If we could find our seats please? Good morning, somebody have to be here. Good morning, thank you for showing up. Welcome to finance where hopes and dreams begin and we pass over to the senate and kill him, but they'll laugh, glad to have you here in the house finance, room 544. House Sergeant-at-arms are ready, Chris McClurkin and David Laden. House pages joining us today are Shawn Cone from Nash County sponsored by Representative Jeff Collins, Bella DeVivo, Wake County, sponsored by by Rob Brian, Morgan Hienen from Wake county sponsored by representative Susie Hamilton, Christine Zendkin from Wake county sponsored by representative Holly, welcome to you all. Thank you all for being here we have an exiting morning, we even have television in it again so everybody be in their best behavior. Prior our agenda we have two bills that we'll hear today, the first one preference would be page P152 of the new historic preservation tax credit recognizing representative Ross for a motions to have a bill before the committee do we have a second? We do have second. Representative Ross? All those in favor. I'm sorry we should take a vote. All those in favor respond by saying I. I Those oppose representative Ross if you would come, come forward. Representative Ross would you like to go ahead and take care of the amendment before we start? Thank you Mr Chairman. Yes I would like to set forth an amendment, it's a strictly technical amendment that fixes a technical glitch in the date that's in the bill proposal. Moves to ammend the bill on page five lines four through six by re-writing lines to read this act becomes effective on January 1st, 2015 and it applies to qualified rehabilitation expenditures and rehabilitation expenses incurred on or after that date, and the remainder of the act is effective when it becomes law. We have amendment as presented in the discussion. We got a question Representative Collins? Does that mean we're going to make this retroactive to projects that came about when we didn't have this law in place? It's a question. Okay. Yes, it would be effective for the entire tax year 2015. So the prior credits ended January 1st and these credits began January 1st, but the regime for credits I think it would require you to get a certifition which are sooner been issued, but it is theoretically retroactive even though I imagine how somebody could use that rate to activity and it would be available for the entire touch here Follow up? Follow up. If there's no way for anybody to get it then why are we doing it? I think our deal was to match the tax years so there wouldn't be any gap in there for that but I can't think of a reason why you couldn't make the whole thing effective when it becomes more sense. Do not try to think of it anybody retroactively. Other questions? Representative Hamilton?
Thank you Mr. Chairman. My question may be directed towards staff as well but it's only been expired for three months. Could that three month period be capture projects that had started before the tax credit expired? These are construction projects they take months and months to finish anticipate that their are projects that started in 2014 that are still underway. So perhaps that three month retro-activity could capture those projects. Is that the entail? Mr. Rawney or Mr. Chart. I still believe my first answer is correct I would have to subvert and really think about this if their's any way somebody could have, I mean I don't know if that the state is not issuing certifications even though there's no tax credit. So I guess I would have to call cultural resources and make absolutely sure they have ceased administering the program. But assuming that they have I don't know how anybody could qualify retroactively. There might be an argument that you did your expense in January and you got certified in June and then that would still be available on your tax return, but that's all I could think of. Rep. Roth. Thank you, Mr. Chairman. We had have the representative here from cultural resources here that could probably answer that question. Please state your name and your title for the committee I'm sorry, Madam Secretary you've made me to press the button there. Susan Kluttz, I'm Secretary at the Department of Cultural Resources, and I have Ramona Bartos who's the Director of the State office of the store preservation and she can answer that question for you Miss Bartos if you would. Thank you representative. Good morning. My name is Ramona Bartos the state historic preservation office one reason that retro-activity is of interest to the department of Cultural Resources is because as representative Hamilton suggested there are all projects that were pending in process at the time of the Historic Tax Credit census in December of last year and so in our discussions in the Department of Revenue a retroactive date will allow projects that were in process that have now been suspended or stalled to continue that program because we have had buildings muffled in the state where people have stopped moving forward on projects and presents our understanding from the Department of Revenue is that those projects will be able to take advantage of the tax credit as existed in 2014, for any expenses they had in 2014 back, and anything that they start in 2015 would be allowed to take advantage of the new credit if indeed our past. Thank Miss Packer any other questions Representative Carlos. Now asked to read in section three in the original bill and reading the amendment now I'm extremely confused. It looks like the the two are identical in the first sentence which I think is what we're talking about and the only difference is the second sentence on the memo says at the reminder of the act and the original bill be section says section two which is the remainder of the act, so I don't see, what is this amendment changing that section three didn't already say, it looks like the you're saying the very same thing credit adviser [xx] early Mr Roney[sp?] The technical problem is this, the bill has three sections: section one, section two, section three, they all need an effective date. So Section Three is the effective date and it gives the factual date for Section One, and Section Two, but it doesn't give an effective date for itself, and so that's a common drafting error, and when it occurs it means that the effective is not going to be effective until [xx]. So the way I fixed it in the amendment is to just say the remainder of the act is effective, and therefore the remainder would be section three. So it will take up section two, and section three, and make them effective at the same time, and that's the problem we're just trying to give section three the effective date section and effective date. Which in the first version of the bill it does not have. Follow up. Mr. Chair, looks like we're arguing over nothing and the retroactive date is already in the bill the only things we're talking about is the technical things, with this amendment. Well Representative Collins has given us all the practices we continue to argue over nothing the amendment before us any other questions saying that those in favor of the purpose say I I Those opposed say no. May representative Rose apologized as with everything here I thought it would be a simple amendment and those famous last words you were recognized to protecting the bill. Thank you Mr. Chairman as I have learnt simple things sometimes are not simple and that's why I never use the term simple bill any more, since 1998 over 2400 historic text
