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House | June 16, 2015 | Committee Room | Finance

Full MP3 Audio File

The house finance committee meeting will come to order if you keep housekeeping items first our sergeant at arms staff Marvin Lee, Terry Mccrowl[sp?] and David Lattin[sp?]. Our pages today are Slade[sp?] Kennedy sponsored by Representative Ray Jordan Cox sponsored by speaker Moore, Meagan Daughter sponsored by speaker Moore, can we have order please, Reagan Robert, sponsored Representative Insko, Henry Smith sponsored by Green and Martin. We also want to take a moment to thank the staff Laura and Lyne and our other staff for always taking empowerment and doing a great job for us. And we'll adjust the agenda today to honor a request from senator Davis and we think his Bill will be done fairly quickly and we'll recognize Chairman Ted Davis for a quick committee report. Yes sir thank you Mr. Chairman. The architects sub-committee did meet yesterday Mr. Chairman and we did consider senate bill 140 and it does comply with the health's guidelines for architects and it did receive a favorable report. Thank you Mr chairman and that would bring the bill properly before us and we'll recognize Senator Davis to explain the bill. Thank you Chairman, here is things and the members of the committee, I think this is going to be the last time that I have to appear before you this session. I know the representative Warren is getting tired of me, so one more favorable report and I'm out of here. What favorable report from senate bill 24? Was that a motion? Yes it is. Mr. Chair. And Senator Davis? Yes sir. It may not be necessary for you to speak the way it sounds, but your welcome to speak sir. No I'm not enamored with my own voice sir Representative Lawrence is recognized Mr. Chair for the third time, I would like to move for a favorable report for senate bill 140 so I have the privilege of voting for, then again on the house floor. Second is not necessary, so any further discussion or debate from the committee members? Hearing none, those in favor say I, I!  Those opposed no. Senator Davis, that was one of the most efficient performances we've ever seen sir. Thank you Mr. Chairman, I owe it all to you sir. And with the permission of Representatives Hagar, Millis, Brody and Collins we're going to move house bill 168 to the third position on the list and go ahead and address house bill 679 at this point, and at this point and with unanimous consent, the bill is properly before us and will recognize Chairman Brawley to explain the bill Thank you Mr. Chairman. This is the self liquidating projects for the unappropriated capital bill for the university system for this year. For those of who are new to the process, the universities cannot borrow money without our permission but they are some functions for which they borrow money that are off of the state budget. That includes things like cafeterias, student centers and dormitories which are paid with the fees from food service and the rental of the lodge. We have four projects ahead that have been put forward and I would like to go through them very quickly at a higher level first, we have Appleton State University. There is a residence hall [xx] near the baseball or the football stadium which is somehow old and dated and it is actually more cost efficient to tear it down and build a new More modern, more energy efficient and larger facility than to renovate the one that currently exists. That would be paid completely out of the fees charged for living in the residence, and there's not an increase in the fees for that. East Carolina University will be renovating four dormitories that will also be done from the receipts for the housing costs. North Carolina Central University is doing some maintenance, actually on academic buildings. This would normally be called renovation and repairs, they are instituting a new $100 fee. I'm some what embarrassed that the're

going to charge the students to repair the following  for side of the law building and a few others update their air conditioning, but they have asked for it. It has been approved by the UNC board of governors and so, we'll go forward with it. The since the NC State. This is a new engineering building in their oval area of campus and some infrastructure. This is an academic building. The total project is, what they're asking for is $77m and authority from us. That money will be repaid from either cash on hand or gifts that they will raise from alumni. They're also expecting a matching 77 million from capital appropriations to build the building. If for some reason the capital appropriations does not happen, this authority will not be exercised but in no case do any of these projects encumber the state for additional expenditures should it pass. And Mr Chairman at the appropriate time I'd like to move a favorable report and willing to take any questions we also have a whole choir of people from the unversity system prepared to answer your questions will salute Mr Chair on your behalf and any further questions or discussions from the committee members first? Okay. Hearing none, I assume it's not necessary to hear from the public because it looks fairly strong those in favor say Aye. Those opposed no. The Bill has passed Mr Chairman, thank you sir. And finally House Bill 168 and with [xx] the bill is reported to the committee, hearing no objection the Bill is before to the committee and recognized the majority leader Representative [xx] to explain the bill. Thank you Mr Chairman this bill is fairly simple, I think it's a little bit complex bill but this simple and what it attempts to do. What this Bill does it tends to take a development and building which has been and as we all know has probably the most devastated sector of our business especially if you leave in the mountains or leave at the beach where second homes are prevalent. It tempts to take those two sector of business and actually take and reduce the cost of doing that business and I'll go through this near real quick developer buys a piece of land, spends several million dollars on whether it's in Mecklenburg county, [xx] county or whatever and