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House | June 27, 2013 | Committee Room | Finance Part 1

Full MP3 Audio File

The House Finance Committee will please come to order. We have three pages with us this morning. Jacob Morris, Jacob is from Wake County. Louis Hollow is from Pitt County, Ree Gutting [SP] is from Mecklenburg County and Carson Tomlinson from Wake County. We appreciate you all being here and I probably messed up somebody's name. As always, we appreciate our Sergeant-at-Arms who's been hear early this morning with this long agenda, Fred Heines, Reggie Seals, John Brandon and Mike Clampett. First Bill on our agenda this morning will be House Bill 292, establish music therapy practice act. Representative Brody, you're recognized, sir. Button. [SPEAKER CHANGES] I'm sorry, I thought it was on. [SPEAKER CHANGES] Representative Brawley is recognized that we have the PCS before us by the purpose of discussion. Without objection. Representative Brody, you're recognized, sir. [SPEAKER CHANGES] Thank you, ma'am. I'll be pretty brief. This bill is, the PCS is creating a study on this music therapy licensure and I ask your support. [SPEAKER CHANGES] Questions? Representative Warren? [SPEAKER CHANGES] Thank you, Madam Chair. Just at the appropriate time, I'd like to make a motion. [SPEAKER CHANGES] And it's the appropriate time. Representative Carney? Other questions or concerns from the committee? Members from the audience? Have a motion to give 292, a favorable report. All in favor will say aye, all opposed? I believe that's unanimous, Mr. Brody. [SPEAKER CHANGES] Thank you, ma'am. [SPEAKER CHANGES] Next bill on our agenda will be 959, expand 1%/$80 rate for a mail machinery, Mr. Malone? [SPEAKER CHANGES] Thank you, Madam. [SPEAKER CHANGES] Again, Representative Samuelson moves that we have the PCS for the purpose of discussion. The PCS, all in House Bill 959, expand 1%/$80 rate for the mail machinery. Any objections? Hearing none, Representative Malone you have the floor, sir. [SPEAKER CHANGES] Thank you. This is a PCS to study committee on large manufacturing facility, the 1% and 80. A lot of manufactures out there do a lot of fabricating, as well, and as a result they're paying 6.75% sales tax on the front end for each piece of equipment they buy in the process of manufacturing a product for resale and they turn around and collect a 6.75% on the back end, as well, from the person that they sell, the company they sell it to. I think that's a little bit of double dipping going on. I think it's also caused us to lose some jobs...yeah? [background voices] But it's just a study committee for the next two years to determine... [SPEAKER CHANGES] Madam Chair? [SPEAKER CHANGES] Representative Lewis? [SPEAKER CHANGES] I'd like to be recognized for a motion. [SPEAKER CHANGES] You're recognized, sir. [SPEAKER CHANGES] Thank you, Madam Chair. I move that the proposed committee substitute for House Bill 959 be given a favorable report, unfavorable to the original bill. [SPEAKER CHANGES] Representative Stam. [SPEAKER CHANGES] A question. I see the study in Section 2, but isn't Section 1 actually doing something more than a study? [SPEAKER CHANGES] We'll ask staff to explain the Section 1, please? [SPEAKER CHANGES] Representative Stam, Section 1 of the bill has to do with an incentive that was enacted in 2011 for large manufacturing and distribution facilities and this related to an actually furniture project that was planning on locating in Davie County and the incentive that was given to them at the time was sort of in two parts. For one year they were going to get a sales tax refund on their distribution... [tape ends at 04:46]

...into some delays related to a wetlands issue. And I believe they're still trying to work out some issues with the feds, so they have asked for a two-year extension on the out-end. In other words, instead of July 1, 2018 to move that to 2020 because of the delay in getting started up. [SPEAKER CHANGES] So, ... could I follow up? [SPEAKER CHANGES] Representative Stam. [SPEAKER CHANGES] So, it's not just a study bill, but it's ...section one is an incentive bill. About only eight-one...eighty-one thousand dollars. Something like that. [SPEAKER CHANGES] Well, fiscal can discuss impact, but you're correct. The first part of the bill is an extension of incentives that General Assembly has already enacted, and then the second part is to study the one percent eighty rate generally by revenue laws. And Rodney can address the fiscal piece. [SPEAKER CHANGES] Representative Stam, the eighty-thousand dollars represents the amount of the sales tax refund that they would have received. In essence, they are still eligible to receive that refund, but they have not been able to develop the project, so this is essentially revenue neutral. It's just showing that the impact is being shifted forward. [SPEAKER CHANGES] Follow up? Follow up, Representative Stam? Or are you satisfied, sir? [SPEAKER CHANGES] No follow up. [SPEAKER CHANGES] Representative Brawley? [SPEAKER CHANGES] If I might ask staff, reading this fiscal note, you're saying eighty thousand dollars, but it says it's expressed in thousands. Does that mean it's eighty-thousand-thousand dollars, which is eighty million dollars? [SPEAKER CHANGES] No, I'm ... thank you for catching that. That is actually eighty-thousand dollars. It's not in thousands; it's in actual dollars. [SPEAKER CHANGES] Representative Luebke? [SPEAKER CHANGES] Thank you. Again, I'm not sure. I see the reference to this study, and I guess I want to go back to staff to explain, and I also understand the part of the bill that is already enacted and we're just looking for and extension, I guess my question for staff is is Representative Malone's bill a general study of all of the one percent eighty dollars, or is there a specific project that we're looking at? That's the distinction I'm trying to understand. [SPEAKER CHANGES] It's a general study by revenue laws of all of those. All. [SPEAKER CHANGES] The entire issue of one percent eighty dollars? [SPEAKER CHANGES] Yes, sir. [SPEAKER CHANGES] Okay. Thank you. [SPEAKER CHANGES] Other questions from the committee? Questions from the audience? Seeing none, waiting for a motion. [SPEAKER CHANGES] Madame Chair? [SPEAKER CHANGES] Representative Lewis. [SPEAKER CHANGES] Thank you, ma'am. I move that the proposed committee substitute for House Bill 959 be give a favorable report, unfavorable to the original bill. [SPEAKER CHANGES] We have a motion to give the proposed committee substitute favorable, unfavorable to the original bill. All in favor will say Aye. All opposed No. Okay, Representative Malone. Thank you, sir. [SPEAKER CHANGES] Thank you very much. [SPEAKER CHANGES] Senate Bill 280, I believe that's Representative Cleveland. [SPEAKER CHANGES] Representative Martin is recognized for a motion to have the P.C.S. before us for the purpose of discussion. All in favor will say Aye. All opposed No. Thank you. [SPEAKER CHANGES] Madame Chair? [SPEAKER CHANGES] If you'll give us just a minute, Representative Cleveland. Our Sergeant at Arms is getting the material out. [SPEAKER CHANGES] Madame Chair? Over here. [SPEAKER CHANGES] Representative Warren. [SPEAKER CHANGES] Would it be possible to just take five minutes and have the Sergeant of Arms pass out all the bills? [SPEAKER CHANGES] We have a reason. We're limited on time and didn't want to put all the material out and have to reprint it for next week's. So, I'm sorry. That's ... [SPEAKER CHANGES] I appreciate your logic and your conservative attitude. Thank you. [SPEAKER CHANGES] Thank you, thank you. I'm cheap. [LAUGHTER] Representative Cleveland, sir, you are recognized. [SPEAKER CHANGES] Thank you, Madame Chair. This P.C.S. will allow the culture...well, it does three things, basically. It will allow non-state employees affiliated with the transportation museum to drive state-owned vehicles on the museum property, only on the property. It allows them to move state-owned artifacts, fire-trucks, whatnot.

