Governor McCrory signs SB 25

Legislative Update
BREAKING:  Governor Pat McCrory signs SB 25 (Zoning/Design & Aesthetic Controls) into Law on 6/19/2015 at 10:30 a.m.

After a busy budget preparation week, the Senate passed its version of HB 97 (2015 Appropriations Act) early on Thursday setting forth its priorities for state spending for the next two years.  As expected, the final vote tally fell mostly along party lines. The two chambers will now attempt to hash out their differences and reach agreement on the roughly $21.5 billion dollar plan.  This process could take weeks or even months.  There is currently a difference of $750 million dollars between the respective spending plans, as well as various tax provisions that were not included in the House plan.  Arriving at a budget deal involves a lot of moving parts, including attracting enough votes to pass a compromise budget within each chamber and gaining the support of the Governor.  This will all play out over what is already proving to be a long, hot summer in Raleigh.

Early this week, your NCHBA legislative team turned its attention to HB 168 (Exempt Builder Inventory).  This legislation would  exempt from local property tax the increase in value of real property held for sale by a builder to the extent the increase is attributable to subdivision or other improvement. Under this bill, the definition of "builder" is a taxpayer engaged in the business of buying real property, making improvements to it, and then reselling it. Thus, both developers and home builders would qualify for this tax exclusion. Improved real property is assessed each January 1 and a new value is assigned to reflect the work in progress.

The bill was calendared for the House Finance Committee on Tuesday during NCHBA's 2nd Quarter meetings. Executive Vice President Mike Carpenter attended and testified in favor of the committee substitute which narrowed the exemption to residential property. The NC Association of County Commissioners also testified against the bill claiming a significant "revenue loss." However, NCHBA was able to counter with an NAHB analysis which predicted that 507 additional single family homes would be built if HB 168 was enacted producing almost $32 million in additional state and local revenue. The committee approved the bill with only three dissenting voices.

The bill was calendared for House floor action on Wednesday afternoon and our members attending NCHBA Legislative Day made it the top legislative priority of conversations with House members. The bill was further narrowed to limit the exemption to subdivision and improvements for single family and duplex development by a floor amendment agreed to by the sponsor and us.  Principal sponsor, Majority Leader Mike Hager (R-Rutherford), did a masterful job handling the bill both in committee and on the floor. Other principal sponsors were Rep. Chris Millis (R-Pender), Rep. Jeff Collins (R-Nash) and Rep. Mark Brody (R-Union). The floor debate saw many House members rise in praise of our industry and to point out how important it is for homebuilding to fully recover after the disaster that was the Great Recession. Spurred by these comments, HB 168 passed with an overwhelming, bi-partisan vote of 110-7 and has now moved over to the Senate.

There is no question that the final vote margin was increased as a result of many one-on-one conversations between legislators and our members attending NCHBA Legislative Day. Legislators respond positively when they hear that a bill is important to their constituents, and hearing it from the people most affected is incredibly persuasive.  Your legislative team is very appreciative of those of you who took the time to come to Raleigh to help us enact your legislative agenda!