GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1999

H	1 

HOUSE BILL 1468

Short Title:  Growth Management Act of 1999.	(Public)

─────────────────────────────────────── 
Sponsors: Representatives Hackney; and Insko.

─────────────────────────────────────── 
Referred to:  Rules, Calendar and Operations of the House.

─────────────────────────────────────── 

May 12, 1999

A BILL TO BE ENTITLED
AN ACT PROVIDING FOR EFFECTIVE GROWTH MANAGEMENT BY LOCAL GOVERNMENTS, AUTHORIZING IMPACT TAXES BY LOCAL GOVERNMENTS ENGAGING IN EFFECTIVE GROWTH MANAGEMENT, PROVIDING FOR THE ACQUISITION BY LOCAL GOVERNMENTS OF INTERESTS IN LAND FOR CONSERVATION PURPOSES; AND ALLOWING PROPERTY SUBJECT TO CONSERVATION MANAGEMENT AGREEMENTS TO BE TAXED AT ITS PRESENT-USE VALUE.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 153A-158 reads as rewritten:
"§ 153A-158.  Power to acquire property.
(a)	A county may acquire, by gift, grant, devise, bequest, exchange, purchase, lease, or any other lawful method, the fee or any lesser interest in real or personal property for use by the county or any department, board, commission, or agency of the county. In exercising the power of eminent domain a county shall use the procedures of Chapter 40A.
(b)	A county may acquire by gift, grant, devise, bequest, exchange, purchase, lease, or any other lawful method except eminent domain, the fee or any lesser interest in real property for the purpose of land conservation, including the acceptance of the transfer of development rights.  For the purposes of this subsection, ‘development right' means the right of the owner of the fee simple interest in land to change the use of the land."
Section 2.  G.S. 160A-240.1 reads as rewritten:
"§ 160A-240.1. Power to acquire property.
(a)	A city may acquire, by gift, grant, devise, bequest, exchange, purchase, lease, or any other lawful method, the fee or any lesser interest in real or personal property for use by the city or any department, board, commission or agency of the city.  In exercising the power of eminent domain a city shall use the procedures of Chapter 40A. In exercising the power of eminent domain a city shall use the procedures of Chapter 40A.
	(b) A city may acquire by gift, grant, devise, bequest, exchange, purchase, lease, or any other lawful method except eminent domain, the fee or any lesser interest in real property for the purpose of land conservation, including the acceptance of the transfer of development rights.  For the purposes of this subsection, ‘development right' means the right of the owner of the fee simple interest in land to change the use of the land."
Section 3.  Article 18 of Chapter 153A of the General Statutes is amended by adding a new Part to read:
“Part 6.  Planned Growth Management and Community Development.
"§ 153A-380.  Applicability; legislative findings and intent.
(a)	The provisions of this Part shall apply to any county that elects to come under its coverage upon adoption of a resolution to that effect by the board of county commissioners.  Upon adoption of the resolution, the incorporated municipalities located wholly or partly within the county shall also come under the coverage of this Part.  The resolution shall remain in effect until rescinded by a three-fifths majority vote of the board of county commissioners. A certified copy of any resolution of the board of county commissioners adopted pursuant to this subsection shall be filed with the Secretary of State and with the Legislative Services Office within 10 days of adoption of the resolution.
(b)	The General Assembly finds that:
(1)	Effective growth management by local governments is essential to the continued prosperity of the State and its citizens.
(2)	Growth planning by local governments facilitates a favorable quality of life for the citizens of this State and helps to preserve the State's natural, economic, and cultural resources.
(3)	New commercial and residential development throughout the State requires local governments to provide additional infrastructure and services as a result of the new development, particularly with regard to public school capital needs.
(4)	For counties engaged in effective growth planning, the option of levying impact taxes on new development will provide a much needed source of revenue to pay for public school capital needs caused by new development.
(c)	It is the intent of the General Assembly that local governments engage in long-term planning, and that such planning be accomplished through regular communication and cooperation among local governments, the agencies attached to them, and the agencies that serve them.  It is also the intent of the General Assembly that the growth plans required by this Part result from communication and cooperation among local governments.
"§ 153A-380.1.  Recommended growth plans.
(a)	The board of county commissioners shall serve as the coordinating body for growth management efforts within the county.  In this role, the board of county commissioners shall confer with the mayor and governing bodies of the incorporated municipalities located wholly or partly within the county.
(b)	The board of county commissioners shall develop a recommended growth plan to identify urban growth boundaries for each municipality within the county and shall identify planned growth areas and rural areas within the county, all in conformance with G.S. 153A-380.2.  In developing a recommended growth plan, the board of county commissioners shall give due consideration to urban growth boundaries proposed by each municipal governing body.  The board of commissioners shall utilize the planning resources that are available within the county, including municipal and county planning boards and commissions.  All State departments, agencies, and institutions that provide planning and community assistance services shall cooperate with the board of county commissioners in developing recommended growth plans upon the board's written request.  The board of county commissioners shall conduct at least two public hearings before adopting a recommended growth plan.  The county shall give at least 15 days' advance notice of the time, place, and purpose of each public hearing by notice published in a newspaper of general circulation throughout the county.