...and drive a trolly on a museum property. It authorizes the Department of Cultural Resources and [unclear] Palace commission to charge admission and related activities fees. The Culture Resource will be at museums, if they don't already charge a fee if they desire to. And it establishes a special fund in the Department of Cultural Resources for the A+ schools on behalf of the North Carolina Arts. The A+ schools are schools that use arts throughout their curriculum and they are receiving donations from individuals and foundations and whatnot and we have to establish this fund for Cultural Resources to handle the money. In a nutshell, that is what it does. [SPEAKER CHANGES] Questions from the committee? Representative Luebke. [SPEAKER CHANGES] Thank you, madam chair. I guess for Representative Cleveland, I'm concerned about the [unclear] Palace situation because I'm generally concerned that cultural centers, historic centers, and museums have been free of charge. Our museums across the way are free of charge. In here the language you have says it will charge reasonable admission. I'm concerned about a situation. I'm not in favor of charging to visit these cultural sites at all. But if we are going to charge it seems to me you should offer us a specific charge because reasonable in your mind or in my mind may be one thing but in somebody else's mind is another. So can you talk to me about reasonable fees and give me... [SPEAKER CHANGES] Reasonable fee... [SPEAKER CHANGES] Excuse me, just to finish. Can you give me a suggestive fee that we put in an amendment? [SPEAKER CHANGES] I cannot give you a suggested fee. Reasonable fees would be determined by the palace commission and the cultural resources folks. This is part of giving them the ability to become self-sufficient, self financially to lower the burden to the taxpayer throughout the state for these facilities and for me, at this point, to say we're going to charge $2.00 for admission would actually be moot. I have no idea what they need and they have not approached me with it. I know at [unclear] Palace they presently have an admission fee for their... I can't think of the name of the new facility they built down there but they presently have an admission fee and they have nothing for the Palace. Well, yes they do. They have a $20 or $22 they charge for the complex so they have a fee already in place. But the problem is they don't have the ability to do activity fees so if they do special activities they need to be able to recoup funding for that. [SPEAKER CHANGES] [unclear] Representative Luebke, are you...? You're good? [SPEAKER CHANGES] Just real quick, so you're telling me that there's already a fee there to get into the [unclear] Palace and this is really just about having evening receptions or...? The reason I'm looking at this is because the word is reasonable admission which sounds like we are authorizing a admission fee and if you're telling me there already is one, I'm not sure what this means. Is it going up? [SPEAKER CHANGES] At this point, Representative Luebke, I don't think any of the fees are going to change. In the future, I honestly don't know. I cannot say what's going to happen in the future. But they do have a fee at the Palace and they have fees in other areas and we're just trying to broaden it and give them as much flexibility as possible so they can maintain their properties and the ability to serve the public. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Representative Martin. [SPEAKER CHANGES] Thank you, madam chair. My question relates to section one on non-state employees driving state owned vehicles. What effect, if any, would that have on liability issues? What would be the liability, for example, of the non-state employee driving a state vehicle who injures someone? [SPEAKER CHANGES] They are covered by the state's insurance policy with Traveler's Insurance. [SPEAKER CHANGES] Representative Starnes. [SPEAKER CHANGES] Thank you. Representative Cleveland, give me an example of a non-state employee who is at the transportation museum who may