credit projects have been completed state wide bringing in over $1.677 billion in private investment in the North Carolina communities boasting local economies and creating jobs while preserving communities historic cores and the states priceless historic character. I passed out the map, and I think everyone has that, big nice color map this time. What this map shows you is that this program in has been used in 90 out of 100 countries. This is not something that you hear is isolated to a couple of just urban areas such as Charlotte or Raleigh. It's been used in 90 of 100 counties, you can see from the dots on the map. It's used all over North Carolina pretty much in every community that is represented in this room. Now the eligibility for this new program is limited only to those historic properties listed in the national historic register, or historic places. Now I'll touch on the highlights of the bill. In the summary, the first portion of the bill involves income producing property, tax credit are capped at $4.5 million and equal to 15% of the first 10 million, plus 10% of the next $10 million, plus 2.5% for the first $20 million, if it isn't a one or two of your two county, and that's important. This is something that's new. We have added an extra bonus for Tia 1, Tia 2 counties because we're trying to stimulate investment in rural areas where we have had some problems in the past. There's also 5% bonus for certain sites, when the expenses are to rehabilitate a structural component of a bill enlisted in the National Register or located in a National Historic District and certified by the Secretary of Interior. The cost of the project must exceed the greater of 5, 000 or the billing is adjusted basis. The next section of the bill involves non income producing properties this would be what the residential. Hatch credit passed to 22, 500 and equal to 15% of the expense to rehabilitate a building, listed in the National Register of Historic Places or certified by the state Historic President evasion officers, contributing to the histroic significance of the National Register Historic District, or a locally designated historic district certified by United States Department of interior. The expenses must not exceed 10, 000. Essentially credit for rehabilitating income producing historic structures, is the sum of the following, that tax credit cannot exceed $4.5 million, this is greatly scaled back. 15% of expenses from $0 to $10 million, 10% of expenses from 10 million to 20 million, 5% of expenses from 0 to 20 million. If the certified historic structure is located in a development with tear one or tear two, that's the bonus, and also a 5% expense bonus from 0 to 20 million and if the certified historic structure is located on an eligible target investment site. That's a site that was used for manufacturing, the manufacturing facilities, textile mill, furniture companies, we have a number of those. It also must be a certified historic structure, and made at least 65% vacant for a period of at least two years, that's another stipulation there. Credit for rehabilitating non income producing historic structure is 15% expense if that the expense exceeds 10 thousand, that the tax credit again cannot exceed 22, 500. That's roughly $125, 000 residence so that eliminates the big large mansions. North Carolina historic commission and the state historic preservation office will adopt rules to administer the program. The Department of Revenue will also report back, a report that will include the following the number of taxpayers that took the credits, the amount of the rehabilitation expense with respect to which credits were taken, the total cost of general fund of credits taken, and for all taxpayers total amount of tax credits claimed and total
amount of tax credits taken against current tax is by type of tax during the relevant tax year. And for all taxpayers the total amount of tax credit carried forward by type of tax, and the Bill is set to expire or sunset on January 1st, 2021. There's fiscal note, I want to mention one thing in the fiscal note, the fiscal note shows a cost of roughly $8 million a year. In the first year, it's calculated that there would probably will be a slow start up because it takes a while to get this projects underway, and since the credit is not given until the end of the project until the project is complete, in the first year we calculate that the maximum would probably be somewhere around 1.6 million instead of eight. So the first year would be dramatically reduced simply because it's stored up that's involved. I also passed out a second piece that compares this, the new program for the whole program, if you look the front side it shows the current and those, the previous. The graph on the other side shows the expenditures for the whole program, the only thing that we can do is cost is looked back, it what we've had in the past, and we go back to 2005 and you can see that the credits were dramatically higher from 2005 to 2012 than it would be if we used or applied the new program, you're in the same time period from 2005 to 2012, under the new program it would run roughly again $8 million a year which is dramatically less than what it would have been under the old program. And the reason for bringing this program forward is that this is a huge economic boom for the state of North Carolina, and we can see it in all over our community as we travel around. A non-partisan study of the state historic tax crew program projects the status historic rehabilitation tax credits would attract 2.5 times more jobs, at the same cost the state treasury as an equivalent across the board tax reduction. Now I'm going to repeat that, the state historic tax credit program would create or attract 2.5 times more jobs at the same cost to the state treasury as the equivalent across the board tax reductions. The program intensifies historic redevelopment in communities from large cities to small town and rural areas. For example, the $20.3 million privately funded historic tax credit driven redevelopment of the former Golden Bell Textile mill in Durham, created 400 jobs. The building is now home to 80 commercial tenants and 37 apartments, 20 rehab historic buildings in downtown Monterey population of about 10, 000 posed down 42 businesses and permanent full-time jobs. The tax credit provides a direct net benefity to the state general fund. The historic tax credit project is like an annuity for the state. The rehabilitation's is not only being watched under utilized buildings back to life but also dramatically increase their property values and local property tax revenue from them for weight forest about to take place in down town Weston asylum once the home of RJR Reynolds Tobacco the property tax evaluation went from 3.7 million to 59.4 million, a 16 fold increase. In North Wilkesborough [xx] now 31 occupied owner residential
