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League Bulletin

April 17, 2015

A bill filed this week in the House of Representatives would give North Carolina cities the option to levy a quarter-cent city-only sales tax by resolution, achieving a long-standing League advocacy goal. HB 903 County Tax Flexibility/Municipal Rev Opts. grants counties additional authority for a sales tax that is not shared with cities, but it also would for the first time allow cities to levy a sales tax that applies only within their borders and which they keep all of the revenue from. Projections of the revenue that could be derived from such a tax are not yet available, but it would almost certainly be more than enough to make up for the loss of privilege license tax revenues. It could also help to offset some of the city losses projected under sales tax reallocation plans.

For multiple sessions, cities have asked for this authority to help stabilize local revenues and allow property taxes to remain low. The League thanks Rep. Jason Saine for his leadership in sponsoring HB 903, as well as Reps. Elmer Floyd, Howard Hunter III, Susan Martin, Chuck McGrady, Robert Reives, Stephen Ross and Michael Wray for signing on as co-sponsors to the bill. Please contact your legislators and let them know of the importance of a city-only sales tax as a municipal revenue source and ask them to support HB 903. Contact: Chris Nida

Pineville was the scene Monday of the League's third in a series of regional meetings on the future of municipal finance, which again provided a glimpse into the unique challenges of municipalities in different areas of the state. The meeting series, A Path Forward: Vibrant Cities Today and Tomorrow, garnered more media attention with this Charlotte Observer op-ed from Charlotte City Councilwoman Patsy Kinsey. Councilwoman Kinsey also participated in a panel discussion during the meeting. She noted that many cities and towns were only able to avoid layoffs during the Great Recession by freezing salaries and hiring. She pointed out that there is growing evidence of rising turnover among municipal employees as cities face more financial challenges even as the larger economy continues to recover.

Comments from Pineville Manager Haynes Brigman reinforced that one-size-fits-all solutions from Raleigh are not adequate to address municipalities' problems. Mr. Brigman discussed Pineville's unique mix of a relatively small population but substantial retail presence. "What other town in North Carolina with 8,500 residents has 38 police officers?" he asked. Pineville stands to lose more than $500,000 with the pending repeal of the privilege license tax. The other panelists -- Albemarle City Councilwoman Martha Sue Hall and Matthews Town Manager Hazen Blodgett -- discussed those municipalities' unique challenges while making the point that they are part of a larger regional economy that Charlotte helps to drive.

Prior to the panel discussion, Chris Nida, the League's Director of Research and Policy Analysis, delivered a presentation examining longstanding state tax policy, recent changes and proposed changes to that policy, and comparisons with others state. Speaking at the end of the program, Sen. Jeff Jackson of Charlotte said North Carolina must address the economic woes in rural areas of the state, but cited a Colorado program that does so with substantial investments through competitive economic development grants.

The League would like to thank the Town of Pineville for hosting this important event intended to foster an ongoing public conversation about the future of municipal finance. We also thank the panelists, Kannapolis Mayor Darrell Hinnant for offering opening remarks, Senator Jackson and all of those who attended. Contact: Scott Mooneyham

The House this week gave its approval to legislation that would affect how building inspectors go about their jobs, but only after one provision that could have threatened public safety and created building code compliance issues was removed. The League continues to have concerns about two problematic provisions in HB 255 Building Code Reg. Reform, but would like to thank Rep. Mark Brody, the bill's primary sponsor, for working with League staff on the bill. Representative Brody agreed to drop a provision that would have eliminated authority to conduct plan review for residential construction prior to the start of construction. 

With the bill now before the Senate, the League will continue to advocate for changes to one provision that would subject building inspectors to new, vague job-performance standards that could imperil their certification and another that could create more work for inspectors based on what constitutes a "full inspection." Read previous League coverage regarding the legislation here. Read media coverage about the bill's passage in the House, including League comments, here. Contact: Erin Wynia

This weekend is the time to contact legislators and ask them to keep in place local authority to regulate billboards. HB 304 Revisions to Outdoor Advertising Laws, originally calendared for a committee discussion Wednesday before being removed from the agenda, would overrule all local rules governing existing billboards. Under the proposal, an existing billboard could be moved from its current location to any other non-residential zone in the city, regardless of a local community's restrictions on location. Further, those relocated billboards could be enlarged, made taller, or converted to digital displays, even if the municipality's ordinance stated otherwise.