they spend another several million dollars developing that piece of property, and then you build houses on that property, by the time the builder and developer gets through, they probably in a tune of five to $13 million on the piece property. Well those will be in multiple phases, well as soon as the developer plus the first phase and there's a final plat approved on there, the next taxation cycle is whether he sold anything or not, he gets it with new taxes on their upgraded taxes on that property. What we're attempted to do is say okay, the land is not really valued that way until you sell it so when you start selling it, that's when the taxes should become due. Now the Bill says if he/she hold it for more than three years taxes come due that tax bill for that year comes due on anyways, that's very simple bill and it does attempt to jump start a sector business that has been devastated probably more than any other have in the especially in the rural areas, and with that Mr. Chairman, I stand for questions. The Bill is properly reforce, the majority of leaders explained it any questions from the committee members, and representative Connie your recognized. Could you please tell us representative Hager, thank you Mr. Chairman. The difference in the original bill and the PCS. This is pretty much the original bill, they got changed a little bit, it went through a little bit of alterations to where it took the development piece out of it and just had residential, but the whole reason for the tenure of the bill was for development and residential so I put it back to development and residential. I'll follow up. Follow up, yeah. So the land is now exempt? Yes, the development piece and that was originally the tenure of the bill was to start county try to kick start development which then kick starts home building after that so you guys start at the ground level. So to speak no fun intended. Chairman Davis is recognized. Thank you, Mr. Chairman. Questions for the bill sponsor, please? Representative Heger I noticed that the local annual revenue loss is projected to be 52.6 and $65.8 million. Is anything that ought to be done to help those local

governments with the lawsuit at revenue? Thank you, [xx] what the intention was on this bill and I'm willing to take an amendment that limits this just to new property moving forward not property and inventory right now so if you need a volume of new houses so maybe staff can explain if you do have a huge loose money that you never had and effected if you never knew this is coming then you got developed tomorrow and next year, then you can count on not being here because you know is coming anyway. So wanted to move in And forward not not that dis respective that makes sense. Were the issue is, you can announce this has been done, this bill right now you going to sign that you be seen in those first four to develop up a value over 500 hundredths of thousands of 3D pulse for doing this business and I also read you about a 35 million dollars in revenue and about 2, 300 more jobs in the bill because of exempting this new laws on the houses.  Thank you, for follow up? Yes sir.  Also I want to ask you, I noticed there this PCAS deletes the requirement that the bill will hold general contractors licence could you please tell the logic behind that. Thank you, most developers don't have a contract licence, some do but most does not. Okay thank you.  Representative stance recognized.   Sort of a question on fiscal note but how do want to lump all favorite bill? I think it will make for the counties for the reason stated Physical impact and show annual revenue loss of 52 million and then net local impact zero. Halo  just a math. Mr. Fabio, lets start questions. That would be order if the staff is prepared to answer?.  Thank you Mr. Chairman and representative Stam, that's a very good catch. It's just a function of the way our memos work but we just included a and then we probably should have wiped out those zeroes, that the actual impact is the 52-65 and we'll correct that on the fiscal line. A thorough pace please sir. Yes Sir. That would get the math right, but if, we always have this discussion on jay day, it all pays for itself, so it doesn't cost anything but I can see this, makes money for the counties for the reason stated because you do not offset any of the loss at all for inducement of new houses? Mr. Chairman, the answer to that is no, we have no that included any economic impact analysis there. I know the home builders have looked at that and, but then our fiscal note we typically do a static analysis we're only showing you the revenue loss from the exception of those properties from the tax space. There is definitely an economic impact associated with the stimulative effect of the bill. But that is difficult to quantify and typically we can't put a number on it, that's why it's not on the fiscal note. You are correct there is, there is definitely that effect. Mr. Chairman, I'd like to comment on that if I could also. Yes Sir. Thank you. What we've said all along is if you limit this to just moving forward, then what you're doing you're saying well, I would have got that, we would have got that so we're losing. My question is how do you lose something you never had before? If I don't have a $100 bill in my wallet, I can't lose it. say yes I may get it a year from now I might lose it then, but I can't lose it now. So if you don't this bill, you don't exempt these developments in these houses then will development be built? Will houses be built? So you never lose it because you never had it. Mr. Chair. Follow up. Is someone preparing such an amendment to conform to your idea? I don't know but to see if they don't I'll have the floor amendment for that Representative Stam. I was just thinking since it's only quarter to nine let's go ahead and get it done if that's alright. I'd be more happy to see if there are friendly member from Representative Stam if that's OK. Just take the [xx]. Well that's being prepared let's move forward with some of the discussion. Chairman Brawley. Thank you, Mr. Chairman. Representative Hager, you and I had a discussion earlier on about the possibility of allowing counties and cities to list the property once it was sold by the developer, and I have discovered We don't need to do that, that's actually