units went from 75, 000 to eight million evaluation a truly exceptional increase. Currently all of North Carolina's neighbors with a state income tax system have historic tax credits.competitive wealth exceeding what North Carolina offers. Virginia consistently ranks in the top two states nationally for the number of completed historic tax credit projects. South Carolina now offers dual historic tax or dual historic in abandoned building tax credits and even states without income tax offer a state historic tax credit program. Most notably Texas, very transferable credit based on a state franchise tax. Now many might wonder why I stated incentive is necessary in addition to federal incentives, and the answer to that is without the federal and state and senates is generally not financially feasible to pursue renovating historic structures. Why? Because these projects are technically difficult or more expensive than comparable new construction. A typical historical renovation can cost one-third more than building from scratch and there's no site selection alternative. Without State incentives many historic projects were not economical and simply won't be none, that would be a huge lost opportunity especially for economically oppressed small towns, they are rich is history but low in wealth, the other benefit to the State is that's risk-free, the incentive is received only and if when the project is completed. Further, if potential investors can't make the deals work in North Carolina, they can easily find alternatives elsewhere nearly all our surrounding states as I said have historic preservation tax credit programs and just last year Governor Rick Perry signed into the law a 25% State Historic Rehabilitation Tax Credit in Texas. Now I have someone, a couple I'd that like to have speak if I could Mr. Chairman you also had a handout from a project that was completed in Mionery and I'd like to maybe run through some of these numbers if I could. You can see here, going out 10 years the State tax credit for this project were 5, 248 for year, for the past five years. You can see what the state tax credit receipts on, this is money coming back to the State not the local government. You can also see the cumulative state tax receipts came in across the bottom. At the end of 10 years the total cost in tax credit was 26 000 and the returns of the State was 315, 000, that's a five year return on investment both 462% and as most of you know I'm an investment adviser and if I can go out and get an investment that would return 462% 62% to me, I'll take it any day and for the state of North Carolina, this is the of return that we're getting on our historic rehabilitations. So if I could Mr Chairman, I'd like to have, recognize Mr. Gene Ress who is developer of this project and ask him if he could come up and maybe take about two minutes to give us his end side on this project. Mr. Ress you would [xx] there press the microphone button and state your name and who you represent [xx] for the committee thank you. My name is Gene Ress I'm from Mount Airy is the microphone on there okay he [xx] I should once the lights are green you're live OK you speak to the microphone thank you. Thank you my name Gene Ress I'm from Mount Airy and I operate a club[sp?] store in down town Mount Airy and I've done a fair amount of historic redevelopment work in the Western part of the North yes sir you could go please go ahead go we just [xx] yeah whatever bringing some OK. We had provided three or four examples of income producing redevelopments we'd completed in Mount Airy and I think you've explained one model
a couple of important footnotes to this I think here number one there are two phases of this type of development one is the construction phase paid back to the state and the other is the post construction paid back to the state. During the construction period we have found that the state before the tax credits ever issued or used the state recovers approximately 33% fact this example you had they did recover 33% of the state tax credit before the tax credit was issued and I went through three or four other historic projects we get in he same town and that will cut construction pay back recovery to the state was approximate the same 29.2%, 32.8% so the point being that approximate a third of this tax credit is recovered in the first year prior to the credit being issued. The post construction payback to the state obviously is much more on a income generating business as is the example that you have and in non- commercial activity of course the post construction payback will be something less than that. These examples also don't include any isolated benefits to our locality. I live in a Tia one county, and I can tell you we need every recruit until we have to recruit industry and young professionals into our community and a desirable downtown, is certainly one of those assets we have to have. I've got about 47 commercial tenants in our downtown comprising 16 buildings. About four of these buildings were done with these tax credits, the balance 12 were done without historic tax credits for whatever reason they didn't qualify couldn't be done, but what this means for a tier one county n our case is 203 full time jobs in $18 million in retail sales every single year. And that's the lifeblood of a small town, I think you could erase [xx] from the top of that page and put North Carolina, Salsbury, Morgan or Bravado[sp?], any town you choose, particularly tier one counties and you would find that this is the economic development tool that not only helps of resurrect ourselves from the ashes, but it also makes good economic sense for the state of North Carolina and for our locality. Thank you sir. Thank you Mr Ree, Mr. Ross someone else to speak to the committee that's it for the moment. That's it for the moment, thank you Mr. Chairman and for the reasons Mr Reese[sp? } just stated, this bill is supported by the North Carolina Metro Mayors coalition, preservation North Carolina, League of Municipalities, Association of County Commissioners, downtown development organizations, economic developers, the American Institute of architects, Centralina Council of Governments, North Carolina Association of REALTORS, Local Chambers of Commerce, the North Carolina Bank association, real estate and building industry correlation, North Carolina chamber of planning association motgage bankers, proffesional engineers, contractors and the local councils of Government, the list goes on. Representative Ross, I may interrupt just one minute looks like you also have a number of core sponsors on the bill as well. That's correct Mr. Chairman, we were blessed with the time, we filed the bill to have non partisan core sponsorship we have 65 core sponsors on the bill it's very popular. If you [xx] Representative [xx] due to all the popularity I'd like make commotions for favor reported the proper time [xx] Let us hear Representative Rosa, is there any discussion we didn't have a motion so we will have discussion Representative recognizing Representative Stan[sp?] Thank you a question we state the question first and very short preamble. This aren't any restriction on what it means to be historic and here's my, I was in Istanbul one time at SantaSophia whatever church, 1500 years old and that'ts a new name Hugh or whatever, but right across from there is a hippo drum and they put an abolist from Egypt which itself was a thousand years earlier. But that's history. In my district. Right next to my district is a historic district with a house that is 60 years old that has to be rehab, 60 years old I'm older than that. Is there a some limit, or what is historic or whatever we can money flow, There is a limit it has to
