The latest economic figures for North Carolina are in. Lt. Governor Dan Forest shares the great news with you since the media neglects to report the positive numbers.
The latest economic figures for North Carolina are in. Lt. Governor Dan Forest shares the great news with you since the media neglects to report the positive numbers.
On June 24, the North Carolina Senate proposed three new amendments to the North Carolina Constitution, all included in House Bill 3. One of these would create additional protections for property rights by increasing the burden on government entities seeking to take property using eminent domain.
The proposed Article I § 38 of the North Carolina Constitution would read as follows:
“Private property shall not be taken by eminent domain except for a public use. Just compensation shall be paid and shall be determined by a jury at the request of any party.”
The amendment would fall within Section I of the State Constitution, which contains North Carolina’s “Declaration of Rights.” Existing amendments include protections for rights such as equal protection, freedom of speech, religious liberty, and due process of law.
“Eminent domain” refers to the power of a government to seize private property for public use, so long as the government provides just compensation to the property’s owner. North Carolina case law currently allows a government actor to take property via eminent domain only if the use is both for a “public use” and will result in a “public benefit.” In Tucker v. City of Kannapolis, the North Carolina Court of Appeals summarized these two distinct requirements:
Our Supreme Court has held that courts must consider whether a proposed condemnation satisfies two separate tests: a public use test and a public benefit test.
“Under the “public use test,” the dispositive determination is “whether the general public has a right to a definite use of the property sought to be condemned.” The “public’s right to use, not the public’s actual use” is the key factor in making the required determination. Under the “public benefit test,” the dispositive determination is “whether some benefit accrues to the public as a result of the desired condemnation.” If the proposed condemnation would “contribute to the general welfare and prosperity of the public at large” and if that contribution cannot readily be furnished without the aid of governmental power, then the public benefit test is satisfied.” Tucker v. City of Kannapolis, 159 N.C. App. 174, 178, 582 S.E.2d 697, 699-700 (2003)(internal citations omitted).
This statement of North Carolina law generally parallels the common law legal tradition, under which private property typically can only be taken for a “public use.” Some public uses that might be legitimate include road construction, public buildings, and public parks. These are things that are traditionally constructed by government, and from which everyone derives certain benefits. More indirect public benefits — such as, say, economic development or potential future job creation — traditionally were not a sufficient “public use” to justify the use of eminent domain.
This changed in 2004, when the United States Supreme Court infamously held that “economic development” constituted a legitimate “public use” for which a local government could take private property. In the case of Kelo v. New London, the Court was presented with the question of whether the City of New London, Connecticut could take private property and give it to Pfizer Corporation, under the theory that the pharmaceutical company’s presence in the area would create more local jobs. In other words, could the city take private property for the “public use” of economic development? The Court held that such potential future job creation constituted a sufficient “public use” for the purposes of eminent domain, thus greatly expanding the types of situations where private property could be taken via eminent domain.
The decision was a disaster. The redeveloper of the property was unable to obtain financing, and Pfizer ended up walking away from the project at no cost to itself. That means that people lost their homes so that a private corporation could negotiate for a better deal elsewhere, then walk away. There was near-unanimous condemnation of the decision, and it inspired various efforts to rein in the eminent domain power of governments, from an executive order by President George W. Bush to new state-level protections for private property across the country.
And this is what brings us back to North Carolina, as the Senate’s proposed constitutional amendment to eminent domain has been described as a direct response to the Kelo decision:
Rep. Chuck McGrady, R-Henderson, said the amendment is a response to the notorious “Kelo” case of 2004, in which the U.S. Supreme Court ruled that the town of New London, Conn.’s use of eminent domain to take land to then be sold to a developer met the definition of “public purpose” under the Constitution but said states could set a higher standard.
In addition to limiting the scope of what constitutes a “public use,” the proposed amendment would also allow a party whose property is being taken via eminent domain to have the “just compensation” to be received determined by a jury.
As of this writing, all three proposed amendments, including that on eminent domain, have passed their second reading in the Senate. Since the Senate introduced the constitutional amendments via a committee substitute, they will have to receive final approval from the House. Following that approval, then the proposed amendments would be put to a vote of the People pursuant to Article VIII Section 4 of the North Carolina Constitution.
If the voters at the November general election approve the amendment, it will become effective on January 1, 2017.
The preceding post was written by Elliot Engstrom, a Civil Litigator and Government Relations Attorney who serves as Lead Counsel of the Civitas Center for Law and Freedom. It first appeared on June 28, 2016 ad reappears here with the gracious permission of the author.
Senate Leader Phil Berger (R-Rockingham) and House Speaker Tim Moore (R-Cleveland) held a joint press conference yesterday to announce details of the $22.34 billion budget agreement reached between Senate and House conferees this past weekend.