(c)	The county shall transmit copies of the recommended growth plan to the mayor and governing body of each incorporated municipality located wholly or partly in the county.  Each municipality shall develop and submit to the board of county commissioners, within 120 days, a written response to the county's recommended growth plans.  The municipal response shall set forth any objections to the county's recommended growth plan, including detailed reasons for each objection.  The municipality shall conduct at least one public hearing on its response to the county's recommended growth plan.  The municipality shall give at least 15 days' advance notice of the time, place, and purpose of the public hearing by notice published in a newspaper of general circulation throughout the county.
(d)	The board of county commissioners shall give due consideration to the municipal responses to its recommended growth plan.  The board of county commissioners shall make any necessary revisions to the recommended growth plan based upon information provided by the municipalities.  The board of county commissioners may consider any other relevant information available to the board subsequent to adoption of its initial recommended growth plan.
"§ 153A-380.2.  Growth boundaries defined.
(a)	The urban growth boundaries of a municipality shall:
(1)	Identify territory that is reasonably compact yet sufficiently large to accommodate residential and nonresidential growth projected to occur during the next 20 years;
(2)	Identify territory that is contiguous to the existing boundaries of the municipality;
(3)	Identify territory that a reasonable and prudent person would project is the likely site of high density, commercial, industrial, and residential growth, or both, over the next 20 years based on historical experience, economic trends, population growth patterns, and topographical characteristics. If available, professional planning, engineering, and economic studies may also be considered;
(4)	Identify territory in which the municipality is better able and prepared than other municipalities to efficiently and effectively provide urban services; and
(5)	Reflect the municipality's duty to facilitate full development of resources within the current boundaries of the municipality and to manage and control urban expansion outside of the current boundaries, taking into account the impact to agricultural lands, forest, recreational areas, and wildlife management areas.
(a1)	Before formally proposing urban growth boundaries to the board of county commissioners, the municipality shall develop and report population growth projections.  The municipality shall also determine and report the current costs and the projected costs of core infrastructure, urban services, and public facilities necessary to facilitate full development of resources within the current boundaries of the municipality and to expand such infrastructure, services, and facilities throughout the territory under consideration for inclusion within the urban growth boundaries.  The municipality shall also determine and report on the need for additional land suitable for high density, industrial, commercial, and residential development, after taking into account all areas within the municipality's current boundaries that can be used, reused, or redeveloped to meet such needs.  The municipality shall examine and report on agricultural lands, forests, recreational areas, and wildlife management areas within the territory under consideration for inclusion within the urban growth boundaries and shall examine and report on the likely long-term effects of urban expansion on such agricultural lands, forests, recreational areas, and wildlife management areas.
(b)	Each planned growth area of a county shall:
(1)	Identify territory that is reasonably compact yet sufficiently large to accommodate residential and nonresidential growth projected to occur during the next 20 years;
(2)	Identify territory that is not within the existing boundaries of any municipality;
(3)	Identify territory that a reasonable and prudent person would project as the likely site of high or moderate density, commercial, industrial, or residential growth over the next 20 years based on historical experience, economic trends, population growth patterns, and topographical characteristics. If available, professional planning, engineering, and economic studies may also be considered;
(4)	Identify territory that is not contained within urban growth boundaries; and
(5)	Reflect the county's duty to manage natural resources and to manage and control urban growth, taking into account the impact to agricultural lands, forests, recreational areas, and wildlife management areas.
(b1)	Before formally proposing any planned growth area, the county shall develop and report population growth projections.  The county shall also determine and report the projected costs of providing urban type core infrastructure, urban services, and public facilities throughout the territory under consideration for inclusion within the planned growth area as well as the feasibility of recouping such costs by imposition of fees or taxes within the planned growth area.  The county shall also determine and report on the need for additional land suitable for high density, industrial, commercial, and residential development after taking into account all areas within the current boundaries of municipalities that can be used, reused, or redeveloped to meet such needs.  The county shall also determine and report on the likelihood that the territory under consideration for inclusion within the planned growth area will eventually incorporate as a new municipality or be annexed.  The county shall also examine and report on agricultural lands, forests, recreational areas, and wildlife management areas within the territory under consideration for inclusion within the planned growth area and shall examine and report on the likely long-term effects of urban expansion on such agricultural lands, forests, recreational areas, and wildlife management areas.
(c)	Each rural area shall:
(1)	Identify territory that is not within urban growth boundaries;
(2)	Identify territory that is not within a planned growth area;
(3)	Identify territory that, over the next 20 years, is to be preserved as agricultural lands, forests, recreational areas, wildlife management areas, or for uses other than high density, commercial, industrial, or residential development; and
(4)	Reflect the county's duty to manage growth and natural resources in a manner which reasonably minimizes detrimental impact to agricultural lands, forests, recreational areas, and wildlife management areas.
"§ 153A-380.3.  Final growth plan; land-use decisions to be consistent with plan; dispute resolution; judicial review.
(a)	Not later than July 1, 2001, a growth plan for each county and the incorporated municipalities located wholly or partly in the county shall be finalized by the board of county commissioners in accordance with the provisions of this Part.  After a growth plan is approved, all land-use planning decisions made by the county and the incorporated municipalities located wholly or partly in the county, and by their respective planning boards and other related departments and bodies, shall be consistent with the final growth plan.