In addition, the proposal would change the calculation for compensation owed to billboard owners during condemnation actions. This change would drastically increase the amounts taxpayers would pay to billboard owners when condemning for public infrastructure projects because it would take into account future earnings that the owner might receive if the sign had continued in use. No other class of property owners is given this special consideration in condemnation actions.

Please describe to legislators how different your community might look if this proposal became law, using specific examples. The bill will likely receive a hearing in the next two weeks, first in the House Committee on Commerce and Job Development, then in the House Finance Committee. You can read media coverage about the legislation here. Contact: Erin Wynia

The League's Governmental Affairs team wishes a sad good-bye and best of luck to intern Shawnda Martin. Shawnda has been working with the Governmental Affairs team since last summer and has provided invaluable assistance in covering legislative committee meetings, monitoring bills, and researching issues. She will graduate this spring from North Carolina Central University School of Law. We wish her all the best as she prepares to take the State Bar exam and in all her future endeavors, having no doubt that Shawnda will be successful in her pursuits.   

Governmental Affairs Intern Shawnda Martin

HB 730 County Provide 911 Dispatch Services was filed Wednesday and would make clear that counties cannot charge municipalities for 911 service when municipal taxpayers already pay county property taxes to help fund that service. This legislation would address a top legislative priority adopted by League members in December to prevent municipalities from being additionally charged for county services which are funded through county property taxes. The League extends it sincere thanks to Rep. Jason Saine of Lincolnton for filing this bill. Please contact Sarah Collins if you have a contract with your county that you think would be affected by the legislation.
The Senate this week approved legislation that would make permanent a temporary ban on local governments' use of contingency fee-based contracts for tax compliance audits. SB 682 Modify Sunset Re: Contingent Audits would remove the "sunset" from a ban on such audits that went into effect in 2013. Without the legislation, local governments could again use contingency fee audits effective July 1. These contracts allow local governments to catch those who fail to declare taxable property and to do so without upfront costs to taxpayers. The state uses similar contingency-based contracts to try to detect Medicaid fraud. The bill now goes to the House for consideration.

House members submitted 314 bills this week to meet the last two major bill filing deadlines of the session. Corresponding Senate deadlines passed last month, with senators filing a total of 712 bills this session. Therefore, legislators have now made public the bulk of this year's proposals. Among the new House measures filed this week--a full one-third of the 941 total filed bills--the following bills were of interest to municipalities:

