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League Bulletin

July 24, 2015

Senate Majority Leader Harry Brown and several of his fellow senators were joined by a number of county government officials at the Legislative Building on Tuesday to tout his plan to shift sales tax revenue. The latest push for Senator Brown's plan comes as House and Senate negotiators consider a wide range of differences in the two budget bills passed by the two chambers, with the tax ideas being pursued in the Senate among the most significant. The news conference prompted Gov. Pat McCrory to issue a statement harshly condemning the proposal and threatening a veto of any separate bill that includes it. The League continues to emphasize the need for a finance plan that helps all municipalities while recognizing that Senator Brown is attempting to address significant issues facing rural communities. 

Most legislative observers continue to predict a drawn out period of budget negotiations that will result in the legislative session moving well into August and even into the fall. The current continuing budget resolution keeps state government operating in the absence of a permanent budget through Aug. 14. Read more about the happenings around the sales tax proposal here. Contact: Rose Williams

The House Appropriations Committee held a hearing on the state budget on Wednesday in which municipal officials figured prominently. The speakers included two NCLM Board members -- Greensboro Mayor Nancy Vaughan and Morrisville Mayor Pro Tem Liz Johnson -- and Kannapolis Mayor Darrell Hinnant and Huntersville Mayor Jill Swain. The topics covered by the four included House budget provisions that would reinstitute state historic preservation tax credits, provide money for job recruitment and help more cities with utility line relocations.

Mayor Pro Tem Johnson also spoke about municipalities' need for financial flexibility. "North Carolina's cities and towns are making vital investments that are allowing the state's larger economy to grow. Help us continue to do that with flexible revenue options," she said. Continuing on that theme, Mayor Hinnant discussed investments that Kannapolis is making aimed at revitalizing the Cannon Village area of its downtown.  You can read more about the plans in Kannapolis here. The League thanks House budget writers for agreeing to hear from city officials on these vital municipal priorities. Contact: Rose Williams

The House voted not to concur with the Senate's approved version of HB 512 Amend/Clarify Back-Up PSAP Requirements, meaning negotiators from the two chambers will now determine the final language in the bill. As passed in the Senate, the legislation would not only give local governments more flexibility in meeting requirements that primary 911 centers have back-up capability, but also achieve a top League legislative priority by preventing municipalities from being additionally charged for county services when those services are already funded through county property taxes.

Rep. Susan Martin, primary sponsor of HB 512, recommended that House members vote not to go along with the Senate's changes. She noted that while the House had already approved both provisions separately (HB 512 and HB 730), there were some technical fixes that she felt were needed. The House took her recommendation and appointed conferees to work out those changes. The League thanks Rep. Martin for seeking the League's feedback. Read more about the provisions of HB 512 in last week's Legislative Bulletin. Contact: Sarah Collins

A League member testified in opposition Wednesday to a bill that would grant homebuilders a property tax exemption on improvements to their property. Garner Assistant Town Manager Rodney Dickerson's testimony came just before a second Senate committee voted unanimously to advance HB 168 Exempt Builders Inventory. Addressing members of the Senate Finance Committee, Garner Assistant Town Manager Rodney Dickerson said cities would lose millions in revenue while still providing these properties essential services like police protection from materials theft, fire protection, and solid waste pick-up. In addition, the Wake County tax assessor testified regarding implementation problems if the bill became law.

The bill would allow property owners to apply for an exemption for up to three years for residential property, and up to five years (or until a building permit was issued or the building was sold) for improvements to commercial property like water and sewer lines and roads. Estimates by legislative staff produced when the House considered the bill indicated that the exemption for both residential and commercial property could cost local governments upwards of $65 million annually in property tax revenue.

The bill now heads to the Senate Appropriations Committee, where legislators will consider incorporating it into the final budget package, which includes a variety of tax law changes. The bill passed the House with only seven dissenting votes, none of which were chairs of the budget conference committee. Read coverage of this bill on WRAL in "Cities, counties balk at home builder tax exemption." Contact: Rose Williams

After a two-hour public hearing Tuesday on HB 765 Regulatory Reform Act of 2015, the full House rejected the omnibus bill and appointed conferees to work out the differences. The bill originated in the House as a one-page technical corrections bill. Upon receiving that bill, the Senate added dozens of provisions that ballooned the bill to 58 pages. In comments offered throughout the public hearing, members of the House Environment Committee cited the greatly enlarged scope of the bill -- and lack of review time -- as a major reason for recommending rejection of the Senate package.

