League Bulletin

June 19, 2020

The Weekly Recap
ACTION ALERT: Urge Legislators to Support Direct Assistance to Cities and Towns
Twin Proposals Shore Up NCDOT Funding, Alter Governance
New Compromise Language for System Development Fee
CityVision 2020 Makes History
Numerous COVID-19 Response Bills Affect Cities
Water and Wastewater Utility Support Inches Closer to Passage
Workforce Housing Bill Sent to Governor, Others Advance
Treasurer Calls for Waiver on EO Regarding Citizen-Owned Utilities

WHAT HAPPENED: The work pace at the General Assembly picked up significantly, with chamber leaders expressing hope that they could wrap up the lawmaking session by next week’s end. “We’ll see if that happens,” Senate leader Phil Berger told the Insider State Government News Service, adding there’s no guarantee. House Speaker Tim Moore issued similar thoughts. “…if it has to be the following week, that’s fine, but the goal is to get out next week,” the same publication quoted of him. Otherwise, the clues were in the kind of bills that materialized this week, the kind that typify late-session activity, including a regulatory reform bill we’ll brief you on in this Bulletin. The Senate, amped to move bills, held an uncommon Friday session.

WHAT IT MEANS: For cities, the main push this week was on replacement revenue. The decision about how to allocate the $150 million from the CARES Act that is being held in the local government reserve is being negotiated now. All things considered, we urge that you take action now and let your legislators know how important it is that funds be directly allocated to cities and towns to help them recover from the pandemic’s detrimental effects. See below in this Bulletin for details.

ON TAP: We’re monitoring the progress on bills summarized below. Of note to cities and towns, they regard N.C. Department of Transportation funding, system development fees, and several angles on COVID-19.

THE SKINNY: This past week also marked a big first-ever for the League – a virtual version of our annual conference, CityVision 2020, that saw historic numbers of participation. Focused on municipal governance in pandemic times, the energy concentrated there is a great sign of the involvement and care of municipal officials across North Carolina. Let’s keep that energy going. Read the action alert below.

ACTION ALERT: Urge Legislators to Support Direct Assistance to Cities and Towns

State legislators are continuing to discuss how to appropriate additional federal CARES Act relief funds which they placed in reserve for local governments. Please contact your legislators this weekend to urge them to treat cities and towns equitably by providing $150 million in the CARES Act local government reserve fund directly to municipalities! Tell them that, to date, the state has provided no direct allocation to cities and towns to address their COVID-19 related needs, and that at least two dozen counties have indicated, in state reporting, that they will not be sharing federal CARES Act dollars with municipalities.

Also let them know that:

-Cities are builders of infrastructure that private industry depends on. When cities are forced to cut spending, economic recovery of the state will be delayed. Future growth will be delayed.

-Municipalities are the primary providers of water and sewer service to North Carolinians, and those utility funds are suffering due to bill non-payments even though they have fixed costs that must be paid.

-Cities and towns are front-line providers of first responders, who have been crucial in responding to the COVID-19 crisis. U.S. Treasury guidance now allows flexibility for recouping these costs.

For North Carolina to emerge strong from the economic effects of COVID-19, the financial health of cities and towns is crucial. Contact your legislator this weekend to let them know that providing equitable assistance to municipalities is a critical part of the state’s economic recovery!

Twin Proposals Shore Up NCDOT Funding, Alter Governance

The N.C. Department of Transportation would see improved finances as well as an altered governance and oversight structure under twin legislative proposals advanced this week. The measures come largely as a response to mounting fiscal troubles at the department, which caused severe budget cuts, work stoppages across the state, and furloughs.

First, new language for HB 77 DOT 2020-2021 FY Budget/Governance received speedy, unanimous consideration by the Senate this week. The lengthy bill included modified budget plans for the state’s transportation operations in the upcoming fiscal year. While the bill ensured the gas tax rate would not decrease at its next readjustment point—thereby shoring up the state’s largest transportation revenue source—the bill made cuts to numerous spending categories that affected transportation activities in cities. Public transportation took on large cuts in this proposal, including the zeroing-out of a critical public transit assistance fund called the State Maintenance Assistance Program for FY 20-21. The bill also balanced Powell Bill distributions for cities in the next fiscal year by reducing the allocations for Charlotte and Raleigh. Then, from a governance perspective, the bill implemented numerous fiscal oversight and accountability processes. It also modified appointments to the N.C. Board of Transportation.