be recognized as a historic structure so and what we call a historic destreak[sp?]. [xx] Yo may, you got to state your name and your department for the committee. Ramon Patches, department of culture research turns of representative stamps questionnaire. I grew with you sir, I'm getting to the edge where there are some buildings I think I recall being built as well there is a two part process to get something listed on the national register of the historic places. There is the state nomination which goes to our department and then there is an ultimate federal determination. So, it's actually quite a lot of scrutiny as to why of these buildings are truly classified as historic and deserving of a tax credit. Typically we look at anything before 50 years alternate just because I think our country is a little younger than perhaps other places. Thank you. Thank you. Representative [xx] Thank you and representative Stan you are approaching historic status and a little bit more historic than you are but if you really want to see history and historic George Cleveland[sp?] is the gentleman that is really historic very old but dignified and still get a lot of juice in them. I got a kind of a different perspective almost an historical perspective on historic tax credit I was so for many years was in the diamond business and part of the territory that I covered was just about all of North Carolina and I also Virginia as well so I had an opportunity in traveling my sales territory to see the small towns for North Carolina when they were trully vibrant and exciting and energized downtown's and then I also was there when the transformation occurred and all of this towns dried up, now going back through many of this places that I visited over the decades I have seen as a result of historic preservation and rejuvenation in these towns all across the state and not just in this [xx] but in the common world of Virginia as well. A couple come to mind right of the top of my head one of them is Smith Field Virginia I don't know if most of you are familiar with Smith Field Virginia or not but its a quite downtown that really was very [xx] years ago and then about 15 years ago was just a ghost town there is nothing going on down in Smithfield at all if you were to drive up and I would encourage all of you to do just for a great day drive up to Smith field and walk the streets and the shops and see the investments that have been made in this historic buildings and you will marvel at this once thriving then non-thriving and now thriving again and perhaps maybeeven more so now than it did in its heyday in our own state of North Carolina when I was travelling the western part of the state, there were towns like Yadkinville one time was a quite a prosperous town, it dried up, and now Yadkinville is got a lot of things going got a lot of wineries over there and so forth but the downtown is really kind of hustling and bustling and so a lot of activity there and a lot of it is the resolve of the historic tax credits. The gentleman that was speaking earlier had mentioned [xx] and I'm familiar with odd areas well, I used to call them Patty Marion's Jewelry store over there at Monterrey, and it too has undergone quite a reinancance and a lot that is direct result of what has happened through historic tax credit and investment in historic properties. I held from North Eastern North Carolina, not originally. But Edenton the provincial capital of the State of North Carolina, one that is a town that is just absolutely incredible for those who have never been there. I feel privileged and honored to be able we call Edenton home. Not only have they done a great job with this tax credits in restoring Edenton and North East to North Carolina that there are projects that are in the pipeline that will truly continue to transform this particular
town and North East of North Carolina. North Eastern, North Carolina. Mr. Steinburg, if you just suspend for just a moment, your colleagues are being very gracious and they enjoy the story and if you could wrap up. I will and I appreciate that Mr. Chairman and thank you colleagues for indulging me here for just a minute here for a minute more or two. The the fact of the matter is that North East or North Carolina, I'm looking at this map that you provided us with today and I'm looking at all the dots on the map and it's very clear that we've benefited greatly by that and I think sometimes Mr. Chairman with all due respect I think sometimes we need to take just a little bit of extra time to listen what the folks say because we are representing the people back home so let's try to always keep that in mind and I say that respectfully. Duly noted and my comment to you was made out of respect. By the way, if you didn't know for History lesson that is [xx] Representative Collins, I just have a question the section that begins on lot 27 of page two credit for rehabilitating non-income producing historic structures. I'm assuming this deal refers to residencies the that people that now live in after the storm. Is that correct? Representative Ross That is correct Pull up So in this case their really is no benefit to the state for the assistance pretty much calls to us is that correct? Representative Ross the benefit back to the, I would argue that there is benefit back to the state because any time you take a rundown dilapidated historic home and renovate it, there is benefit obviously back to the local community, but you're providing housing, which in turn results in a family that can live in that house which in turn results in someone that has an income and also spending money. Follow up? Yeah I have one follow up. I hear a lot and I've heard from my local folks, I heard it today several times, that the cities in the counties really, really benefit from this and therefore we need to do this, and I agree with that to a point, I agree that the cities and counties, mine included, really, really benefit this, but the one thing I don't see here is, I've always told them since the cities and counties for the primary beneficiaries of this, especially the non income producing structures, and even the income producing ones because they buildings which are valueless basically on the tax books that suddenly have great value and pay city and county taxes year after year after year. I don't see any local commitment required here and that's always bothered me. It's really, really easy to spend other people's money, and I can't vote for a bill unless it has some kind of local commitment in it. Otherwise every project looks great to us because it's not our money. Mr. Chairman could I respond? Yes, Representative Ross. As far as local commitment, as most of you know I spent 20 years either as city council member or mayor, and I can assure that in, maybe not every case, but in most cases in order to make these projects work local government chips in a lot of money, in fact they chip in probably as much as they can do under the restricted sources of revenue that they have now. The day that I filed this bill, for example, I went home that afternoon and then the local paper was a picture of the white furniture building, that's a huge, it looks like a bombed out factory from behind the Iron Curtain after world war II. [xx] the city has worked hard to try to locate, and find a developer that might, could take on the risk to renovate this factory. This factory was built in 1881, and for a partnership between in the City of Maben and the developer, the City of Maben is providing the infrastructure moving water lines, sewer lines, side walks, roads construction, all the things that a city legally can do to put into to make this project work. This is going to turn out to be a $25 to $27 million investment and the benefits back to the city are there, yes, but benefits back to the state are also there because this would be turned into a facility that will house 157 apartments. But the big part of that is this will a section of Mebin which is a large section, Mebin is a small town and there's nothing going on in this section of Mebin like as described earlier, it all left, the furniture company closed down.