(b)	The final growth plan shall include, at a minimum, documents describing and depicting municipal corporate limits, as well as urban growth boundaries, planned growth areas, if any, and rural areas, if any, developed in conformance with the provisions of this Part.
(c)	The final growth plan shall direct the coordinated, efficient, and orderly development of the covered local governments and environs that will, based on an analysis of present and future needs, best promote the public health, safety, morals, and general welfare.  The final growth plan may address land-use, transportation, public infrastructure, housing, public education, and economic development.  The goals and objectives of the final growth plan shall include the need to:
(1)	Provide a unified physical design for the development of the local community;
(2)	Encourage a pattern of compact and contiguous high density development to be guided into urban areas or planned growth areas;
(3)	Establish an acceptable and consistent level of public services and community facilities and ensure timely provision of those services and facilities;
(4)	Promote the adequate provision of employment opportunities and the economic health of the region;
(5)	Conserve features of significant statewide or regional architectural, cultural, historical, or archaeological interest;
(6)	Protect life and property from the effects of natural hazards, such as flooding, winds, and wildfires;
(7)	Take into consideration any other matters that may be logically related to or form an integral part of a plan for the coordinated, efficient, and orderly development of the local community; and
(8)	Provide for a variety of housing choices and assure affordable housing for future population growth.
(d)	Any objection to a recommended growth plan made by an incorporated municipality in accordance with G.S. 153A-380.1 that is not resolved fully under the provisions of the final growth plan adopted by the board of county commissioners may be subject to consideration and dispute resolution by the Local Government Commission as provided by G.S. 159-3.
(e)	An affected incorporated municipality, a resident of the county, or an owner of real property located within the county is entitled to judicial review under this subsection, which shall be the exclusive method for judicial review of the final growth plan, as follows:
(1)	Proceedings for review shall be instituted by filing a petition before the superior court in the county.  The petition must be filed within 30 days of the board of county commissioners' approval of the final growth plan.
(2)	Judicial review shall be de novo and shall be conducted without a jury.  The petitioner shall have the burden of proving, by a preponderance of the evidence, that the recommended growth plan is invalid because it was adopted in an arbitrary, capricious, illegal, or other manner characterized by an abuse of official discretion.
(3)	The filing of a petition for judicial review shall not automatically stay effectiveness of the final growth plan.  The court may order a stay upon appropriate terms if it is shown to the satisfaction of the court that any party or the public at large is likely to suffer significant injury if the stay is not granted.  If more than one civil action is filed within the county, then all the petitions shall be consolidated and tried as a single civil action.
(4)	If the court finds by a preponderance of the evidence that the final growth plan is invalid because it was adopted in an arbitrary, capricious, illegal, or other manner characterized by an abuse of official discretion, then an order shall be issued vacating the plan, in whole or in part, and remanding the plan to the county to adopt a final growth plan in conformance with the procedures set forth in this Part.
"§ 153A-380.4. Joint economic development planning.
(a)	There shall be established in each county a joint economic and community development board which shall be established by interlocal agreement.  The purpose of the board is to foster communication relative to economic and community development between and among governmental entities, industry, and private citizens.
(b)	Each joint economic and community development board shall be composed of representatives of county and municipal governments, private citizens, and present industries and businesses.  The final composition of the board shall be determined by interlocal agreement but shall, at a minimum, include the chair of the board of county commissioners, the county manager, the mayors, and city managers, as appropriate, of each incorporated municipality lying within the county, and one person who owns land qualifying for classification and valuation under Article 12B of Chapter 105 of the General Statutes.  In cases where there are multiple municipalities, smaller municipalities may have representation on a rotating basis as determined by the interlocal agreement.
(c)	There shall be an executive committee of the board which shall be composed of members of the joint economic and community development board selected by the entire board.  The composition of the executive committee shall be determined by the entire joint economic and community development board but shall, at a minimum, include the county manager and the mayors or managers of the larger municipalities in the county.
(d)	The terms of office shall be determined by the interlocal agreement but shall be staggered except for those positions held by elected officials whose terms shall coincide with the terms of office for their elected positions.  All terms of office shall be for a maximum of four years.
(e)	The board shall meet, at a minimum, four times annually and the executive committee of the board shall meet at least eight times annually.  Meetings of the board and the executive committee shall be documented by minutes kept and certification of attendance.  Meetings of the joint economic and community development board and its executive committee are subject to the open meetings law.
(f)	The activities of the board shall be jointly funded by the participating governments.  The board may accept and expend donations, grants, and payments from persons and entities other than the participating local governments.  An annual budget to fund the activities of the board shall be recommended by the executive committee to the board which shall adopt a budget before April 1 of each year.  The funding formula established by the interlocal agreement shall then be applied to the total amount budgeted by the board as the participating governments' contributions for the ensuing fiscal year.  The budget and a statement of the amount due from each participating government shall be immediately filed with the appropriate officer of each participating government.   In the event a participating government does not fully fund its contribution, the board may establish and impose such sanctions or conditions as it deems proper.
"§ 153A-380.5.  Impact tax.
(a)	The following definitions apply to this section:
(1)	Commercial building enclosed floor space. – All enclosed floor space used for any purpose except:
a.	Dwelling units and accessory structures to dwelling units.
b.	Recreational facilities constructed as part of a residential development and used primarily by residents of the development.
c.	Buildings owned by the United States, the State of North Carolina, any county, or any municipal corporation.
d.	Buildings owned and operated by nonprofit entities for noncommercial and nonresidential purposes.
e.	Schools or day care centers.