The compromise budget includes a responsible 2.8 percent spending increase and achieves both chambers’ shared goals with Governor Pat McCrory of prioritizing teacher pay raises, cutting taxes on the middle class, controlling the growth of government spending and bolstering the state’s savings.
It continues Republican state leaders’ commitment to dramatically raising teacher pay with a bold plan to boost average teacher salaries to $50,186 next school year and to nearly $55,000 within three years. The plan would set average teacher pay above $50,000 for the first time in state history and, when fully implemented, would mean average teacher salaries are up almost $10,000 – more than 20 percent – under Republican leadership since the 2013-14 school year.
The agreement also provides more than $550 million in salary and benefit changes for state workers, including a permanent pay increase and bonus for state employees and a cost of living bonus for state retirees. It invests hundreds of millions of additional dollars in public education and other core priorities and shores up the state’s rainy day fund by close to $475 million. And it includes provisions to help make college far more affordable and accessible to students across the state, strengthen and stabilize public universities with lower enrollment and stimulate regional economies.
Finally, the budget provides major tax relief to the middle class and small businesses by making the first $17,500 a family earns exempt from income tax over the next two years, with a family making the N.C. median household income of $44,000 annually seeing an additional tax cut of $110 next year alone. This will bring the total amount of tax relief provided by state Republican leaders since 2011 to approximately $3 billion per year.
“I am grateful to members of the Senate and House for reaching a compromise that continues the discipline and conservative principles of spending responsibly, taxing sparingly and saving wisely that have turned North Carolina’s fiscal outlook around from multi-billion dollar deficits to significant budget surpluses,” said Berger. “This budget keeps our promises to support our public schools and raise teacher pay above $50,000, let families and small businesses keep more of their hard-earned money, and control the spiraling costs of college.”
“This budget is the embodiment of what can be accomplished when common sense, conservative ideas are put to work – we are cutting taxes, reinvesting in the state’s infrastructure and saving money,” said Moore. “I am particularly happy that, in addition to teachers, we were able to deliver pay raises to our state employees and provide a one-time payment to our much deserving state retirees.”
Moore went on to say, “the Governor, President Pro Tempore Berger and I entered this short session with a shared desire to give meaningful raises to teachers and tax relief to working-class North Carolinians while still demonstrating fiscal discipline and conservative budgeting. Through close collaboration, House and Senate budget writers helped achieve these goals in a major way.”
Other highlights of the budget agreement include:
In Salaries and Benefits
- Lays the foundation to dramatically increase average teacher pay from $47,783 to $54,224 over the next three years, which will provide North Carolina public school teachers an average $4,700 permanent pay raise over the same period and propel the state to the top of regional rankings. This is in addition to the generous teacher pay raises legislators passed in 2014 and 2015.
- Includes a 1.5 percent permanent pay increase and 0.5 percent one-time bonus for state employees, over $80 million for merit-based bonuses, and a 1.6 percent cost of living bonus for retirees.
- Offers experienced-based step increases to teachers, assistant principals, principals, State Highway Patrol troopers, clerks and magistrates, appropriates $16 million to boost pay for correctional officers, and provides a 4.5 percent pay raise to assistant district attorneys, public defenders and other judicial branch workers.
- Includes $10 million for a pilot program to provide performance-based bonuses of up to $6,800 for third grade reading teachers. $5 million would be available for the top 25 percent of teachers in each school district based on EVAAS growth scores, and an additional $5 million would be available to the top 25 percent of teachers on a statewide basis.
- Establishes performance-based bonuses for Advanced Placement (AP) and Career and Technical Education (CTE) teachers when students are successful in completing AP exams and earning industry-recognized certifications and credentials.
- Increases education funding by $512 million over the enacted 2016-17 budget.
- Funds K-12 enrollment growth, community college enrollment and public university enrollment.
- Continues the commitment to lower class sizes in the early grades – a step research has repeatedly shown is key to academic success – by hiring close to 450 additional first grade teachers.
- Protects the Read to Achieve, School Connectivity, Teach for America, and Communities in Schools programs from being cut by the Department of Public Instruction.
- Establishes an opportunity scholarship grant fund reserve of $34.8 million to award more need-based scholarships to children from working families and provides forward funding to add 20,000 children to the program over the next ten years.
- Creates a teacher assistant tuition reimbursement pilot program in Anson, Franklin, Moore, Richmond, and Scotland Counties, which will provide tuition reimbursement of up to $4,500 annually for 25 local TAs to pursue a college degree leading to teacher licensure.
- Fully funds teacher assistant positions at the 2014-2015 level.
- Provides that school performance grading (A-F school grades) will continue to utilize a 15-point scale for the next three school years.
- Allocates $10 million to support teacher professional development and technology infrastructure improvements.
