Foundation Act: Building NC's Housing Future.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 736

Short Title: Foundation Act: Building NC's Housing Future. (Public)
Sponsors: Senators Garrett, Grafstein, and Bradley (Primary Sponsors).
Referred to: Rules and Operations of the Senate
March 26, 2025
*S736-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO COMPREHENS IVELY ADDRESS HOUSIN G AFFORDABILITY AND 2
ACCESSIBILITY ISSUES AND NEEDS IN THE STATE. 3
The General Assembly of North Carolina enacts: 4
5
PART I. HOUSING FINANCE AGENCY ENHANCEMENT 6
SECTION 1.1.(a) G.S. 122A-8 reads as rewritten: 7
"§ 122A-8. Bonds and notes. 8
The Agency is hereby authorized to provide for the issuance, at one time or from time to time, 9
of bonds and notes of the Agency to carry out and effectuate its corporate purposes. The Agency 10
also is hereby authorized to provide for the issuance, at one time or from time to time of (i) bond 11
anticipation notes in anticipation of the issuance of such bonds and (ii) construction loan notes 12
to finance the making or purchase of mortgage loans to sponsors of residential hou sing for the 13
construction, rehabilitation or improvement of residential housing. The total amount of bonds, 14
bond anticipation notes, and construction loan notes outstanding at any one time shall not exceed 15
twelve billion dollars ($12,000,000,000) eighteen billion dollars ($18,000,000,000) excluding 16
therefrom any bond anticipation notes for the payment of which bonds have been issued. The 17
principal of and the interest on such bonds or notes shall be payable solely from the funds herein 18
provided for such payment. Any such notes may be made payable from the proceeds of bonds or 19
renewal notes or, in the event bond or renewal note proceeds are not available, such notes may 20
be paid from any available revenues or assets of the Agency. The bonds or notes of each iss ue 21
shall be dated and may be made redeemable before maturity at the option of the Agency at such 22
price or prices and under such terms and conditions as may be determined by the Agency. Any 23
such bonds or notes shall bear interest at such rate or rates as ma y be determined by the Local 24
Government Commission of North Carolina with the approval of the Agency. Notes shall mature 25
at such time or times not exceeding 10 years from their date or dates and bonds shall mature at 26
such time or times not exceeding 43 years from their date or dates, as may be determined by the 27
Agency. The Agency shall determine the form and manner of execution of the bonds or notes, 28
including any interest coupons to be attached thereto, and shall fix the denomination or 29
denominations and the place or places of payment of principal and interest, which may be any 30
bank or trust company within or without the State. In case any officer whose signature or a 31
facsimile of whose signature shall appear on any bonds or notes or coupons attached thereto shall 32
cease to be such officer before the delivery thereof, such signature or such facsimile shall 33
nevertheless be valid and sufficient for all purposes the same as if he had remained in office until 34
such delivery. The Agency may also provide for the aut hentication of the bonds or notes by a 35
trustee or fiscal agent. The bonds or notes may be issued in coupon or in registered form, or both, 36
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 736-First Edition
as the Agency may determine, and provision may be made for the registration of any coupon 1
bonds or notes as to princi pal alone and also as to both principal and interest, and for the 2
reconversion into coupon bonds or notes of any bonds or notes registered as to both principal and 3
interest, and for the interchange of registered and coupon bonds or notes. Upon the filing w ith 4
the Local Government Commission of North Carolina of a resolution of the Agency requesting 5
that its bonds and notes be sold, such bonds or notes may be sold in such manner, either at public 6
or private sale, and for such price as the Commission shall de termine to be for the best interest 7
of the Agency and best effectuate the purposes of this Chapter, as long as the sale is approved by 8
the Agency. 9
The proceeds of any bonds or notes shall be used solely for the purposes for which issued 10
and shall be disbur sed in such manner and under such restrictions, if any, as the Agency may 11
provide in the resolution authorizing the issuance of such bonds or notes or in the trust agreement 12
hereinafter mentioned securing the same. 13
Prior to the preparation of definitive bo nds, the Agency may, under like restrictions, issue 14
interim receipts or temporary bonds, with or without coupons, exchangeable for definitive bonds 15
when such bonds shall have been executed and are available for delivery. The Agency may also 16
provide for the replacement of any bonds or notes which shall become mutilated or shall be 17
destroyed or lost. 18
Bonds or notes may be issued under the provisions of this Chapter without obtaining, except 19
as otherwise expressly provided in this Chapter, the consent of any d epartment, division, 20
