As usual the Legislature has been busy and as we reached the figurative half-way point of the 2015 session let's take a quick look at some of the items affecting the design & construction community.
Last week the budget office released some good news as it appears the state will have an addition $400 million in revenue to work into the 2015-2016 state budget. Of course that has kicked off a feeding frenzy of sorts in the lobbying corps. A few items that are sure to get some favorable attention this year will be another look at increasing teacher pay, addressing the ever rising Medicaid expenses, additional funding for the state courts system and adding to the state rainy day fund.
A lot of discussion is being had on the Governor's proposal for two large infrastructure bonds, one for $1.5 billion in transportation and a similar amount for state buildings. While there is finally some willingness on the part of the Legislative leadership to start talking about bond financing, much of the debate now is on the total amount and the timing of a voter referendum on new bond expenditures. The Governor has called for a vote this November while many in the General Assembly believe that to be too soon and not the optimal timing for a statewide vote. As the budget gets hashed out over the next month, there will be a lot more discussion on these debt financing issues.
Another pretty large discussion around the budget will be tax reform, round 2. There are at least three bills in the Senate that lay out another round of tax cuts for personal and corporate income. Add to this the myriad of tax credits, incentives and economic development bills for various industries and it's shaping up to be another huge philosophical debate in June about how our tax policy affects growth in our state.
HB 760 Regulatory Reform
This is the major Regulatory Reform bill for the 2015 legislative session containing almost 30 provisions.
Items concerning design and construction include:
1) Making zoning density credits mandatory vs. permissive.
2) Make recommendations on occupational licensing boards.
3) Eliminating local inspection authority for building components if an architect or engineer inspect and certify the components.
4) Restricts local governments ability to define a bedroom for one & two family dwellings.
5) Creates further definitions for storm water runoff.
6) Creates a whole new section of law on deviations for riparian buffer requirements.
One interesting aspect of the bill that has created a tremendous amount of controversy is in the renewable energy area. Following an unsuccessful attempt to get a stand-alone bill passed in the House to significantly modify the Renewable Energy Portfolio Standards (REPS), House proponents of rolling back the REPS, made a successful attempt to insert language into this bill that will freeze the utilities required percentage of renewable power at the current 6%, thus eliminating the goal for 2018 of 12%. In addition, the added amendments removed developer incentives that acted as a catalyst for solar development in the state over the last 7 years.
Position: Neutral w/Amendments
Status: Senate Ag & Natural Resources
HB 152 - Historic Preservation Tax Credits Reinstatement
This bill reinstates the expired state historic tax credit program. It made it through the House with overwhelming support. Unfortunately the credit is not equal to the old program and allows for a stratified credit based on what Tier County the project is in. The residential credit is also lower than the old program.
The Senate has made it quite clear that they have no intention of passing this bill and have sent it to a graveyard committee. Senate leaders have unveiled their own plan that would only authorized credits from local communities but not the state (SB 472). There are a myriad of tax credit and economic incentive bills waiting to be acted on in the Senate, but all of them ultimately appear to be heading to the Senate Finance Committee where they will be debated on as part of a larger discussion on further tax reform for the State.
Status: Senate Ways & Means
HB 255 - Building Code Reg Reform
This bill is a Christmas wish list for the North Carolina home building industry.
Section 2 of the bill sets up a study on the use of alternate means and methods. A fairly common procedure already employed by designers and code officials. The attempt here appears to allow its use more broadly, especially in the face of a code that will now only be updated every 6 years.
Originally section 4 of the bill had two separate elements as it relates to plan review for residential projects. The first, would raise the threshold of exemption from a building permit from $5,000 to $15,000. This provision has stayed in the bill as it has made its way over to the Senate. The second provision was the complete elimination of plan review for residential projects. AIA and others raised objections to this provision and it was removed in the House.
Section 6 of the bill requires written interpretations to be posted on the DOI web site within 3 days. Probably a good policy but we wonder if it goes far enough. What about e-mail and verbal interpretations?