Gone. This project right here will rejuvenate that entire section of amendment and results back to the state is hard, it's really hard to put a number on it, but that be very huge one final. One final follow-up. Would you be a man within that may work with you between now and the time this is the floor [xx] that requires local commitment in order for us our state dollars too. I would discuss that but I don't think I want to put something in the bill that is an absolute requirement because we have many communities that absolutely just don't have the revenue sources to do that, and what I'm talking about, the very small communities that rural areas, in the bigger cities you have French bars, you have Winstons, they have the wherewithal to do that, but I don't want to put something in the bill that will other hands of the small communities, That brings up another question senate since these projects are always successful and increase the property and value so much, could we not just require them to do retroactive, just like we're doing we get the money upfront then we get some of that back so they can certainly re-base some of the increase and tax barrier amount, I don't understand why that'll be a hardship on anybody. If you got a property is going from being worth $20, 000 been worth a half million dollars and then you you're going to get the taxes every year, I don't know why it will be a hardship to refund a very big part of that I think there is a, thank you, Mr. Chairman, I there is a shared responsibility between the local community and the state, to make this kind of thing happen I think representative Steinberg said in another meeting that I was in about two weeks ago we are as a state one community and we need to work together as a state and as our local communities for economic development, for jobs, for housing in some case that this provides. I think the state also, I don't think the local government actually corners the market, protecting our history. I think the state also has a responsibility in protecting the history of our historic structures. Some of these facilities absolutely cannot be done, they can't be done with just private money, they can't be done with private money and local money. It takes State participation. We have a number of locations all across North Carolina waiting. Here's one in Graham, North Carolina. A huge male, bigger than what I just I showed you here in Mebin, built in 1881 also, waiting the city of Graham was working trying to find a developer to develop this property some of this structures are getting so old that time is running out for them. Roof collapses of historical and [xx] mills under the weight of the snow that we just recently had so there is one we missed. Representative Ross I don't mean to interrupt you but we do have three more folks who would like to speak on this. Well that's my final comment this is the third fellow comment. Yes sir you are making my point for me, working together state and local, you're making my point for me, I want us to work together because I'm trying to find a way to come to an agreement with you, but if we can't we can't be sure that we're working together locals and states as a like representative of state have to look out for state tax payers and I'm proud to finalize I'm agreeing with, if I can't be assured that locals and the state are going to work together, I cannot commit the state in a one side of view. Thank you Bauers for the exchange I've got Representative Adam, Representative Zack and Representative Blunt, anyone else a question to speak. Representative Johns, anyone else Alright, Representative Adams. Thank you Mr. Chairman as I hear the conversation more thoughts come to mind, I have some photographs from Hinckley taken in the winter time of 1967 just before Urban Renewal and if we had not had that experience what a beautiful city Hinckley would be today, far more beautiful than it is, but I have a question about historic designations. We talk about buildings over 50 years old, but can a structure be declared historical because of an event that occurred there before it's 50 years old? Representative Ross, If you know. That's a good question. Representative Ross, suspend and if you approach the microphone state your name and department. Thank you. we are mono persians partner cultural resources to answer Representative's question there happened a circumstance where extraordinary circumstances where buildings have been listed in international registers.