- Directs $3.5 million in additional funds to grow the Principal Preparation Program to meet the demand to train new and aspiring public school principals.
- Authorizes an increase in the base budget for the UNC system of up to $40 million to fund the Access to Affordable College Education Act.
- Guarantees no in-state tuition increases for a standard undergraduate college term (usually 4 years) at all North Carolina public universities, not only providing certainty to families who are budgeting for college costs and taxpayers who heavily subsidize tuition, but also additional incentive to students to complete their degrees on time. This tuition guarantee would also apply to active members of the military based in North Carolina.
- Freezes student fees – often used to fund non-academic expenses – at all North Carolina public universities at current levels and limits future increases to no more than three percent per academic year.
- Lowers tuition at select universities from the mountains to the coast to $1,000 per year for in-state students and $5,000 per year for out-of-state students, ensuring all North Carolinians have an affordable option. This would also help attract new students to universities with lower enrollment, make those schools more stable and competitive and stimulate struggling regional economies that sometimes transcend the state’s borders. The reduced tuition would apply to the following schools beginning in the Fall of 2018:
- Elizabeth City State University
- University of North Carolina at Pembroke
- Western Carolina University
- Directs $300,000 on a recurring basis to administer the new Cheatham-White Merit Scholarship Program for students at North Carolina Central and N.C. A&T Universities.
- Provides a community college tuition and registration fee waiver to firefighters, EMS, and rescue and lifesaving personnel at military installations for courses that support their organization’s needs.
- Expands an internship program for students at the state’s Historically Black Colleges and Universities.
- Requires eight public universities with educator preparation programs to open and operate a lab school for K-8th grade students in a school district where 25 percent or more schools are identified as “low performing.”
In Taxes and Economic Development
- Provides an immediate $145 million tax cut this year and an additional $205 million tax cut next year, mostly benefitting middle class families and small businesses.
- Increases the zero percent tax bracket over the next two years – ensuring all North Carolina taxpayers, regardless of income, pay no state income taxes on more of their earnings.
- Creates a new international job recruiting office in the Department of Commerce focused on opportunities in Asian markets and designates close to $4 million for job recruitment advertising in domestic and international markets.
- Provides $5.75 million for downtown revitalization grants in over 50 towns and cities across the state.
- Enhances rural economic development and job recruitment by placing an economic developer in each of the state’s eight regional Prosperity Zones.
In Health and Human Services
- Repurposes a more than $300 million surplus in the Medicaid budget, made possible by Republican-led reforms that have gotten the chronically troubled program back on track.
- Invests over $9 million to reform North Carolina’s child welfare program by requiring additional training, providing more positions and expanding in-home services to support children’s safety while keeping families together.
- Builds a stronger Controlled Substance Reporting System that will use advanced analytics to detect and fight prescription drug abuse.
- Continues the commitment to improving education and retention of rural physicians by directing nearly $20 million to help establish new medical school programs in Fayetteville and Asheville.
- Funds nearly $500,000 for Zika prevention and detection.
- Directs proceeds from the sale of the Dorothea Dix property go toward services for the mentally ill, including $2 million to establish child facility-based crisis centers and $18 million to expand inpatient behavioral health beds targeting rural areas.
- Funds over 300 additional slots for Alzheimer’s patients and their families through the Community Alternative Program for Disabled Adults.
- Provides nearly $4 million in state funding for temporary assistance to adult care homes and facilities that serve special assistance recipients, bringing total available funding with local dollars to $7.5 million.
- Increases funding for the Strategic Transportation Investment (STI) law by over $32 million, which will allow new highway projects to be added over a ten-year period.
- Allocates over $3 million to improve customer service and decrease wait times in high-volume DMV office locations.
- Increases state assistance for urban and rural transit systems by $4 million and state aid to general aviation airports by $15 million.
- Provides nearly $14 million in additional funding to improve freight rail tracks, crossing safety, and industrial, port, and military access.
- Repeals the $500,000 cap on state funding for light rail projects effective for the next round of project prioritization (P5.0).
In Justice and Public Safety
- Makes strategic investments in public safety by providing $1.3 million to get the Western Crime Lab up and running and $640,000 for equipment upgrades in the other two crime labs.
- Includes $2.1 million to help close out the longstanding backlog at the State Crime Lab once and for all.
- Provides $250,000 to digitize mental health records to help streamline background checks for gun purchases.
- Invests $500,000 for School Risk Management Plans to be developed in 835 public schools to help keep our children and teachers safe while they are at school.
In Agriculture and the Environment
- Allocates over half a million dollars for international marketing of North Carolina agricultural products.
- Increases funding for the Clean Water Management Trust Fund by $8.6 million.
- Directs federal funds to a broadband initiative and water and sewer projects in public schools.
