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League Bulletin

March 31, 2017

Town Hall Day 2017 Brings Biggest Crowd in Memory; Rep. Lewis, Sen. Brown and Others Address City Officials From Across the State
After the Fire: An Update
ACTION ALERT: Oppose Code Enforcement Limitations
Omnibus Bill Substantially Weakens Land Use Protections
League Releases FY17-18 Revenue Projections Memo
'HB2' Repealed in Compromise Measure That Imposes Prohibition on Local Gov't
Senate Filing Addresses Doughnut Hole Annexations
House Passes Veterans Property Tax Exclusion Bill; Hold-Harmless Included
Multiple Bills Affect LGERS Pension Benefits
Special Retirement Benefit for Firefighters Advances
Senate Buffer Proposal Surfaces
Bill Tracker Charts More From Latest Flurry of Proposals
New Episode: Murals Unlock a City

Town Hall Day 2017 Brings Biggest Crowd in Memory; Rep. Lewis, Sen. Brown and Others Address City Officials From Across the State

N.C. House Rules Chairman Rep. David Lewis address city and town officials from across the state at Town Hall Day 2017. Photo credit: Ben Brown

In a word: outstanding. Not only was Town Hall Day 2017 the most well-attended in memory -- with an extraordinary 34 percent increase over last year and more than 600 officials registered -- it saw representation from several municipalities that hadn't attended a Town Hall Day in many years. That means North Carolina's cities and towns struck a new chord in their communication with legislators at the General Assembly, with focused messaging and in-person meetings on statewide important topics like broadband expansion and local revenue options. Click here for a video recap.

But Town Hall Day's audience was much farther flung than Jones Street. The same morning, North Carolinians statewide read a thought-piece, penned by Zebulon Mayor and League President Bob Matheny and published in the News & Observer in print and online, on municipalities' indispensable role in the prosperity of North Carolina and the importance of preserving the local resources that empower it. "Municipal governments all around the state are taking the initiative to understand what their local economies need to succeed, and then taking action to make investments that lead to job and residential growth," Mayor Matheny wrote.

He then highlighted for readers the League's Here We Grow campaign and website, www.herewegrownc.org, where municipalities from the mountains to the coast are posting locally driven economic development success stories. "Municipal governments also need the authority to pursue these projects, and any erosion of that authority affects their ability to pursue the unique visions of their residents and leverage the unique characteristics of their communities," Mayor Matheny wrote in the N&O piece. Here We Grow stories were a major component of Town Hall Day, giving policymakers real-life narratives of how local government is using resources and partnerships constructively for the betterment of all. The mission of Here We Grow is to spread that message, and Town Hall Day's activities reflected a huge victory to that end.

Senate Majority Leader Harry Brown advises municipal officials on the importance of relationships and conversation with legislators. Photo credit: Ben Brown

The day's programming also included special guest speakers, including House Rules Chairman David Lewis and Senate Majority Leader Harry Brown. State Treasurer Dale Folwell also gave remarks and joined a panel with Golden LEAF Foundation Senior Vice President Mark Sorrells, Division of Water Infrastructure Director Kim Colson, and Department of Commerce Chief Economic Development Liaison Susan Fleetwood. The panel focused on funding and the economy and placed emphasis on intergovernmental teamwork. The vital role of municipalities in the state's economy also received focus. "We would not have a strong North Carolina without strong cities, and I've always been an advocate for the cities," said Folwell.

Later, a panel composed of leaders of the governor's cabinet departments took the stage. Secretaries Jim Trogdon of the Department of Transportation, Mike Regan of the Department of Environmental Quality, and Larry Hall of the Department of Military and Veterans Affairs discussed and answered audience questions about policies from the executive branch.

Finally, it's important to note that Town Hall Day 2017 followed some serious challenges for facilitators -- for one, the massive structure fire that just two weeks prior displaced the League from its offices and supplies and badly damaged Town Hall Day's nearby venue, forcing fast-paced adjustments to programming.

The Reynolds Building after the blaze. Staff photo.

League Executive Director Paul Meyer, during the morning portion of Town Hall Day, narrated a slideshow of the extensive damage and expressed thanks that no one was badly hurt and that the League has been able to continue services to cities and towns largely without interruption. "There were literally still fires burning in the parking lot that (next) morning when we arrived," Meyer said. While the fire was detrimental to the League's home, Meyer noted the opportunity to make the best of it with refreshed focus and energy. He also noted the warmth of member cities and towns, which in the aftermath of the fire offered every variety of support. "Creating positive outcomes for you all is why we're here, and we'll continue to do that," Meyer said.

