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House | April 16, 2015 | Committee Room | Finance Committee

Full MP3 Audio File

Committee members please take your seats good morning? [xx] I think I like something here, it's okay with the committee, we'll start first with house bill 332, we have a PCS, we have a motion. We have a motion by representative Hager, member of the committee to consider the PCS. All those in favor signify by saying I?, I. Those opposed [xx] Representative Hager, you may present your bill. Thank you Mr Chairman this is as I said in the other committee we were in this is not a simple bill. This is a very complicated bill it's an economic development bill, it is set up for what we call large whales to come into North Carolina that drive over $250 million worth of lease 1500 jobs. Mr. Chairman if it's okay with you I'd like the staff to quickly go through this. Please staff Sure. I'm going to actually go to the bill backwards let me go to the second part of the bill first and then the first part of the bill. But for background information for natural gas service, when it's extended to a new customer the local distribution company or the gas company will calculate what portion of the cost of that line will be recovered in the rates. And the portion of the line that would be recovered in the rates is considered the feasible part of the line. The portion of the line that will not be recovered in the rates is considered the infeasible portion of the line. Generally the customer seeking to have that line extension will pay for the infeasible part of the line. What this bill does is allow the infeasible part of the line to be paid to be covered in the rate and paid for by natural the gas distribution customers for certain very large customers. So the first part of the bill provides, the Department of Commerce must first determine that the natural gas infrastructure that's requested to be built is going to be eligible. And to be eligible under this program, a project must plan to invest or intend to invest at least 200 million in private funds for real and personal property, and the business must employee at least 1500 full time employees. As with other economic development programs there's also a wage standard of 110% of the average ways in the county where the project is located. There is also requirement that part of the health premiums are paid, and there is a requirement that the is this must not have any health and safety violation or disqualifying environmental events. Once the Department of Commerce signifies or determines that this is a eligible project, the project will then go to the utilities commission, and once approved by the utilities commission the cost for that infrastructure could be recovered in the race in the form of a rider. So before the rider can be approved, the commission must determine that the project is located in an area where Natural Gas Infrastructure is not feasible. The developer of the project or the customer or the acumen of the project provides binding commitment that will use natural gas for at least 10 years, and that the margin with the profit for the LDC will not generate enough funds to cover the cost of that infrastructure. So once approved, what will be recovered in the rider is only the invisible part of the infrastructure. The cost that will be recovered rider for the infrastructure or the normal cost that we recovered for any other infrastructure from a Natural Gas Company. The commission is directed to adopt rules to implement this rider mechanism and the writer will be tude up or periodically reconciled once a year or perhaps twice a year. The writer will terminate upon the earlier of the next late case of ODC will win all the cause in fully recovered under the writer. There are a two limits on the writer, first of all a local distribution company may not invest more than $25 million a year and any infrastructure that is allowed to be recovered under this writer and there is a total aggregate cap under this entire writer not more than $75 million may be invested by all gas companies in the state. This act is effected when it becomes law and there's a sunset on this. This will sunset July 1st 2020. Mr Chairman it's OK just a couple of comments. Representative Hager. Thank you Mr Chairman we met with Manufactures Association and some other stakeholder it was yesterday and that's why we have a PCS in front of you. The cap was put on

then for the $75 million for everybody and then we had some further addition page 2 line 15, so on line 15 any rates adjustment surcharge mechanism adopted on the section shall terminate upon the you were earlier at the full recovery of the [xx] other than the substation on Section on natural gas you see that and if you go further on to back on page one there's another couple of pieces put in there starting on lines 31 on the natural gas economic developmental infrastructure with a negative present value shall be determined by the economic feasible, and a couple o little small things that determine what this money can be spent for, and put the overall curb on there, and again we met ex-association prison [xx] here and a couple of state covers[sp?] and well there are some of the things we agreed to, so Mr. Chairman I think if any questions and real quick this right adjustment can not be levied until the project is been completed, so if it's a large manufacturer if it's a large company when the project is completed pleaded and they started using natural gas that's when they'll start looking at levying the [xx] charge. Thank you, Representative Harger. Representative Adams you have a question? Yeah, I got questions on. Please use the microphone, please. I got questions on page three, the requirements for health insurance and safety and health programmes environmental impacts is this Boiler[sp?] plate? Is this what you're seeing in anything like this or is this specific to this bill? Because just curious to me, who's going to verify these items? Representative Harger. Thank you, Mr. Chairman I believe that we've got a Representative here from the Commerce Department but I believe Representative Adams that is Boiler plate in there are the one the commerce firm are the on verified. Thank you. Thank you. Any other questions for the bill sponsors? Representative Lukie[sp?] Hi, Mr. Chairman. I had a question I guess for staff on page two the section under rate adjustment, my question is Who is included in those who have to pay this rate adjustment i. E. Pay more?   [xx] The right way to apply to all of the customers of the natural gas company that receive natural gas under the tariffs. So if you have a specially negotiated contract would be implied at that rate, but it would apply to almost all residential, commercial and industrial customers. Thank you question for the bill sponsors?  If I understand that correctly, that means that residential customers are being charged for this project.  Representative Hager. Thank you representative Rucky that's correct and I've got some numbers here to give you the number we are looking at the average residential customer recharge additional 28 cent per month. Under $25 million investment. You're saying the total is 28 cents a month. 28 cents per month. Okay it was given to me there was $3 a month. It's 28 cents per residential, $1.18 a month for commercial and about $20 for industrial. Very similar to the reps adjustment. Recognizing Rep. Luebke for a follow up. Well I think the question that's raised here is really that of consumers participating, and can I ask member of the public who talked to me about the bill, one of the organizations representatives who talked to me yesterday about it. I just want to be sure on the consumer cost. I'll allow that. If you please state your name and who you are with or represent. Good morning. My name is Daniel Palm. Rep. Luebke, it's $3 a year, so 28 cents per month spread over 12 months is about $3 per year. Okay, I had given a different figure and there's a difference between $3 and 28 cents. I acknowledge that. Any other questions for the bill sponsors? Seeing none, recognizing representative Hager for Motion, if you will please state your motion? Thank you Mr. Chair, I got to know what my bill number is, I apologize one second, I move for a favorable before the PCS on house bill 332 and favorable to the original. You've heard the motion, is there a second? We have second by representative Zuka. Any other discussion? Seeing non all those in favour say 'aye', 'aye' [xx]. Congratulations, your bill passes, the finance committee. Next upon the agenda this morning we have House bill 183 repeal the meth act. Do we have a motion?

We have a motion by representative have the bill before, we have a second by Representative [xx] Is it a PCS, It is not a PCS. Well then, we don't have a motion grate! recognising the bill sponsors, representative Brown. Thank you Mr. Chair, good morning committee, We are here to appeal the map art, and I'd like to tell you about it. So unless you are in transportation or you are in one of the counties that this affects tax your people you might not be aware of what has been going on in our State, since 1987 when the map Act was passed. The map art is a law that allows DOT establish official maps of future road quarters. From the moment that map is forwarded to the registrar of deeds. Lease are put on every single property. These property owners have little or no control of their property from that moment on. These liens are put on their property for decades, and as long as environmental protections or environmental assessments are began within one year. Relief can be obtained in three ways, if you are willing to accept DOT's offer, which is appraised by one of the appraisers on their list of appraisers, or if you meet their definition of hardship, and you are able to go through a very lengthy and involved process to prove it, or if they just have the money. And alot a lot of times, they don't just have the money. Many people will decline their kind offer, or they'll be rejected as a hardship case and will wait for condemnation, which can take decades DOT saves a substantial amount of money and they save it off the back of a few thousand people across the state because those properties, the value of those properties is going to steadily decline, making condemnation less expensive. The math that kills investment and it destroys market sales and Versailles county DOT pays no property taxes, costing your local governments millions and millions of dollars. and tax revenue, and those local governments still have to provide those services. DOT provides no fire insurance, repairs, no property, and we have pictures that are supposed to be going around so you can see some of the real properties in Versailles county that illustrate this point. The properties that have been bought by them and have been destroyed or often left attended. We [xx] homes that they own and rent income. It's very profitable to DOT to rent those but because they are exempted from providing insurance so they don't have to pay far pay taxes, they are able to rent those homes for less money so then they undercut the whole real estate, the whole real estate market. The homes fall into disrepair further lowering of the property values of the surrounding properties, and then sometimes they bring people into these properties. They have no interest in who rents and who doesn't, and those people often have, they look a little different than the folks who lived in those neighborhoods, creating a lot of anxiety and apprehension. Now we've build roads, before this maparch[sp?] was instituted in 1987, since 1915 we build roads without the maparch What the Map Act is, is a very efficient way to avoid paying just compensation. We're one of only 13 states to even have a Map Act, 37 have to manage their holloway quarter without any such thing. The state with comparable Map Acts statutes either allow property owners to acquire acquisition or release from the