627: House finance Speaker1: He is having one of these vehicles? Speaker changes: The transportation museum has a very active foundation that supports the museum tremendously and one of those volunteers would more than likely be the individuals for referencing. Speaker changes: They would be. Speaker changes: They would be the individuals for referencing. They work on the museum grounds and they are xx involved in the Transportation museum. Speaker changes: Representative Dollar. Speaker changes: Thank you Madam chair, I am moving the vehicles in the transportation museum. They have a lot of rolling exhibits so this will actually help the members of the foundation, they have a foundation there that is working to raise tremendous amounts of money and supporters with years but thy need this authorization as just a very practical way of working the museum and in terms of the fees Representative Cleaveland said it right, you have got some fees are already being charged at both of these locations they just need the ability to broaden that out so they can maximize the return on these two very very popular facilities and allow them to continue to develop those facilities and keep them in the right shape and if they are able to raise money for transportation museum and xx that empowers you to have more money down the road to go to the hip up- keep those distorted?? sites that don’t have any capacity to really generate money. So it’s a great bill and Madam chair, if you please?? I would be pleased to offer a motion. Speaker changes: Representative Dollar, I will take your motion we have a couple of those ;for your information Representative Dollar. Speaker changes: Madam chair, I would offer a motion for favorable report for the house committee substitute for senate bill.. Speaker changes: 280 for favorable motion. Speaker changes: Floored the motion; further questions or debate? All in favor will say aye, all opposed say no. Speaker changes: No. Speaker changes: I don’t believe that is unanimous Representative Louis . We would like to take just a special moment and recognize Representative Cleveland and note that Representative Cleveland is making great efforts and strides for xx for the Arts.[ All laugh at once] Speaker changes: Thank you Madam chair, [laughter] committee[ still more laughter] Speaker changes: House bill 565, Representative Soszka we will call this one more time. Speaker changes: Thank you madam chair, hopefully third time will xx the charm. Speaker changes: There is a PCS just in front of you that Representative xx amendment he never got to present. Let it roll into xx time .I made an attempt in the last couple of days to talk to each and every one of you and I could not speak to each and every one of you and I am sorry. xxx say i would be happy answering a couple of questions here on the bill this time. Speaker changes: Madam chair, Speaker changes: Sorry I lost track over here .Representative SOZKA , Representative Brawley. Speaker changes: I wanted to send forth an amendment to the bill Staff housing.[ pause. Some discussion going on in a low note] Speaker changes: Represented Larry brawley is recognized to present the PCS before for the purpose of discussion. All if favor will say aye, all opposed no. Representative Soszka we now have the proper PCS before us for discussion in July for staff to have one of these ..

Time that PM and then she had to back this time-limit to the PCs to take that the man and 1/2, committee and the British fashion and have 2% of the 11-fifth time, education time that the bronco braking and fan club and the command of the amendment that the faction and would have a workbook?? (SPEAKER CHANGES) to make sure that they all the time that the best we can play that could be an NT version of Britain, cannot talk about this time, I am concerned about is getting involved in guaranteeing result of that if the business but he also makes some good points to two interesting situation of the minimum balances from infection oil, bill time it's a study to them later and that we should be establishing this?? the port is there a better way to indemnify and make sure people get playing time L escrow account of And other industries that this would be only the second day in the union that would put into to fill a guaranteed by the time of you play goals and one that play that role can we don't have enough information for the academy, and that only two times a day, cut bill that her study and then we have more date on which to decide the deputy had, AMA-ensure that they can then put them all and the state-of-the operation defense led the display of this amendment column of the day-fed by the detective ?? that's not a diverse to old-time at a holiday visit two, one which there are major issues that from integration and the company's going back to last won a close 1/2 million dollars two abrasions Nationwide and more time to time of $250,000, covered, this is a unique situation there's no leads to a moral, people would show me the one where bottom of the 5554 letter word two , playful, Britain and the company today are too long, pager a letter, that the matter what the patient management company and the two lived for the long run, and that happens when two of the study, bailey of confidence that the detail of the wave and, from unlimited, a lot different from London time: the flow label first because of that where the first time in the nation and the other states: Allen actually, one that the request carefully lonely and North Carolina did have to weigh in at a knife in the Pacific-line by then, again Finley this, which the fillet that the cars and fit the problem and it protects North Carolina - from North Carolina consumers and (SPEAKER CHANGES )businesses that they disapprove. I'm Alan FU 2 of the national bank left and the L.a. and time to 15, and from the banking and cat, Janet A official Asia and the L.a. to look into fed hand and then land had hired the play command company they come and co-anchor and then had paid, a management company that the management company that has been playing for time they added that hang a warning after two: then get paid, actually work out when the data management company had a hand EA puppet-management-a-handed-national companies television and the appraisal board: court's current law and force them to pay the appraiser's office workers and then declined to adopt more than two dozen times this land-management companies were to play holes to play Thursday band that were confronted them-management company goes bankrupt time on live on Carolyn of the delay and planning, bankrupt AAA bottom of the plane to land time they put the operator from the plane, and the play command, and today, claimed PA playtime-Ashbury two lot of attention to the bill -all bankruptcy situation again, turning ??.......