  • HB 630 Alternative WQ Protection for Falls Lake: evaluates whether in-lake nutrient removal devices that are currently being tested in Jordan Lake would also merit testing in Falls Lake, and directs DENR to reassess the Falls Lake Rules to determine if any portions of the Rules are unnecessary
  • HB 634 Stormwater/Built-Upon Area Clarification: resurrects a debate from last session over whether the State and local governments should treat gravel-covered surfaces, such as parking lots, as impervious under stormwater laws
  • HB 635 Property-List Subterr. Pipes/Plat & As-Built: adds requirements for property owners who are installing water/sewer or stormwater infrastructure, withholding issuance of building permits until the property owner gives the local government information regarding the location, size, and materials of those pipes and devices
  • HB 639 Risk-Based Remediation Amends: expands the use of risk-based remediation techniques for sites with contaminated land or groundwater, including sites placed on the state's inactive hazardous sites list or the federal Superfund list
  • HB 647 Epi Pens in All Child-Serving Businesses: allows certain entities, such as parks departments with youth programming, to receive prescriptions for epi-pens and treat program participants experiencing extreme allergic reactions; program personnel must undergo training to administer the medication
  • HB 666 WC/Firefighters'/Presumptive Cancer: creates a new presumption that working conditions caused any of nine listed cancers in firefighters, which would entitle the employee to worker's compensation coverage of the medical condition
  • HB 672 STI and Ferry Tolling Revisions: removes DOT engineers' judgment when determining the local input portion of the STI transportation formula; tweaks the criteria used by the STI workgroup to determine statewide transportation project priorities
  • HB 674 Fair Competition & Emp. Classification Act: companion bill to a Senate bill explained in this LeagueLINC Bulletin article
  • HB 680 Regulate Transportation Network Companies: companion bill to a Senate bill explained in this LeagueLINC Bulletin article
  • HB 688 WC/Limit Benefits of High Earners: caps the amount of worker compensation payments owed to high earners
  • HB 693 Add Towns to State Health Plan: continues a trend of bills filed this session to allow certain local governments to participate in the State Health Plan; this bill applies to Lilesville, Marshville, Peachland, and Wadesboro
  • HB 702 Preemption Affirmation Act: enhances the legal relief available to persons "adversely affected" by any local ordinances or rules affecting their right to bear arms, including an automatic award of attorney's fees if the plaintiff is successful in the action against a local government
  • HB 708 Preservation of Historic/Heritage Trees: allows local governments to create advisory commissions to coordinate with state agencies when a state agency action would impact a tree designated as "historic" or "heritage" by the local government
  • HB 710 Allow Special Elections/Odd-Numbered Years: companion bill to a Senate bill explained in this LeagueLINC Bulletin article
  • HB 713 Body & Dash Cam Recording/Public Access: classifies video from police body and car dashboard cameras as "records of criminal investigations," which allows release of the video at the discretion of the law enforcement agency and exempts it from personnel information protection laws
  • HB 716 LRC Study Wage Garnishment: directs a two-year study of wage garnishment practices in the state, including any fee that may be paid to an employer in exchange for administering the wage garnishment procedure
  • HB 718 DENR Study of IBT Laws: directs an agency study of the limited circumstances under which the state's interbasin transfer of water laws may be relaxed
  • HB 721 Subdivision Ordinance/Land Develop. Changes: details specifics under which local governments may require of developers performance guarantees like bonds or letters of credit, including one limitation that may severely restrict the ability of local governments to require these types of financial assurances for the continued performance of post-construction stormwater devices, as required by the federal stormwater permits issued to cities
  • HB 739 Repeal Business License Fees: eliminates the ability of cities to charge any type of fee, even a nominal one, when issuing privilege licenses to businesses
  • HB 749 Voters' Right to Know: adds to the public records laws any written complaint against a local elected official alleging acts including sexual harrassment and assault
  • HB 751 No Breed-Specific Dog Laws: disallows local ordinances that restricts the possession of dogs based on the dog's breed or presumption of the dog's behavior based on its breed
  • HB 760 Regulatory Reform Act of 2015: requires local governments to award density credits or severable development rights for parcels split by a dedicated road right-of-way; clarifies that state rules readopted pursuant to the "review of rules" process do not need a fiscal note; eliminates local governments' ability to implement stormwater programs that vary from the state's model stormwater ordinance, even if those local deviations are required by federal regulations, and requires submission of these rewritten plans to the N.C. Environmental Management Commission for review and approval; restricts the ability of local governments to deviate from state riparian buffer rules, even when required by federal regulations
  • HB 762 Universal Broadband for All State Citizens: repeals current restrictions on establishing and operating municipal broadband systems; mandates the deployment of broadband service in underserved, rural areas via technology available through smart energy meters
  • HB 763 Task Force on Regulatory Reform: forms a twelve-member panel to solicit, review, and recommend to the legislature regulatory reform measures, with a report due at the end of next year