mayor or they put limits from the links of time the recorder, the kit mark and the block building and sub division applications. Anywhere from 80 - 365 days. Right now many of you are being affected by the Map Act. Official maps have been used or being used in at least two dozen projects statewide. Cleveland County, Guilford County, Wythe, Phyte, Pender and Cumberland are just a few of the counties affected. There's been a recent court here and I've got another bill sponsor who wants to tell you about that, and then we have someone from Passaic County that we're very anxious to you hear from his been so intimately involved in this whole fight for maybe a dozen years. Thank you very much. Thank you representative Brown, representative Brown Thank you. First I want to tell you Passaic County has been one of the counties where people have suffered the most under the Map Act. You cannot modify the Map Act, cannot twink it, we've got to re pill it and over the next six months, I believe that's what we've in the Bill, formulate a new plan that will have a better balance between road planning and respecting the property rise of individuals. This passed unanimously through transportation and also few remember one of the first bills we passed this session was about a

constitutional amendment on a referendum in 2016 about eminent domain. If you believe in the concept of eminent domain and then when you have a taking, then you have to give just compensation to the property owners, then you will repeal this Map Act. We had a group of individuals sue the DOT, and they have won at the appellate court. There is a 50 page ruling, and it is fascinating to read the judges assessment of the Map Act. These individuals had to sue for inverse condemnation and the unconstitutionality of the Map Act. And what the judge found was that the DOT and the western leg map was filed in 1997, almost 20 years ago, in Forsyth County. The DOT said it could be 6 years before this road is built. They are operating under sovereign police power, non-eminent power. They feel no obligation to pay for these owners properties, but they can strict their use. If somebody has a house and they need to add a bedroom for another child, they and do it there would be no reason to remodel your house cause you are not going to get any compensation for it. There are two farmers in my office the other day just devastated, therefore its going to be split by the next stage of the [xx] and they just wanted, they have to operate the farm. They wanted to build another grain silo, the hooves and they had to go through to fight the DOT just to continue being farmers while they are  waiting decades for their farm to be taken it's just unbelievable, so the judge ruled in favor now the DOT has recently appealed this to the North Carolina supreme court. I don't think they'll win because I think that with all respect the right to property owners and that they said when the map is filed it is a checking and that within a very reasonable period of time all the homeowners or farmers, whatever, should receive that just compensation and that has not been happening and even the original writers of this bill, although they're no longer in the General Assembly, have said that often bills are filed you have unintended consequences, they said they never intended for this to happen to the people of North Carolina. So hope that all of you stand up here today and move this bill out of finance so we can get it to the floor and do the right thing for the people of North Carolina and also have appropriate planning because we know roads are important. We're not trying to diminish that, but to come up with a plan that has better balance and fairness. Thank you. Thank you Representative Conrad. Representative Wartford. As it has already been stated, what we're to accomplish is just to expedite the property acquisition process to move faster. So back to the financial aspects of this morning is what we're here for. There will come a time in the future that we'll back buy these properties in terms of years instead of decades that'll have a bump. They'll have to acquire more properties when you make a decision to build a particular road here, we'll have to buy the property in a matter of years instead of decades so a bump will come that is only going to have a negative impact impact but I don't believe that the bill act was [xx] today, if you look for it in a file in future it would have a positive impact financially and that's what I'd like to visit. That's all we're trying to accomplish especially in the more populated areas, the urban areas where a lot these roads have to go through that's why we're having such a negative impact on peoples' lives everyday and you've worked all your life to buy your home, you understand that, the road is coming through, and we take decades to buy other properties.  So let's speed the process up, and it will have a negative impact, we'll have to focus more on buying properties for a few years, and then we'll go back to a shorter time spent of a couple of two three years to accomplish it. Thank you. Thank you Representative Waterford. Representative Stan. I'm going to vote for the bill, my family's land was tied up for 25 years, due to Map Act and preliminary to Map Act, but I do have a series a real question. Have read the [xx] case several times, I could make a case that repel the math back would save this state several hundred million dollars. I could make the case that repelling the math act, if that case were reversed would cost the state several hundred million dollars, but I do not understand at all, we are here in finance which I guess why we are here, how they come up with a zero impact to me, it's got be several hundred of million dollars one way or the another. Any thought? Representative Brown. DOT estimates right now the cost of what they would own for side counties about $200 million, the numbers that I've heard that was high about 600 million. So say we split that and we say it's going to cost 400 million to the tax payer's in the state to pay property owners, but they