Part of that 50 year date the twin tower site in New York City is one of those examples again a very extraordinary set of circumstances. But generally is that 50 year period to give us all that time to reflect on why that particular event was important, sometimes that's more evident than other times, but again it's very unusual for that to be the case. Thank you. Thank you. Representative Adams does that satisfy you for an answer? Yes it does. Thank you. Reverend Bazooka. Thank you Mr. Chair this question is probably for staff to answer, you need previous tax credit. My understanding when talking with developers was that for example a $10 million project had 20% credit. The developer would actually monetise that he would sell that credit instead of $2 million he might sell it a discount to a large corporation for $1.5 million to free cash to enable him to do the project and my question here is on page three where it talks about down line 43 and going farther down than that. Proprietor for distribution, proprietor for change an ownership and so on and so forth right there. Is there anything in this bill that would change that ability for a developer to in essence monetize the tax credit? Staff, let's start. Representative Zogger this bill is the same as the previous one in that regard. If you look I want to refer you to another section of the bill. This is the same language that was in the original historic credit. Thank you, Hold on I'm trying to share, there was a provision. I can't find it, I want to reference it to you, but anyway in any event, there's a first for provision it allows for a special allocation of the Canada among members in the past serenity as long as their basis is at least 40% and the past activity and that provision gives developers some discretion how they passed through those credits, through those hours of the project. okay and the reference to that tree you help me find where that is if you want to read it is page one paragraph B follow mister? Follow representative Zaker? Then I see that for example a project was kind of put down in my county and it was a $10, 000, 000 project needs an anticipate monitising the whole tax credit and selling it to someone who is not actually developing the project so this language would allow a developer to do that am I correct? Yes, thank you, thank you I just have a question because of something representative Raw said and I thought I understood this but I may have misunderstood what you said, my reading was this had to be a specific structure to qualify, and you said something about something in the historic area. I have concerns if I own something in a historic area, he owned a historic building, he owned a historic building and I can use this just because of my location near them. I'm I reading this wrong? It looks to me it's got to be a structure. No, you're correct, it does have to be a structure, but in order to meet the qualification, and you're from Guilford County. OK . Greensboro has an area right within the downtown that they have certified as historic district, and it's spelled out properties that are in those historic districts have to be of a certain age, have to have had a history with the beginning of Greensburg and building of Downtown. A lot of cities of any size have historic districts and that's to protect the very oldest section of the city and I'm trying to think of what they call a section in Greensburg maybe old having park or something like that. [xx] Barrington has one which results very and they have been set up years back in order to protect this neighbourhoods and to preserve the historic nature of those neighborhoods. But it does have to be a structure? Follow up Representative [xx]. So it would have to still be a historic structure
within a historic district? That is correct. Great thank you, representative Jones. Thank you Mr. Chairman, and in the interest of time I know that we've had a lot of discussion and I'll probably less than 10% of what I would like to say in my own vote with all due respect to our bill sponsors I do want to stand with what representative Collins said my friend you are not alone and concerns for the tax payers of this state and try to exercise fairness in the way that we treat them. I understand that everybody in this room believes in restoring his historic buildings. I do want to make two quick points that I don't think have been made, so I'm going to try and make them briefly, but as a representative who represents two tier one counties. I believe the only two tier one counties in the triad area of the state. We've had how this is so greatly beneficial to our counties I would just say that I would love to see us come forth with something that would brought ransom funds to those counties, and let the local governments decide that this is the most effective use of those funds. And if that is the case I would gladly support such a deal. Because I will tell you we've many, many needs, and I think rather than for the powers that be that sit up here, and rally to make those decisions for them, I would prefer to allow them to make them for themselves. So, I would say that. Well I had another big point that I was going to make it, it probably doesn't make any difference anyway, but I would say that, I know what I was going to say. It has been said that these projects are sitting in mothballs, and they're not moving well of course they're not moving because people have been led to believe that when this house passed tax reform, and we said were trying to go something that was lower and flatter and fairer and picked the last winners and losers that people were meant to believe that we really didn't mean what we said, and apparently an effort to unraffle a lot of what we did which I think was extremely effective for the stay so for that reason also, again, I could say a lot more, but even though I support historic buildings, I think there're better ways to to get at it and I just can't support the bill. Thank you. Thank you. Representative [xx] should restate your motion knowing the enrolment on the amendment to a new PCS. Yes Sir, move the house bill 152, [xx] substitute and receive the favor report. Make sure, wait a second, All noted all those in favor certify by saying aye, aye those opposed [xx] so the ayes have it the ayes do have it and the bill passes from committee. Up next. Thank you Mr. Chairman. Thank you sir. And thank you all for the debate. I hopefully that will limit some of our discussion on the floor, though I'm not sure that that ever happens. Up next, yeah right we're laughing, House Bill 89 on economic development improvements. And before we start, I've heard few questions about amendments. These bills we're hearing only today, we're not voting there's been some discussion between both parties about Partisan effort to craft an economic development bill. As agreed upon, the Chair and the sponsors that we will hear this Bill today, we'll have a quick overview of the Bill, maybe a little bit of discussion and get on to the next meeting, so and Stef can do the quicker review. Stef if you would we'll go ahead and start with that. Motion to start have motion for us. Mr. Chairman, motion. We have a motion in a second, Stef. Thank you Mr. Chairman, I'll just go through at a very high level the different sections of this bill so part one would appropriate $20 million to the side infrastructure development fund, part two you would create a new state tax credit modeled after the federal new market tax credit program. Part three of the bill is the historic rehabilitation tax credit and is the same and substance as the bill you just approved.
