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League Bulletin

October 2, 2015

The General Assembly adjourned in the wee hours of Wednesday morning after running through a final gauntlet of legislation that included a previously unseen and harmful proposal undermining municipal authority that was ultimately defeated. The conclusion of this year's legislative session came after several high-profile successes for towns and cities, including the restoration of historic tax credits, gasoline tax changes that protect local Powell Bill funds, and a statewide bond referendum expected to lead to more infrastructure investment at the state and local level.

Numerous other measures approved by state lawmakers also proved beneficial to municipalities, whether an extension for new 911 center requirements, help with utility line relocations, or an increase in a municipal vehicle tax cap. A number of harmful proposals, including early sales tax legislation and a Senate budget provision threatening Municipal Service Districts, were dropped or significantly improved. All of this was only made possible by the work and dedication of League members from around the state.

The final days of the legislative session saw the League work to stop provisions in SB 279 Amend Qualifications/Practice of Counseling that would have pre-empted local authority enacting and enforcing various types of housing and anti-discrimination ordinances. A wide-ranging regulatory reform bill also was passed, along with a bill affecting E-Verify requirements for local governments and so-called sanctuary city policies. Beaten back in the final days and hours was a proposal that would have limited a city's ability to issue bonds for projects like auditoriums, civic centers, and parks and recreation facilities.

As legislators adjourned, they agreed to come back for the 2016 session earlier than in previous year's even-numbered year session. They are set to reconvene on April 25, instead of the typical early May date.

You can read about all of the final week's developments in the Bulletin items below. In coming weeks, also look for the League's End-of-Session Bulletin, which will provide a detailed accounting of all of the legislation affecting municipalities and the outcomes of those bills. Thanks so much to the legislators in both chambers who worked with the League on a variety of issues and were willing to listen to municipalities' concern. The League and its members truly appreciate your understanding regarding the importance of policies affecting how municipalities provide and deliver services to their residents, and how these services affect the larger economy of the state. And thank you again to all of the League members whose dedication and perseverance were so crucial to the many positive outcomes we saw this session. Read media coverage about the adjournment here and here. Contact: Rose Williams

As the legislature worked toward adjournment, previously unseen provisions undermining local authority were unveiled in an unrelated Senate bill late Monday before ultimately being blocked. The provisions in SB 279 Amend Qualifications/Practice of Counseling (that link represents the final version of the bill; the municipal-related provisions can been found in this version) would have restricted municipalities' ability to enact and enforce various types of housing and anti-discrimination ordinances.

The insertions of the provisions led to a flurry of activity from League staff, as well as representatives of cities from around the state, to try to stop the measures, and also a great deal of media attention. The bill was removed from the House floor after questions were raised by House members from both political parties, and sent to the House Rules Committee. League Director of Governmental Affairs Rose Vaughn Williams addressed the committee regarding the concerns of cities. The committee later voted 14-7 to not endorse the bill, which blocked it from being sent back to the House floor.

In response, the Senate undertook procedural steps that had the effect of passing an earlier House version of the bill without the additions affecting municipalities. The League thanks Reps. John Blust, Chuck McGrady and Darren Jackson for their call to have these provisions fully vetted, as well as all House members for considering cities' concerns about the damaging effects of these provisions. Also, thank you to all League members who immediately jumped into action to let legislators know of our opposition. Contact: Rose Williams   

The House this week approved a $2 billion bond package, agreeing to Senate changes made a week earlier. Once signed by Gov. Pat McCrory, the passage of HB 943 Connect NC Bond Act of 2015 means that state voters next spring will decide on a wide-ranging borrowing package that includes $300 million for local water and sewer funding.

Although the bill does not include earlier House proposals for transportation funding, the legislation does achieve a key League Municipal Advocacy Goal of passage of a state bond supporting local infrastructure. The League thanks House and Senate members, as well as the McCrory administration, for their support of these crucial investments in infrastructure. Read earlier League coverage about the bond package here. Contact: Chris Nida

The final day of the legislative session saw approval of HB 318 Protect North Carolina Workers Act, legislation affecting immigration issues in the state. The legislation, following League negotiations, largely kept intact the concessions won last session regarding E-verify requirements for the purchase of goods. However, the final version puts restrictions on so-called sanctuary city policies by prohibiting local governments from adopting ordinances or policies that give limited safe harbor to undocumented immigrants. More details about these provisions can be found in previous League coverage.