file against the company that is bankrupt. However, because of the way the Dodd-Frank Law is written, the lender who originally ordered the appraisal from the appraisal management company is still on the hook for paying the appraiser. It’s a very confusing thing, which larger companies have much more ability to pay the fees and pay the attorneys and everything else. It’s the appraisers who really bear the brunt of that when that happens. [SPEAKER CHANGES]: ??, yes Ma’m. [SPEAKER CHANGES]: It would seem to me that, in a way, if the appraisal management company goes bankrupt, they bear none of the consequence of the fact that they got paid for something that they then didn’t pay. If I’m correct on that, then I would urge that you not support the amendment and leave it the way it is, but I’ll let you answer that question. [Crosstalk] In that scenario, the appraisal management company, if they go bankrupt, would not bear the consequence of the fact that they received the money from the bank but then kept it and didn’t give it to the appraiser. In a way, under the current scenario, they get off not really scott-free because you’re in bankruptcy, but in a way they get off scott-free, is that correct? [SPEAKER CHANGES]: Yes. [SPEAKER CHANGES]: Then I would urge keeping the bill the way it is so that there’s some way for the appraisers to get paid, and for the lenders to not have to pay extra because the middle man didn’t do what they were supposed to do. [SPEAKER CHANGES]: Madam Chair, could I address that question also. [SPEAKER CHANGES]: Representative Brawley, yes sir, on your amendment. [SPEAKER CHANGES]: Representative Samuelson, the situation that you described is very similar to a situation involving a subcontractor of a prime contractor for a homebuilder. Currently the developer will pay the homebuilder for building the home who is responsible to pay the subcontractor. If he is paid for the work does not pay the sub, the sub still has a lien on the property which must be satisfied before the property can be sold. So we have subcontractors and builders that are in the same situation as the mortgage companies and the appraisal companies who have a totally different mechanism for insuring that the subcontractors get paid. My point of the amendment is, if we’re going to do this, let’s do this for every sub, not just appraisers, but the plumbers and electricians who may not get paid when a homebuilder goes bankrupt. In other industries, mechanics liens exist for people that perform labor and don’t get paid. This is creating a whole new structure. [SPEAKER CHANGES]: Representative Szoka. [SPEAKER CHANGES]: Thank you, Madam Chair. Thank you for that explanation and that example. I think that example actually shows why that this is required because in the example that you gave; the plumber, the carpenter whoever, takes out a mechanic’s lien, which is a lien on the property that’s owned by the homeowner or the builder at that point in time, so there’s a lien on a physical asset which is entirely different than what we have here. [SPEAKER CHANGES]: Representative Jordan. [SPEAKER CHANGES]: Thank you, Madam Chair. As one of the members who was involved in the major mechanics lien reformation that we just went through, we need to keep these folks separate and deal with them the way Representative Szoka has proposed would be my position. I would like to ask Representative Szoka, have the AMCs weighed in on this issue of your bill, this particular aspect? [SPEAKER CHANGES]: Thank you for the question. Yes they have. They’re not in favor of it. I had a stakeholder meeting on April 11th. The original concept for this bill was not to do this recovery fund that was to have established an escrow fund. Going along my experience that in the mortgage industry and dealing with real estate attorneys and customers give a check it goes into an escrow fund and it’s not touched; that proved to be totally unworkable for AMCs for a multiple number of reasons, which I won’t bore the committee with. But we threw that out. We looked at bonding requirements, which there’s a small bond requirement in here. We looked at staggering the amounts of bonding requirements for different-size AMCs. However there’s no mechanism to tell how big an AMC is, so that would have been inherently unfair for someone to pick and choose. This ?? management company pays this bond; this one pays another; all a bond does ?? while it’s in here is that it gives us an opportunity in one point in time every year

Look at an agency to make sure they still have good business practice. So the only mechanism to solve this issue was the recovery fund. [SPEAKER CHANGES] Thank you Madam Chair. As one of those real estate closing attorneys, I would oppose this amendment. [SPEAKER CHANGES] On the amendment, further questions on the amendment? All in favor of the amendment will all say aye. All opposed, no. The nos definitely have it and the amendment fails. Representative Szoka, we’re back on the bill please sir. [SPEAKER CHANGES] Thank you Madam Chair. If there are any other questions or issues which I could address, I’d be happy to do so. [SPEAKER CHANGES] Representative Brawley. [SPEAKER CHANGES] Madam Chair, I’d make a motion that we give the proposed Committee Substitute a favorable report, unfavorable to the original bill. [SPEAKER CHANGES] You’ve heard the motion, members of the committee. All in favor will say aye. All opposed, no. The ayes have it, Representative Szoka. [SPEAKER CHANGES] Thank you Madam Chair, members of the committee. [SPEAKER CHANGES] Our next bill up is going to be House Bill 67. Representative Jones. Representative Kelly Alexander moves that we have the PCS before us for the purpose of discussion. All in favor will say aye. All opposed, no. I believe the ayes have it. Representative Jones, you may proceed sir. [SPEAKER CHANGES] Thank you Madam Chairman, members of the committee. House Bill 67, and I know the short title is permanent license plates for charter schools. I’ll just start by saying that this is not so much a license plate bill as it is a charter school bill. I want to make it very clear that this has nothing to do with the license plate laws that this body passed in the last session. Those laws did not address charter schools. They did not take that privilege away from charter schools or anything like that. But they may have helped lead to a situation where we need to clarify what has been the existing practice at least I think in most cases, prior to now. What this bill simply seems to, tries to do is to recognize that indeed charter schools are public schools, and treat the vehicles of a public charter school in a similar way as we would treat a vehicle of the traditional public school, by allowing them to be able to access permanent license plates. I will say that this has been the practice. It came to my attention during the interim, where my local charter school who had been given permanent license plates, went to the DMV and they were denied, and kind of went through a situation where well, they really weren’t sure what they should do. So we just wanted to clarify this. You will notice under the PCS that basically says that it does have to be identified by some kind of permanent decal or painted marking disclosing the name. The fiscal impact is minimal. It’s really not about the money. The fiscal impact to the state is estimated at $6900 in the next fiscal year, $8600 going forward. I think that it is more to the charter schools, quite frankly not just about the money but just recognizing them for who they are. They are a public school and they should be treated in that manner. Madam Chairman, I would be happy to answer any questions. As a member of this committee, I would be happy to offer up a motion at the appropriate time. [SPEAKER CHANGES] Sidebar conversation. ?? Yes sir, we’re ready. [SPEAKER CHANGES] Madam Chair, I move for approval of the proposed Committee Substitute for House Bill 67, unfavorable to the original. [SPEAKER CHANGES] Members of the committee, Representative Hall. [SPEAKER CHANGES] Thank you Madam Chair, just a question for the bill sponsor or staff on these new license plates being issued, and my question goes to the charter schools or the other entities who would get the plates. What is the procedure, I know they’re either painting