(2)	Dwelling unit. – An enclosure containing sleeping, kitchen, and bathroom facilities designed for and used or held ready for use as a permanent residence by one family.
(3)	Land development. –
a.	Land development includes any of the following:
1.	Construction of any dwelling unit, other than one excluded under sub-subdivision b. of this subdivision, for which a building permit was issued or should have been issued after the effective date of an ordinance adopted under this Part.
2.	Construction of any commercial building enclosed floor space for which a building permit was issued or should have been issued after the effective date of an ordinance adopted under this Part.
3.	Conversion of a building that adds one or more new dwelling units or that creates new commercial building enclosed floor space.
4.	The initial location of a manufactured home or other dwelling or commercial structure within the county.
b.	For purposes of determining the impact of land development for this section, land development does not include:
1.	Construction of an addition to a dwelling unit.
2.	The relocation within the county of any structure located within the county on the effective date of an ordinance adopted pursuant to this Part or any structure with respect to which an impact tax pursuant to this section has been paid.
3.	Within the county, the reconstruction or replacement of one dwelling unit by another or the replacement or reconstruction of commercial building enclosed floor space that was in existence on the effective date of an ordinance adopted pursuant to this Part or of any such floor space with respect to which an impact tax adopted pursuant to this section has been paid.
(4)	Net proceeds. – The gross proceeds of the tax less the cost to the county of collecting and administering the tax.
(5)	Person. – An individual, a partnership, a corporation, or another legal entity.
(6)	Person responsible for the impact of land development. – The owner of any dwelling unit or commercial building enclosed floor space on the date an occupancy permit is issued for the dwelling unit or commercial floor space or, if no occupancy permit is issued, the date the dwelling unit or commercial floor space is occupied.
(b)	Except as provided in subsection (c) of this section, a county which has adopted a final growth plan pursuant to G.S. 153A-380.3 may adopt an ordinance levying a tax on the impact of land development within the county and to provide for the administration, enforcement, and collection of the tax.
(c)	A county may not adopt an ordinance pursuant to this section if any other ordinance pertaining to a system of impact fees to provide for capital improvements to public schools within the county is in effect.
(d)	A county may not levy impact taxes on a land development that would exceed one dollar ($1.00) per square foot of each new dwelling unit or one dollar ($1.00) per square foot of new commercial building enclosed floor space.
(e)	The purpose of the tax authorized by this section is to generate funds to partially offset the cost of constructing new school capital facilities or replacing, expanding, or improving existing school capital facilities necessitated in part by new growth within the county.  Accordingly, the net proceeds generated by the tax authorized by this section shall be deposited by the county in its capital reserve improvements fund or funds established under Part 2 of Article 3 of Chapter 159 of the General Statutes and may be expended, to the extent otherwise authorized by law, only for capital improvements projects related to public schools.
(f)	An ordinance adopted pursuant to this section shall provide that:
(1)	A person responsible for the impact of land development shall pay an impact tax for each square foot of dwelling space and commercial building enclosed floor space for which an occupancy permit is issued or, if no occupancy permit is issued, for each square foot of dwelling space in an occupied dwelling and for each square foot of occupied enclosed floor space in a commercial building.
(2)	The tax shall be due on or before the date an occupancy permit is initially issued for the dwelling unit or commercial building enclosed floor space in question or, if no occupancy permit is issued, the date the dwelling unit or commercial floor space is initially occupied.  However, no tax due shall be considered delinquent until 60 days after the tax becomes due.  There shall be added to delinquent taxes interest at the legal rate.
(3)	Taxes authorized by this section may be collected pursuant to G.S. 153A-147 or G.S. 160A-207.  In addition, taxes authorized by this section may be recovered in a civil action in the nature of debt including an award of reasonable attorneys' fees as part of costs.
(g)	The county shall establish annually at the time of the adoption of its annual budget the tax rate to be levied per square foot of dwelling space and per square foot of commercial building enclosed floor space for the ensuing fiscal year.  Different tax rates may be established for different types of dwelling units and different types of commercial building enclosed floor space.
(h)	The county may repeal all or part of an existing ordinance pertaining to a system of impact fees to provide for capital improvements to public schools within the county adopted under any local act.  The county may not adopt another ordinance pertaining to a system of impact fees to provide for capital improvements to public schools within the county while an ordinance adopted pursuant to this section is in effect.
(i)	Whenever the sale of real property located in the county involves new construction, the seller shall prepare and sign, and the buyer shall receive and sign, a disclosure statement.  The disclosure statement shall either be included in a contract or sale or contained in a separate document executed prior to the execution of a sales contract.  This disclosure statement shall fully and completely disclose that the owner of the property at the time an occupancy permit issued for the new construction or, if no occupancy permit is issued, the date the new construction is occupied, may be subject to a tax levied by the county on the impact of land development.  If a seller fails to make this disclosure and the buyer suffers injury as a result of the seller's failure to disclose, the seller is liable to the buyer to the extent of the buyer's injury."
Section 4.  G.S. 159-3 reads as rewritten:
"§ 159-3.  Local Government Commission established.