already in the general statures. I just wanted to point out that in 105 - 285; that if real property is transferred from a non-taxable status and sold that puts it all at a taxable status prior to July 1. It is taxed for the balance of that governmental fiscal year and if it is transferred after July 1, it's listed January 1 but taxed for the entire fiscal year, and while we often think we're taxing on a calendar year your actual tax bill is from July 1 to June 30, so we don't need to amend your bill, which I appreciate you telling me that you would accept, because the general statutes will already allow that so that the counties as soon as this is sold to the person who will occupy it we'll be able to tax the property. and I just wanted to put that on record but there is no, the amendment is not forthcoming sir so. Mr. Chair [xx] Absolutely. Well what Representative Brawley is talking about we Discussed on pro rating if the property got sold in March the pro rater for the rest of the year and I said that sounds acceptable to me but, Representative Dier seems to think we don't need that now if we find we do will be happy to put in the bill.  Mr. Chairman. At least for just a moment. For a point of clarification, the Chair would recognize Greg Roney.  I just want, this is Greg Roney with the Research Division. I don't think this thing is left right it applys to tax serious beginning at a world force 2016, and so we would run a wasting day about January 1st, 2016, a day that hasn't happened yet so the effective day is just four improvement  that you have made, so, I don't see how this could be retaracted so, it's all desired to be quite respectively. Okay, the chair. Representative [xx]. I think what you told me is that my explanation was incorrect, and I appreciate that, thank you it's better we catch it now and do our committee working comedy. I may have missed all of what you said with so much activity back here. I thought that people were worried about the situation up at transfer.  If somebody if like a builder sale a piece of property, and then there is a general law would makes that person that bought it pay a paraded portion of property tax for that year because they weren't exempt. Then there seemed to be this other discussion about whether the thing was retroactive and the design of the effective date by pushing up to July 1st, 2016. That July 1st, 2016 links to a listing date of January 1st 16. So that will be the first time somebody could potentially try to meet the requirements and the statute. OK, we have a number of speakers who still have questions, but if this is a procedural part, Representative Stan we could go ahead and do that and get it out of the way you are recognized. The staff is convinced we don't need an amendment, but I think we do need is clarification in committee summary and face school not if they could look at that That would be in order. Representative Adams, you are recognized. Thank you, Mr. Chairman just reading through this. Will this apply to single family? Condominiums, town homes? Mr. Chairman these applies to residential not to commercial, so the answer is I believe in new tech was the public answer is yes, but you know better and I know that the volunteer was certainly to apply the single family and that will be Mr chairman field record Representative Adams would you like the staff to clarify that? I would be interested yes. Okay thank you members of the staff did you here that question? Yes the exemption from property tax would apply to multi family residential construction and any improvements related to multi family residential construction as we as single family follow up. Follow up Yes sir When we speak of other improvements in the bill would that include things so that I

can understand this, water sewer rezoning, grading, site prep would those be the things that we be talking about in terms of other improvements [xx] Would know that I would assume yes but that's just stuff.  It would be any physical improvement so everything on your list except maybe rezoning because that didn't touch the land so if you did any physical change to the land that would be an improvement to the real property so it would include road, sewer, piping, bull dozing, anything other than maybe just some kind of service thing that didn't touch the land.   Mr. Chairman, just a follow up on that it that's okay. Yes sir President Adam that is you know everything you've talked to as you know it is most folks know are very unique to real estate development so all those are being included, push some roads in, putting infrastructure in to development curbing, pavement, those things.  Corner. At this point to move the meeting along unless you have a motion, let's clarify the questions if you have a motion and later we could recognize comment but let's move forward and have if that's okay with you representative and so representative Bradford. Thank you Mr Chairman, first happy birthday. Thank you.  Representative Hager, just a quick question a lot of planned, I guess planned unit unities of single family detached houses, builders will put in, let's say three model homes and they'll put an office in one home house next door. How does this legislation treat the model homes because those model homes and many times they will try to sell them to investors and alot of the cases if the builder had enough financial awareness they'll keep them but they may not be actively for sale but all things are for sale so would model homes they are being used as a sales tool to perpetuate the sales of others will those be exempt form this legislation? Thank you Representative Bob, thank the question I believe they would be until the year window comes up, once the three year window hits then they will not be exempt any more.  