- Improves government transparency by helping the office of the State Auditor conduct more specialized audits of state agencies and by implementing a new filing system for Statements of Economic Interest.
- Provides recurring funding for the Human Relations Commission.
- Establishes a cyber-security program for disabled veterans to develop their skills while protecting the state against cyber-attacks.
- Adds $10 million to the Disaster Relief Fund.
- Pays off an outstanding $37 million loan from the federal government that Gov. Jim Hunt borrowed in 1999 and deferred payment on for over 15 years, saving the state $45 million in interest over the next 30 years.
- Invests $12 million to implement state of the art software to ease tax filing for North Carolinians.
The full budget agreement has been posted to the North Carolina General Assembly. The legislation can be found here and the Joint Conference Committee’s report (aka the “money report”) can be found here.
Governor Pat McCrory joined law enforcement officers, first responders, legislators and health care officials earlier this week at the Guilford County Sheriff’s Office to sign legislation making naloxone, a life-saving opioid reversal drug that has already saved 3,300 North Carolinians, more accessible.
“Addressing mental health, substance use, underage drinking and drug overdose have been primary focuses of our team since day one,” said Governor McCrory, who prioritized these issues in his first State of the State address. “Signing this legislation builds on our success and will save lives throughout North Carolina. I want to thank our legislators for unanimously passing this bipartisan initiative.”
The legislation represents an early accomplishment of the Governor’s Task Force on Mental Health and Substance Use, which delivered a report to Governor McCrory in May recommending expanding capacity for opioid treatment services, medications and overdose prevention, such as naloxone.
Beginning at 2 p.m. Monday, pharmacies in North Carolina began making naloxone available without a prescription. North Carolina is the third state in the country to issue a standing prescription order statewide for naloxone.
“We listened and are aware of how many families will find hope and help from the wide availability of naloxone,” said DHHS Secretary Rick Brajer, who co-chaired the Governor’s Task Force. “This law is the catalyst we need to help protect people across our state.”
In North Carolina, more than 1,000 people die each year from prescription opioid and heroin overdoses. One out of four autopsies performed by state medical examiners are on those whose deaths are from drug overdose.
North Carolina’s Good Samaritan Law, signed by Governor McCrory in 2013, cleared the way for law enforcement to carry and use naloxone. It is now carried by officers at more than 70 law enforcement agencies across the state, including the Guilford County Sheriff’s Department which has administered more than 600 doses since 2014. In 2015, North Carolina reached a major milestone when the number of opioid overdose reversals from the use of naloxone exceeded the number of overdose deaths.
Authorizing the standing order for naloxone is the latest in a series of commitments by Governor McCrory to support those living with substance use disorders. In addition to the Mental Health and Substance Use Task Force co-chaired by Health and Human Services Secretary Rick Brajer and N.C. Supreme Court Chief Justice Mark Martin, the governor also established the Crisis Solutions Initiative and the Governor’s Substance Abuse and Underage Drinking Prevention and Treatment Task Force which resulted in the statewide Talk It Out initiative.
If you or someone you know is in immediate danger, dial 911. For more information about available services and treatment options, go to crisissolutionsnc.org.
There is no shortage of activity in the North Carolina General Assembly. While most capitol watchers are focused on the short session’s main responsibility, developing and passing a state budget, it’s good to remember other significant education legislation has already been passed or continues to work its way through the General Assembly.
Here is a quick review of some of the major education bills.
HB632 – Introduced by Rep. Jason Saine (R-Lincoln), the bill tightens protections on student privacy. The bill further defines what data students can expect to remain private. It also spells out regulations for data collection and how student data can be distributed and used.
Status: House: Passed, Senate: Passed; Signed by Governor McCrory 6/8/2016 (S.L. 2016-11)
SB867 – Sponsored by Sen. Chad Barefoot (R-Wake), the bill compels the State Board of Education to require all candidates for teacher licensure to have a criminal background check. The bill also requires public school personnel and board members of charter schools that are seeking initial approval to also have criminal background checks. The legislation is in response to a much-publicized USA Today story that showed North Carolina school districts hiring teachers who had committed crimes in other states.
Status: Senate: Passed; House: In Committee
HB1080 – Sponsored by Rep. Rob Bryan (R-Mecklenburg), the legislation creates a special Achievement School District (ASD) to provide flexible and innovative ways to help turn around some of North Carolina’s worst performing schools. ASDs could involve up to five of the lowest performing schools in the state, and would have to be managed by experienced charter school operators and approved by the State Board of Education. ASDs enjoy “charter-like” flexibility and significant top ASD officials have significant control over hiring. LEAs with low-performing schools may also choose to transfer a failing school to the ASD. Schools can also benefit from creation of what are called “Innovation Zones.” Such zones are flexible environments where the best practices and innovative techniques are readily applied. Lastly, schools not selected to be part of the Achievement School District would have a number of turnaround models to choose from. One of those would be to employ a turnaround principal to improve academic performance. “Turnaround” principals are given five years, additional resources and flexibility to improve academic performance.