  • HB 783 Define Locally Sourced/Public Contracts: permits bidders on local contracts to label themselves as local, or the goods they produce as local, if they are within a 50-mile radius of a municipality
  • HB 785 Close Loopholes in Ethics Compensation: lowers to $1,000 the income threshold for reporting on statements of economic interest, which are currently required for officials serving on MPOs/RPOs, among other state-level offices
  • HB 797 Alarm Registration Info Not Public Record: removes from the definition of public record any information received or compiled by a city's alarm registration program; makes a previous local bill that only applied to the City of Wilson statewide
  • HB 799 Zoning/Changes to Hist. Preserv. Procedures: eliminates the authority of a local government to establish an appearance commission; shortens the period of review for certificates of appropriateness within a historic district from 180 to 120 days, and also deems inaction by a historical commission within 120 days to result in issuance of the certificate; allows a petitioner to submit to arbitration a decision of a board of adjustment instead of the typical superior court appeals process; gives owners seeking a certificate of appropriateness the option of requesting that the historic commission prepare a "renovation report" and issue it within 60 days of the request, to be used by the commission when making its appropriateness determination
  • HB 804 Kelsey Smith Act: allows law enforcement officials and public safety answering point (PSAP) officials to request cell phone location information from private wireless providers, in certain emergency circumstances
  • HB 811 Law Enfrocement Body-Worn Camera/Study: directs a study by several state subdivisions of the feasibility of equipping all law enforcement officers with body cameras, best practices for activation/deactivation of the cameras, best practices for storing video records, and the level of public access that should be granted to these recordings
  • HB 829 Automatic License Plate Readers: allows state and local law enforcement agencies to utilize automatic license plate reader technologies to assist in investiagtions; sets out boundaries for retention of this information as well as public reporting requirements of collected data by the state or local governmental unit
  • HB 836 Local Government Regulatory Reform: clarifies the types of easements a municipality may reserve when closing a street, including easements for utilities, drainage, landscaping, and others; repeals the requirement for a going out of business license; modernizes the process for issuing pre-audit certifications for local government expenditures
  • HB 845 Exempt Property Owned or Leased by Tribe: exempts all real and personal property located on lands held in trust for the Eastern Band of Cherokee Indians, regardless of ownership of the land
  • HB 848 Modify Utility Account-Eligible Areas: expands the areas that may receive economic development grants from the Industrial Development Fund Utility Account to include urban progress zones and agrarian growth zones
  • HB 874 Cities/Availability Charge/Improved Property: allows municipalities to charge an availability fee to properties that would qualify for issuance of a building permit and where the municipality has installed a water/sewer line
  • HB 875 Restrict Municipal Eminent Domain: requires county commissioner approval before any municipality acquires real property by condemnation, exchange, purchase, or lease
  • HB 876 Cell Phone Location Tracking: sets out the circumstances under which a law enforcement agency may obtain cell phone location information, either with or without a warrant; includes requirements for judicial officials to report statistics on warrants issued for the purposes of tracking cell phone locations
  • HB 890 Attract Nat'l HQs to NC: identical bill to HB 848, described above, except with a different title
  • HB 920 Omnibus Economic Development Improvements: includes previously-introduced economic development measures, such as the historic preservation tax credit and film tax credit; appropriates $20 million for the House-approved Site Infrastructure Development Fund
  • HB 927 Reestablish NC as the "Good Roads State": seeks additional transportation revenue through a combination of measures, including a reworked gas tax formula, raising certain vehicle and driver fees, and eliminating the transfer of funds from the Highway Fund to the General Fund; appropriates funds for various transportation purposes
A House committee gave its approval to HB 530 Local Gov'ts/Inspect Bldgs & Structures Thursday, but not before the bill sponsor committed to working with the League to address concerns with the legislation. HB 530 is similar to legislation that passed the House in recent sessions and is intended to restrict cities' ability to have rental registration programs. Cities around the state have successfully used these programs to force absentee landlords to address repeated criminal and housing violations on their properties, thus upping the quality of available housing and protecting the public safety of neighboring tenants and property owners. HB 530 would significantly limit the reach of these programs, restricting the area that programs could target, increasing thresholds before properties are subject to the terms of the programs, and eliminating fees that support the programs' administration, among other measures. Rep. Bill Brawley acknowledged the League's concerns with the bill and invited the League to comment on the bill before the committee chairman determined there would not be time for public comment. Representative Brawley did commit to working on the bill in advance of its next hearing, before the House Committee on Regulatory Reform, and we appreciate his willingness to do so. The League would also like to thank Reps. Stephen Ross and Paul Luebke for expressing their concerns regarding the provisions of the bill. If your city runs a rental registration program, please contact your legislators and share with them the positive benefits the programs have had for your communities. Contact: Chris Nida