markings or permanent decal. Is there a procedure for the approval or standardization of those and I have a follow up. [SPEAKER CHANGES] I believe John ?? from federal evaluation could, he's in a position to give you a better answer on this. Mr. Turcott, you're recognized sir. [SPEAKER CHANGES] Madam chair, and members, currently counties, cities, municipalities, other instrument powers of government get permanent tags have decals. There is no standardization on how they do them. There is a number of different ways of doing it. The bill just had a generic reference to that so they'd be in the same category or they'd follow the same process that's currently out there. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Yes sir follow up Representative Collins. [SPEAKER CHANGES] Thank you again for ?? a bill sponsored, either one and the question is toward if a charter school gets issued these permanent plates and then is no longer in operation, what is the procedure for recovery and the cost for recovery of the plates or to have the plates turned in and who is responsible for accomplishing that. [SPEAKER CHANGES] Mr. Turcott. [SPEAKER CHANGES] The division of motor vehicles still has authority over tags and any law enforcement agency would stop the vehicle and find in court inquire about the tag would find that the tag is no longer in effect. If someone challenges the status of it, the title of the vehicle. If the title of the vehicle is in the name of a corporation nonprofit organization is out of existence it's void. This is all a matter for DMV to decide and they have procedures now that they've been using to deal with permanent plates that have been revoked by de facto or by law. So. [SPEAKER CHANGES] Representative Hollo. [SPEAKER CHANGES] Just for a comment and it might be something that the bill sponsor looks at before it comes to the floor. We know charter schools don't have as long average life as our public school systems do and other government entities so this is an issue that's probably going to come up with some frequency and maybe you would look at how those plates would be required to be turned in when charter schools or other entities wind down their operations so that responsibility is part of the lying down instead of us having to hope that somehow department of motor vehicles or someone else stumbles upon the fact that the plates might be out there being improperly used. [SPEAKER CHANGES] ?? for you. I'm sorry Representative Hager. [SPEAKER CHANGES] Had a motion. [SPEAKER CHANGES] We have a call for a motion before us. All in favor will say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] All opposed no. I believe that's unanimous. [SPEAKER CHANGES] Thank you members. [SPEAKER CHANGES] Next bill up is going to be Senate Bill 212, referendum on incorporating late jains, Representative Blackwell do you stand for the bill? Or? Yes. 290, ??. 290 ?? Memorandum will roll. Go to Senate Bill 290, Senator Davis. [SPEAKER CHANGES] Thank you Madam chair and ladies and gentleman of the Committee . [SPEAKER CHANGES] Senator Davis, just a moment please. Representative Burr moves that we have the PCS before us for the purpose of discussion. Any objections? Hearing none, Senator you may go forward. [SPEAKER CHANGES] Thank you Madam Chair, the PCS that you have before you was completed without my knowledge, and I obviously didn't have any input in this PCS. What I'm here to advocate for is the bill that I sent to you from the Senate. That was approved unanimously in the Senate. What I would.. [SPEAKER CHANGES] Representative Hagar? [SPEAKER CHANGES] Thank you madam Chairwoman -

question. Senator. What’s the difference between the two bills, could you help us out with that a little bit? [SPEAKER CHANGES] Well the difference is basically the last part of this bill has some time limits on it and I again I was not advised of these changes, they were not done by me and they were not done with my knowledge, i my prior knowledge So what I would advocate would be for the bill that I sent over here with an amendment that was suggested yesterday. Came out of a meeting with Mr. Cohen and it basically and my understanding is, and Representative Presnell is here, and my understanding is that she agrees with this amendment as well and that would be to have a referendum in November of the Lake Junaluska residents to approve or disprove the annexation. [SPEAKER CHANGES] Representative Hager. [SPEAKER CHANGES] Thank you, Madam Chairman. I’m not sure Senator, I apologize I’m just not familiar with the bill. You said there were some time limits in the bill, could you tell me where that’s at? [SPEAKER CHANGES] I think if you look in the last page, talking about in the PCS, you will see in Section 2 and Section 3, we’re talking about this act becoming effective August 31, 2015. And again, this is a very unique situation. Lake Junaluska it’s a Methodist assembly, many of you may have been there and visited that campus, it’s a beautiful campus. The problem that we opinion to canvass the homeowners including all the residents to determine how they’re going to resolve some issues especially having to do with infrastructure and they were looking at several options and the option that was most appealing to them was to bean need by the town of Waynesville and so that’s what my original bill was proposing. And we have members here from Waynesville, and from Canton and from the church that would be glad to answer any questions that the Committee may have. [SPEAKER CHANGES] Senator, I’m going to ask the staff to give us the difference between the original bill and the Committee Substitute. [SPEAKER CHANGES] Mr. Cohen? [SPEAKER CHANGES] Thank you, Madam Chairman. The Committee Substitute has, sorry. [SPEAKER CHANGES] He’s new. [SPEAKER CHANGES] The Committee Substitute has two differences. First of all, the description has some corrections because of some small errors in the original description. So the Committee Substitute fixes the description, so that’s one difference between that and the original bill. So I would suggest if we go forward with an amendment dealing with a referendum that we work off the Committee Substitute rather than the Senate passed bill. The second difference however that another major one is that if provides that rather than being effective August 31, 2013 the annexation be effective August 31, 2015 and if however, if any of the area in the described areas incorporated in a new town by the General Assembly between now and June 1st, 2015 which would require an act to the General Assembly that that described area in a new town would not be annexed to Waynesville but instead would be governed by the provisions of an Incorporation Act and there is a process for incorporation so that’s the two difference. If however no Incorporation Act was passed the area would be annexed to the town of Waynesville effective 2015. [SPEAKER CHANGES] Members of the Committee. Representative Burr? [SPEAKER CHANGES] Could possibly the sponsor of the Chair tell us, since the sponsor doesn’t know where the PCS came fom? Could someone enlighten us where the PCS came from? [SPEAKER CHANGES] I would like that as well. [SPEAKER CHANGES] I’d be glad to do that. Representative e Burr, yesterday we had the opportunity because yesterday all of the folks that had skin in the game or happen to be in the building and we did have about a two hour conversation to try to work through some concerns. And we had Mr. Cohen, we had people from the Conference Center and then we had members of the public that live in the Lake Junaluska area.