To address criticism from law enforcement officers about the bill, a provision was added Tuesday to this year’s technical corrections bill amending HB 318 to allow officers to accept certain identification to determine a person's identity or residency. Both bills now await Gov. Pat McCrory’s signature. Read more about the legislation here. Contact: Sarah Collins

League members and legislative opponents organized quick opposition to harmful proposed restrictions on local debt Monday, defeating new language introduced on one of the last days of session. The restrictions, added to an unrelated bill dealing with outdoor food service, came as a "strip and replace" measure before the House Rules Committee Monday night. Rumored to be aimed at halting a $32 million downtown events facility project in Rocky Mount that faces organized local opposition, the provisions would have applied to all cities with populations less than 60,000. They would have prevented Local Government Commission (LGC) approval of debt for municipalities that size when certain conditions applied. Approval by the LGC is necessary for all local government debt issuance in North Carolina.

Specifically, the proposal would have taken away small- and mid-size cities' ability to borrow sums over $25 million for projects such as parks facilities, sports complexes, civic centers, auditoriums, coliseums, arenas, cultural facilities, and public gathering spaces when those cities faced certain financial conditions. The language would have prevented public-private partnership financing for these types of projects as well. In addition, it would have prevented a city or county of any size from using its own reserves for a project that the LGC rejected, unless the LGC subsequently approved the project or more than two years had passed since the LGC disapproval.

The League thanks those municipal officials who reached out to legislators on short notice to explain the numerous projects across the state that would be stopped if the proposal had advanced. In response to those concerns, Reps. Elmer Floyd and Skip Stam successfully offered amendments in the House Rules Committee to remove both of these harmful debt provisions from the bill. The League thanks these two legislators as well as Rep. Leo Daughtry for their efforts and comments in support of local government decision-making. The League also thanks Rocky Mount legislative delegation members for their work to defeat this proposal, including Sen. Angela Bryant and Representatives Shelly Willingham and Bobbie Richardson. Contact: Rose Williams

Projects meeting a list of conditions received authorization to claim the state historic tax credit during the 2015 "gap year," thanks to a provision approved by both the House and Senate Wednesday in SB 119 GSC Technical Corrections 2015 (Section 54.5). This year is a gap year in the state's tax credit authority because the previous authority expired January 1, 2015, while the recently-enacted budget re-authorizes a new tax credit effective January 1, 2016. The provision included in the technical corrections bill would allow taxpayers to claim the credit for projects taking place in the gap year, provided they met a set of conditions. These include being owned by a city and being located in a Tier 1 or Tier 2 county.

The League appreciates the legislature approving this additional authority for projects that spur economic development, often helping to revitalize downtowns. In addition, the League extends a special thanks to Rep. Stephen Ross, the prime sponsor of the House bill, other legislative supporters, Governor Pat McCrory, Department of Cultural Resources Secretary Susan Kluttz, the range of private- and public-sector groups who supported the effort, and all the League members who worked to reinstate this important economic development tool. Contact: Scott Mooneyham

After releasing compromise language last week, both the House and Senate took action in the final days of session to approve HB 765 Regulatory Reform Act of 2015, the session's primary regulatory reform bill. The final package incorporated changes that the League had sought to a number of provisions that would have proven harmful to municipal infrastructure, public health and environmental programs. Those changes included converting to studies earlier provisions that would have foisted costs for electronics recycling onto municipal taxpayers and would have restricted municipalities in their choices for water, sewer and stormwater piping materials (read previous coverage about these provisions here).