The second bill that would increase employer contribution rates to the to the Local Government Employees Retirement System (LGERS) was filed this week. HB 759 Retirement System COLAs would provide both LGERS and Teachers' and State Employees' Retirement System (TSERS) retirees with a 2% cost of living adjustment (COLA) effective July 1 of this year.

Although a fiscal note by the General Assembly has not yet been released, the higher COLA called for in this legislation would increase each participating local governments' contribution rate for general employees. That rate had been previously set at 6.67 percent, but would rise to approximately 7.00 percent under the bill.

HB 616 Local Governmental Employees’ Retire. COLA that was filed last week is scheduled to be heard by House Pensions and Retirement Committee on Tuesday and would provide LGERS retirees with a 1% COLA (read more here).

Both these bills come after the Local Government Employees Retirement System Board of Trustees voted in January to provide a fiscally responsible COLA to retirees by relying solely on existing funds available through the system's recent investment gains. Specifically, the Board approved the League- and the N.C. Association of County Commissioners-supported COLA of 0.625%. Contact: Sarah Collins

A bill filed in the House this week would offer some municipalities relief when it comes to paying for utility relocation costs due to state road construction, advancing one of the policy goals prioritized by the League membership for this session. HB771 DOT/Utility Relocation Costs would force the state to pay for all or some of the relocation cost of municipal water and sewer lines for municipalities with a population under 50,000 when state road construction forces those relocations. Currently, the state pays those costs only for towns with a population of 5,500 or less. The bill would set up a tiered system where municipalities with a population of 10,000 or less would pay no costs, those with a population greater than 10,000 but less than 25,000 would pay 25 percent of the cost, those with a population of 25,000 but less than 50,000 would pay 50 percent of the cost. The legislation is sponsored by Rep. Phil Shepard of Jacksonville, Rena Turner of Olin, Pat Hurley of Asheboro and George Robinson of Lenoir. The League would like to thank the sponsors for this important bill. Contact: Erin Wynia

The League's Listening and Visioning Tour continued this week with stops in Greensboro, Mooresville, Monroe and Pinehurst. These breakfast and dinner events are a chance for League members to provide feedback to the organization and to let Executive Director Paul Meyer know your views on what is happening in Raleigh and elsewhere. There are five more stops on the tour over the next two weeks. Learn more and find registration information here, and thanks to everyone who has attended.

Two separate bills were filed in the House on Thursday that would legalize and regulate video sweepstakes games in North Carolina, and both would allow city governments to impose excise taxes on the operations. HB 922 Video Sweepstakes Regulation and Taxation and HB 938 Comprehensive Gaming Reform would each legalize video sweepstakes games, and allow municipal and county governments to impose excise taxes of $1,000 per operation and $500 per gaming machine in each. County and city governments could not both impose the tax on the same business.

League members established a legislative goal in December opposing legalization of Internet sweepstakes operations, but in the event of their legalization, calling for the ability to make land-use decisions governing their location and levy taxes on the operations. The state Supreme Court, in 2012, issued a ruling declaring that a legislative ban of the games was enforceable despite subsequent modifications to the games by video sweepstakes operators. In the aftermath of that decision, most operations in the state shut down, but some have continued to operate with the claim that other modifications have put them in compliance with the law.

The House Committee on Local Government gave its OK on Thursday to a bill that would change the governing relationship between the City of Fayetteville and its city-owned utility, the Fayetteville Public Works Commission. HB 392 Fayetteville Charter/PWC Changes will next be considered by the House Finance Committee. Although intended to resolve a governance dispute between city officials and the members of the utility's board, the bill continues to include a provision that would prevent the city from requiring voluntary annexation as a condition of extending water and sewer service to areas outside of its corporate limits.
The House overwhelmingly approved a bill on Thursday calling for a study of moving all municipal elections to even-numbered years. HB 402 Study Municipal Elections in Even Years would have the Joint Legislative Elections Oversight Committee examine the costs of current municipal elections, election turnout data and the preferences of municipal officials. The committee would report back its findings to the full General Assembly next year. Currently, only a few towns and cities in the state hold municipal elections in even-numbered years. The bill now goes to the Senate for consideration.
The House on Thursday unanimously approved a bill that repeals the state Map Act, a law that critics said led to unfair restrictions on property owners in designated road corridors. HB 183 Repeal Map Act now moves to the Senate for consideration. A separate bill in that chamber would not repeal the law, but seeks to limit the delays that restrict property owners' development of their land once road corridors are designated. Although local governments had authority under the Map Act, state road-building is believed to be most affected by any repeal or changes to the law. Read previous League coverage here.
The House has approved HB 108 Site and Building Development Fund, which would establish a fund to provide loans to municipal and county governments to build or renovate buildings and provide infrastructure for commercial development sites. The program would be put under the Department of Commerce, and the bill calls for the state agency to develop much of the criteria for awarding the loans. The interest amounts would range from 0 percent to 2 percent, based on the relative wealth of the counties under the state's tier formula. The bill now goes to the Senate for consideration.