commission, board, body, bureau or agency of the State, and without any other proceedings or 21
the happening of any conditions or things other than those proceedings, conditions or things 22
which are specifically required by this Chapter a nd the provisions of the resolution authorizing 23
the issuance of such bonds or notes or the trust agreement securing the same." 24
SECTION 1.1.(b) G.S. 105-228.30 reads as rewritten: 25
"§ 105-228.30. Imposition of excise tax; distribution of proceeds. 26
(a) An excise tax is levied on each instrument by which any interest in real property is 27
conveyed to another person. The tax rate is (i) one dollar ($1.00) on each five hundred dollars 28
($500.00) or fractional part thereof of the consideration or value of the inter est conveyed up to 29
five hundred thousand dollars ($500,000) and (ii) one dollar ($1.00) on each four hundred dollars 30
($400.00) or fractional part thereof of any remaining consideration or value of the interest 31
conveyed. The transferor must pay the tax to the register of deeds of the county in which the real 32
estate is located before recording the instrument of conveyance. If the instrument transfers a 33
parcel of real estate lying in two or more counties, however, the tax must be paid to the register 34
of deeds of the county in which the greater part of the real estate with respect to value lies. 35
The excise tax on instruments imposed by this Article applies to timber deeds and contracts 36
for the sale of standing timber to the same extent as if these deeds and cont racts conveyed an 37
interest in real property. 38
(b) The register of deeds of each county must remit the proceeds of the tax levied by this 39
section to the county finance officer. The finance officer of each county must credit one -half of 40
the proceeds of the tax levied at a rate of two-tenths of one percent (0.2%) to the county's general 41
fund and remit the remaining one-half of the proceeds, less taxes refunded and the county's 42
allowance for administrative expenses, to the Department of Revenue on a monthly basis. A 43
county may retain two percent (2%) of the amount of tax proceeds of the tax levied at a rate of 44
two-tenths of one perce nt (0.2%) allocated for remittance to the Department of Revenue as 45
compensation for the county's cost in collecting and remitting the State's share of the tax. The 46
Department of Revenue shall credit the funds remitted to the Department of Revenue under thi s 47
subsection to the General Fund." 48
SECTION 1.1.(c) Offset by the increase of the excise tax, as provided in subsection 49
(b) of this section, there is appropriated from the General Fund to the Housing Finance Agency 50
the recurring sum of five million dollars ($5,000,000) for each fiscal year of the 2025-2027 fiscal 51
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Senate Bill 736-First Edition Page 3
biennium to be allocated to a Housing Innovation Office established by the Housing Finance 1
Agency. The Housing Innovation Office shall use funds appropriated in this section for (i) 2
administrative and operational costs and (ii) research and implementation of housing solutions, 3
including technical assistance, grants, loans, and other measures designed to address the housing 4
crisis by supporting the construction and maintenance of affordable, supportive, and sustainable 5
homes and developing innovative funding models and building techniques. 6
SECTION 1.1.(d) Subsection (b) of this section becomes effective July 1, 2025, and 7
applies to conveyances made on or after that date. Subsection (c) of this sect ion becomes 8
effective July 1, 2025. The remainder of this section is effective when it becomes law. 9
SECTION 1.2.(a) There is appropriated from the General Fund to the Housing Trust 10
Fund established under G.S. 122E-3 the recurring sum of fifty million dollars ($50,000,000) for 11
each fiscal year of the 2025-2027 fiscal biennium to be used (i) for the purposes set forth in that 12
statute and (ii) in the discretion of the Housing Finance Authority, for a program, using a 13
competitive application process, to provide funds to local housing authorities, local housing trust 14
funds, or other entities that have the primary purpose, and agree to use the funds for, loans, grants, 15
or both for construction and maintenance of affordable housing units in the State. The Office 16
shall develop an application process and detailed guidelines applicable to assistance derived from 17
the funding provided in, and to accomplish the purposes of the program. Funding for the program 18
is reserved for properties meeting all of the following requirements: 19
(1) Financial assistance to an area served by a local housing trust fund does not 20
exceed two million dollars ($2,000,000). 21
(2) The local housing trust fund contributes one dollar ($1.00) of private funds 22
for every dollar of assistance received from the Office. 23
SECTION 1.2.(b) Part 2 of Article 4 of Chapter 105 of the General Statutes is 24
amended by adding a new section to read: 25
"§ 105-153.12. Credit for housing trust fund donations. 26