Status: House: Passed; Senate: In Committee
HB657 – Sen. Jerry Tillman (R-Archdale) is the primary sponsor of legislation that offers students the opportunity to choose their math track. The legislation, which is regarded as a compromise between critics and supporters of Common Core, provides students the chance to enroll in the current integrated Math, 1, Math 2 and Math 3, a track which teaches concepts of Algebra 1, Geometry and Algebra II across the three courses. Or they could learn math via the standard Algebra I, Geometry, Algebra II sequence, which was the way most math instruction was delivered prior to the imposition of the Common Core math standards. Conservatives should applaud any legislation that provides students an option to Common Core. However, conservatives should also be skeptical of the State Board of Education’s (SBE) ability to review the current math standards and develop new standards that are age-appropriate, rigorous and reflect the highest possible standards – a task the Academic Standards Review Commission failed to carry out. The SBE is charged with having new math standards by the fall of 2017.
Status: House: Passed, Senate: Passed; Differences Being Reconciled.
SB536 – Sponsored by Sen. Chad Barefoot (R-Wake), this bill calls for creation of a website to provide prospective students relevant information on North Carolina public and private colleges regarding job market information, labor markets, degree programs, graduation information, median salaries, financial aid and the like. The bill also calls for centralizing questions of residency in one office rather than by individual campuses.
Status: Passed Senate, Passed House, Differences Being Reconciled
HB539 – Sponsored by Rep. John Szoka (R-Cumberland), this legislation would allow charters to receive a greater share of tax money, grant money and federal appropriations currently reserved for traditional public schools. The bill states that gifts or grants expressly designated for a specific school would not be shared with charter schools. However, the bill requests that monies received from indirect costs, reimbursements, sales tax revenue, unrestricted gifts and federal grants and appropriations to LEAs be shared with charter schools. The legislation also lays out penalties for LEAs that fail to comply with the transfer of funds within the required time limits.
Status: Passed Senate; Passed House, Differences Being Reconciled.
SB873 – Sponsored by Sen. Tom Apodaca (R-Buncombe). This legislation freezes tuition for resident undergraduate students for eight semesters for students seeking a baccalaureate degree at UNC institutions. Legislation also rolls back the fee charges 5 percent from their 2015 levels and reduces tuition at all UNC institutions. Tuition would be rolled back to $500/semester at Western Carolina University and state funds would be provided to make up for the loss of tuition revenue.
Status: Senate: In Committee.
SB554 – Sponsored by Sen. Jerry Tillman, the bill allows school districts to redirect state money originally designated for personnel costs to be used to help pay the costs of long-term leases. The bill is beneficial for cash-strapped rural districts that are downsizing or consolidating, but still need newer facilities. The State Treasurer’s Office has come out strongly against the bill, saying it will increase local debt and it puts the interests of developers ahead of taxpayers.
Status: Senate: In Committee
The preceding post was written by Dr. Robert Luebke, Senior Policy Analyst at the Civitas Institute. It was first posted on Civitas’s website on June 21, 2016 and reappears here with the gracious permission of the author. For a comprehensive look at Education policy in North Carolina dating back to 1985, check out the Civitas Institute’s public policy series here.
With a unanimous vote this afternoon, the House gave its final approval to the Regulatory Reform Act of 2016. The measure now goes to the Senate for its consideration.
The wide-ranging legislation, which continues the legislature’s ongoing commitment to reforming the North Carolina’s burdensome and outdated system of regulations, amends a number of state laws related to business, state and local government, agricultural, energy, environmental, and natural resources policy — including streamlining the reporting process to the legislature’s Environmental Review Commission.
“Our work is a continuation of the conservative majority’s effort to provide meaningful legislation targeting unnecessary and overly burdensome regulations,” commented Representative Chris Millis, who serves as one of the chairmen of the Regulatory Reform Committee and was one of the bill’s co-architects. “The House’s Regulatory Reform legislation addresses a broad spectrum of regulatory red tape facing property owners and entrepreneurs striving to prosper in our state — all while maintaining a commitment to protect health, safety, and our commonly shared environment.”
Regulations are rules made by state agencies to control the conduct of the public. Violating these regulations, even unintentionally, can carry substantial financial (and even criminal) penalties, and as such, have the form and effect of law. Over the last century, the General Assembly has delegated most of its authority to make and review these regulations to bureaucrats who are not directly accountable to voters, comprising an unprecedented (and largely hidden) growth in state government’s power.