(a)	The Local Government Commission consists of nine members. The State Treasurer, the State Auditor, the Secretary of State, and the Secretary of Revenue each serve ex officio; the remaining five members are appointed to four-year terms as follows: three by the Governor, one by the General Assembly upon the recommendation of the President Pro Tempore in accordance with G.S. 120-121, and one by the General Assembly upon the recommendation of the Speaker of the House in accordance with G.S. 120-121. Of the three members appointed by the Governor, one shall be or have been the mayor or a member of the governing board of a city and one shall be or have been a member of a county board of commissioners. The State Treasurer is chairman ex officio of the Local Government Commission. Membership on the Commission is an office that may be held concurrently with one other office, as permitted by G.S. 128-1.1.
(b)	Except as provided by subsection (b1) of this section, the Commission shall meet at least quarterly in the City of Raleigh, and may hold special meetings at any time or place upon notice to each member given in person or by mail not later than the fifth day before the meeting. The notice need not state the purpose of the meeting.
Action of the Commission shall be taken by resolution adopted by majority vote of those present and voting. A majority of the Commission constitutes a quorum.
(b1)	The Commission may meet, as often as necessary, outside the City of Raleigh to consider and resolve disputes between local governments arising under Part 6 of Article 18 of Chapter 153A of the General Statutes.  Whenever practicable, the Commission shall meet in the county where the dispute has arisen.
(c)	The appointed members of the Commission are entitled to the per diem compensation and allowances prescribed by G.S. 138-5. All members are entitled to reimbursement for necessary travel and other expenses.
(d)	The Commission may call upon the Attorney General for legal advice in relation to its powers and duties.  The Commission may call upon the Secretary of Commerce, the Secretary of the Department of Cultural Resources, the Secretary of the Department of Environment and Natural Resources, and the Secretary of the Department of Transportation, as appropriate, for consultations and technical assistance in connection with the resolution of disputes between local governments arising under Part 6 of Article 18 of Chapter 153A of the General Statutes.
(e)	The Local Government Commission shall operate as a division of the Department of the State Treasurer.
(f)	The Commission may adopt rules and regulations to carry out its powers and duties."
Section 5.  Subchapter II of Chapter 105 of the General Statutes is amended by adding a new Article 12B entitled “Use-Value Taxation."
Section 6.  G.S. 105-277.2 is recodified as G.S. 105-282.10 in Article 12B of Chapter 105 of the General Statutes.
Section 7.  G.S. 105-277.3 through G.S. 105-277.7 are recodified as G.S. 105-282.12 through G.S. 105-282.16 in Article 12B of Chapter 105 of the General Statutes.
Section 8. Article 12B of Chapter 105 of the General Statutes, as enacted and amended by this act, reads as rewritten:
"ARTICLE 12B.
"Use-Value Taxation.
"§ 105-282.10. Definitions.
The following definitions apply in this Article:
(1)	Agricultural land. – Land that is a part of a farm unit that is actively engaged in the commercial production or growing of crops, plants, or animals under a sound management program. Agricultural land includes woodland and wasteland that is a part of the farm unit, but the woodland and wasteland included in the unit shall be appraised under the use-value schedules as woodland or wasteland. A farm unit may consist of more than one tract of agricultural land, but at least one of the tracts must meet the requirements in G.S. 105-282.12(a)(1), and each tract must be under a sound management program.
(1a)	Business entity. – A corporation, a general partnership, a limited partnership, or a limited liability company.
(2)	Forestland. – Land that is a part of a forest unit that is actively engaged in the commercial growing of trees under a sound management program. Forestland includes wasteland that is a part of the forest unit, but the wasteland included in the unit shall be appraised under the use-value schedules as wasteland. A forest unit may consist of more than one tract of forestland, but at least one of the tracts must meet the requirements in G.S. 105-282.12(a)(3), and each tract must be under a sound management program.
(3)	Horticultural land. – Land that is a part of a horticultural unit that is actively engaged in the commercial production or growing of fruits or vegetables or nursery or floral products under a sound management program. Horticultural land includes woodland and wasteland that is a part of the horticultural unit, but the woodland and wasteland included in the unit shall be appraised under the use-value schedules as woodland or wasteland. A horticultural unit may consist of more than one tract of horticultural land, but at least one of the tracts must meet the requirements in G.S. 105-282.12(a)(2), and each tract must be under a sound management program.
(4)	Individually owned. – Owned by one of the following:
a.	A natural person. For the purpose of this section, a natural person who is an income beneficiary of a trust that owns land may elect to treat the person's beneficial share of the land as owned by that person. If the person's beneficial interest is not an identifiable share of land but can be established as a proportional interest in the trust income, the person's beneficial share of land is a percentage of the land owned by the trust that corresponds to the beneficiary's proportional interest in the trust income. For the purpose of this section, a natural person who is a member of a business entity, other than a corporation, that owns land may elect to treat the person's share of the land as owned by that person. The person's share is a percentage of the land owned by the business entity that corresponds to the person's percentage of ownership in the entity.
b.	A business entity having as its principal business one of the activities described in subdivisions (1), (2), and (3) and whose members are all natural persons who meet one or more of the following conditions: 
1.	The member is actively engaged in the business of the entity.
2.	The member is a relative of a member who is actively engaged in the business of the entity.
3.	The member is a relative of, and inherited the membership interest from, a decedent who met one or both of the preceding conditions after the land qualified for classification in the hands of the business entity.
c.	A trust that was created by a natural person who transferred the land to the trust and each of whose beneficiaries who is currently entitled to receive income or principal meets one of the following conditions:
1.	Is the creator of the trust or the creator's relative.
2.	Is a second trust whose beneficiaries who are currently entitled to receive income or principal are all either the creator of the first trust or the creator's relatives.
d.	A testamentary trust that meets all of the following conditions:
1.	It was created by a natural person who transferred to the trust land that qualified in that person's hands for classification under G.S. 105-282.12.
