When asked of his political affiliation, Will Rogers famously said, "I am not a member of any organized political party, I am a Democrat." On another occasion when asked to explain the differences in the American political parties he said, "Democrats never agree on anything, that's why they're Democrats. If they agreed with each other, they'd be Republicans." 

Oh my how things have changed!

When the Republican party took complete control of North Carolina government in late 2012 with a veto proof majority in both houses of the General Assembly, and winning both the Governor and Lt. Governor's offices, it signaled a new day in Raleigh. No matter your political persuasion, legislative efficiency, we were told, was right around the corner.

Yet, there's been more acrimony within the Republican leadership than seemingly the Democrats had when they predominantly controlled the state for 125 years. Lawmakers had high hopes of coming to Raleigh on May 14, passing a few modifications to the two-year budget including teacher raises and some response to the Duke Energy coal ash spill in the Dan River, then go home before July 4. In what was suppose to be a "short" session of the 2013-2014 biennium of the General Assembly, this year turned out to be anything but short.

As I write this column, it's August 21 and both houses of the Legislature just concluded their business for the year. In the 11th hour, leaders finally agreed to a first step in addressing the Duke coal ash crisis but failed to deal with teacher assistant pay issues brought about by drafting errors in the state budget.

As the session drew longer a number of other critical issues surfaced that has made very few people happy, and political pundits scratching their heads. Clearly divisions within the Republican majority became pronounced this year as Speaker Tillis, due to his impending departure from the House, became a lame duck leader. That leadership vacuum allowed the President Pro Tem of the Senate Phil Berger to exert much more influence on legislative proceedings. The Senate and the House seemed to be at odds on just about everything this year, and with Tillis preoccupied with his U.S. Senate campaign, Berger was all too happy to take advantage of the situation.

So what were the issues of importance to our AIA members during this session?

This was perhaps one of the most important pieces of legislation for the architectural profession this year. Last session the Legislature passed the first part of their tax reform package lowering and flattening the personal and corporate income tax rates in the state. The goal was to actually eliminate those taxes and replace the lost revenue with a broad swath of new sales taxes including the addition of some 300 new service taxes, architecture being one of them.

After the failure of completing that goal in 2013 the Senate vowed to attempt the comprehensive overhaul in the 2015-2016 legislative session. What that meant for tax measures to be dealt with in 2014 was nothing that might deter comprehensive reform in 2015 would be passed in 2014. That included specific tax credit programs that had been eliminated in 2013. Thus the Senate steadfastly refused to deal with any extensions of the historic preservation or the much reported on film industry tax credits.

The battle over the tax credits this year is a harbinger of things to come in 2015. It's no secret that the Senate leadership wants to finish the job they feel wasn't completed on tax reform in 2013. In fact, without a broadening of the sales tax base there is no way to eliminate the income tax and quite possibly make up for the loss in income tax that was already implemented in 2013.

Part of another larger tax reform bill, this measure creates a change to what local governments are allowed to charge business in privilege license taxes. The new proposal will cap at $100 what any local government can charge businesses for this privilege of conducting business within its borders. The current system allows for local governments to basically set their own rate structure. AIANC has heard about many municipalities applying their privilege tax collections unevenly throughout the design industry. While the measure will have a significant impact on local government tax revenue, it will lend consistency for business across the state in understating their obligations in paying these privilege taxes.

This was primarily a clean up vehicle from HB 857 from 2013, the design/build PPP bill. During the legislative interim, a study commission set up under HB 857 came out with recommendations on how to more accurately define what contractor pre-qualifications really are for units of government in the state. The bill requires the following: 

1. Must be uniform, consistent, and transparent in its application to all bidders.
2. Must allow all bidders who meet the pre-qualification criteria to be pre-qualified to bid on the construction or repair work project.
3. Clearly state the pre-qualification criteria, which must comply with all of the following:
    a. Be rationally related to construction or repair work.
    b. Not require that the bidder has previously been awarded a construction or repair project by the governmental entity.
    c. Permit bidders to submit history or experience with projects of similar size, scope, or complexity.
4. Clearly state the assessment process of the criteria to be used.
5. Establish a process for a denied bidder to protest to the governmental entity denial of pre-qualification, which process shall be completed prior to the opening of bids and which allows sufficient time for a bidder subsequently pre-qualified pursuant to a protest to submit a bid on the contract for which the bidder is subsequently pre-qualified.
6. Outline a process by which the basis for denial of pre-qualification will be communicated in writing, upon request, to a bidder who is denied pre-qualification.