We spoke at length with Representative Millis about the various provisions of the law.
What the Legislation Does
Part I: Business Regulation
Employment Status of Franchisees
Part one of the legislation deals with the relationship between a “franchisee” and a “franchisor.” Franchising allows an independent business person (the “franchisee”) to utilize the business model, operating support and infrastructure, marketing, trade name, and the products and/or services of another firm (the “franchisor”) in return for licensing fees. (For more information, including a brief glossary of franchising terms, please visit the International Franchise Association’s website.)
The legislation clarifies that the franchisor is not the employer of the franchisee (nor is the franchisee an employee of the franchisor) for a number of common employment claims and legal actions in state court.
In August 2015, the National Labor Relations Board issued a decision that changed the practical definition of “joint employer.” Prior to this ruling, a joint employer was defined as two or more companies exercising direct operation and supervisory control over an employee. Under the NLRB decision, the definition is expanded by applying an “economic realities” test which would include “indirect control” and possibly “potential, unexercised control” over employees.
Under established practice and applicable law, individual franchisees control wages, operating hours, hiring practices, working conditions and file their own taxes, entirely independent of the franchisor. Holding franchisors responsible for actions taken independently of their guidance or control represents a chilling effect on many businesses.
The concern is that under the federal interpretation, franchisors can be held liable for employment actions of their franchisees. The language in the legislation clears up how businesses and employees will be treated under state law.
“This provision will help offer certainty regarding how state law handles joint employment,” commented Representative Millis. “In light of the federal ruling, our action to clarify state law is a necessary reform by the legislature which sends a strong signal to both job creators and the citizens who work within a franchise system.”
Texas, Tennessee, Louisiana, Michigan, Indiana, Utah and Wisconsin have all passed similar legislation; Georgia and Oklahoma are in the process of also addressing the issue.
Part II: State and Local Government Regulation
Water and Sewer Billing by Lessors
Part two of the legislation clarifies that a landlord charging tenants for the cost of water or sewer service will not be considered a “utility.” Previously, both lessors of single-family homes and non-residential property were interpreted by the North Carolina Utilities Commission (NCUC) to be utilities if the lessor used pass-through water utility billing for tenants.
Specifically, the provision provides that, with the NCUC’s approval, property owners may use pass-through billing for water or sewer service on leased property while not meeting the definition of a public utility. This provision applies to both residential single-family properties and non-residential properties. Multi-family property owners already have flexibility to use pass-through billing.
“By reforming regulations to truly distinguish between those directly providing a public utility from those who desire to administer the payment of public utility billing, a great deal of common sense will be able to be put into practice through utility construction and administration, removing unnecessary red tape for utility providers and those receiving utility services,” explained Millis.
Under current law, the definition of a public utility includes a person “diverting, developing, pumping, impounding, distributing or furnishing water to or for the public for compensation.” The NCUC believes that by engaging in the practice of re-billing or reselling the cost of water and sewer, the owners are “furnishing” water to their tenants and are considered public utilities.
Pass-through billing has become commonplace practice for owner/lessors of many property types and many feel the current interpretation of Public Staff does not match the intent of the statute.
The Public Staff of the NCUC has sought a declaratory ruling from the Utilities Commission on this matter. If the Commission were to agree with the position of the Public Staff, North Carolina would stand in the unique position of holding that a direct pass-through of a water utility’s usage-based charges causes the landlord to be a public utility.
Language in Senate Bill 303, Section 2.2, (a) and (g), broadly clarifies that lessors of property may use pass-through billing on leased premises, regardless of whether the leased premises are contiguous. Senate Bill 303, Section 2.2, (g)(1a), also references and makes a distinction between residential property and non-residential property for these purposes.
Additional language in Senate Bill 303, Section 2.2, (g) (4a), directs NCUC to develop an application form for owners of single-family homes to pass-through water and sewer billing to tenants without being considered a public utility and provides that the Commission must approve the application.
Rezoning/Simultaneous Comprehensive Plan Amendment
Part two of the legislation also streamlines the process of approval of a zoning amendment, allowing a rezoning application to simultaneously serve as the application and plan amendment, saving months in time and expenses.
“Basically, this provision helps save time for citizens going through a local government rezoning process,” said Representative Millis. “It’s an example of much needed reforms to regulatory processes for the benefit of our citizens.”
Some local governments are requiring applicants to successfully complete a plan amendment process for the use they are seeking before a rezoning application may be processed if the use being sought by the rezoning request is not consistent with the comprehensive plan.
The North Carolina Court of Appeals held in Graham vs. City of Raleigh that “the amendment serves not merely the functions of amending the zoning ordinance, but also enunciates a change in the comprehensive plan itself, thus bringing about the necessary conformity or harmony between the amendment and the comprehensive plan.”