should have been paid years ago, that's only one community, my point is we got a support that cost in the future to do away with the [xx] we have dug a hole so deep for ourselves in North Carolina and I do believe is representative Comeres I think this plain pose can uphold this but even if they don't we are going to owe that, it's like once you have dug a hole for so long, you just got to stop digging. It is costing us hundreds and hundreds of millions of dollars to continue with this so I don't see any downside in discontinuing and I can't think it will be worse economically or the cost of the tax payer being any worse, does that answer your question at all? One follow up. Representative Stan at least have manners when it comes when it [xx] to for follow up. I am [xx], fiscal research, I cover transportation topics, I and representative Stan is correct that the fiscal note has a zero fiscal impact for the first five years, that's largely due to the program coming in the step, simply that the maps that are ineffective that there will be no properties that are bought in this time period that when and already be bought. And so I think what you're looking for is on page four where it starts with table three because it does anticipate the potential of a significant physical impact for this outside of the five year range into the physical impact does say given these incredible ranges you don't know how much the properties will be improved until that the fiscal note has a wide range of 35 to almost $500 million because we don't know how longer will take for this projects with existing maps to be programmed. Representative Starmford. Yes if I could follow up but again I agree to the brown you have the money, you should go and pay the money but the policy in saying this is beyond five years, but say this just depends on what DOT wants to do, but the court decision say they are taking the audio curve, so if less to revers supreme court the land daughter they are all keen get a trial next fall and get several want to make collectively, get $700, 000, 000 in money within the 5 year period. on the other hand, a drastic course but it's a proper course, on the other hand you could say that this will save the state money. This is the other way I could argue there sir but the only thing that it can't be is 0. [xx] next step is reverent Robinson yes thank you Mr. Speaker, if someone who can speak to 1987 and make to be in the fence of department of transportation what was really occurring back then. Was that several anti [xx] were following this bound buying up properties and then holding up the agency when it came time to purchase the property so that was the reason that created and it appears it is kind of outlived its usefulness, but that [xx] end of the fence and an explanation. Thank you. Rep. Hager. Thank you, Mr. Chairman. As I have said in numerous bills like this that basic property rights are what we are about and what it should be about North Carolina and the United States. Mr. Chairman, at the appropriate time I would like to make a motion. Thank you. Thank you, Rep. Hager. Anyone else? Rep. Meyer. I'd like to ask the bill sponsors a question. You are recognized. As in you be learning about the Map Act today from you, you said that this can't be modified and you want to go for the full repeal, but what Rep. Robinson just asked. Well I don't want to end up back in that situation years, so can you explain just why you believe this can't be modified? Why it has to be repealed? Rep. Wartford, And the five year plan's the same thing. What we're after is you'll have to have a new plan, a new way to protect our sales when buying property, so that when the buyer develops it and runs around. Is that what Ms. Robinson is talking about? But to modify this act the way it is as it is today we feel it would be better off to clean, have a clean slate start again and reduce the time frame significantly and just like I've said go over that hump to acquire the properties what we can get up to a current date and then move forward. That kind of makes the five year. The five year plan is based on the current legislation step as it's written today, now really need to get rid of this

to start with and we are going to have something new, there is no question about that Fold up, fold up Thank you Mr. Chair, Representative Brown mention a couple of other States that has similar actions, different provisions do you have any evidence from those States of ways that this could work better even with your prior[sp?] we could put something else in placebo Representative Brown? Larry H, program evaluation is Larry here? Stan[sp?] some work on this, Okay I knew he was going to be out of town we sure he would make it. He sent some work on us and the last email that I got from him was about [xx]. And [xx] is without a map and they have a 30 to 40 day limitation and the action to be taken by the state, grounds to properties released but we have given DOT, instructions through this bill, to come back with a better way. That protects private property. I got really interested in this because of property that was in the North Eastern  part of my county but they didn't follow a map but they designated a corridor, or they would go change the road. Well that devastates property values because nobody can sell their home, but unlike the map act they are going to have a hard time selling their home, but they can subdivide it, they can change it, they can do things with it, but I don't know how you get around by that but other states when they do follow an official quarter map, they make sure they got the money. We need to have the money and go on with it instead of holding people, you can imagine an elderly person whose home is their greatest investment, and they have saved all their lives and then they need care and they are alright they can't sell their home, they can't move their children's so these devastates lives and