(a) Credit. – A taxpayer who makes a qualified contribution is allowed a credit against 27
the tax imposed by this Part in an amount equal to thirty percent (30%) of the donation . For 28
purposes of this section, a qualified contribution is a monetary donation (i) to the Housing Trust 29
Fund established pursuant to G.S. 122E-3 in the Housing Finance Agency and (ii) for the 30
construction, maintenance, or both of affordable housing. 31
(b) Reserved. 32
(c) Application. – To claim the credit provided in this section, an individual must file an 33
application with the Secretary for the credit. The application must be filed on or before April 15 34
of the year following the calendar year in which the qualified contribution was made. An 35
application is effective for the year in which it is timely filed. The Secretary may not accept late 36
applications under this subsection. The application must be on a form prescribed by the Secretary 37
and include any information required by the Secretary demonstrating that the qualified 38
contribution has met the conditions for the credit 39
(d) Substantiation. – An individual claiming a credit under this section must maintain and 40
make available for inspection by the Secretary any records the Secretary considers necessary to 41
determine and verify the amount of the credit to which the individual is entitled. The burden o f 42
proving eligibility for the credit and the amount of the credit rests upon the individual, and no 43
credit may be allowed to an individual that fails to maintain adequate records or to make them 44
available for inspection. 45
(e) Ceiling; Use Allocation. – The total aggregate amount of all credits allowed to 46
taxpayers under this section for qualified contributions made in a taxable year may not exceed 47
twenty million dollars ($20,000,000). The Secretary shall, first, fully fund any prorated credits 48
in accordance with subsection (f) of this section and, second, if funds remain after fully funding 49
prorated credits, reopen the application period for credits under this section for which funds have 50
become available. If the Secretary reopens the application period and n otwithstanding the 51
General Assembly Of North Carolina Session 2025
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application deadline in subsection (c) of this section, the additional applications must be filed 1
with the Secretary on or before October 15 of the year following the calendar year in which the 2
qualified contribution was made. The Secret ary may not accept late additional applications 3
permitted under this subsection. The Secretary's determinations based on additional applications 4
timely filed in accordance with this subsection are final. 5
(f) Reduction. – The Secretary shall calculate the t otal amount of credits claimed from 6
applications timely filed under subsection (c) of this section. If the total amount of credits claimed 7
for qualified contributions made in a calendar year exceeds this maximum amount, the Secretary 8
shall allow a portion of the credits claimed by allocating the maximum amount in credits in 9
proportion to the size of the credit claimed by each taxpayer. If a credit claimed under this section 10
is reduced as provided in this subsection, the Secretary shall notify the taxpayer of the amount of 11
the reduction of the credit on or before December 31 of the year following the calendar year in 12
which the qualified contribution was made. The Secretary 's allocations based on applications 13
filed under subsection (c) of this section are final and shall not be adjusted to account for credits 14
applied for but not claimed. 15
(g) Limitation. – The credit allowed under this section may not exceed the amount of tax 16
imposed by this Part for the taxable year reduced by the sum of all credits allowable, except tax 17
payments made by or on behalf of the taxpayer. 18
(h) No double benefit. – A taxpayer who claims a credit under this section must add back 19
to taxable income any amount deducted under the Code for the qualified contribution. A taxpayer 20
who claims the credit allowed in this section may not, for the same qualified contribution, claim 21
another credit allowed in this Part." 22
SECTION 1.2.(c) Subsection (a) of this section is effective July 1, 2025. Subsection 23
(b) of this section is effective for taxable years beginning on or after January 1, 2025, and applies 24
to qualified contributions made on or after that date. The remainder of this section is effective 25
when it becomes law. 26
27
PART II. HOUSING PRODUCTION AND AFFORDABILITY 28
SECTION 2.1.(a) Article 9 of Chapter 160D of the General Statutes is amended by 29
adding a new Part to read: 30
"Part 1A. Housing Production and Affordability. 31
"§ 160D-917. By right development for affordable housing. 32
A local government shall allow by right, and without requiring a conditional use or special 33
use permit, the following: 34
(1) The development of at least one attached and one detached accessory dwelling 35
unit which conforms to the North Carolina Residential Code for One - and 36
Two-Family Dwellings, including applicable provisions from fire prevention 37