2.	At the time of the creator's death, the creator had no relatives as defined in this section as of the date of death.
3.	The trust income, less reasonable administrative expenses, is used exclusively for educational, scientific, literary, cultural, charitable, or religious purposes as defined in G.S. 105-278.3(d).
(4a)	Member. – A shareholder of a corporation, a partner of a general or limited partnership, or a member of a limited liability company.
(5)	Present-use value. –In the case of agricultural land, horticultural land, or forestland, the value of the land based solely on its ability to produce income, using a rate of nine percent (9%) to capitalize the expected net income of the property and assuming an average level of management.  In the case of conservation land classified under G.S. 105-282.11, the value of the land based solely on its value in its present use.
(5a)	Relative. – Any of the following:
a.	A spouse or the spouse's lineal ancestor or descendant.
b.	A lineal ancestor or a lineal descendant.
c.	A brother or sister, or the lineal descendant of a brother or sister. For the purposes of this sub-subdivision, the term brother or sister includes stepbrother or stepsister.
d.	An aunt or an uncle.
e.	A spouse of a person listed in paragraphs a. through d.
	For the purpose of this subdivision, an adoptive or adopted relative is a relative and the term ‘spouse' includes a surviving spouse.
(6)	Sound management program. – A program of production designed to obtain the greatest net return from the land consistent with its conservation and long-term improvement.
"§ 105-282.11. Classification of conservation land.
(a)	Land that meets all of the following conditions is designated a special class of property under Section 2(2) of Article V of the North Carolina Constitution and shall be appraised, assessed, and taxed as provided in this Article:
(1)	It is managed for the protection of environmental resources for the public benefit.
(2)	It is subject to a written conservation management agreement between the owner and the State, a local government, or an entity that is both organized to receive and administer lands for conservation purposes and qualified to receive charitable contributions pursuant to G.S. 105-130.9.
(3)	The Department of Environment and Natural Resources has certified that the land is suitable to be managed for the protection of environmental resources for the public benefit.
(b)	Land that meets all of the following conditions is designated a special class of property under Section 2(2) of Article V of the North Carolina Constitution and shall be appraised, assessed, and taxed as provided in this Article:
(1)	It is managed for the preservation of historical, architectural, archaeological, or other cultural aspects of land.
(2)	It is subject to:
a.	A written conservation management agreement between the owner and the State or a local government.
b.	Either (i) a written agreement between the owner and local government that transfers the owner's development rights to the land or (ii) another instrument conveying to a local government less than a fee simple interest in the land in accordance with G.S. 153A-158(b)	or G.S. 160A-240.1(b).
(3)	The Department of Cultural Resources has certified that the land is suitable to be managed for the preservation of cultural resources for the public benefit.
"§ 105-282.12.  Classification of farmland.
(a)	Classes Defined. – The following classes of property are  designated special classes of property under authority of  Section 2(2) of Article V of the North Carolina Constitution and shall be appraised,  assessed, and taxed as provided in this Article.
(1)	Agricultural land. – Individually owned agricultural land consisting of one or more tracts, one of which consists of at least 10 acres that are in actual production and that, for the three years preceding January 1 of the year for which the benefit of this section is claimed, have produced an average gross income of at least one thousand dollars ($1,000). Gross income includes income from the sale of the agricultural products produced from the land and any payments received under a governmental soil conservation or land retirement program. Land in actual production includes land under improvements used in the commercial production or growing of crops, plants, or animals.
(2)	Horticultural land. – Individually owned horticultural land consisting of one or more tracts, one of which consists of at least five acres that are in actual production and that, for the three years preceding January 1 of the year for which the benefit of this section is claimed, have met the applicable minimum gross income requirement.  Land in actual production includes land under improvements used in the commercial production or growing of fruits or vegetables or nursery or floral products.  Land that has been used to produce evergreens intended for use as Christmas trees must have met the minimum gross income requirements established by the Department of Revenue for the land.  All other horticultural land must have produced an average gross income of at least one thousand dollars ($1,000). Gross income includes income from the sale of the horticultural products produced from the land and any payments received under a governmental soil conservation or land retirement program.
(3)	Forestland. – Individually owned forestland consisting of one or more tracts, one of which consists of at least 20 acres that are in actual production and are not included in a farm unit.
(b)	Natural Person Ownership Requirements. – In order to come within a classification described in subsection (a) of this section, the land must, if owned by a natural person, also satisfy one of the following conditions:
(1)	It is the owner's place of residence.
(2)	It has been owned by the current owner or a relative of the current owner for the four years preceding January 1 of the year for which the benefit of this section is claimed.
