Raleigh, N.C. — Two proposals to limit or repeal local governments' authority to assess impact fees on new development cleared the House Finance Committee on Thursday. But the measure that would have statewide impact was significantly scaled back by a committee amendment.
House Bill 406 and House Bill 436 are both sponsored by Rep. Sarah Stevens, R-Surry, who argued that it's unfair that some cities and counties have been been given authority to assess impact fees on new development to pay for schools and infrastructure while other local governments don't have that power.
House Bill 406 would repeal Orange County's impact fees immediately. Stevens said it was prompted by the case of a developer in Orange County whose impact fee liability quintupled when the county Board of Commissioners raised the fee last year.
Orange County's fees go directly to schools, but Stevens argued the proposed student housing complex would have little impact on area schools. She said repealing the fee "will send a message that a 527 percent increase fee is a little ridiculous."
Rep. Graig Meyer, D-Orange, said that message has already been received in Orange County, where the new complex has been granted permission to qualify for the prior impact fee rate.
"I cannot justify why anyone would think you could increase any tax by 500 percent. I don’t think it was a good decision by my county commission," Meyer said. "The shot across the bow has been heard. The county understands they may need to reassess this."
Meyer attempted to amend the bill, but chairman Rep. Bill Brawley, R-Mecklenburg, refused to allow it and also refused to take comment from the two Orange County commissioners who sought to address the committee. The measure passed 13-12.
The wider measure, House Bill 436, would have repealed impact fees in all cities and counties that currently have the authority to charge them.
Stevens said she's working on a proposal to allow all local governments to charge impact fees based on a cost formula but said it isn't ready to be heard yet. In the meantime, she said the repeal measures should go through now because they're subject to the April 27 crossover deadline.
"I feel like we’re putting the cart before the horse, and we’re going to leave several counties hanging," said Rep. Becky Carney, D-Mecklenburg. "If we’re going to go down this road, let’s put it together first. Let’s do it in a seamless process."
Rep. Nelson Dollar, R-Wake, said the bill would result in higher property taxes in his district.
"What’s in this bill doesn’t fix our problems in Cary; it creates problems in Cary. I can’t vote for it," he said.
Rep. Robert Reives, D-Lee, represents much of Chatham County, which has committed tens of millions of dollars to a new regional water plant, expecting to pay for much of it with impact fees that House Bill 436 would wipe out.
"What you will do to communities that are already depending on this revenue will be devastating," Reives said, "and these communities who have this ability have not acted irresponsibly outside Orange County."
"I have a problem with summarily removing income streams from local governments," agreed Rep. Jay Adams, R-Catawba.
Meyer offered an amendment that would leave impact fees in place but roll them back statewide to their levels as of June 30, 2016. It also would put a one-year moratorium on increasing those fees. In the meantime, a legislative committee would study impact fees and report its findings by the 2018 short session.
Despite opposition from Stevens, the amendment passed easily, 16-9.
Both measures will likely reach the House floor for a vote next week.