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League Bulletin

June 21, 2019

WHAT HAPPENED: It's been a fast week, with a near-the-end-of-session vibe. State budget negotiations continue in private while committees and floor calendars reflect substantive bills moving (including one we'll bring to your direct attention with an action alert in this Bulletin; it deals with preemption on vacation rentals and is of high interest to cities and towns).
WHAT IT MEANS: We might indeed be in the last miles of the 2019 session, in terms of known business, but we still don't have a sure landing date on the budget. This week, Republican budget writers and Democratic leaders from the General Assembly brought negotiations to Gov. Roy Cooper in a meeting that didn't create agreement​. Medicaid expansion, which the governor supports, was one area of misalignment with the majority party.
ON TAP: Local-level leaders have tight eyes on the proceedings, as the respective House and S​enate budget proposals included a number of positives for communities, from a much-needed increase in Powell Bill funding to other infrastructure support to disaster recovery aid to revitalization funds. The new fiscal year begins July 1, and if a budget isn't in place by then, the legislature will have to pass one or more continuing resolutions to extend existing funding levels until a new plan arrives. Meanwhile, the chambers have lots of bills calendared for attention starting Monday.
THE SKINNY: Amid budget talks, other important bills are moving. This week we bring you focuses on land-use, affordable housing, police recordings, building-code regulatory reform and, of immediate importance, short-term rentals. Read on.

League staff expects language that would preempt local regulation of short-term home rentals, such as Airbnb, to be inserted into an existing bill to be considered by the House Rules Committee on Monday. Proponents are likely to insert the language in SB 483 Vacation Rental Act Changes, which is scheduled to be heard by the committee Monday afternoon, should the measure go forward.
Please contact your legislators​ this weekend and urge them to oppose any attempt at local preemption of short-term rental regulations. Let them know that cities and towns that have or may adopt local ordinances regulating short-term rentals are doing so to protect surrounding property owners.
As Airbnb and other short-term rentals have grown in recent years in areas with heavy demand, a lack of local regulation means that owners can turn second homes into de facto hotels within residential neighborhoods, making weekly or other shorter-term rentals throughout the year. Neighboring homeowners can see the value of their homes decrease as public safety and quality of life issues arise.
Meanwhile, a last-minute attempt to insert this language into an existing bill means that it could become law within days with very little opportunity for public input. 
With that in mind, let your legislators know:
-Using homes as continuous, year-round, short-term rentals can lower neighboring property values. Local regulations can and do address noise, parking and other factors that can harm public safety and quality of life.
-By continuously using homes as short-term rentals, owners are using them more like commercial hotels. Local regulation ensures that they comply with minimum housing codes.
-Local regulation ensures that cities know the location of short-term rentals so that occupancy taxes are properly collected. Creating gaps in those collections will mean decreased dollars for tourism promotion and other needs, as well as damage commercial hotels that are required to collect them.
Please contact your legislators​ this weekend and urge them to oppose any attempts to preempt local authority regulating short-term rentals. Let them know that by doing so they will be helping protect the most important investment most people will ever make, their home. 

A bill that included a top goal prioritized by municipal leaders received a unanimous favorable report Wednesday by the House Finance Committee. HB 557 Municipal Omnibus Bill, sponsored by the co-chairs of the House Municipal Caucus, Reps. Gale Adcock and Steve Ross, contained eight different items. Among that list was an extension of the notification a county must give the municipalities within it when the county commission switches the method it uses to distribute sales tax among the municipalities, from two months prior to the new fiscal year to five months prior. The extension will allow affected municipalities more time to account for the different funding level in their budgeting processes. Read about the other items contained in this bill in a prior League report. The bill is now scheduled for a hearing Monday in the House Rules Committee​.

The League negotiated several concessions on a major land-use law bill this week. SB 355 Land-Use Regulatory Changes, which advanced Thursday during the first of two expected House committee votes, contains provisions affecting litigation practices in land use disputes (Part 1) as well as a complete rewrite of the state’s planning and land use statutes (Part 2). Although the wide-ranging bill still includes provisions that will create a more difficult landscape for cities and towns in their land-use decision-making, the changes the League secured to the bill lessened those impacts. The N.C. Home Builders Association put forward the Part 1 provisions dealing with land use litigation, while the N.C. Bar Association developed the planning statute rewrite contained in Part 2 of the bill. Both organizations sought passage of their respective proposals for the past five years, but this year was the first time they came to the table to address the concerns of municipal officials.​The League extends a deep thanks to primary bill sponsors Sens. Dan Bishop, Paul Newton, and Sam Searcy, as well as Sen. Floyd McKissick, for pushing all parties to work out differences. The bill moves next to the House Rules Committee.