(3)	At the time of transfer to the current owner, it qualified for classification in the hands of a business entity or trust that transferred the land to the current owner who was a member of the business entity or a beneficiary of the trust, as appropriate.
(b1)	Entity Ownership Requirements. –  In order to come within a classification described in subsection (a) of this section, the land must, if owned by a business entity or trust, have been owned by the business entity or trust or by one or more of its  members or creators, respectively, for the four years immediately preceding January 1 of the year for which the benefit of this section is claimed.
(b2)	Exception to Ownership Requirements. –  G.S. 105-282.13(c) provides that deferred taxes are payable if land fails to meet any condition or requirement for classification.  Accordingly, if land fails to meet an ownership requirement due to a change of ownership, G.S. 105-282.13(c) applies.  Despite this failure and the resulting liability for taxes under G.S. 105-282.13(c), the land may qualify for classification in the hands of the new owner if both of the following conditions are met, even if the new owner does not meet all of the ownership requirements of subsections (b) and (b1) of this section with respect to the land:
(1)	The land was appraised at its present use value or was eligible for appraisal at its present use value  at the time title to the land passed to the new owner.
(2)	At the time title to the land passed to the new owner, the owner owned other land classified under subsection (a). 
(c)	Repealed by Session Laws 1995, c. 454, s. 2. 
(d)	Exception for Conservation Reserve Program. –  Land enrolled in the federal Conservation Reserve Program authorized by 16 U.S.C. § 1381 is considered to be in actual production, and income derived from participation in the federal Conservation Reserve Program may be used in meeting the minimum gross income requirements of this section either separately or in combination with income from actual production. Land enrolled in the federal Conservation Reserve Program shall be assessed as agricultural land if it is planted in vegetation other than trees, or as  forestland if it is planted in trees.
(e)	Exception for Turkey Disease. –  Agricultural land that meets all of the following conditions is considered to be in actual production and to meet the minimum gross income requirements: 
(1)	The land was in actual production in turkey growing within the preceding two years and qualified for present use value treatment while it was in actual production.
(2)	The land was taken out of actual production in turkey growing solely for health and safety considerations due to the presence of Poult Enteritis Mortality Syndrome among turkeys in the same county or a neighboring county.
(3)	The land is otherwise eligible for present use value treatment.
"§ 105-282.13.  Appraisal at use value; appeal; deferred taxes.
(a)	Application. – Property coming within one of the classes defined in this Article is eligible for taxation on the basis of the value of the property in its present use if a timely and proper application is filed with the assessor of the county in which the property is located. The application must show clearly that the property comes within one of the classes and must also contain any other relevant information required by the assessor to properly appraise the property at its present-use value. An initial application must be filed during the regular listing period of the year for which the benefit of this classification is first claimed, or within 30 days after the date shown on a notice of a change in valuation made pursuant to G.S. 105-286 or G.S. 105-287. A new application is not required to be submitted unless the property is transferred or becomes ineligible for use-value appraisal because of a change in use or acreage.
(b)	Appraisal at Present-use Value. – Upon receipt of a properly executed application, the assessor shall appraise the property at its present-use value as established in the schedule prepared pursuant to G.S. 105-317. In appraising the property at its present-use value, the assessor shall appraise the improvements located on qualifying land according to the schedules and standards used in appraising other similar improvements in the county. If all or any part of a qualifying tract of land is located within the limits of an incorporated city or town, or is property annexed subject to G.S. 160A-37(f1) or G.S. 160A-49(f1), the assessor shall furnish a copy of the property record showing both the present-use appraisal and the valuation upon which the property would have been taxed in the absence of this classification to the collector of the city or town. The assessor shall also notify the tax collector of any changes in the appraisals or in the eligibility of the property for the benefit of this classification. Upon a request for a certification pursuant to G.S. 160A-37(f1) or G.S.160A-49(f1), or any change in the certification, the assessor for the county where the land subject to the annexation is located shall, within 30 days, determine if the land meets the requirements of G.S. 160A-37(f1)(2) or G.S. 160A-49(f1)(2) and report the results of its findings to the city.
(b1)	Appeal. – Decisions of the assessor regarding the qualification or appraisal of property under this section may be appealed to the county board of equalization and review or, if that board is not in session, to the board of county commissioners. Decisions of the county board may be appealed to the Property Tax Commission.
(c)	Deferred Taxes. –  Land meeting the conditions for classification under this Article shall be taxed on the basis of the value of the land for its present use. The difference between the taxes due on the present-use basis and the taxes that would have been payable in the absence of this classification, together with any interest, penalties, or costs that may accrue thereon, are a lien on the real property of the taxpayer as provided in G.S. 105-355(a). The difference in taxes shall be carried forward in the records of the taxing unit or units as deferred taxes.  The taxes become due and payable when the land fails to meet any condition or requirement for classification.  The tax for the fiscal year that opens in the calendar year in which deferred taxes become due is computed as if the land had not been classified for that year, and taxes for the preceding three fiscal years that have been deferred are immediately payable, together with interest as provided in G.S. 105-360 for unpaid  taxes.  Interest accrues on the deferred taxes due as if they had been payable on the dates on which they originally became due. If only a part of the qualifying tract of land  fails to meet a condition or requirement for classification, a determination shall be made of the amount of deferred taxes applicable to that part and that amount becomes payable with interest as provided above. Upon the payment of any taxes deferred in accordance with this section for the three years immediately preceding a disqualification, all liens arising under this subsection are extinguished.