Follow up, would you have any issue problem representative Hager if in cases of model homes being used because those model homes are being used as a sale tool to perpetuate sales of other homes. I would not. Okay. Okay. I would not have a problem with that just by the way just clarifying. Representative Walz. Thank your Mr. Chair I just want to ask a simple question, when the developer buys the piece of property that they're going to put this development on, that property has already been appraised and taxes have been assessed for the value part of the developer being, owning the property, correct? That is correct. So, if the developer buys a piece of property, there's still going to be taxes levied on that piece of property on the land piece of property at that right. That's correct. It says and to clarify raising Model's question is line 18 says, in the increasing value so there would not be on the tax issue. But the base tax would still be [xx]. And all of a sudden I want an Orange PushUp for some reason Representative Warren.  Thank you, this is probably passed out. I just, I'm struggling with clarification issued on, when does the clock start ticking on the three years because the summary says the exclusion ends when the property is sold or three years from the time the builders should have listed the property and it is pretty similar in the bill itself. So when does the three years begin? Usually Representative Roland and make sure I understand this. It's usually when I went and the final plan is improved but Mr. Roland you can tell me I'm wrong. The clock is and what it says is when they should have listed it. So you have to have made an improvement to even be that issue here. So if the way we're using the terms in this discussion is like the developer get's it first, so then rolls in and the developer buys it. he doesn't have an improvement that qualifies but whenever he does an improvement, which could be anything, then all of a sudden he should have listed it, and that's pretty typical in tax stuff because it's when you should have done it not when you actually did it, so the clock starts running even if you tried to dock and get yourself an extra year bit not telling anybody about that improvement, so as soon as start improving it, then that's when you should have listed it, and then that's when the three year,

the three property tax cycle happen that you get the advantage of this, at least for your ownership of the property. [xx] The gentleman is recognized to propound the second question. Thank you. Mr. Renny does that mean if a developer bought a vacant land[sp?] and then put in sewer or some other improvements, that's when the clock starts? Yes, so for example if there is a land owner and and they sell it to a developer and the developer buys it, as soon as they start construction or do any kind of improvement on land then that's when the clocks starts and then those improvements wont be exempt from property tax for up to three years as long as the developer doesn't sell it [xx] will be right.  As a courtesy to the committee members and to respect parliamentary procedure and articles we have a number of members who have either follow up comments or second or third questions is there a member or other members who would like to ask a first question before we get the people to give them a second and a third opportunity. It appears that we have just a couple more questions and Representative Your'e recognized. Thank you Mr. Chairman, my question on multifamily was already answered bit I would like a question for you Mr. Chair, are we going to allow comments from the public because I would like to hear from the county association just to weigh in. I think that would be in order and it's a good idea representative and we'll do that in just a brief moment. We have two other questions, representative Bradford.  Thank you Mr. Chair. Representative Hager was gracious enough to say that he'd be willing in terms of the model homes to exclude them from this legislature so I just have a question. Is there something the sponsor would like to may be run amendment in committee or prefer to run on the floor. I just thought I'd ask. Too if it's okay Mr. Chairman I think we'd probably get this up and running on the floor would be fine with me. I think it'd be fine. Satisfactory. And without trying to stifle debate this would be the last comment or question before we move for, I think we only have one person from the public who wants to speak And representative Adams is recognized for a comment as I understand.  Thank you Mr. Chairman. I just want to say, I think this is a very good Bill. I think this would be you're very stimulative and I appreciate you putting this together. And without any any objection, Michael Carpenter's recognized or his colleague's recognized if you would please introduce yourself and tell us who you're with. Thank you Mr. Chairman. I'm Johanna Reese with the County Commissioners Association. Excuse me one second. Yes sir. I'm sorry. I thought that Mr. Carpenter was going to recognize one of his colleagues, so I apologize to the speaker. Yes, go ahead.  Thank you again. So with the County Commissioner association and with representative Hager has spoken to us a great deal about this bill and we appreciate that and we appreciate the change to residential remedies only and reduction from the five years to three years. However, we do continue to have a good number of concerns about this bill. It would still mean a loss of revenue to County and it would mean valuing of different properties that aren't the same, valuing them differently, and Mr. Chairman I also have a County Assessor here with me if it would be alright to at some point to recognize this assessor who works in this arena to speak also. Okay. Thank you. As a courtesy, let's have someone who is in favor of the bill and that would be Mr. Carpenter, if you would introduce yourself and tell us who you're with. Here we go, I should know how to do that by now you'd think, sorry. Mike Carpenter, North Carolina Home Builders Association. We appreciate the opportunity to have this bill considered, we thank the sponsor for bringing it forward. I want to say a couple of things with respect to pile up on the statement to the aspect of this. We did a study as staff has already indicated as per our economic of the National Association of Home Builders to take a look at this thing that lead to the impact of this legislation and as Representative Hager has already indicated, the conclusion was in over 500 homes that