Also this week, the House advanced a bond proposal sponsored by House Speaker Tim Moore that would include funding for both transportation and education needs across the state. House members approved HB 1225 Education & Transportation Bond Act of 2020 yesterday on a 113-4 vote, and the package will likely receive a final House vote next week. In the Senate, however, the measure likely faces a chilly reception amidst the economic downturn, with Senate President Pro Tem Phil Berger telling the Insider State Government News Service yesterday, “If your boss has told you that he’s cutting your pay next week, do you go out and borrow money to buy a new car? I just don’t know that that’s the answer.”

New Compromise Language for System Development Fee

The point in time at which some water systems would collect system development fees would change under new compromise language introduced this week in HB 873 System Development Fee/ADU Sewer Permit. The change, modifications to which were negotiated by the League after the N.C. Home Builders Association proposed the change, would apply in a tightly-defined set of circumstances. Specifically, the water systems affected by this change would be those that currently collect the fee at the time of plat recordation. If the bill passes into law as expected, that timing would be pushed to a point later in the development process: either when an applicant applies for a building permit or when the water service was committed by the water system -- whichever point was later. The bill also contained language requested by the League to clarify another part of the system development fee law and ensure that some water systems could utilize fee revenue to repay capital debt. Finally, the bill included an unrelated provision crafted with input from city officials which would streamline sewer connections for a form of affordable housing called “accessory dwelling units.”

CityVision 2020 Makes History

With nearly 750 municipal officials registered and a highlight number of cities and towns represented, CityVision 2020, which began on Tuesday and wrapped up Thursday, was a history-making event for the League. It wasn’t just about the numbers – it was the first time the League held its annual conference in virtual form, online only, in adherence to social distancing and mass gathering regulations as COVID-19 continues its impact. The face-to-face camaraderie was missed, but the virtual format didn’t hamper engagement over the three-day program (which was “part two” of the conference, following opening activities and the swearing-in of new League Board of Directors members during “part one” in May). COVID-19 became the focus of the conference this year, with live sessions fearing state government officials tackling relevant angles to cities and towns. Day one focused on economic development issues, economic forecasts and direct tools communities could use to rebound. Day two went straight into the pandemic’s impact on operations and ways that municipalities could leverage technology for future resilience. The final day concentrated on the power of leadership during crises and skillset-building for future events that could impact cities and towns. The League is ever heartened by the engagement and focus of its membership and thanks all who attended and made CityVision 2020 such a unique success.

Numerous COVID-19 Response Bills Affect Cities

Along with the quickened end-of-session pace of this legislative week, lawmakers took up numerous COVID-19 response bills, many of which affected cities.

Emergency declarations. No local declaration of emergency would take effect until it had been published on the local government’s website and submitted to the N.C. Department of Public Safety’s WebEOC critical incident management system. This new requirement would come under a provision included in HB 374 Regulatory Reform Act of 2020 (Section 20). It came at the request of the N.C. Retail Merchants Association, which had long pushed for a centralized database of local declarations of states of emergency. Though the House advanced this bill through several committees this week, it still faces additional House committee and full chamber consideration before heading to the Senate.

Budget bills. Both chambers continued to consider bills this week that would spend down the remaining $2 billion in previously unappropriated federal funding from the CARES Act. (Cities have requested direct allocation of a separate pot of CARES Act funding, as detailed elsewhere in this Bulletin.) Notably for cities, the House held a discussion-only hearing of HB 1200 Foreclosure Prev.Grants/Rental & Utility Asst Tuesday. This bill, supported by NCLM and numerous other stakeholder groups, would appropriate $200 million for assistance to qualifying renters, homeowners, and utility customers so they can pay their bills. Action on another CARES Act appropriations bill detoured yesterday when the full House voted to send the bill back to committee, with instructions to consider adding two items that would amount to unfunded mandates on local government employers: a firefighters special separation allowance and automatic worker’s compensation coverage for employees that contracted COVID-19. The League is closely following this development.