codes, for each single-family detached dwelling in areas zoned for residential 38
use that allow for development of single -family detached dwellings. An 39
accessory dwelling unit may be built or sited concurrently or after the primary 40
single-family detached dwelling has been constructed or sited. Nothing in this 41
subdivision shall prohibit a local government from permitting accessory 42
dwelling units in any area not otherwise required under this subdivision. 43
(2) A development in an area zoned for residential use with at least 20 units per 44
acre that is located with one-half (1/2) mile of a transit stop or that is within a 45
transit-oriented development district or similar designation. 46
"§ 160D -917.1. Administrative review of applications for development approvals for 47
affordable housing developments. 48
(a) Notwithstanding any provision of this Chapter to the contrary, (i) within 30 days of a 49
local government's receipt of an application for development approval for a qualifying affordable 50
development or within 60 days of a local government's receipt of an application for development 51
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Senate Bill 736-First Edition Page 5
approval of a residential project with less than 100 units, the local government shall complete an 1
administrative review of the application and any supporting documents and make an 2
administrative decision that does one of the following: 3
(1) Notifies the developer in writing that the application is complete and no 4
further information is required for the local government to make a 5
development approval determination. 6
(2) Notifies the developer in writing that the application is deficient and provides 7
the developer with a deficiency list, in writing, that identifies all of the 8
following: 9
a. Each deficiency. 10
b. The specific law, ordinance, policy, or procedure used as the basis for 11
each deficiency. 12
c. A description of the action the local government would deem 13
corrective for each deficiency identified. 14
For purposes of this section, a "qualifying affordable development " is a residential or 15
mixed-use development that (i) reserves at least twenty percent (20%) of total units for 16
households earning eighty percent (80% ) or less of the area median income (AMI), or reserves 17
at least ten percent ( 10%) of total units for househo lds earning sixty percent ( 60%) or less of 18
AMI; (ii) maintains affordability restrictions through deed covenants for a minimum period of 19
30 years; (iii) contains at least eight residential units; (iv) includes a binding commitment to 20
accept housing choice vouchers; and (v) meets the minimum standards of habitability, safety, 21
and quality of life for all established housing. 22
(b) The notice under subdivision (2) of subsection (a) of this section may include local 23
government recommendations pertaining to the d evelopment project but any recommendations 24
must be clearly designated as recommended or advisory only and shall not be required as a 25
condition for a development approval determination. 26
(c) Upon a developer's receipt of a notice of a deficient application a nd a deficiency list 27
under subdivision (2) of subsection (a) of this section, the developer may do any of the following: 28
(1) Correct the deficient application and resubmit a corrected application to the 29
local government. 30
(2) Submit a written explanation fo r each deficiency and request another 31
administrative review under this section that shall be completed by the local 32
government within 10 business days and takes into consideration the written 33
explanation. 34
(3) Appeal the administrative decision as provided in G.S. 160D-405. 35
(d) Within 10 business days of a local government 's receipt of a corrected application 36
under subdivision (1) of subsection (c) of this section, the local government shall notify the 37
developer in writing whether the application (i) is complete and no further information is required 38
for the local government to make a development approval determination or (ii) does not correct 39
all the deficiencies identified in accordance with subdivision (2) of subsection (a) of this section. 40
If the developer amended or altered the application with respect to matters that are unrelated to 41
the deficiencies identified in accordance with subdivision (2) of subsection (a) of this section, the 42
local government shall consider the corrected application a new applica tion to be processed in 43
accordance with subsection (a) of this section. 44
(e) This section does not apply to permits submitted pursuant to G.S. 160D-1110.1. 45
"§ 160D-917.2. Lot size and density for affordable housing. 46
(a) Notwithstanding any provision of this Chapter to the contrary, a local government 47
with a population greater than 10,000 may not establish a minimum lot size that is less than 48
one-quarter (1/4) acre and may not estab lish a density requirement of less than eight units per 49
acre for development approvals in areas zoned for residential use. 50