would not be built in the absence of passing this legislation and a significantly multifamily units and it would create over 2000 jobs and over $35 million in economic stimulus. So there is an offset to the suggestion that there is a revenue that would be not come to the cities and the counties. What I also want to point out going back to the original comment that Representative Hager made, the housing market during the great recession was devastating, the worst situation that we've had since the great depression, and just to give you some perspective in 2007 we had over a 100, 000 building permits issued in the State of North Carolina for single family and multi family family. Two years later in 2009 that number had fallen to 33, 000 last year we just crossed 49, 000 building permits so we were only half way back to where were in 2007. When this economy is operating properly and the housing sector is contributing as it should we're about 15% of the gross domestic product of the state, at this point were about 7%. We lost 100, 000 construction jobs in North Carolina, that is one of the reasons that this state a significant revenue short fall. This an effort to stimulate the production of plots[sp?] for a demand that is there and too build houses to meet that demand. Give us the opportunity to build and we will recover North Carolina and we will recover state revenues in North Carolina when our sector resumes it's former place thank you. In the opinion of the Chair and that of the interest of everybody's time it appears that there has been sufficient and discussion and opportunity to question and so at this point I would like to recognize the majority leader Representative Hager for a final comment before the motion. Thank you Mr Chairman, guys as many of you guys are I'm from a rural area. I'm from one of the probably top 10 or 15 poorest counties in the state. Unemployment [xx] county was over 19% when I filed for election 2010. A lot of my friends like your friends build in the building business and this bill will have an effect on those that have been hammered by the economy more. Those framers, those HVAC guys that we all know, the electrician we all know, the plumbers we all know, this is an attempt to put those folks back to work. This is an attempt to build the economy in particularly rural areas from our folks that have skilled labor that have been on the side lines for now three or four years. If you want to help folks at the bottom, that help, that really bring everything up and lift all boards, this is the bill to do it, this is bill that will hit as some of the most defected folks that we see every day in our communities. So if you think about it, you think you want to support jobs, you want to support the building industry, please yes on this bill. The Chair apologizes he's been brought to chairs of tension that other members including chairs would like to ask more questions. Representative Braley your recognized. Thank you Mr. Chairman and I appreciate your courtesy in recognizing, I had to, been dropped, I do have a reputation for sometime digging into things and wanting to make sure that we understand and I think I create a little more confusion than I needed to earlier and I've liked to ask Mr. Rineous[sp?] series of questions if I may, then I thinking straight now some of the confusion that we created earlier or at least that I created earlier if Mr. Rineous[sp?] is amendable to that as I understand the bill that a builder has built a house, that would still be listed with the tax department will just not be subject to tax for the increased value, is that correct Sir? Yes, now under the try the general statutes as they currently exist. When that property is sold that tax could then be pro-rated if it's sold after it January 1 in which was put on the tax rules but not taxed, prior to July 1 of the same year and that would be for a pro-rated year of the fiscal year ending on that June 30. Is that correct, Sir? That's right, in general yes. Okay, and what we were talking about with the effective dates on the 16th property

that had not been listed on January 1 2016 could not be affected in the taxable year beginning July 12016 was that correct? That pro-rater for the last part could not take place because it could not have been listed. what the effective date does is to make just sure the earlier the effective date was to make none of this retro active. Like a slow perspective only Alright, so, as I understand it then if this law goes into effect that on January 1 2016 any builders inventory that is not been sold will be listed but not taxed. Should it be sold, it will be taxed. for the period in which it was owned as owner-occupied or not inventory house for sales, is that correct Sir? Yes. Okay, good enough. There is a way that the counties will recoup the the revenue once it's actually sold. Thank you, sir. Representative Carney. You're recognized. Thank you, Mr. Chairman. Well I'm a little perplexed with the bill and I think the chair, I know. As a former county commissioner in a county that will tend to be a little hard from this and having heartburn on open the bill and maybe between now and the floor, I can get some more of my questions answered from that county and within the committee from the Chairman. I will say that I just ask us, before we go down this road, remember that counties don't have whole a lot of options for revenue, and the biggest to have is property taxes, so when we look at, we don't want counties have to raising Property Taxes, I don't want mine raised, that just. To look at that there be assurance from the step we're taking that we will recoup the money three years out, or whatever it is now. So I just, I thought I could have it off my chest, believe me [xx] This should be interesting. Thank you. Representative Caiger[sp?] Representative Carnie, I think that there's something, I guess not being on county commissioner, I don't understand. You can't lose money you don't have, you never forgot. If I'm developing a developer today, you didn't get that money last year or the year before, so you didn't know it was coming. Does that make sense? So when I develop a piece of property, you don't have that money, so can't say, well I've lost it or you got to recoup it because never had it. So now, three years down the road, you'll get more money because of that not now, so I'm a little perplexed how we can lose money we don't have and maybe I don't understand local government. Maybe that's it, maybe I plan on things that I don't know are going to happen, and I build them to my budget, but that's not the way to do, that's not a good business. My life wouldn't belief. Representative Davis is recognized.  