After the Fire: An Update

Two weeks after a devastating structure fire impacted multiple downtown Raleigh buildings including League headquarters, League staffers are continuing to offer cities and towns a largely uninterrupted flow of services via temporary office space provided by the City of Raleigh and remote work stations. The League will continue to function strongly as such while longer-term accommodations are being explored. Staff email is fully operational, as are our main phone lines -- 919-715-4000 and 1-800-228-0986. However, individual phone lines remain offline, and we appreciate your patience as we work to restore them. In the meantime, please contact individual staffers as needed via email or dial our main phone lines. We will keep you updated on our recovery, and we thank you for your tremendous outreach, thoughts and prayers. It's meant a lot.

ACTION ALERT: Oppose Code Enforcement Limitations

Contact your legislators this weekend to express opposition to a 2016 code enforcement measure that made a surprise reappearance in the House this week. The League expects the omnibus bill that contains this controversial measure will receive a final vote in both the House and Senate next week. The measure was not permitted to be discussed during two House committee debates this week. Therefore, your outreach to legislators this weekend is that much more important. Tell legislators that:

This measure cuts off all remedies a local government may have to ensure neighboring property owners aren’t affected by illegal or nonconforming land uses.

Because the proposal ties a local government's hands and reduces its flexibility, neighbors’ only remedy will be expensive lawsuits against their violating neighbors.

As written, this proposal allows a property owner who knowingly breaks the law to avoid any punishment after a statute of limitations has passed.

Because land use violations are ongoing and not just a one-time incident, public policy up until now has favored allowing enforcement actions at any time the violation is occurring.

You oppose this controversial measure and appreciate their vote to remove it from the bill.

The provision, championed last year by former Rep. Skip Stam, flips local practice on its head by limiting how long a local government may enforce its codes. Specifically, Section 2.15 of SB 131 Regulatory Reform Act of 2016-2017 institutes a six-year statute of limitations for enforcement of any local or state land-use regulations, beginning when a violation is "apparent" from a public right-of-way or in plain view from a place to which the public is invited. Within that six years, the measure shortens the time frame for code enforcement to three years once the local government actually knows of the violation. The proposal contains one exclusion to this limitation, in the cases of enforcement of dangers to public health or safety. Contact: Erin Wynia

Omnibus Bill Substantially Weakens Land Use Protections

Members in both chambers filed a bill this week that contains over a dozen land use proposals which substantially undercut local governments' ability to protect neighboring property owners and taxpayers. HB 507/SB 575 Land-Use Regulatory Changes brings back measures that failed to pass into law last session, thanks to intense advocacy from League members. It also adds several brand-new provisions related to development permitting. The League OPPOSES this omnibus bill, and believes it will move quickly in the coming weeks. Please contact your local legislators now and give them specific examples of how this bill would ultimately chill development in your community. The bill:

Incentivizes land-use litigation in a number of ways, making this a dream bill for plaintiffs' lawyers who specialize in this type of litigation.
Burdens taxpayers with the costs incurred by more litigation, whether it's municipal taxpayers paying for additional court costs and legal fees or state taxpayers paying for an additional case load for an already overburdened court system.
Weakens protections for neighboring property owners by creating an uneven playing field in the courts.
Undermines performance guarantees, meaning that local property taxpayers will pay the cost of failing infrastructure and homebuyers suffer the harms created by failing infrastructure.

For a more detailed description of HB 507/SB 575, read an explanation of the substantially similar 2016 bill. Contact: Erin Wynia

League Releases FY17-18 Revenue Projections Memo

The League has released its annual revenue projections memo. The document, intended to provide members with guidance in their budget preparations for the 2017-18 fiscal year, discusses how several key sources of revenue -- including sales taxes -- may fare in the upcoming year. The full memo can be found here. Additional resources -- including the sales tax calculator and Basis of Distribution memo -- can be found on the League's website here. Questions can be directed to League Director of Research & Policy Analysis Chris Nida.

