse Prevention (STOP) Act. From Reps. Greg Murphy, Ted Davis, Chris Malone and Craig Horn alongside a massive bipartisan showing of cosponsors, the bill seeks a multipronged crackdown on opioid abuse. Our bill tracker shows its most recent move: that it passed the House unanimously this week and now awaits action in the Senate Rules Committee.

A few new bills we're monitoring:

  • HB 747 LRC Study/Reg. Impact in Coastal Areas, which would authorize an interim legislative study on the impacts of environmental regulations and local land use regulations, as well as the impacts of underinvestment in infrastructure necessary for economic development. The study area would include any county containing or to the east of I-95.
  • HB 795 Economic Development Incentives Modifications, portions of which would generally address a League goal. For one, it would reform the current economic tier system, transforming it into an index against which counties are compared and eliminating adjustment factors and exceptions in current law, such as one that automatically designates small-population counties as the most distressed in the state. A League advocacy goal seeks revision of the current economic tier system. If passed into law, however, this bill would not reform it to measure the causes of distress or take into account sub-county data, all components of the League goal. This bill would also adjust the breakdown of Job Development Investment Grant (JDIG) economic development awards such that 70 percent of each award goes to the business grantee, and 30 percent goes to the Utility Account (from a 75/25 split). It would also raise the limits on award amounts in the JDIG program to allow unlimited awards in the most economically distressed areas of the state and reduce the state match for local government grants offered as part of the One North Carolina Fund when the local government is located in one of the state’s most prosperous counties. It includes many identical provisions from last week's Senate omnibus economic development bill.
  • HB 825 Protect NC Children from Lead Exposure, which would require water suppliers to test drinking water for the presence of lead at drinking water fountains in each school or child care facility in the water supplier’s service area, using protocols and procedures specified in the bill. This would be a new requirement.
  • HB 843 Adjust Municipal Election Schedule, which would adjust the municipal elections calendars related to certain primary dates and candidate filing dates, thereby accommodating other state requirements for printing of absentee ballots prior to the early vote period.
  • HB 844 DOT/Traffic Signal Oversight, which would hand authority to govern traffic signals on all public roads of the state to the N.C. Department of Transportation (NCDOT), which would have to establish standards for traffic signal operation. It would allow NCDOT to assume control over the operation of municipal-owned traffic signals or devices that do not meet the state standards, with an additional requirement that the local government reimburse NCDOT for any costs it incurs.

The League closely monitors legislation of importance to cities and towns and marked 24 of the 193 bills filed in this week's two legislative days as ones to follow. Check out the bill tracker to see what's happening. Access it here or via the Legislative Advocacy menu at

The General Assembly is officially on spring break. After a long day of business on Tuesday, the chambers gaveled out with a plan to resume voting on April 19. When they return, they'll be hard at work moving bills ahead of the crossover deadline on April 27, when non-finance or -spending bills need to pass either the House or Senate to remain eligible.

Don't forget to register for the next joint meeting between League members and Duke Energy to discuss issues surrounding the modernization of municipal street lighting. The meeting will take place by webinar on April 21, 10-11:30 a.m. This webinar will serve as a continuation of discussions that began after the League, in 2013, intervened in the Duke Energy Carolinas rate case before the N.C. Utilities Commission. It's an opportunity for Duke to check in with municipal customers to discuss outdoor lighting strategies, updates and sustainability efforts. Click here for the agenda.

Rocky Mount officials breaking ground on a project slated for big returns. Read below for details. Photo credit: City of Rocky Mount

Multiple municipalities added new stories to the Here We Grow map this week to show how their efforts and investments are creating jobs, boosting the economy and strengthening North Carolina's position as the best state to live and work now and in the future. The City of Kannapolis, for one, added its third story to the map to explain a move the city council just made that's projected to bring huge private investment in the coming years. The City of Concord, for another, added a story to explain how it's preparing for the future with a strategic growth regimen. The City of Rocky Mount also added itself the map, telling of its latest project and how its making the city a star for sports tourism and special events. They follow scores of other stories from cities and towns across North Carolina, and they just keeping coming. The Here We Grow map at is a real visualization of how, together, they're driving North Carolina's economy. And we're working to complete that picture. Haven't added your story yet? Send an email to, and if you're one of our member municipalities, we'll send you the login info you need to add your story and photo. No one knows your economic development story better than you. No one can tell your story better than you. Here We Grow is your amplifier.  

Click here for the latest episode of Municipal Equation, the League's biweekly podcast. On this outing we explore sound and its relationship to place -- a busy downtown square, a street corner, a pond, a construction site. As America develops, how often do you pause to listen? To the places undergoing active change? Or those preserved in time? To the sounds that truly identify a location in the moment, whether natural or developed? Put on your headphones (seriously, it's important for this episode) as we discuss the connections and influences we can develop with specific places when we pause to take them for what they are in the moment, via active listening. Many -- including guests Anne Guthrie and Donald Best -- have also taken to field recording, to capture what's around them for analysis -- in some cases highly scientific, and influential of public policy. It's a different approach this time. Listen in. Click here for all past episodes and here to subscribe on iTunes (where you can also leave us a good review). Want to provide feedback or an idea for a future episode? Email producer/host Ben Brown.