Thank you Mr. Chairman. I've always supported the building industry and I want to look at ways to stimulate new building especially because my wife is re-retiring, she keeps me on the lifestyle to which I've become accustomed, so the more houses we build the more she can sell and the better I can lay up, but in all seriousness to touch on something that Representative Brawley said, I understand you might the money down the road when the property is sold but to touch on what Representative Carney said, as a county commissioner for 16 years I did 16 budgets and she's absolutely correct that a county is very limited in the resources that they have to to pay for the expenses and we really hurt the city of Wilmington and other cities throughout, and counties throughout the state, we took away the tax. We can't keep as the General Assembly taking away revenues sources from local governments because what you're going to end up is that they're going to have to look at the local people that have a lot of taxes and I was one that never voted except I think on one occasion my whole 16 years to raise taxes in New Hanover County, it's just something that we can't keep putting on the backs of the local taxpayer so I'm in dilemma as Representative of [xx], I want to help building and as much as I can but I also have to be sensitive to the local government, city, county and otherwise to be careful

not to keep limiting economic resources that can be used to pay for the cost of government thank you. Mr Chairman comment. Thank you, Representative Davis you again you can't spend money you don't have and what we're trying to do is stimulate the economy to actually grow way more revenue for the local sales taxes, local counties and so I think what you're not careful you are taking a very short term side to what may be a long term problem. May I respond Mr Chairman. The gentleman is recognized for a second question. Thank you Mr Chairman I appreciate that Representative Hagar, if I understand it correctly now if a property is being developed January 1, does not the tax office look at what has been done so far and tax the developer on what he's been doing up to that point, the value of that. Generally yes sir, correct. Well that is my point. You say we're not losing anything we couldn't have well if this development is going on then we would be getting tax money each year based upon the amount of improvement so up to that point, I realize this is nothing that has happened at this point it will happen in the future, but let's say you get the money back three or five years road, well that great what do you do during that three to five years when you losing the income you could have been getting up to that point based on the approvements that have been done, that's my concern. I understand. Mr. Chairman really quick it's not mine, I guess I'm perplexed how state counties do their budget. Do they budget on things they don't know they're coming, will you budget on the next available material which is not there yet, so you don't loose that and I don't get to [xx] you're not going to discuss this, a little bit to understand, where I'm at and where you're at, so that'll be fine. As a courtesy to the Chairs, I would recognize Chairman [xx] next. Thank you, Mr. Chairman. mortgage business, and see tax records all the time and deal with some of these issues. We'd just like to hopefully bring a little clarity to something, I'm sure that what I heard Steff say before was internally correct. And this issue of wonders of property, begin being taxed you have to a certificate of occupancy for the house being completed. I've seen that for the last 16 years that, houses in construction you know, if their frames something they are not taxing anything, it's taxing bare land and the issue that representative Brawley brought up earlier about the January and that is entirely the way that it goes. So you got to have a CO first before it actually can be taxed as a house. If you think about it, it makes sense. If you got framing on a piece of land, I mean, you can't live in it, so what's the real value to it? There's no value until the inspectors say that she can live in it. Hopefully that clears up a little bit of that misconception. I just like to make a comment here that for the last 60 years, home building has led the country out of every recession because it's not just building the house, it's the appliances that go in, it's the carpets, it's the tile guys, it's the AC guy, it's all that. I think what we're seeing here is that, there's a fine line once again that we're straddling between trying to stimulate some portion of the economy and making sure that counties and municipalities get their share of the taxes for an house which is completed. In this case if we are crossing the line a little bit in favor of the home builders I would advocate that going back to what I said just a minute ago that home building has led the country out of every recession for the last 60 years. If we truly want to see our economy, get a little bit of gas going with it. I think that this is a good Bill that achieves that. Once we get back up to the levels where we're some other time we might want to go back and relook this visit this is stimulus measure I think it's a good bill.   Yes, we do have just as you noticed in the committee, we do have a number of members who still won't to speak. Thank you, chairman Sang, we do have a number of committee members who want to ask questions or speak, but as a point of clarification if he can't to clarify, the chair would like to recognize David Beckham with department of revenues Good morning, my names are David Beckham was the director for [xx] division for department revenue, which does include property tax, as far as the discussion around most tax for what is not on January 1st of each year the North aye statute does require the wholesly completed structured are taxed