The largest concern for cities in the bill is a provision that would prohibit public entities from using their judgment in the selection of piping materials for water, wastewater, or stormwater projects. The League opposes this provision and will continue working with a coalition of stakeholders to remove it from the final negotiated bill. Five speakers testified during this week's public hearing, both in opposition to and in favor of this piping preference provision, including League allies from the Professional Engineers of North Carolina and the NC Rural Water Association. Other speakers also backed the League's opposition to the elimination of recycling fees paid by certain electronics producers. A portion of those fees support state-mandated municipal collection of these recycled products.

The Senate must appoint its own panel of conferees before negotiations on the bill would begin. This regulatory reform package follows an earlier Senate effort that is also in conference negotiations now, HB 44 Local Government Regulatory Reform 2015. Read more analysis of these two omnibus bills in this month's edition of EcoLINC, the League's electronic environmental newsletter. Contact: Sarah Collins

A number of lawsuits have been filed in the wake of the U.S. Environmental Protection Agency and Army Corps of Engineers announcing their highly controversial final rule to clarify the jurisdictional reach of the Clean Water Act (CWA). This week, North Carolina joined other states and organizations that have challenged the rule's validity. The N.C. Department of Environment and Natural Resources filed a joint complaint with 10 other states in U.S. District Court in Georgia claiming the rule unconstitutionally subjects states to excessive federal and state regulation with little environmental benefit. Clean Water Act jurisdiction is an important issue to cities because it triggers CWA regulatory actions, such as permitting, that apply to projects that cities undertake including road-building, and construction of water, wastewater and stormwater infrastructure. Contact: Sarah Collins.

The League filed an amicus brief to the N.C. Supreme Court this week in a case that will determine the ability of both public and private sector utilities to preserve access to their easements. The central issue under appeal in Duke Energy Carolinas v. Gray concerns the length of time given to utilities in enforcing encroachments on their property. Examples of encroachments on utility easements include outbuildings and fences. For cities, the decision affects their access to their own water, wastewater, and electric line easements. The League's brief supported Duke's contention that the lower court misapplied the law, and that easements held for public purposes deserved protection from claims that interfered with provision of that public service.

An adverse ruling handed down by the N.C. Court of Appeals late last year judicially created a new law by imposing a six-year statute of limitations that begins running from the time of encroachment rather than the time the encroachment was discovered. If the N.C. Supreme Court agrees and requires a utility to discover and bring an enforcement action against encroaching property owners within six years of when the encroachment began, the costs of providing utility services statewide will increase. That increased cost comes because, to comply, utilities may have to expend additional resources to police millions of miles of utility lines across the state. Or, they may have to initiate condemnation actions to recover use of an easement whose rights they already hold. Utilities that cannot keep their easements clear also run the risk of violating the terms of their environmental permits, opening them up to state and federal enforcement actions. Contact: Gregg Schwitzgebel

A provision in the Senate's version of the budget intended to create additional government spending transparency, including at the local level, is being heavily promoted by the conservative John Locke Foundation. The provision, authored by Sen. Andrew Brock of Mocksville, envisions a state web portal that would include budget and spending information from state agencies and all state political subdivisions, including municipalities. The Locke Foundation's Carolina Journal recently featured an article on the provision, which included comments from League staff. The organization has been lobbying for its passage following its earlier efforts to collect data and report on local job recruiting incentives.

It is not entirely clear how and to what extent the provision would affect municipal governments. It calls on the State Chief Information Officer, in coordination with the State Controller and Office of State Budget and Management, to develop the state web portal. Those three entities would also work with local governments and school boards to "facilitate the post of their respective local entity budgetary and spending data on their respective Internet Web sites and to provide the data to the Local Government Commission." Under current law, municipalities are required to semi-annually report financial information to the Local Government Commission. The compiled information can be found here, at the LGC's website. League staff is working with legislators to ensure the provision does not create compliance issues for cities and towns. Contact: Chris Nida

The Senate has approved a bill that makes clarifications to laws that allow municipalities to effectively recover the costs of incomplete infrastructure. The full Senate's approval came after a second Senate committee made technical changes to HB 721 Subdivision Ordinance/Land Develop. Changes on Tuesday. Local governments use financial security measures, or "performance guarantees," to provide assurances that developers will complete necessary infrastructure improvements for new development. With the language proposed in this bill, developers may choose the type of performance guarantee from a list that includes surety bonds, letters of credit, or an equivalent measure, which is typically cash.