that's why I'm opposed to it. It's got be a better way other State do it we are not less intelligent than they are we will find we'll find a good way to do it Thank you. Wibden[sp?] Brown you had someone that you wanted to invite to speak as well Mathew Braint form West Asylum, if you would, press the button, state your name and where you are from button on the mic, I'm sorry. Thank you. No, you have to hold it. Good morning. I'm Matthew Brian from North Carolina. I was the attorney on the Kurvy[sp?] case in along with that I have about 150 other cases file across the state with more to come, I should applaud the Representatives here for doing that, this is long over due. The Department of Transportation in 2004 conducted a study by land design. One of the preeminent land use things and I knew in 2004 that this was constitutional. I will be glad to provide that study to Mrs. Brown. So to think that they went another 10 years and filed some number of maps knowing it was unconstitutional is appalling, it's an audacious use of the States power that has been struck down in every state in the country where this is been tried add starting in 1893 they strop these laws down in New York and in just about every other state where they tried to rig the system. Texas disapproved of this, I think in the 70's and wrote an outstanding opinion, that the use of government should not be used to rig the system in the States favor, which has happened for nearly 30 years. The amount of money that this state has saved on the backs of the owners that this has bought, over the courts of these 30 years is incalculable. Now I have heard a $600 million figure bounty in about some number of days and weeks about this may cost the State, one that assumes that all owners are offended by what's going on and will follow. That may not very well be the case. A lot of owners are snug as a bug in a rug to use a rather juvenile phrase there, but is it okay to steal $600 million of owners property? And representative Brown recognizes that it is not. That is a burden that we should all bear and just as black in the fifth amendment case back in 1966 the fifth amendment is designed to protect those still bearing a burden we should all bear and for too long this state has passed the buck on a few elderly folks out in the counties. You can drive 10 miles from here down 401 Representative Stan knows exactly what I'm talking about and there is no economic development in that area. You can see development and then there's a barb wire fence along down along Tin Tin road, go to Tin Tin Road and then there's nothing. and it is stolen millions of dollars and then when the DOT does come around and they have behaved badly because we have let them behave badly, they buy who they want to when they want to, they bought out Preston Development in 2010 and 2011 for $87 , 000 an acre on Holey Springs road I think it's Sunset road, they will not talk to my client about buying them but they will stand $87, 000 an acre to buy them because they thing is good deal.

I have had clients die waiting for an offer from DOD, it's shameful what is been allowed to happen when other state have declined this and run from this types of laws, and the department that we are now castigating knew in 2004 it's wrong so this bill simply squares the circle I think that the right phrase I certainly capable of bending around the wrong places but I want to point out a law you all passed [xx] Ryan if you could wrap up your comment please I'm wrap up go to the section your own laws section 106 A 381 H Mr. Stermar[sp?] is a lawyer that is your more [xx] statue. There has been on the books, 60 days, release the property. You have to have a health safety eminent harm eminent threat their healthy and safety and the map has to expire, compare that with what DOT get away with and stolen lives and property, the supreme court's decision in [xx] paved way for the [xx] decision, we are confident that this decision will stand and don't seal $600 million whatever it costs it's a cost it's a song cost is representative Brown said Thank you, I appreciate your kindness Mr. Brown, bonus points [xx] and your [xx] was incredible thank you, thank you for speaking to the committee. Next up I have representative [xx] with a question, thank you Mr. Chair I just have a clarifying question for staff on the fiscal note and the conversation that representative [xx] brought up, saying that 'how can this be a re cost? ', and if I am understanding properly, is it that this court cases require that money to go out anyway? So there is a cost within the five years, but that's kind of irrelevant of the passage of this bill, or if we re-appeal the Act, will that impact this current cases, so I think you're saying that there is no cost coming up as a result of this, it's just not related to this legislation, can you clarify that please? Yes representative Martin you have very accurately described the intent of the fiscal note. To say that yes, a cost is anticipated, you have several maps that will, where the properties will be completed with right of away and so those will happen anyway and so regardless whether this bill passes or not those maps will become nullified by the purchase of the property during that five year time. Thank you. Seeing no other, I recognize representative Hager for a motion. Thank you Mr chairman I move for a favorable house bill 183. We have a motion, and we have a second for representative Moore. Any other discussion? Seeing non, all those in favor, [xx] by saying I? I. Those oppose [xx] the bill does pass, congratulations to the bill sponsors. Quick announcement, we have a put together our two committees the annexation, the annexation committee. Chairman Bawley and I are assigning house bill 99, 131, 217, 218 and 353 to deal with those issues, the annexation, annexation  to that sub committee and then we have the occupancy tax committee, we're assigning house bill 531 and 347 to those committees, no other business for us, we stand adjourned.