Part four of the bill, extend the sunset on the film credit part five extend the sunset on the low income housing credit part six, extend the sunset on the renewable energy property credit. Part seven reenact then extend the sunset on the North Carolina Ports credit, part eight extends the sunset on the qualified business investment credit, part nine will increase the JDcap from 15 to 20 million part 10 is referred to as a jump start our business startups act, and this will allow North Carolina businesses to raise funds by the Sellers securities by exempting them from the registration and filing requirements under North Carolina security's law. Part 11 extends the sunset on the various sales text refunds that we have for economic development purposes visits for the passenger air carriers, the motor sports teams and the analytical services businesses. Part 12 extends the sunset on the research in the development credit, and section 13 is a new section entitled world assistance and basically we require the department of Calmers to provide information to units of local government within the prosperity zones that would assist those units of local government in terms of maximizing their underutilized assets and to assist with coordinating recruitment to those zones. Oh and Dan just reminded the JDEG part also extends JDEG, extends the sunset to 2019. Thank you staff and again, this bill is up for discussion early but there are really no votes on this bill and we have a by partisan effort based on the content of this bill and also have to 117, that is a working group and folks who are willing to work together for both parties to put together something because we're all very concerned about economic development of the State and so the bill sponsors have agreed to do that and if you're interested in working on that, with the bill sponsor, they welcome you to do that. Recognizing the bill sponsors to present the bill I'm at the start of my third term in the general assembly and for the first time in five years I stand before you very hopeful today, very hopeful because last week Representative Moore and Representative Heinz and I reached out to house leadership to discuss the possibility of a bipartisan bill for job creation and economic development in this day that the members of the house could get behind and move over the to the senate, we are very lucky in North Carolina because for the last 50 years economic development incentives and touch strategy have always been a bipartisan activity in this day the significant job creation successes under governor Martin and governor Holsalzer as well as recent democratic administrations, have always been the result are they practical give and take between incentives and tax policy reform. The results have been exceptional. Has the job force since have changed and this day we have adopted our policies and incentives where we are today, leaders in biotech pharmaceuticals, auto parts manufacturing internet technologies and many other fields where future jobs growth can and will occur. This has not been by accident but by will that have incented our behavior to foreign price towards the creation of high paying jobs while not demeaning the old economy of jobs in manufacturing that will cater this state 50 years ago. As you heard from the staff, the approach to this Bill is wide than that is cast very wide, and we're looking to try to provide economic development opportunities on a regional basis if you will, not everything that works in Mecklenburg County is going to work in New Hanover County to create jobs, not everything that works in New Hanover County is going to work for Surry County to create jobs or Lincoln County or any other county in the state. This Bill is intended to benefit all 100 counties in North Carolina. and all we need is more and continued cooperation to see this thing through. People want results, they will look that's for leadership, that leadership
comes with responsibilities to make compromise and have a dialogue because that is after all governing. The co-sponsors of House Bill 89 are offering out this legislation as the starting point as Chairman Sahin has mentioned, so that we can return ourselves to the Red burst its economy of not so long ago, so we are putting this forward today as the starting point for a third Bill that will be introduced, that will be about partisan effort working with leadership of the House to send a message to the rest of North Carolina and its citizens and its decision makers, that we are open do for business. We are all serious about economic development in the state and we are prepared to move forward with policies that provide job growth, after all that's what we all ran on, that's what we're all here for, and I'm thrilled to be part of this effort. so with that alternative to other bill sponsors. Thank you representative Hamilton, representative Morris, you want to speak next? Just wanted to kind of magnify on what you just heard, we are at a critical point in our state where we have to really, really hold hands on to be competitive, we are losing a lot of momentum as you can see hour partners to the south are just like dragging us down the field for old football metaphor and so we need to do everything that we can Democrat, Republican to make sure that North Carolina is the most competitive and has the best advantage to spur business, to bring new business to North Carolina, to support existing discussing businesses to spur our small business and job creation and those things. Also I think that this particular effort is a good first step to come in together as a body because when we get here we might be in different parties but we are all in the same situation and I think this is a good step to putting forth series effort, a series effort to get North Carolina back on track and get us competitive so that once again like in the words of my former Mayor Governor Pedro we going to have two Carolina come neck because right now, all the Caroline come neck is not been equally felt across the state and so we need to do all that we can to facilitate that for all of us. So with that Thank you Representative Moore, thank to the Bill sponsors, any discussion anyone would like to speak? Representative Leakey Thank you Thank you representative Sam, Mr. Chairman. I'm concerned that in house bill 89, there was something in ti that many in this room support, and that is the earned income tax credit. The earned income tax credit has benefited 900, 000 North Carolinians for a year. It is the most direct economic development tool we have because it's working families, that's working family earned income. Working families get the benefit, and they turn around and have to spend that money because they are not well off. This is as representative Ross said with respect to the historic preservation tax credit, this is parallel, there's a federal program and we've had a state program, and it has been led to sunset and we don't have it. I thought we were moving forward by having it in House Bill 89, and I now don't notice that it's not in the committee substitute. I'm really very concerned about that because I think it should be there. I think we're not being fair to the working people of the state, working families, if you look at who benefits from this, it is working family, it is working people with children. it's a very positive thing, very positive program and I just don't think it should come out at 89. I'm very disappointed about that and wondered if the Representative Hamilton or Representative Moore would address that and also the same as chairman I hear and respect your decision not to move further on this in terms of doing anymore than hear the bill but I wondered if I could speak to why the [xx] contest [xx] is no in the committee [xx]. Thanks representative [xx] representative Moore I can address that, representative Luke, I appreciate your commence, I understand you passion mere, you share the same passion for working families in North Carolina, there is