based percentage of completion on January 1st of each year. So if I have a house that's 50% completed on January 1st and it's dated[sp?] at $100, 000 when it's completed the $50, 000 that will be taxed for that year. So just a point of clarity on that. Representative Bishop is recognized. Thank you Mr Chairman, I was prompted by my predecessor of Mecronberg County board of commissioners. What's got me about this bill is that and also the notion about serving on the board of commissioners is that we had lots of programs that gave incentives to various businesses who suffer with who are operating on a profitable basis as they want, at cost to the county, I was in fact on the wrong end of the a lot of eight to one votes on those things. This is different, number one it helps predominantly little guys the smaller developers who are developing residencies and it also, this it owes to the nature of the business. There is a time period in which the land is taken down, subdivided which is nothing more than a legal process to separate the parcels and then built, during none of that time is there any return to the builder, return is realized when there is a sale. So you are, in fact there's federal tax law that allows income tax to be done the same way, you do it on completion of the project basis, so this seems to me, although I am often opposed to, almost always opposed to corporate welfare where winners and losers are picked by government and benefit are passed out, this different, this is destroying someone fairly under the tax guard and now importing a higher tax on them, just because of the one step they take a piece of property in the drier land side and then they can't accept the law which has some of the poachers guys in the whole world, and then they instruct the wholly ones which is a [xx] and that improves [xx] so you wait until the economic trend [xx] is complete the better you realized the four years to import that higher tax that make all the sense in the world and I start with, nowadays we give out revenues and things that [xx] that we are just Yeah, [xx] [xx] representative [xx] you seem to be recognised I have a couple of questions then my comment, thank you Mr. Chairman first, Macken Soren is half finished houses, houses that then will be built and set up everything except for the finishes that a I may want like flooring and refrigeration and granite counter tops and things like that where the house is really not hospitable but the builders can then build this houses and not pay taxes on them or have them sitting there having that's a concern I have. And the other one I have is it this is stimulus steam-less is temporary, why is this is a permanent bill. This is permanent, I'm I not correct Representative [xx] So this is a permanent thing we're doing to stimulate the economy but stimulus is a temporary infusion so I can't call this stimulus.   [xx] Holey, even if the house was completed everything the builder would not pay tax on until he has either sold it or his three years lapses. No benefit for him or her to finish it half way or finish it 3/4 or finish it 90%, there's no fit at all. He'll just go ahead, he or she will just go ahead and complete it out and then see for himself. I can tell you and Representative Brody is back there and he can tell you that a builder is not there to figure out how to the house as long as he can. A builder is there to sell a house so if he is not going to be in business very long is that right representative Reg[sp?] is right. Second thing is remember as I think is Representative Szoka has said as Representative Adams has said this part of the business it stimulates a lot of other things. If you live in a second home area like I do or at the coast like some of our representatives representatives do. This drives the economy in our area from 04 to 09 representative Kenny did very well. From 09 till now we've suffered greatly and it's been aphid because for the building business because the developing business is low. This is and it's kind of I don't think you guys in urban areas see the devastation that this industry can cause in rural areas and it is the folks that can least afford to be out of a job in a lot of cases it's not

your CEOs it's not your millionaires it's not folks it's again it's your framers is the guy that runs the local hardware store it's your local businesses so it is very seamless because it spreads out he gets the local hardware stores down the street he gets a lumber store down the street the gets he lumber mill, he gets the man or woman [xx] in the the diner down the road for where the houses are being built but now have gone to business. In Lake Lure I know you guys have gone to Lake Lure during the building business so that you could find something to eat anywhere. Now there is very very a few restaurants are open because the builders have all left since developers have all left so it does fan out to be more ad more folks not just the contractor but all the folks working for him all the folks where they eat all the folks where their get their clothes all the folks they get their hardware at. So it does spread out and you see that more in rural areas than you see in urban areas to remain consistent the Chair is going to try to recognize members who have not had a chance to participate at this point the Chair would recognize Representative Jitter  Thank you Mr Chairman there's a couple of things I don't understand in my life. I don't understand how my wife [xx] thank You we don't understand why your [xx] picks husbands either that's out of order out of her taste in man she is perfect I've said that for 16 years. I don't understand what she says, she says she saved me $500 by spending a 1000. I'm sure there's a mathematical equation to make that