House seeks to repeal local development impact fees

A House committee on Wednesday approved two bills that would ban Orange County and other localities around the state from imposing impact fees on real estate development to pay for schools, roads or water and sewer improvements.

The votes on House Bill 406 and House Bill 436 came despite the testimony of local leaders from Orange and Chatham counties, as well as representatives of city and county governments across the state.

House Bill 406 would remove the authority that was granted to Orange County in the late 1980s to charge fees on development to help pay for school construction and other infrastructure.

"This is a question of fairness to all the other counties" that don't have such authority, said sponsor Rep. Sarah Stevens, R-Surry.

It's highly unusual for a bill affecting one county to be filed by a legislator from another county and without the blessing of the county's legislative delegation. But Stevens said she felt she had to address the issue after hearing complaints from developers.

"Orange County has really gone sort of hog-wild with their fees," Stevens said, telling the House State and Local Government I Committee about a student housing apartment complex planned for the county that faced an impact assessment of nearly $1.6 million after the county increased its fees last year.

The impact fee was initially set at $302,000.

Orange County Attorney John Roberts told the committee that the board implemented a grandfathering provision after multiple developers complained about the increase. He said Townhouse Apartments, the developer of the project to which Stevens referred, was also offered eligibility for grandfathering.

However, lobbyist Jeff Barnhardt insisted that Townhouse Apartments had not been offered an avenue to be grandfathered until a meeting with the Orange County commissioners on Tuesday night.

Committee members noted that other counties had been charging such fees, but Rep. Bill Brawley, R-Mecklenburg, said they had done so in violation of a 2012 state Supreme Court ruling. In that case, the court ruled that local governments didn't have the authority to assess impact fees unless it was explicitly given by the state and ordered many of those local governments to reimburse developers for fees they had charged.

House Bill 436, also sponsored by Stevens, would remove the authority to impose regulatory fees on new construction from 19 municipalities, including Cary, Garner, Knightdale, Rolesville, Wake Forest, Wendell and Zebulon.

"It’s all the other people who’ve been given express authority when the rest of the state hasn’t," Stevens explained.

Debra Henzey, representing the Chatham County Board of Commissioners, was given one minute to speak to the committee. She said Chatham is the fastest-growing county in the state, especially the northern portion, but the county has little commercial, retail or industrial development.

"We don't have many options," Henzey told the panel. "The 5 cents that this would put on [our property tax] immediately will shift the burden to parts of the county that are quite poor."

"Please reconsider this," she urged them.

Former Chatham County commissioner Brian Bock, a Republican, echoed that sentiment. "If you just cut us off right now, that’s going to cause some serious issues with our budget," he said.

Stevens said she is working with developers and other stakeholders to come up with a standard formula for assessing fees that could then be used by every local government in the state, not just a few.

"I am negotiating with the Senate and others to get that formula in place before we revoke this,“ she told the committee, but offered no further details on timing.

Rep. Susan Fisher, D-Buncombe, said that the replacement formula proposal should be included as part of the repeal bill.

"We’re doing away with the ability to levy impact fees before we have a solution," Fisher said. "It seems like putting the cart before the horse.“

The North Carolina Association of County Commissioners and the North Carolina League of Municipalities also spoke against the bills.

Nonetheless, both measures passed on voice votes and will next be heard in House Finance.