(d)	Exceptions. – Notwithstanding the provisions of subsection (c) of this section, if property loses its eligibility for present use value classification solely due to one of the following reasons, no deferred taxes are due and the lien for the deferred taxes is extinguished:
(1)	There is a change in income caused by enrollment of the property in the federal conservation reserve program established under 16 U.S.C. Chapter 58.
(2)	The property is conveyed by gift to a nonprofit organization and qualifies for exclusion from the tax base pursuant to G.S. 105-275(12) or G.S. 105-275(29).
(3)	The property is conveyed by gift to the State, a political subdivision of the State, or the United States.
(e)	Repealed by Session Laws 1997-270, s. 3.
"§ 105-282.14. Notice of change in use.
Not later than the close of the listing period following a change which would disqualify all or a part of a tract of land receiving the benefit of this classification, the property owner shall furnish the assessor with complete information regarding the change. Any property owner who fails to notify the assessor of changes regarding land receiving the benefit of this classification shall be subject to a penalty of ten percent (10%) of the total amount of the deferred taxes and interest thereon for each listing period for which the failure to report continues.
"§ 105-282.15. Appraisal; computation of deferred tax.
(a)	In determining the amount of the deferred taxes under this Article, the assessor shall use the appraised valuation established in the county's last general revaluation except for any changes made under the provisions of G.S. 105-287.
(b)	In revaluation years, as provided in G.S. 105-286, all property entitled to classification under this Article shall be reappraised at its true value in money and at its present use value as of the effective date of the revaluation. The two valuations shall continue in effect and shall provide the basis for deferred taxes until a change in one or both of the appraisals is required by law.  The present use-value schedule, standards, and rules shall be used by the tax assessor to appraise agricultural property, forestland, and horticultural property receiving the benefit of this classification until the next general revaluation of real property in the county as required by G.S. 105-286.
(c)	Repealed by Session Laws 1987, c. 295, s. 2.
"§ 105-282.16.  Use-Value Advisory Board.
The Use-Value Advisory Board is established under the supervision of the Agricultural Extension Service of North Carolina State University. The Board shall annually submit to the Department of Revenue a recommended use-value manual developed in accordance with the guidelines in G.S. 105-289(a)(5). In developing the manual, the Board may consult with federal and State agencies as needed. The Board shall submit to the Department of Revenue recommendations concerning requirements for horticultural land used to produce evergreens intended for use as Christmas trees when requested to do so by the Department.
The Board shall be chaired by the Director of the Agricultural Extension Service of North Carolina State University and shall consist of the following additional members: a representative of the Department of Agriculture and Consumer Services, designated by the Commissioner of Agriculture; a representative of the Forest Resources Division of the Department of Environment and Natural Resources, designated by the Director of that Division; and a representative of the Agricultural Extension Service at North Carolina Agricultural and Technical State University, designated by the Director of the Extension Service. All members shall serve ex officio. The Agricultural Extension Service at North Carolina State University shall provide clerical assistance to the Board."
Section 9.  G.S. 105-282.7(a) reads as rewritten:
"(a)	When any cropland or forestland owned by the United States, the State, a county, or a municipal corporation is leased, loaned, or otherwise made available to and used by a person, as defined in G.S. 105-273, in connection with a business conducted for profit, the lessee or user of the property is subject to taxation to the same extent as if the lessee or user owned the property. As used in this section, ‘forestland' has the same meaning as in G.S. 105-282.10, and ‘cropland' means agricultural land and horticultural land as defined in G.S. 105-282.10."
Section 10.  G.S. 105-284(a) reads as rewritten:
"(a)	Except as otherwise provided in this section, all property, real and personal, shall be assessed for taxation at its true value or use value as determined under G.S. 105-283 or Article 12B of this Chapter, and taxes levied by all counties and municipalities shall be levied uniformly on assessments determined in accordance with this section."
Section 11.  G.S. 105-290(c)(1) reads as rewritten:
"(1)	A property owner of the county who, either separately or in conjunction with other property owners of the county, asserts that the schedules of values, standards, and rules adopted by order of the board of county commissioners do not meet the true value or present-use value appraisal standards established by G.S. 105-283 and Article 12B of this Chapter, respectively, may appeal the order to the Property Tax Commission within 30 days of the date when the order adopting the schedules, standards, and rules was first published, as required by G.S. 105-317(c)."
Section 12. The introductory language of G.S. 105-361(a) reads as rewritten:
"(a)	Duty to Furnish a Certificate. – On the request of any of the persons prescribed in subdivision (1) of this subsection and upon the condition prescribed by subdivision (2) of this subsection, the tax collector shall furnish a written certificate stating the amount of any taxes and special assessments for the current year and for prior years in the tax collector's hands for collection (together with any penalties, interest, and costs accrued thereon) including the amount due under Article 12B of this Chapter if the property should lose its eligibility for the benefit of classification under that Article, that are a lien on a parcel of real property in the taxing unit."
Section 13.  This act becomes effective July 1, 2000, with Sections 5 through 12 effective for taxes imposed for taxable years beginning on or after July 1, 2000.