Legal immunity. All N.C. private businesses and units of government would receive immunity from lawsuits alleging an act or omission that led to contraction of COVID-19 under HB 118 COVID-19 Liab. Safe Harbor. The immunity would not apply in instances of gross negligence, willful or wanton conduct, or intentional wrongdoing. The bill, backed by numerous interest groups, passed the Senate this week and awaits House consideration.

Reopening orders. Both legislative chambers continued their line of bills this week to override state and local declarations of emergency related to the terms of how businesses must operate during the pandemic. Building on prior bills that would allow all restaurants, bars, and gyms to reopen in accordance with certain operational regulations, legislators this week took up similar bills to allow the reopening of skating rinks and bowling alleys (SB 599 Open Skating Rinks/Bowling Alleys); amusement parks, water parks, and event centers (SB 258 Open Amusement Parks/Arcades/Venues); and privately-organized Independence Day celebrations and fireworks displays (HB 686 Freedom to Celebrate the Fourth of July). Gov. Roy Cooper signaled his intention to veto bills of this type, telling the Raleigh News & Observer yesterday, “I have concerns about these legislative mandates. It’s pretty easy to vote for a bill that lifts restrictions when you don’t have to deal with the consequences.”

Water and Wastewater Utility Support Inches Closer to Passage

This week, the Senate approved the Viable Utility Reserve -- a new grant program that would support financially distressed public water and wastewater systems by facilitating viable operations and encouraging regionalization. Senators passed HB 1087 Water/Wastewater Public Enterprise Reform this week, providing $9 million in non-recurring state funds to create.

The bill language was result of a yearlong legislative study and stakeholder process that focused on the more than $17 billion in water and sewer infrastructure needs statewide and also includes a study of the feasibility of authorizing historical charters for units of local government. League Board President Jennifer Robinson had previously sent letters to both House and Senate sponsors thanking them for their support of the Viable Utility Reserve.

The Senate added provisions to the bill, including reallocating some existing funds to specific local water and wastewater utility projects, so the bill heads back to the House for their approval. The League thanks Rep. Chuck McGrady and Sen. Paul Newton for their leadership during the legislative study committee and stakeholder process.

Workforce Housing Bill Sent to Governor, Others Advance

In other activity this week, the following bills of interest to cities and towns also received action:

HB1208 Funding for Workforce Housing Loan Program. The General Assembly approved and sent to the governor’s desk this bill, from Rep. Donny Lambeth, to fund a workforce housing program that wasn’t previously slated for recurring state investments. Affordable housing is a focus of the League’s current list of advocacy goals, set by member cities and towns.

HB425 Implement Conner’s Law. The Senate advanced this bill to allocate nonrecurring funds to pay benefits provided under Conner’s Law from 2019, which generally increased penalties for using weapons to assault law enforcement officers.

SB 380 Clarify Felony Possess Sweepstakes Machine. The House advanced this bill, which, according to a summary from the General Assembly, broadens the scope of the existing offense by amending the definition of “electronic machine or device” to cover machines or devices that are autonomous and expanding the definition of “entertaining display.”

Treasurer Calls for Waiver on EO Regarding Citizen-Owned Utilities

The following is an excerpt from a release from the office of State Treasurer Dale Folwell:

State Treasurer Dale R. Folwell, CPA, called on Gov. Roy Cooper and Attorney General Josh Stein to grant waivers from Executive Order 142 for cities that operate citizen-owned utilities like ElectriCities of North Carolina. Without the waivers some of the citizen-owned utilities could face potential bankruptcy.

On May 30, Gov. Cooper issued Executive Order 142, which allows customer to defer payments to utilities, including electric, natural gas, sanitation and water and sewer for four months. This executive order was an extension of Executive Order 124 issued in March. At the end of the period, the order further requires that utilities give customers months to pay the incurred costs from the period of non-payment.

While the order is meant to help people during the economic hardship caused by COVID-19, citizen-owned utilities across the state have seen precipitous drops in revenue due to lower business usage and non-payment of utility bills. This results in the cities being unable to pay for the costs of providing those services.

Read the full statement.