Additionally, the bill remedied complications in a measure included in HB 44 Local Government Regulatory Reform 2015 that required local governments to provide notice of construction projects. Instead, HB 765 would limit the notice requirement only to new projects, not maintenance and repairs of existing facilities such as water lines and roads. Contact: Sarah Collins

With final House and Senate votes on Tuesday, cities gained the ability to bring more construction projects in-house under a provision sought by the League in HB 924 Highway Safety/Other Changes. Once signed into law by Gov. Pat McCrory, utility ratepayers and taxpayers will realize additional cost savings for small-scale construction projects like water/sewer or road resurfacing projects. The new language raises the dollar thresholds that limit when a municipality can use its own labor for a construction project. Read more details about this provision in last week's Bulletin item, "Provision Allows Cities to Save on Construction Projects." Contact: Erin Wynia

The state Department of Transportation this week announced the second of bi-annual Powell Bill disbursements, which are required to be made to eligible cities and towns on Jan. 1 and on or before Oct. 1. These disbursements are made from the State Highway Fund. Find information about the street funding and amounts here.

Provisions aimed at limiting local governments' ability to regulate oil and gas development activities were added to the final versions of two separate bills at the end of the this year's legislative  session, allowing the measures to slip by without much attention. The language appears to be a response to efforts by a handful of county governments to slow or delay hydraulic fracturing in their counties. 

The Energy Modernization Act, passed in 2014, banned local ordinances that prohibited or had the effect of prohibiting hydraulic fracturing. Recently, a few North Carolina counties adopted ordinances imposing moratoriums on approvals for oil and gas development, arguing that they were not prohibiting the activity but instead were giving the county time to develop a permit process for such operations. However, a provision added during negotiations early Wednesday morning for this year’s technical corrections bill appears to put an end to these efforts by changing the statutory language to instead invalidate local ordinances that regulate or have the effect of regulating oil and gas development.

Additionally, a provision related to special use permits added to the conference report for HB 765 Regulatory Reform Act of 2015  also was aimed at local governments trying to limit hydraulic fracturing. The changes do not appear to affect current law that presumes valid generally applicable zoning and land-use ordinances. Read more here and here. Contact: Sarah Collins

A provision that would have reinstated state funding for light rail projects across the state failed to advance before the legislative session adjourned Wednesday. Ultimately, inaction by the Senate left in place a $500,000 cap on the state's contribution to such projects that became law two weeks ago when Gov. Pat McCory signed the budget. Most immediately, the cap affects a planned light rail line between Durham and Orange counties; local officials had counted on the state paying for one-quarter of the project's cost, similar to the state's contribution to Charlotte's light rail line. The law also would affect any other future light rail projects.

The House voted to lift the cap as part of an omnibus finance bill. The League thanks Rep. Skip Stam for sponsoring the amendment to SB 605 Various Changes to the Revenue Laws (Section 6.5) to repeal the cap. The League also is appreciative of supportive floor comments by Rep. Bill Brawley stating that politics should stay out of transportation funding decisions. The Durham-Orange light rail project scored high on the state's objective-based transportation funding ranking system. After the House approved SB 605, the Senate did not take up the bill with the House changes.

One of the dozens of "technical corrections" approved by the General Assembly in its last action this session included a measure that appeared to bolster the state's legal case in the ongoing Greensboro redistricting litigation. Though Guilford County Rep. John Faircloth offered the measure, the local delegation did not support it unanimously. In explaining his vote against the measure to The News & Record, Greensboro Rep. Ralph Johnson stated, "It's just trying to resurrect something to help out in court. I believe we ought to put all of this on the table in the open and let the people decide."

The new language, found in Section 85.5 of this year's technical corrections bill, reinstates the city's ability to draw its own maps after the 2020 census. Until then, Greensboro remains the only N.C. municipality without the authority to draw its own electoral districts, an issue in the federal lawsuit filed by the city after the General Assembly took away that authority and redrew the city's districts earlier this session.

Rep. Paul "Skip" Stam announced this week that he will not seek re-election next year and will retire from the House after serving continuously since 2003. He also served a single term in the late 1980s. A former town attorney for the Town of Apex, Representative Stam has spoken at several League functions over the years, including last year's Advocacy Goals Conference.

He is currently House Speaker Pro Tem and has previously served as House Majority Leader and House Minority Leader, meaning that he has served in every top position in the chamber other than Speaker. The League thanks Representative Stam for his service and continues to look forward to working with him next year.