true I don't understand it, but there is no greater job creation, there's no better thing for our economy than investment and creation of jobs. It seems to me the core issue here is; if things were on a flat line then I think the county's argument is correct that they wouldn't lose revenue. The assumption here which I think is a accurate assumption is that this is going to allow more development, and more progress based on the fact that they have an economic incentive to do so or in fairness, they don't have an economic disincentive not to do so. That's the real key is, what's the added benefit of this? What are the new developments that are going to come? If you believe no new developments are going to come, I understand the concerns with this bill, but I think that everything we've seen from economic perspective, every votes we've made indicate that if you give people incentive to do things, I'm not going to get, well, let me rephrase that except for solar of course Representative Hager. If they do things, this is one of those things that great investment in the communities, and it's not just tier one and tier two counties. I'm in a tier three county, these parts of my district that are devastated as well. So this has an opportunity to create growth and expansion in parts of our state that desperately need it, and that's going to be new money and that's, I think the key point to this bill it's new money. It's not, not capturing existing money. That's what makes this bill different going in to Commissioner Bishop's great points. This is what makes us different and I think I absolute vote yes in this committee Autumn time if you have a comment or a question please let us know whether it's a comment or a question. If you have just a comment if it is worthy of a motion please bring forward that motion quickly otherwise try to keep the comments related to a question so we can move forward. Representative Cunningham for what purpose do you seek recognition? Thank you Mr Chair I have a comment and a question. Your recognized for a question. Thank you. Representative Hager you and I had the conversation about this bill and you told me how much you liked, and I appreciate that but what I would want to know if we have 100 or 200 homes siting in Necklebur County that are partially built, and they are sitting and they only sell in a little bit sparingly, what will we do for that three years waiting for the taxes because of the revenue short fall. Ms [**] I understand, but I'm not sure those are applicable to this since it's a new construction it's prospective not retrospective. Staff if it's a [**] question you're recognized to respond. I don't think I would say anything differently than what I have said, I mean that It

will be an exemption tax is not a deferral and so it would have been tax theoretically that this bill would calls to be exempted. Thank you Representative Kane, what I said earlier I'm not sure if you heard it or not if we find out that it's retrospective in things that are already seen there, I'd be happy to accept the amendment to make it for anything new moving forward. Because it's not my intention to cause the loss of revenue from Counties. at this point, Representative Goodman sought recognition for what purpose fora  question Mr. Chair, The gentleman is recognized for a question. Representative Hager, I think I understand this maybe some all members it is a little unclear, but there is no intend to take any unoccupied home that's on the tax books now off the tax book is that correct? Representative [xx] it's my intention to do that's correct Follow up then more county has going to lose any revenue that they are currently realizing. Representative Gimmy it's not my intention to have a county loose revenue and if this bill does that I would be happy to accept amendment if not amend it myself to make sure that that doesn't happen. One more follow up. Then the only You're recognize for follow up, Sorry Mr. Chair then the only potential revenue you lost is additional tax revenue that the counties do not currently enjoy at this point, is that correct? Representative Grier that was the intention of unteach in this bill and again if it doesn't say that then I will have to say what amendment we need to run to make sure it does say that. Thank you, thank you very much. Okay chairman, Saine is recognized. Thank you Mr. Chairman, having a brief on everyone I've just clocked test one first Paul would like to say happy birthday to the chairman, happy birthday to you,. Thank you friend Push and hope you appreciate us allowing you to work on your birthday but I just want to say that this is a good bill I think I will achieve what this purpose is itend[sp?] and it is one to stimulate the industry or protect finice that is realy what this is about tax secondy[sp?] and tax finace and make sure that we do get academy moving quickly and nothing this is a great way I come from the mutches of this bill will be very important thank you sir Thank you Mr chairman, I have been a close observer of real estate activities for over 27 years and I've been involved with property tax bills of the state level in a number of occasions. I will just put this into perspective. If I was in a county, I've never been a County Commissioner, but if this was a plot on a county by county basis, and my county could choose to adopt it or not, I would be jumping up and down the table saying adopt this, adopt this, adopt this and going to my neighborhood counties saying don't adopt this, don't adopt this this would make a county far more competitive than its neighbor if it was adopted against another county not adopting it. Mr. Jader. The Chair thinks that is the final comment and at this point Representative Sturn will be recognized for a motion. Move for a favor report to the committee's proposed reception, unfavorable to the original bill. The second is not necessary, those in favor say aye, those opposed say no, no. In the opinion of the Chair they ayes have it. The bill follow the floor. Thank you Mr Chair, thank you committee at ease one second. Sure. If there is no further business from the staff or the members this meeting is adjourned.