In addition Norma Houston with the UNC Institue of Government produced a very comprehensive summary of the new law and it's implications, which you can find on their web site here.  

Another section of this bill deals with some minor changes to the designer qualifications based selection (QBS) law that will help to clarify when fee information is to be allowed. The new language added to the existing statute reads:

"... no work product or design may be solicited, submitted, or considered as part of the selection process under this Article; and no costs or fees, other than unit price information, may be solicited, submitted, or considered as part of the selection process under this Article. Examples of prior completed work may be solicited, submitted, and considered when determining demonstrated competence and qualification of professional services; and discussion of concepts or approaches to the project, including impact on project schedules, is encouraged."

AIA's big legislative ask for the year, and a focus for our Legislative Day in May, was for the State to begin a study of our vertical infrastructure needs and ways in which to finance them. Representative Dean Arp who authored HB 1043 took up the challenge and included a new Blue Ribbon Commission to Study Building and Infrastructure Needs in the bill. Over the next two years this Commission will look at state and local governmental building repair, renovation and new construction needs.

This measure that originally would have rolled back the 2012 NC Energy Code to the 2009 version for all new construction, had been lurking around the Legislature since last year. A coalition of design, construction and  clean energy business interests were successful in slowing its progress but in the waning days of the session the bill was amended in the Senate Rules Committee to offer existing buildings, and building additions an option to use the 2009 Energy Code.

This version made it through the full Senate and was concurred with back on the House side.

The details on how two separate codes can be applied to construction will now be left to the NC Building Code Council, as HB 201 did call for that regulatory body to come up with provisions on how to implement the measure.

The practical effect of HB 201's passing means that substantial new construction could be exempted from the provisions of the 2012 Energy Code. Hypothetically a 200,000 sq.  ft. building will be able to add an additional 100,000 sq. ft. of additional space using the 2009 energy code. For all intend and purpose this is new construction.

The AIA argued that there really needed to be some limit and parity on the size and scope of buildings that enjoy a lower standard of energy efficiency and those that should meet a higher standard outlined in the 2012 Energy Code.

To this end we offered the limitations outlined from SB 668 (2007), G.S. 143-135.36(5)(6), which applied to state buildings for energy efficiency. The new definitions would have created a 20,000 sq. ft. threshold as the standard for meeting the 2012 Code for existing building additions. These amendments were rejected by leadership in the House and Senate. 

As for building renovations we believe that most projects will opt to use the new 2015 NC Existing Building Code adopted in March of this year. In that code energy requirements were reduced for building renovations, in most cases less stringent than the 2009 Energy Code.

Of the 61 different provisions in the regulatory reform bill the one that might affect our members the most is the following new provision added to state law entitled Permit Choice. The text of the new statute below will give you a pretty good idea what it's trying to accomplish:

SECTION 16.(a)  Chapter 143 of the General Statutes is amended by adding a new Article to read:

"Article 80.

"Permit Choice.

"§ 143‑750.  Permit choice.

(a)        If a permit applicant submits a permit for any type of development and a rule or ordinance changes between the time the permit application was submitted and a permit decision is made, the permit applicant may choose which version of the rule or ordinance will apply to the permit.

(b)        This section applies to all development permits issued by the State and by local governments.

(c)        This section shall not apply to any zoning permit."

SECTION 16.(b)  Part 1 of Article 18 of Chapter 153A of the General Statutes is amended by adding a new section to read:

"§  153A‑320.1. Permit choice.

If a rule or ordinance changes between the time a permit application is submitted and a permit decision is made, then G.S. 143‑750 shall apply."

SECTION 16.(c)  Part 1 of Article 19 of Chapter 160A of the General Statutes is amended by adding a new section to read:

"§  160A‑360.1. Permit choice.

If a rule or ordinance changes between the time a permit application is submitted and a permit decision is made, then G.S. 143‑750 shall apply."

SECTION 16.(d)  This section is effective when it becomes law and applies to permits for which a permit decision has not been made by that date.

The Senate Finance Committee amended this bill forcing a change on the future of local option sales taxes.The bill would have set a cap of 2.5% for local-option sales taxes and would have forced counties to choose between public transportation or public education when utilizing the tax. This new law would replace the county's existing authority to levy unlimited 1/4 cent taxes for any public purpose authorized by the voters. In essence, it would have severely limited local communities' flexibility to use the sales tax to address their local capital construction needs including public schools, transit, parks, recreation, libraries, etc...

The bill became the most hotly contested measure at the conclusion of the session and ultimately divided the Republican Caucus in the House to the point where the bill was defeated on the Floor on the last day of session.


AuthorDavid Crawford