I believe that this Committee Substitute is an opportunity for everybody to have the time to do what they felt like that they wanted to do. Perhaps try to incorporate. If that isn’t possible, that then they would go under the annexation. But this just gives time for the folks to be able to have the opportunity to do what they felt like they would like to do. We felt it was a fair thing, and when we walked away from the table I thought that everybody saw the options we took. Two of the options emerged. One to call for the referendum, the other to give the opportunity for incorporation, if it was to be. [SPEAKER CHANGES] Madame Chair, if I may add to that? That I, as the bill’s sponsor, was not involved in those conversations. Neither was a significant group of people from that area involved in those conversations. It was a very limited group. I just think that that’s highly irregular. It’s not the way that… I’ve been here for, this is my third year and this is not the typical way that business is done. [SPEAKER CHANGES] Representative Moffitt? [SPEAKER CHANGES] Thank you, Madame Chair. I would like to kind of steer the conversation more to a pedestrian line of questioning regarding this issue, if you don’t mind? In regards to the infrastructure issues, let me ask you this Senator. Is there currently like a Homeowner’s Association or something for the homeowners in Lake Junaluska? [SPEAKER CHANGES] Yes, there is. And we have people here in the audience with the Chair Woman’s permission that would be glad to address these issues. In my opinion they’ve done their due diligence and they can tell you the sequence of events, and the results of the surveys that they did, They will be able to give you the details. We have the town manager of Waynesville. We have a representative from Lake Junaluska. We have a lobbyist that’s been involved in this area extensively, Chip Killian. And we have a representative from Lake Junaluska, the utilities board or whatever they… I forgot the name that they’re called. But we have resources here that could answer your questions in detail. [SPEAKER CHANGES] OK. Follow up, Madame Chair? [SPEAKER CHANGES] Follow up for Senator Moffitt. [SPEAKER CHANGES] I’ve read through all the material and Lake Junaluska has a Public Works Department. So apparently the Public Works is funded by a contribution or an assessment against all the homeowners, whether they’re resident, full time or part time of Lake Junaluska. Is that correct? [SPEAKER CHANGES] Madame Chair? [SPEAKER CHANGES] Yes, sir? [SPEAKER CHANGES] I may answer the member’s questions? That’s correct. The homeowners own the infrastructure. They purchase their water from the town of Waynesville, but they own the infrastructure. And one of the reasons why they’ve pursued this annexation, again this was a friendly annexation that was initiated by Lake Junaluska, is because they have significant infrastructure needs that they’re no longer able to fund. So they’re looking for a way to upgrade their infrastructure and still supply the needs of their homeowners. [SPEAKER CHANGES] A follow up, Madame Chair? Thank you. [SPEAKER CHANGES] Follow up for Representative Moffitt. [SPEAKER CHANGES] In regards to Waynesville providing them water, does Waynesville only own the pipes up to the highway there and then when it hits Lake Junaluska property it’s the responsibility of Lake Junaluska to maintain and repair and replace those lines? Or is it to the actual residences themselves? [SPEAKER CHANGES] Not to the residences. Up to the road. [SPEAKER CHANGES] That would be the highway, or… [SPEAKER CHANGES] The highway, yes. That’s correct. Waynesville owns that infrastructure and they supply the water, but the homeowners own the infrastructure in the homeowner development itself. [SPEAKER CHANGES] Thank you. Follow up, Madame Chair? [SPEAKER CHANGES] Yes, sir. [SPEAKER CHANGES] What about sewer? How is sewer currently handled within the assembly? [SPEAKER CHANGES] The same thing applies for the sewer. [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] If this annexation was to occur, what would happen to the Public Works Department within Lake Junaluska? I notice that they would take over some of the remaining structures, but not the infrastructure. So would there be a savings to the homeowner by reduction or elimination of an assessment for these items. How would that work? So what would be the benefit to the homeowners outside of if they’re going to be taxed by the city of Waynesville through this annexation? Do they get some…

relief financially from the assembly by this action moving forward [SPEAKER CHANGES]yes the unfunded liability they have for the infrastructure will be taken over by the town of Waynesville and their taxes will be actually less and their services will be greater than the assessment that they now have[SPEAKER CHANGES]and I thank you[SPEAKER CHANGES]Representative Carney, Representative Martin[SPEAKER CHANGES]Thank you Madam Chair I got a geography question I'm Presbyterian not a Methodist so I'm not familiar with Methodist heaven that is Langdon, Alaska how you don't have to draw me a map but just give me a rough ideal if you would Senator how Waynesville and Langdon, Alaska are situated geographically are they I'm interested also how contiguous are the property areas[SPEAKER CHANGES]there right adjacent to one another and so it will be no problem and so they will then be contiguous it will be an easy annexation for them they're both in Haywood County??[SPEAKER CHANGES]Thank you Senator Madam Chair follow-up[SPEAKER CHANGES]yes sir, [SPEAKER CHANGES]thank you Ma'am so I see before us what looks like homeowner's association seemingly to support the original version of your bill and then the town of Waynesville and Haywood County Commissioners all supporting it. Who are the folks opposed to it and what are there reasons? and that's the one thing I think I'm not clear on[SPEAKER CHANGES]Nor am I sir, I know there are some people that are having a difficulty with In my opinion, I'll give you my opinion, some people ?? ?? has been there a methodist assembly for a hundred years and so there are some people that have been homeowners there for a significant amount of time, there homeowners there,there who parents and grandparents who brought property and so they're having difficult time learning how the transition is going to occur. The United Methodist church is no longer sending over I think like over a million dollars per year to help support that area and so they are struggling with how to meet these infrastructure needs with that loss of revenue and so things are changing but yet the infrastructure needs the utilities are still there so they have to deal with that and this was something again that was initiated by Lake ?? not by the town of Waynesville [SPEAKER CHANGES]Madam Chair to speak on the bill[SPEAKER CHANGES]Yes sir,[SPEAKER CHANGES]Thank you Madam Chair, right now I got just one side of the story and that one side of the story leads me to support the original version of the bill over the PCS I'll be interested to hear the other side of the story but until I hear it I'm certainly inclined to support the original version of the bill[SPEAKER CHANGES]Representative Stam[SPEAKER CHANGES]Thank you Senator Davis if everybody in agreement with this why doesn't Waynesville just do a voluntary annexation, why is the bill necessary?[SPEAKER CHANGES]Well my understanding well we haven't had a referendum and the reason why that we haven't had a referendum is that sixty percent of the homeowners are non-residents so the amendment that has been proposed is to have referendum this November and I will certainly be amendable to having that amendment onto the bill to have a referendum this November and then the annexation could occur after that but it's a very unique situation again sixty percent of the homeowners are non-residents so they wont be able to vote on a referendum anyway.[SPEAKER CHANGES]Follow-up Madam Chair[SPEAKER CHANGES]Follow-up Representative Stam[SPEAKER CHANGES]but in the annexation reform bill we passed last session there still is a means where municipality can go through a voluntary annexation quest why don't they just follow the statute that's currently there instead of having to go through this law[SPEAKER CHANGES]Madam Chair if I may defer that question to Mr. Killian or one of the other representatives that may be able to address that legal issue[SPEAKER CHANGES]there someone in the audience that would like to address that question[SPEAKER CHANGES]I'm ?? as I represent both of the parties to this the ??group as well as the town of Waynesville this type of annexation really doesn't fit into the general law and its the kind of thing that is so unique that Senator Davis said that we needed to come to a general assembly for approval of this.but I think that Mr. Young Buddy Young who's head of public works for ?? can answer most substantive questions about the issues the important issues that representative Martin has raised[SPEAKER CHANGES]Excuse me it wasn't Representative Martin's question it was