From pothole-fixing to the rollout of slick new vehicles that drive themselves, modern transportation elements make for interesting conversation at the very least. But the challenges upon policy writers, and the responsibilities of local-level leaders to support our changing ways of getting around, are often missed or lacking detail in public discussion. "While more fuel efficient and electric vehicles will mean less pollution for our environment, those changes will also mean less gasoline purchased, and right now, how we maintain our roads is directly tied to the taxes collected per gallon of gas purchased," League President William Pitt, a member of the Washington City Council, said in a piece published this week by WRAL TechWire​. "One aspect of that maintenance that many people are not aware of is just how much that responsibility falls on local city and town governments." 
Pitt in the TechWire piece noted that North Carolina has one of the biggest state-supported road systems in the United States. But city and town governments are no slouches in the number of road miles they, themselves, maintain in their borders, he emphasized. "In my city of Washington, we maintain 59 miles of city streets; in the City of Sanford, the total is 130 miles; the City of Raleigh maintains 1,100 miles of city streets," said Pitt.
The N.C. Department of Transportation's annual transportation budget is about $4.7 billion. Municipalities here spent an estimated $1.8 billion on transportation in 2018. "While the state does pass on a portion of its collected fuel taxes to cities and towns, that money – often referred to as Powell Bill funds – is about $147 million, or about 9 percent of total municipal spending on transportation," Pitt said, adding that the League has worked to persuade the legislature to boost that amount, which has remained flat for years. Pitt offers more context and detail in the full piece​ on TechWire as he points to municipalities' commitment to transportation thought leadership. 

As negotiations toward a final state-budget plan play out behind closed doors (as is standard) at the General Assembly, a number of bills relevant to cities and towns have received committee or floor-level attention this week. With our online bill tracker, you can stay current on any or all of the proposals we've been following. But here are some timely highlights:

​Performance guarantees: A consensus bill negotiated between the League and the N.C. Home Builders Association received a favorable report Thursday in the first of its two House committee votes. SB 313 Perf. Guar. to Streamline Afford. Housing, dealing with the laws that authorize local governments to require land developers and builders to provide financial assurances to ensure completion of development-related improvements such as roads, curb-and-gutter, and water/wastewater lines, now explicitly states that the amount of the guarantee may be determined by the local government, among other changes.

Development review and inspections: A wide-ranging bill related to local development review and inspections processes gained the approval of the Senate Commerce Committee on Wednesday, the first of its three Senate committee hearings. Prior to this vote, the League secured changes to extend the amount of time for residential plan review from two days to 15, and also to remove a problematic provision related to installation of backflow prevention devices on irrigation lines.

Affordable housing reporting: A House committee gave a nod Thursday to SB 316 Affordable Housing, which would require all cities above 90,000 in population to report to the N.C. General Assembly on their local efforts to increase affordable housing.

Water and wastewater infrastructure: After discussion last week, the Senate’s Pensions and Retirement and Aging Committee voted on Thursday to approve a large rewrite of HB 777 Various Retirement Chngs/Wastewater Reform. The rewritten bill includes provisions intended to assist utilities in addressing water and wastewater infrastructure issues that were originally included in SB 536 Water/Wastewater Public Enterprise Reform and the Senate budget, and a variety of non-controversial retirement provisions.

Police recordings: SB 148 Public Records/Release of LEO Recordings​, introduced at the City of Greenville's request, received its final approval this week and was presented to the governor for his signature. The law will add two new factors to the list of purposes a law enforcement agency may release a law enforcement recording: 1) suspect identification or apprehension, and 2) locating a missing or abducted person.
Follow these and more bills with our online tracker​.

The League has released its most recent Quarterly Revenue Report, available in an interactive web format, as well as PDF​. Both are housed on the League’s website. The latest report examines state-collected local revenues received by local governments for the third quarter of the 2018-2019 fiscal year. These reports provide a snapshot of quarterly trends in state-collected local revenues and supplement the League’s Annual Revenue Projection, released in March. If you have any questions regarding the Revenue Reports or Revenue Projections, questions can be directed to Chris Nida or Caitlin Saunders​.