The process of amending the comprehensive plan can take between 6 and 12 months to complete. If the plan amendment process is successful it will then be followed by another 6 to 12 months or more to complete the rezoning process. Codification of this case will streamline the process resulting in a considerable savings of time and expense to the applicant.
Parent Parcel/Subdivision Clarification
Part two also updates the definition of “subdivision” to exclude land divided among heirs in a will or in cases of intestate succession (when someone dies without a will) and adds the applicable language to ensure that no subdivision fees, improvements or rules are applied to such cases. It also stipulates that when up to two parcels of land are subdivided from a parcel of at least 5 acres, that division of land shall not be interpreted as a “subdivision”.
In situations where land is being divided among heirs in a will or in cases of intestate succession, the courts have held that such a division does not constitute a subdivision. Williamson v. Avant (1974). The proposed language codifies this position. As a result, such a division of property shall not be subjected to subdivision rules for streets and utilities and other infrastructure improvements or fee-in-lieu payments and other related fees.
“What we’ve done here is to remove the red tape of going through a subdivision process for folks who want to leave land to their relatives,” said Representative Millis.
Relief is also being provided from subdivision regulations for the division of up to two lots from a tract of land larger than 5 acres. This provision will allow for the recordation of up to two new lots from a parent parcel without the need to comply with subdivision rules for developments. It provides that a tract or parcel may be divided once in a ten year period and ensures that resultant lots meet size, dimension and various local land use requirements. This will provide a substantial benefit to owners who are trying to assist children or others with a lot for a new home at minimal expense.
Statute of Limitations/Land Use Violations
Part two also establishes a six-year statute of repose on land-use violations. This gives local government six years to enforce violations that are visible from a right-of-way or from a public place. In addition, it establishes a statute of limitations on land-use violations, providing that local governments have three years to enforce a violation once aware of the issue. These two provisions are intended to prevent local governments from circling back many years after the fact to enforce easily identifiable land use violations against property owners.
“We have defined a timeline for cities to enforce these sorts of violations, which was entirely lacking in statute previously” said representative Millis. “This provision prevents bad actors in local government from abusing their power over land use violations.”
Program Evaluation to Study Nonprofit Contracting
This provision addresses broad concerns from North Carolina’s nonprofit community that are experiencing administrative and funding obstacles to providing essential services in North Carolina. To that end, the legislation allows for the Program Evaluation Division (PED) to take up a study to examine administrative burdens related to state grant funding for nonprofits and to examine options to streamline and improve the process.
“We’re finally beginning a much-needed discussion regarding how non-profits in our state are affected by regulatory obstacles imposed by government,” explained Representative Millis. “It’s our hope that the results from this study will lead to beneficial legislation for our state’s charitable organizations and the furtherance of their missions.”
The scope of this study provision intends to address burdensome red tape, late or non-payment from state agencies and mid-stream contract modifications. The intent of this provision is to improve and responsibly streamline state administration of in-demand nonprofit services.
Rename and Amend the Board of Refrigeration Examiners
This provision of part two broadens the pool of potential qualified Board members beyond applicants from the UNC system, and establishes licensure sub-classifications for individuals who only seek to perform service work rather than installation work and individuals who work with ammonia as a refrigerant gas, and to raise licensure fees. It also renames the State Board of Refrigeration Examiners the “State Board of Commercial Refrigeration Examiners.”
The State Board of Refrigeration Examiners is seeking to update its practice Act, housed in G.S. 87-52. These updates include:
- Broadening the pool of potential qualified Board members beyond applicants from the UNC system;
- Establishing licensure sub-classifications for individuals who only seek to perform service work rather than installation work and for individuals who work with ammonia as a refrigerant gas; and
- To raise licensure fees.
The sub-classifications of licensure intends to address the following issue: Current statute provides for licensing persons who perform service and maintenance work. However, the Board has realized a number of applicants were passing the repair portion of the examination but not the installation portion of the examination, which served as a barrier to entry for many.
This provision would provide a means for these individuals to obtain a service license without a license to perform equipment installation. Additionally, the board wishes to separately test competency for those working with ammonia for public health and safety concerns.
Finally, this provision raises fees for annually renewed licenses from $40 to $80, and raises fees for new applicants from $40 to $100. Fees have not been increased since 1980. This increase is intended to reflect the current costs of appropriately administering oversight.
Amend Definition of Antique Automobiles
This provision clarifies that antique automobiles held in a pass-through entity owned by an individual qualify as a “special class of property.” This special class of property designation, which antique automobiles directly owned by an individual already receive, caps property taxes at $500 per vehicle.
Current statutes governing taxation of antique automobiles require that qualifying vehicles must be registered as such with Department of Motor Vehicles:
- Attain a historic vehicle special license plate,
- Primarily be used club or parade activities, and
- Be owned by an individual.