The House must now vote on whether or not to accept the Senate's changes. Throughout this session, the League worked with the development community and primary bill sponsors Reps. Rob Bryan and Skip Stam to improve the proposed language in the bill. Read about previous improvements to this bill negotiated by the League in this article in last week's LeagueLINC Bulletin and this April LeagueLINC Bulletin article. Contact: Erin Wynia

The Senate approved statewide regulations for ride-sharing companies such as Uber and Lyft yesterday. Among other things, SB 541 Regulate Transportation Network Companies would place insurance and driver background check requirements on ride-sharing companies, and prevent airports from precluding ride-sharing companies from operating there. While the bill prevents local governments from imposing additional requirements on the companies, the League has worked with city officials and legislative staff for months on this legislation to achieve a statewide regulation system that will benefit cities and their residents.
Some senators expressed concerns that the $5,000 permit fee would be a barrier to new and small ride-sharing companies wanting to do business in North Carolina and discussed taxi companies' opposition. But bill sponsor Sen. Floyd McKissick noted the large amount of stakeholder involvement in vetting this proposal and stressed the need for legislation to protect drivers since ride-sharing is currently unregulated. The bill now heads to the House for consideration. Contact: Sarah Collins
A bill that restricts state agencies and local governments regarding the treatment and movement of monuments has passed the House and been signed into law by Gov. Pat McCrory. SB 22 Historic Artifact Mgt. and Patriotism Act grants only limited exceptions to allow for the removal of "objects of remembrance" on public property. Attempts to amend the bill to remove local governments from the restrictions were defeated on the House floor. An amendment requiring the state to maintain all "objects of remembrance" on public property, regardless of ownership, did pass. Read previous League coverage about the bill here and media coverage here.

The League extends its condolescences to the family of Maggie Valley Mayor Ron DeSimone, who died in a construction accident last Friday. Mayor DeSimone was elected in 2011 and had planned to seek a second term. He was a licensed general contractor and the accident took place on a work site in the town. At a memorial service on Tuesday, Mayor DeSimone was remembered as someone dedicated to improving his town and making life better for the residents there. Read more about the Mayor DeSimone here.

Boone Mayor Andy Ball announced last week that he will resign at the end of the month to relocate to Asheville. Mayor Ball said that he is moving to Asheville to be with his fiancée and to "live in the same city as our family as we prepare to start our own." The League wishes Mayor Ball well in his new endeavors and thanks him for his service to the Town of Boone. Mayor Ball's resignation prompted the Watauga County Board of Elections to reopen candidate filing, and the Boone Town Council was expected to name an interim mayor at its next meeting. Read more here
If you have interest in serving on the League's Board of Directors, now is the time to let us know. Board members for terms expiring later this year will be chosen at this year's annual conference, CityVision 2015, beginning on Oct. 11 in Winston-Salem. Terms are expiring for seats in odd-numbered districts and for two at-large elected officials seats. Contact us with any questions about the board seats and about serving in these positions, which are so important to furthering the goals of North Carolina cities and towns. Contact: Paul Meyer
A federal judge has granted an injunction blocking new Greensboro City Council districts, recently set by the General Assembly, from taking effect during upcoming 2015 municipal elections. Judge Catherine Eagles said the legislation treats Greensboro voters disparately by not allowing them to determine their own district lines. Read more about the ruling here.
The House has approved its version of a bill that would allow state and local law enforcement agencies to use automatic license plate readers to assist in investigations. SB 182 Automatic License Plate Readers now goes back to the Senate, which will consider House changes. The bill would set parameters for the use of the technology and create rules regarding the retention of the data collected using it.
The House has given its approval to Senate changes made to  legislation intended to clarify authority regarding city and county sign ordinances. HB 544 County Sign Ordinances in Cities makes clear that cities may require that county sign ordinances conform to their ordinances when that county ordinance is applied within city corporate limits. The bill now goes to Gov. Pat McCrory to be signed into law.