Section 8 requires inspections to be done in a timely manner. Sounds good. Then it goes on to require the inspector to supply the permit holder with a full list of items that fail to meet the requirements of the Residential Code. Still, not a bad idea.
There are a couple provisions in this bill that may touch a nerve with AIA members. Just about every architect has been party to perceived over-reach by local building inspectors and have felt powerless to challenge their authority. Section 3 of this bill attempts to swing a big hammer at local inspectors by creating penalties for "willful misconduct, gross negligence or gross incompetence." None of these terms are clearly defined in the bill and leaves the impression that, as the saying goes, "to a hammer everything looks like a nail." Even in the contentious world between builders and regulators the language in this provision of the bill seems rather Draconian and pretty insulting.
Section 5 was a crafty end around move with regards to influence over the writing and adoption of the Residential Building Code. This section would statutorialy create the Residential Committee within the Building Code Council and give it the sole authority to propose any changes to the Residential Code. Now keep in mind, there is already a Residential Committee of the BCC just as there is a Building Code Committee, an Electrical Code Committee, a Structural Committee, etc... But this bills initially singled out the Residential Committee and stacks it with only home builder reps to control all residential code adoption. This is actually not a new concept and it's one AIA has worked with the HBA on over the years. The difference in past attempts was both sides always agreed that dividing the greater BCC into separate residential and commercial bodies would allow for each code to be more fairly debated and adopted by industry members with greater knowledge of each building type. AIA proposed an amendment to this section of the bill that would treat the Building Code Committee exactly same for the commercial side of the code as the HBA has outlined its Residential Committee for the Residential Code, which was accepted by the House.
Status: Senate Rules
SB 330 - Change Orders on School Construction Projects
The bill would required all school districts in the state to authorize certain change orders on K-12 school construction projects. A two-tier system for districts, one where districts have done $50 million plus in construction during the last 5 years and another for districts under $50 million, would be required to review and approve change orders of more than $100,000 and $25,000 respectively.
While AIA continues to oppose any policies that have the potential to slow up the construction process, we have worked with the bill's sponsor, freshman Senator Tom McInnis from Rockingham, NC, to clarify the architects role under new procedures created by the bill.
The measure has moved over to the House where there is more opportunity for design and construction professionals to educate their representatives about the potential for school construction delays.
Status: House Rules
This bill is intended to look at modernizing North Carolina's laws related to local zoning. What began as a project the State Bar Association undertook turned into a 100 page rewrite of zoning authority and land use policy. Understanding that not all the stakeholders in local development had been party to negotiations on the measure, The Bar agreed to turn the bill into a year-long task force study. The new Task Forces' findings will be used for legislation in the 2016 session. The Task Force will have 16 stake holder members, one of which will be an architect recommended by AIA North Carolina.
Status: Senate Rules
This bill would allow subcontractors to store materials and equipment for a project on their own property and allow for billing for those items to the general contractor. This has the potential to create enormous conflict between subs and GCs. It has the potential to put the architect in the middle of pay disputes.
We don't see that the bill is addressing a concern that is present on State projects. Here are just some concerns we've identified:
1. If a sub was to go bankrupt and the bank locks everything down there is no way to get the material that the owner owns without obtaining a court order. This is a costly and time consuming process which would delay the project.
2. You could have a sub storing material on his site and showing the same pictures to multiple designers on several different projects and getting paid up front for the same material on multiple projects.
3. Designers would be required to make trips all over the state and possibly the country to verify that the material is indeed stored. This would be very costly.
4. There is no line drawn here. Storage in this bill is not just for specialty items or long lead time items, but for any and all material on a project. This will be a nightmare for a GC to police because at the end of the day that is who the owner expects to complete the project and the owner will not be paying twice for the material. This would fall on the shoulders of the GC.
5. Possibility of material being stored in another state on a subs site.
6. Is a supplier a subcontractor? This opens up a number of problems.
Status: DId not make crossover/Dead