'HB2' Repealed in Compromise Measure That Imposes Prohibition on Local Gov't

General Assembly lawmakers and ultimately Gov. Roy Cooper on Thursday approved a repeal of the controversial 2016 law colloquially known as House Bill 2, or HB2, undoing the its most publicly maligned component while also maintaining a restriction on local government. The repeal, set out in HB 142 An Act to Reset S.L. 2016-3 and touted as a compromise between parties at odds over HB2, undoes the requirement that persons in government buildings and schools use only the restrooms that correspond with the sex reflected on their birth certificates. Governor Cooper, an opponent of HB2, called the change a step in the right direction after noting economic development troubles for which HB2 is blamed along with widely publicized issues over equality. “This law I’m signing today is not just about North Carolina’s reputation – or jobs and sports,” he said. “It’s about working to end discrimination." Senate leader Phil Berger, a supporter of HB2, had previously labeled the compromise a “path forward,” noting that it keeps in the legislature’s hands the ability to regulate multiple-occupancy restroom, shower and changing facility access. Local governments and school boards are preempted.

The new law also prohibits local governments, until Dec. 1, 2020, from passing ordinances regulating private employment practices or public accommodations. Governor Cooper in a statement said he wished that prohibition could end sooner, but that the new law does restore certain powers to local government that HB2 denied. “With HB2 in place, local governments could not pass protections for their LGBT employees. Now they can," Governor Cooper said. "With HB2 in place, local governments could not pass laws to protect LGBT people in their contracting. Now they can. Under HB2, a supposed bathroom bill, cities were prohibited from adding minimum wage requirements for companies they contract with. But now that restriction is removed.” The Associated Press quoted Senator Berger as saying the 2020 date is meant to provide adequate time for federal litigation related to HB2’s provisions to play out.

The new law does have opponents, from both sides of the HB2 debate. LGBT-equality leaders have blasted the change as short on protections; HB2-backers say the prior law should have remained, no exceptions. The compromise came as the NCAA had threatened a long period of inactivity in North Carolina if HB2 remained in effect. Officials involved with the compromise are hopeful it will restore business recruitment discussions more broadly as well.

Senate Filing Addresses Doughnut Hole Annexations

Two senators introduced a League-supported measure on Thursday that allows counties and municipalities to execute a joint agreement for annexation of doughnut holes, renamed "enclaves" in this bill. The League thanks Sens. Andy Wells and Tommy Tucker for working to address a frustrating consequence of the annexation reforms earlier this decade. Please call your senator now and ask them to sign onto SB 557 Annexation of Enclaves as a co-sponsor. Their deadline for co-sponsoring this bill is Monday night. Explain to them that you support SB 557 because it:

Offers a narrow, limited path for municipalities to annex small areas that are now completely surrounded by a municipality's jurisdiction.
Requires an executed agreement with the county commission before the annexation may proceed.
Allows both counties and cities to better-address problems of public safety, transportation, and code enforcement in these areas.
Requires full municipal services to be provided to annexed enclave residents as of the date of the annexation.

Contact: Erin Wynia

House Passes Veterans Property Tax Exclusion Bill; Hold-Harmless Included

House lawmakers this week approved and sent the Senate a modified version of a bill that would, among other things, grant limited property tax relief to fully disabled veterans. When we last reported on HB 2 Provide Certain Property Tax Relief, the proposal would have increased the property tax exemption for fully disabled veterans from the first $45,000 of property value to 100 percent of the property value. The version approved by the full House this week focuses on no more than the first $100,000 of value and maintains a proposed hold-harmless provision to reimburse local governments for the loss of tax revenue due to the increased exclusion. The latest version of the bill would also grant a full exclusion to the surviving spouse (if that spouse has not remarried) of an emergency personnel officer killed in the line of duty. The bill awaits action in the Senate Rules Committee.

Multiple Bills Affect LGERS Pension Benefits

This week saw bills filed in both chambers that would affect pension benefits of the Local Government Employees Retirement System (LGERS).

SB 467 North Carolina Retirement Reform would switch the current retirement system model for all of the statewide pension systems, including LGERS, from a defined benefit system to a defined contribution system for new hires after July 1, 2018. It would not affect existing employees' pension structure. Read more coverage here.

HB 497 - Retirement Systems 2% COLAs/Funds would provide retirees in both LGERS and Teacher and State Employees Retirement System (TSERS) a 2 percent cost-of-living adjustment (COLA). A legislatively mandated COLA of 2 percent would mean that local governments’ contribution rate for general employees would rise for FY2017-18. This increase would be added to the employer contribution rate of 7.5 percent of salary that LGERS Board approved in January. The Board's January actions were in line with the League-supported Employer Contribution Rate Stabilization Policy that the board approved last year -- in which LGERS employer contribution rates increase 0.25 percent annually through FY2020-21.