Well then let me address this to staff then. [SPEAKER CHANGES] Rep. Starnes, I believe Mr. Cohen might ?? [SPEAKER CHANGES] ?? we have provisions for voluntary annexations, and it's been presented that lake Junaluska is physically adjacent to the city limits of ?? so why is their voluntary annexation not a reasonable option under the current law? [SPEAKER CHANGES] My understanding, let's assume it's contiguous to the corporate limits, it would require 100% petition of all the property owners to annex the described area. If there were any people who didn't want to sign, their lots and water infrastructure would be left out of the town. If it's a satellite annexation, really the result is the same. It requires 100% of the people proposing annexation, but if there's any subdivided lots left out, if it's non-contiguous, then it couldn't be annexed at all. Even leaving out some people. So my understanding, it's because they could not obtain 100% petition. [SPEAKER CHANGES] Rep. Starnes, you have a follow up sir? [SPEAKER CHANGES] Well, I'd be curious to hear- I see Rep. Presnell in the audience, I'd like to hear what her take on this proposed committee substitute [SPEAKER CHANGES] Members of the audience, Rep. Pressnell, if you would like to- [SPEAKER CHANGES] Well, it is a difficult subject, if they did the referendum, my problem is that all of the people affected in lake Junaluska, because they don't live there year round, would not be able to vote. But most of these people, these are homes that have been passed down to generation to generation, and I think they should have the choice to vote. But if they do a referendum then we can't. It's sort of- A referendum would be, I'm assuming it would be the best way to do it, but I can't- I have to say I'm okay with it, but like I say, all those people are not going to have the opportunity to vote on it. [SPEAKER CHANGES] Mr. Chairman, if I may ask a question. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] Rep. Pressnell's exactly right, there was a survey done, a very thorough survey of all property owners including those who were residents and those who were not residents. Mr. Young knows the results of that survey and he'd be happy to share those with you, I think that was the route that was decided upon after consultation with the local delegation as being preferable to a referendum. However both parties are willing to do a referendum if that's the desire of the committee. [SPEAKER CHANGES] The Chair is going to displace this bill for this morning and we will bring it back at our next meeting Senator. [SPEAKER CHANGES] Could you tell me when that next meeting is? [SPEAKER CHANGES] We hope it will be next Tuesday. [SPEAKER CHANGES] Thank you Madam Chairman and members of the committee. [SPEAKER CHANGES] Our next bill up is going to be Senate bill 312, referendum on incorporating lake James, I believe the sponsors were here a moment ago. [SPEAKER CHANGES] Madam Chair. [SPEAKER CHANGES] We're going to ask Representative- We're going to ask staff to go through this proposed bill in the absence of the sponsors. Staff? [SPEAKER CHANGES] Madam Chair? Madam Chair? [SPEAKER CHANGES] Rep. Lewis. [SPEAKER CHANGES] Thank you ma'am and I apologize for interrupting the staff. I'd like to speak briefly on the consideration of this bill. This is a very big state, we all work hard, our schedules are packed, and we make decisions based on the information we have before us. Last night, at about 9:45, the member representing this area, Rep. Blackwell, and the bill sponsor called me as one of the co-chairs of finance, and asked me did I think it would be possible for Senate Bill 312 to be pulled today, and they asked that for 2 reasons: The first was that there were some last minute amendments that they wanted to have prepared, and the second and more important is that there were members of the public impacted by this bill who support it