If these conditions are met, the vehicle will be designated as a “special class of property.” The maximum tax imposed on an automobile meeting the conditions specified above is no more than $500.
However, many owners of these antique vehicles own them by way of pass-through entities. Under current law, the owners of these antique vehicles do not qualify for a “special class of property” designation because the vehicle is not technically owned by an individual, but rather a pass-through entity owned by the individual.
This provision allows a remedy by clarifying that pass-through-held vehicles are eligible for the “special class of property” designation, so long as the pass-through entity is owned by an individual.
Copies of Certain Public Records
This provision provides that public agencies that make data readily available online for free are not required to compile or manipulate data to satisfy a request for disclosure.
The Wake County Register of Deeds (ROD) office was the first in North Carolina to make all real estate images and indexes available to the public by posting them online. As a result of this move towards transparency, the Wake County ROD system is relatively limited with regards to data export functions.
In the recent past, Wake County has tried to accommodate requests for public information from real estate marketing entities such as Zillow, pursuant to General Statutes Section 132-6.2., which requires public agencies to provide records in the medium requested if capable of providing the records in that medium.
Wake County consumed two weeks of man-hours at a cost of approximately $3,000 in fulfilling the request. Another request was recently received for three months-worth of activity. Stakeholders also understand that other counties are receiving the same request for information and that other public agencies are likely to be affected by similar issues.
Despite the fact that the requested information is available free of charge already, the Wake County ROD has been told that if they do not provide the information requested in the specified “method or medium”, it will be interpreted as an unlawful denial of access under state law. This is especially concerning, as Zillow cites the fact that the county has demonstrated its capability of providing the information.
Many feel that this scenario does not reflect the original intent of the statute and that fulfilling these requests represents an undue burden for public agencies. This provision broadly clarifies that public agencies which make data readily available online for free, are not required to compile or manipulate data to satisfy a request for disclosure.
Stormwater Requirements and State Road Construction
This provision clarifies that when a contractor performs work under Department of Transportation (DOT) purview, they will be held to the same stormwater requirements applicable to DOT.
Some contractors on DOT road projects have received notification that they must comply with separate stormwater management rules from those being applied to DOT. This interpretation does not match the intent of the stormwater management rules for DOT projects.
“Regulatory uncertainty and the moving target that it presents is an incredible cost,” said Representative Millis. “This provision provides much needed certainty for individuals attempting to traverse our state regulatory agencies.”
Part III: Agriculture, Energy, Environment and Natural Resources Regulation
Inspection of Rendering Plants
This provision eliminates the rendering plant inspection committee and directs the Commissioner of Agriculture, or Commissioner’s designee, to inspect rendering operations.
This provision would eliminate the rendering plant inspection committee, which is composed of:
- An employee of Department of Agriculture and Consumer Services (DACS),
- An employee of the Department of Health and Human Services, and
- A person having practical knowledge of rendering operations.
The concern with the committee was that having an industry representative, such as an individual affiliated with another plant, performing inspections on the rendering facilities would put the facilities at risk of revealing trade secrets or confidential information to the inspector.
Solid Waste Amendments
This provision clarifies that the term “life of site” for sanitary landfills is defined as 60 years and requires all parties involved to agree to converting existing franchise agreement to “life of site” agreement. Last year, the General Assembly passed legislation that requires landfill permits and associated franchise agreements to be executed for the duration of the life of the site; governed by G.S. 130A-294.
The language also provides that an existing franchise agreement may be modified to reflect a 60-year duration, if both parties consent to the modification.
Riparian Buffers and Intermittent Streams
Directs the Department of Environmental Quality (DEQ) to study whether the size and allowable uses for riparian buffers for intermittent stream should be modified and whether the allowable activities within the buffers should be modified.
Transfer of Certain Conservation Easements
This provision clarifies that when an agency, local government, private company or nonprofit organization receive funds for acquiring a conservation easement or for acquiring real property pursuant to a restoration project, that the recipient of the funds may directly transfer the land to another agency or approved third party.
This change is intended to eliminate an unnecessary step, whereby all such receipts and paperwork currently must pass through DEQ before the land is granted to the ultimate holder. The measure is intended to streamline the process of executing conservation easements and restoration projects across North Carolina.
Part IV: Eliminate and Consolidate Reports
The final provision eliminates a number of redundant reports submitted to the legislature’s Environmental Review Commission (ERC) and lengthens reporting deadlines on unnecessarily frequent reports.
The consolidation and elimination of certain reports was a recommendation from the ERC. These reports were considered to be either redundant, needlessly frequent, or both. This section intends to streamline the submission and review of reports for both the submitting agencies and the ERC.