a stand on bill, house bill 27 they will try to talk the leadership that specifically adress the earning contest credit, but for the purpose of moving forward and that we felt like we should moreso concentrate on that stand alone piece, that stand alone Bill, and then try to see what we can actually do what we can actually agree on in a bipartisan effort to get this the meres 117 and 89 together or whatever comes out of that and about progress and matters so there's some strong feelings on both sides as about the earn Income credit would have felt like it would be served better if it was a stand alone bill and wouldn't have any consequences as of close to what we were doing moving forward. OK thank you anyone else wising to speak? Representative Stam I don't want to Rep. Stam's post hoc ergo propter hoc falacy but I would note may I translate that which therefore because of which no the roots are close because he saw the sunrise because he made the sunrise that I would know historically and whether this was caused by the change in policy or not for the decade or so we were using a lot of this tools and house bill 89 vis-a-vis the other states North Carolina was less competitive and our economic performance was lower than other states since we took a new approach under the tax reform North Carolina, vis a vis the other states has done better economically, and that's again whether that's post-hacker or pro-hacker or not that's just a fact that I think we need to think about as we move forward. I think Representative Blast in running here when we keep the language clean in the Committee. I'm not sure what you've just said, but that is quite interesting. Bill sponsors would you like to respond to that? With all due respect Rep. Bliss I'm not sure which successes you speak of. Recently we've lost the opportunity to bring several automobile manufacturing facilities to the state for North Carolina. Our rural communities are hurting. Last week's job report, the report on the unemployment rate in the state, shows that unemployment in the state of North Carolina has increased in 98 of 100 of our counties. So I personally have watched industries choose South Carolina, Georgia, Louisiana to name a few, to take their businesses to those states and those locations because we lack any tools in our toolbox at this point to properly address any request for proposals. We've got a $20 million commerce department sitting over in a non-profit situation right now with very little to do, no clients to impress so to speak, and it's because we don't have a seat at the table right now we're not in the game and I think that Governer McCoy has done a really fine job in recent weeks of bring this to the attention of the legislature and that's what's encouraging me so much about the discussion that's happening in the house now because it is truly governing. It is truly us working together to try and create economic opportunities, i. E job creation in this state. So we are behind the curve ball, we've spent the last 20 years being in the top three or four and all of the the best places to do business and we no longer have that ranking. I believe this level at this point. So it's time to move this ball down the field. We've talked about it enough, we've been out of economic development in the state of North Carolina for the last 120 days, that's not acceptable, we've got to move this forward, we have to set aside our differences, we have to set aside ideology and that public policy and move this forward so that we can provide jobs for our citizens. Representative Heines, Representative [xx] Representative [xx] I think in regard to what you are saying with regard to tax reform, as you know I support a tax reform in this state acroos the isle to do that, but I think that what house bill 89 seeks to do is certainly accept the fact that there's been a large swing in terms of some of the improvements you're talking about that have made us more competitive than other states, but we're trying to do is work together across the isle to find a sweet spot, and we think that some of the items that we
have in this bill while we all understand we're not going to agree to I think can bring us a little bit back closer to finding that sweet spot that we like while still recognizing [xx] from the tax reform that you and I both voted for last year. Thank you before we move to the next speaker just remind everybody if you did not know Chairman Brawley is not with us today. His wife is undergoing some surgery in Charlotte if you keep her and him in your prayers please. Representative Collins please. I was just going to speak a little bit about Representative Blue's comments since he was cuaght in the question, I think the facts he was talking about were the fact that in the decade of the 2000s, from 2000 to 2010, North Carolina actually declined our unemployment rate got worse compared to other state and our real wage growth declined comparative to the other states and in the last three years if you look since about 2011 we started passing tax reform and regulatory reform North Carolina is rebounding in unemployment has exceeded other states our job growth if you just saw that figure recently has exceeded other states and we seem to be heading the right direction our policies are working so why we want to abandon them all and go back to something that didn't work in the decade of two thirds I really don't understand as far as the earned income tax credit is concerned, I think we dealt with that a different way by giving a high stand introduction, which helps helps obviously people at the bottom the most. I know our earned income tax credit is found that was rife with fraud, and I think by raising the stand introduction it takes care of those people without creating something that is as rife with fraud as the earned income tax credit was, just wanted to make those comments. Thank you, Bill sponsors Representative Moore Thank you for your comment Representative Collins there again we are not bringing what happened in 2010 what happened in 2007 what we are trying to do now is come together and we have some different ideas so different philosophies about what economic development looks like what living wage looks like and all of those things but I hope that as we continue to have this dscussion that we'll able to bring all ideas to the table and meet out what what we don't agree on and just come together what we agree on because the state of North Carolina is hurting. You have to states let me be clear about this you have two states of North Carolina you have those who are doing particularly well and then you have those who are doing extremely poor, and the middle class, the middle part of this state is bulging in both directions, and so I think that we need to do our all we can to bring new industry to North Carolina to support the industry that we have, and I think that this is a great conversation, a good first step and I know we're friends, we may disagree, but we can definitely be cunning and talk, and I look forward to that conversation. Thank you Mr. Chairman, I just want to make a point about history theory that Representative Stam has that works both ways the increasing unemployment from 200 had more to do with our manufacturing of textiles and furniture than it did. The fact that we had a big incentive program, you can always make the case that it could have been a lot worse without it so I just make case that that theory works in both sides of the equation thank you. Thank you. Representative Gibson Representative and please start anyone else wishing to speak we kind of wrap it up, thank you all for the discussion. Representative Zack. Thank you Mr. Chair h and I appreciate the work of the bill sponsors on this you've obviously given a lot of thought. I do have a question on the fiscal analysis memorandum in 2015/ 16 it will cost the state 147 million in 1617 236 million, this are are not trivial sums, what programs are you proposing cutting to fund this? Thank you. Do you want to take that on? He's a hot potato so Chen will take it like that and efforts to the sponsors. Again, this is part of the discussion. So as we look to craft a new Bill, I think your point's well made, and hope that you be part of crafting the new bill. Obviously finding the money is key to this but it's also the way this sentences are structured they are not preparated and they are out for the facts so the revolutionals some of those cars and unfortunately in the way we do our physical analysis in North Carolina I have learnt they only consider the cost it doesn't seem that these programmes they haven't considered the revenue side of that that ever steps the cost but again but then as the chairman said
this is part of the discussion that we will be having and I will hopefully participate in that group thank you all if no one else wants to speak we stand adjourned thank you thank you (BLANK).