Tax Reform Moves to the Legislative Forefront

With last week’s failure by President Trump and House Speaker Paul Ryan to garner enough votes to pass legislation to repeal and replace the Affordable Care Act, both the White House and the GOP’s congressional leadership moved swiftly to shift the focus to tax reform. House Ways and Means chairman Kevin Brady (R-TX) said in a statement shortly after the Republican leadership’s healthcare bill had to be pulled that his committee was “moving full speed ahead with President Trump on the first pro-growth tax reform in a generation.” President Trump said on Friday that “we will probably start going very, very strongly for the big tax cuts and tax reform. That will be next.”

While comprehensive tax reform was always expected to be politically very difficult, the failure to pass the House leadership’s healthcare bill will make tax reform even more of a challenge because of the effect on the federal budget baseline. If enacted, the House healthcare bill would have reduced government expenditures by a trillion dollars over the next decade, so larger tax cuts could be provided while still ensuring the legislation would be “revenue-neutral” (not increase the deficit), because the resulting tax legislation would need to raise less in federal revenue.

NAIOP has been advocating for the interests of the commercial real estate industry in meetings with elected leaders and their staff. House Republicans have put forth broad plans that would have a profound impact on commercial real estate. These plans have raised questions as to the continuation of real estate like-kind exchanges, whether carried interests will be treated as capital gains, and whether interest payments on business debt would remain deductible. With House Republican leadership and the Trump White House aiming to have a tax reform bill enacted in 2017, the tax reform debate is expected to dominate the legislative agenda over the next few months.

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Commercial real estate execs commend lawmakers’ vote to repeal HB2

The local leader of Cushman & Wakefield had one word when news broke that state lawmakers had voted to repeal House Bill 2: “exhilarated.”

“I think it’s remarkable that the economy grew the way it did over the last year, admittedly mostly by internal growth,” said Steve Gassaway, market leader at the Charlotte Cushman office. “I’m amazed that the number of people coming to Charlotte has kept going.”

House Bill 142 — a replacement for the controversial House Bill 2 that passed 53 weeks ago and was cited as a key reason for canceled corporate relocations, concerts, major athletic events and conventions in North Carolina — passed both the N.C. Senate and House of Representatives on Thursday following months of failed compromises.

HB142 repeals HB2 but bans city governments from passing local ordinances until 2020. That provision was a hotly-contested one on Thursday among some politicians and organizations who said the bill still denies protections for LGBT individuals.

The state Senate voted 32-16 and the House voted 70-48. The bill now goes to Gov. Roy Cooper, who is expected to sign it later today.

Click here to read the full CBJ article written by Ashley Fahey.

NAIOP NC Urges NC Legislators to Pass HB2 Compromise Bill

A prominent real estate and development industry group threw their weight behind a proposed bill to repeal House Bill 2 on Thursday, even as advocates on the left and right decried the measure.

The repeal bill, House Bill 142, passed Thursday in the legislature. N.C. General Assembly leaders Phil Berger and Tim Moore, along with Gov. Roy Cooper, pushed for the bill’s passage.

NAIOP North Carolina, which represents developers and brokers in Charlotte, Raleigh, Durham and the Triad, said the bill under discussion “allows our state to recover from the economic damage suffered over the past year.”

In a statement, the group warned that the surge of office and industrial space that will be completed soon in major cities won’t be filled if HB2 isn’t repealed.

“Since the passage of HB2 last March, North Carolina and its commercial real estate industry has suffered millions in lost revenue from taxes, leases and fees, as dozens of economic development prospects have passed over our state because of this law,” the group said. They’re having their annual meeting Thursday in Pinehurst, with many members keeping a close eye on Raleigh. “The office and industrial sectors have been most strongly hit, and with millions of square feet coming on line over the next few quarters, net absorption will be insufficient to keep up with deliveries in Charlotte, the Triangle and the Triad.”

But groups such as the Human Rights Campaign and the ACLU are against the bill because of prohibitions against new local nondiscrimination ordinances until 2020, while groups on the right such as the Civitas Institute are against the bill because of what they say are “extortionist tactics” from HB2 opponents.

View article here.

HB2 Repeal Measure Clears First Hurdles — What’s Next?

House Bill 142 — a measure that would replace North Carolina’s controversial HB2 — has cleared its first hurdles Thursday.

The Senate Rules Committee spent about 20 minutes discussing HB142 Thursday morning before passing it through to the Senate floor. During a session that began at 11 a.m., state senators approved the bill after a short debate. It has since advanced to the House, which, as of about 12:30 p.m., is still discussing the legislation.

The Senate voted 32-16 in favor of HB142. The measure includes a contentious provision that prevents any state or local agency from making changes to state regulation — or imposing restrictions on private employers — of multi-occupant bathrooms, showers or changing facilities, like the ordinance Charlotte passed in 2016 that led to the creation and passage of HB2. (Charlotte leaders rescinded that dormant ordinance in December in a failed attempt to repeal HB2 at the state level.) HB142’s restriction would remain in place until Dec. 1, 2020.