When it comes to COLAs, the LGERS Board has a long-standing policy of providing COLAs to retirees when the previous years’ investment returns are sufficient to provide them. For LGERS retirees, if a COLA cannot be supported by the system and its investment gains, legislation can be passed to provide a COLA. However, funding has to be provided for that COLA or the system would be put in jeopardy; that additional funding is paid for by the personnel budgets of the local government employers in the system. Contact: Sarah Collins

Special Retirement Benefit for Firefighters Advances

A House proposal to provide firefighters and rescue squad workers with an extra post retirement benefit called a “special separation allowance” received a favorable report on Wednesday by the House Pensions Committee, but only after receiving a commitment from bill sponsor Rep. Nelson Dollar that he would work with Rep. Steve Ross to find a funding mechanism for the benefit.

The special separation allowance benefit in HB 340 Special Separation Allowance Firefighters/RSW would be in addition to the firefighter and rescue squad workers’ pension benefit, serving as a gap filler from the time of retirement until the age of social security eligibility. The actuarial analysis provided to pension committee members states that the present total value of the additional benefit for local employees is $298 million -- the cost of which is paid solely by the last employer.

In remarks to the committee about the proposal, the League recognized the tremendous service that our firefighters and rescue squad workers provide to our communities, while explaining that without a funding mechanism this benefit is an unfunded legislative mandate on the local government employer – one that will be passed to the local taxpayer.

Many committee members also commented on the fact that HB 340 would put a substantial cost on local governments and that the legislature needed to find a way to fund the benefit. The League sincerely thanks Reps. Jeff Collins, Mickey Michaux, and Steven Ross for raising these concerns and Rep. Nelson Dollar for agreeing to work on a funding solution. The bill will next be heard by House State and Local Government II Committee.

Additionally, SB 396 - Special Separation Allowance Firefighters, the Senate companion to HB 340, was filed this week. Contact: Sarah Collins

Senate Buffer Proposal Surfaces

SB 434 Environmental Amends 2 was filed in the Senate this week and would, among other changes, rewrite the state’s riparian buffer laws to restrict local governments’ ability to set buffer widths that exceed state minimums. SB 434 amends 2015's buffer law changes and could potentially cause stormwater permit-holders to violate the terms of regulatory permits or certificates. Additionally, the bill adds flood control to the list of reasons a local government can't have a larger buffer, harming a community's ability to protect property from flooding. Contact: Sarah Collins

Bill Tracker Charts More From Latest Flurry of Proposals

Now is a great time to get to know our online bill tracker -- an easy and clear way to track legislative proposals that matter to cities and towns. With virtually every bit of info you need to know about a particular bill -- number, sponsor, description, committee assignment, history and level of importance -- you can quickly familiarize yourself with legislation like SB 539 Environmental Regulatory Reform Act of 2017, an omnibus bill that will likely grow in size as it receives consideration. This bill would, among other things, change current law to restrict the use of eminent domain powers to those for public use, though it carves out specific authority for local government condemnors to acquire property through condemnation for the connection of utility customers. Filed in the House this week, HB 522 Change the LOST Adjustment Factor (companion to SB 126) would eliminate the current adjustment factors applied to the half-cent local sales tax imposed under Article 40 and would replace those factors with new adjustment factors that are tied to the economic development tier ranking given to the county and municipalities within it that levy this tax.

For another, HB 503 Local Budgets/Public Enterprise Funds would restrict payments from a public enterprise fund to a local government’s general fund to only expenditures for related debt service, and eliminate the authority for a local government to make payments for internal cost allocation between funds. SB 419 Planning/Development Changes would reorganize and move all of the current planning-related statutes from Chapter 160A into a new Chapter 160-D, at the initiative of the N.C. Bar Association. There's plenty more to track. Visit the bill tracker here or via the Legislative Advocacy menu at marianneangelirodriguez.com.

New Episode: Murals Unlock a City

Click here for a brand new episode of Municipal Equation, the League's biweekly podcast on the challenges, changes and great ideas spinning out of municipalities today. This time out, we take a look at public art -- murals to be specific. Sure, perspectives vary on public art, but here we visit a North Carolina town with a ton of buy-in for art as a transformative tool -- for revitalization, community pride, local history, economic development -- all starting with publicly facilitated yet privately financed murals. And then, for our host, comes a funny coincidence. Hear what it's all about on this episode of Municipal Equation. Click here for all past episodes.