And to pose it who are going to after drive four and half hour to get here to speak for or against this bill and out to respect to them those who supported to opposed it they still what I told and I take full responsibility for that and based on what I told them, they informed the members from the lake James area that the bill will not be heard today. I apologies to you and to everyone else of this has caused a tremendous problem I would respectfully ask that the bill remove from today's calendar and recalenderated the next time the committee on finance would meet. [SPEAKER CHANGES] Representative Hager. [SPEAKER CHANGES] Thank you ma'am chairman. I do appreciate what representative Lewis says I just wanna make sure that it goes on that I go that nobody know that I am part of the berg county delegation and I think myself alone with representative Starnes fully oppose this bill so what do today wanna make sure we are on record with that. [SPEAKER CHANGES] Representative Hall. [SPEAKER CHANGES] Thank you ma'am chairman. I appreciate co-chairman Louise comments about people from lake James being available at seeing audience several people who are here and follow up on representative Lewis’s comments that people have come a long way to be heard on this bill and it's property schedule for today I would hope that we can go and address the bill today depose of it again I know they are here and they made the drive I don't know why they didn't get notified or who was supposed to be in charge of it. [SPEAKER CHANGES] Representative Carney. [SPEAKER CHANGES] Thank you ma'am chairman. I was back in the day when we having ?? corporation joint committee I was a co-chair and was very much involved with this petition back in 2009 and it seems to keep coming back we at that point have bill unfavorable report and I still continue to be oppose to this if you look at all the considerations that are giving before and area is being cooperated this particular project did not meet that criteria. And like representative Hall said yesterday there were people that traveled here from lake James that hard was gonna be on yesterday's calendar and some stayed overnight they expense to be here today so I have a great deal of respect for representative Lewis and his effort to help the another member of that delegation. This bill is being around for a long time and it has problem every time it's been here. It just hasn't gone anywhere I would hope that we would move forward today and address this bill. [SPEAKER CHANGES] Representative Starnes. [SPEAKER CHANGES] Madam chair is one of the bill sponsor in the room? I don't see them. [SPEAKER CHANGES] Madam chair. [SPEAKER CHANGES] Senate bills senator Daniel was here just a moment ago I don't know why he had to leave. Representative Stam. [SPEAKER CHANGES] Ma'am I suggest that we hear from the people who are here but not vote on it today. [SPEAKER CHANGES] Representative Blust. [SPEAKER CHANGES] I have talked to senator Daniel briefly and I just always thought it was the protocol that we pretty much of they wouldn't overwhelming reason went by the bill sponsors wishes and he's the bill sponsor and he told me he desired to have a bill postponed I don't understand why we wouldn't postpone it now I just gonna also ask the question who actually represents the area covered by this bill. [SPEAKER CHANGES] Staff can you? Blackwell and Daniel it's my understanding and they both were in the room just few minutes ago. [SPEAKER CHANGES] Madam chair if I can be recognized. [SPEAKER CHANGES] Representative Hall. [SPEAKER CHANGES] Again as we talked about this bill is been noticed the folks have been here.

If the bill is before us we need to go ahead and do the business of what needs to be done o the bill so we can move forward. [SPEAKER CHANGES] The bill is before us. Are there members of the audience that would like to speak on this bill? For or against. Sir if you’ll give us your name for the record, and hold the button down on the mic. [SPEAKER CHANGES] Can you hear me? [SPEAKER CHANGES] Yes, sir. [SPEAKER CHANGES] All right. Good morning. My name is Bruce Irving. I’m from Burke County. I live at 2680 Nc 126, Morganton, North Carolina. I’ve been one of the people who’s been opposing this bill since 2009, and even as far back as 1997. And every time we come down we have the same problems. We get laid over, laid over and we just keep driving, keep driving, keep driving. Fortunately enough I am retired and I’m able to use my own financial money to come down and speak to all of you. And I think most of you have met me over the period of time. And the bill itself has enough credentials. I think we wrote a book on this bill from the last 1997 up until the present time. And there are so many things that I could start off. If you haven’t been informed and haven’t seen it, you can contact Bruce Irving at area code 828-584-1047. Please give us some helping hand. We have a petition from Southpoint. Two weeks ago Senate Bill, they pulled out 1780 out of it, to go to committee. The map itself, you’ll see, is non ??. Representative Carney was on those bills. Many of you was on those other committees. All we’re saying today is let’s put some rest to it so we can stop traveling, and using our gas and our resources. And I’m sure if it gets shut down or do whatever you need to do, you won’t have this camaraderie of people calling. Burke County’s uproar. Our County Commissioners have sent letters down. Our County Manager, our whole county has been forward. It’s almost divided, and it’s not a black and white issue, it’s a community at stand. [SPEAKER CHANGES] Representative Brawley? [SPEAKER CHANGES] Madame Chair, if you’re ready for a motion? [SPEAKER CHANGES] The bill is before you. We will accept a motion. Representative Brawley. You’re recognized. [SPEAKER CHANGES] Madame Chairwoman. [SPEAKER CHANGES] Brawley go ahead. [SPEAKER CHANGES] Representative Brawley. [SPEAKER CHANGES] I move that we give Senate Bill 312 an unfavorable report. [SPEAKER CHANGES] Representative Hager? [SPEAKER CHANGES] Thank you Madame Chairwoman. I’ve made no… Made sure everybody understands how much I oppose this Bill. If you look at the map, and the map is not before us, but if you guys remember the map from last year. It totally removes an African American community. It goes around the community. They weren’t surveyed like the other communities were. It jumps across a lake, it goes down a road. It’s just an incorporation like I’ve never seen. I think Representative Starnes made the comment that if you were trying to annex this area there’s no way you could annex it because of all the violations you have in it. It’s just a terrible map. And I’d ask anybody that is for this annexation, to look at the map. It’s just amazing everything that has gone on with this and how long it’s been around. If you look at the map, you would fully oppose it also. [SPEAKER CHANGES] Representative Stam, we are going to vote, I’ll give you one minute. [SPEAKER CHANGES] Thank you. I’m not in favor of this bill, but the last thing you’d want to do Representative Brawley is move for an unfavorable report. Because under House rules, one fourth of the committee can then bring it straight to the floor. I don’t know if that was the rule 18 years ago, but that’s the rule now. So I would encourage people to vote no for the motion on an unfavorable report. [SPEAKER CHANGES] You have a motion before you, and the motion is to give the bill an unfavorable report. All in favor will say aye. All opposed no. Division. The Chair’s going to call that the ayes have it, and the motion to give the bill an unfavorable report carries. And at this point we’re out of time and we stand adjourned.