Senators debated on the compromise for about 40 minutes before approving the bill.

“This bill is at best a punt; at worst, it is a betrayal of principle,” said state Sen. Dan Bishop, a Mecklenburg Republican, was the lead author of HB2. “I predict the peace may be fleeting.”

Click here to read the full article and updates written by Jenna Martin.

City Council Considering Storm Water Fee Hikes in 2018 Budget

The Charlotte City Council is considering a 4% hike to local Storm Water rates in 2018, along with substantial cuts in fee credits provided to commercial property owners, to address a growing backlog of projects on pubic and private land.

City staff told Council members they have a current backlog of more than 1,500 storm water projects, with a wait time of 6 – 8 years. If no changes are made to the fee schedule, staff estimates their backlog will more than double, with customers waiting as long as 18 years for the City to complete their request. To address this, staff is asking Council to approve annual storm water fee hikes over the next decade. Even under that scenario, the project backlog in 10 years will remain right about where it is today.

Councilman Ed Driggs summarized the thoughts of many on Council when he said the City was “on a collision course with a big problem here.”

In the Council workshop discussion, Councilwoman LaWana Mayfield asked staff how the City could hold developers more accountable for their impact on downstream flooding.  But the City’s Post-Construction Stormwater Ordinance (PCCO) already requires significant onsite storm water investments by all new development, to prevent any net flood impact on downstream properties. Developers also have the option of paying a PCCO Mitigation Fee, which is used by the City to construct public storm water improvements and infrastructure.

Charlotte is one of the few cities its size that spends public funds to make stormwater repairs on private property. These improvements range from creek restoration to acquiring property in flood zones. Funds are provided through a monthly fee assessed on the water bill for each property owner, but commercial properties that constructed required on-site storm water ponds have received credits as high as 100% to offset those fees. The staff proposal would reduce the maximum credit available to 72%, resulting in potential fee increases for dozens of large commercial and industrial properties.

City Council will continue to evaluate the storm water fee proposal over the next few weeks, before voting on a budget later this Spring. REBIC will monitor the discussion and continue to advocate for the preservation of the 100% Storm Water Fee Credit.

You can watch the budget workshop and read the full staff presentation HERE.

Click here to view the original posting on REBIC’s blog.

House Committee Approves Building Code Reform Legislation

The House Regulatory Reform Committee this morning approved important amendments to a bill designed to make substantive improvements to the state statute regulating building code and permitting processes, before moving it to the floor for likely consideration later this week.

HB 252, ‘Building Code Regulatory Reform’, includes the following provisions:

  1. Clarifies that counties and municipalities may not continue to enforce any ordinance or policy requiring the inspections of homes more than those specifically set forth in the North Carolina Building Code. Jurisdictions were prohibited from adopting such ordinances or policies by a law enacted in 2013 at the behest of NCHBA.
  2. Authorizes an employee under direct supervision of a licensed architect or licensed engineer to perform field inspections of the completed installation of an engineered component of a project.
  3. Clarifies that no architect or engineer certification is required for components that are engineered by the manufacturer when those components comply with the North Carolina State Building Code.
  4. Requires all local inspection departments to create and implement an informal review process of inspectors. Disagreements on interpretations or inspection issues will be subject to this process. Furthermore, the bill directs inspection departments to report annually to the Joint Committee on Local Government on the implementation of this provision.
  5. Subjects any future or existing codes to the process established in HB 255 for review and approval by the Residential Code Committee or the Building Code Committee of the Building Code Council before consideration by the Council.
  6. Clarifies that inspection agencies shall not apply any local or state interpretation of the building code to projects that are begun under a valid building permit, unless the permittee elects to have the new interpretation apply.
  7. Finally, excludes lots with septic tanks or other on-site wastewater systems from dual meter requirements, if the cutoff valve and backflow prevention device are placed within 12 inches of the water meter.

One critical amendment approved today by the committee addressed REBIC’s concerns with the code interpretation process, and now allows builders and contractors to choose whether or not a new state building code interpretation would apply to their project. We will continue to monitor the progress of this bill and advocate for its passage in the House.

Click here to view the original posting on REBIC’s blog.

The Internet of Things is Changing the Supply Chain

Big data isn’t coming; it’s already here, allowing real-time tracking of packages, vehicles and devices. All that information is expected to drive a revolution.

The Internet of Things and the Modern Supply Chain,” a report by C3 Solutions, predicts: “Chances are the next tech boom will be companies trying to cash in on the IoT by developing apps in a variety of areas to enable the tracking, storage, analysis and application of the available information. The trick will be to figure out what works, what’s useful and what you actually need to drive efficiencies into your supply chain.”

The report warns the security will be a big concern. Companies and people will need to protect against hackers and develop ways to protect their privacy from tracking devices.

“Given the great unknown that the IoT presents, supply chain managers need to keep a close eye on what will no doubt be the emergence of many new technologies that will leverage the data that’s becoming available,” the report concludes. “Know the dangers but keep the potential benefits in mind as you watch this tech story unfold.”