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(b) A local government shall allow at least a thirty-five percent (35%) increase in density 1
for projects where at least fifteen percent (15%) of the units are reserved for low-income 2
residents. For the purposes of this subsection, "low-income residents" are those residents with a 3
family income that is sixty percent (60%) or less of the area median family income." 4
SECTION 2.1.(b) This Part becomes effective July 1, 2025. 5
6
PART III. HOME OWNERSHIP AND ACCESSIBILITY 7
SECTION 3.1.(a) G.S. 105-153.5(b) and (c) reads as rewritten: 8
"(b) Other Deductions. – In calculating North Carolina taxable income, a taxpayer may 9
deduct from the taxpayer's adjusted gross income any of the following items that are included in 10
the taxpayer's adjusted gross income: 11
… 12
(12a) The amount deposited during the taxable year, not to exceed fifteen thousand 13
dollars ($15,000), to a first-time home buyer savings account to be used for 14
eligible expenses by a qualified beneficiary. For purposes of this subdivision, 15
the following definitions apply: 16
a. Eligible expenses. – A downpayment and any closing costs included 17
on a real estate settlement statement, including appraisal fees, 18
mortgage origination fees, and inspection fees. 19
b. First-time home buyer savings account. – An account with a qualified 20
financial institution that has less than one hundred fifty thousand 21
dollars ($150,000). 22
c. Qualified beneficiary. – A first -time home buyer designated by an 23
account holder for whom the money in a first-time home buyer savings 24
account is or will be used for eligible expenses for the purchase of the 25
qualified beneficiary's first primary residence, which is located in this 26
State. 27
d. Qualified financial institution. – A commercial bank in North Carolina 28
with a charter, either from the Commissioner of Banks, for a State 29
Charter, or from the Office of the Comptroller of the Currency, for a 30
National Charter. 31
… 32
(c) Additions. – In calculating North Carolina taxable income, a taxpayer must add to the 33
taxpayer's adjusted gross income any of the following items that are not included in the taxpayer's 34
adjusted gross income: 35
… 36
(7a) The amount deducted in a prior taxable year to the extent this amount was 37
withdrawn from a first-time home buyer savings account and not used to pay 38
for eligible expenses of a qualified beneficiary in conformity with this section, 39
unless the withdrawal was rolled over to another newly created first -time 40
home buyer savings account. 41
…." 42
SECTION 3.1.(b) This section is effective for taxable years beginning on or after 43
January 1, 2025. 44
SECTION 3.2.(a) There is appropriated from the General Fund to the Housing 45
Finance Agency the recurring sum of three million dollars ($3,000,000) for each fiscal year of 46
the 2025-2027 fiscal biennium to be allocated to the NC 1st Home Advantage Down Payment 47
Program administered by the Agency for uses consistent with that program. 48
SECTION 3.2.(b) This section becomes effective July 1, 2025. 49
SECTION 3.3.(a) There is appropriated from the General Fund to the Housing 50
Finance Agency the recurring sum of ten million dollars ($10,000,000) for each fiscal year of the 51
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Senate Bill 736-First Edition Page 7
2025-2027 fiscal biennium to be used for a program to establish new, and exp and existing, 1
community land trusts with the primary purpose of facilitating affordable homeownership by 2
retaining ownership of the land and leasing it to homeowners who purchase the house on that 3
land at below -market pricing. The Agency shall develop an application process and detailed 4
guidelines applicable to the program to accomplish the purposes of, this section. Required 5
guidelines for the program include, but are not limited to, the following: 6
(1) Interest on the financing of the purchase of the hou se is provided at a low, 7
fixed rate. 8
(2) No private mortgage insurance is required. 9
(3) Recipients are first-time home buyers. 10
(4) Recipients provide at least three percent (3%) of the purchase price as a 11
downpayment. 12
(5) Recipients meet income and credit score limits, as established by the Agency. 13
(6) Recipients have less than one hundred thousand dollars ($100,000) in total 14
household assets, including checking accounts, savings accounts, stocks, and 15
bonds, but not including retirement and college savings accounts. 16
(7) Recipients agree to live in the property as the primary residence. 17
SECTION 3.3.(b) This section becomes effective July 1, 2025. 18
SECTION 3.4.(a) There is appropriated from the General Fund to the Department 19
of Commerce the recurring sum of f ifteen million dollars ($15,000,000) for each fiscal year of 20
the 2025 -2027 fiscal biennium to be used for the Rural Water Extension Program. The 21
Department shall develop an application process and detailed guidelines applicable to the 22
program. The progra m shall be open to rural communities with populations of 10,000 or less 23
that apply to obtain technical assistance and necessary financing necessary for the purpose of 24
developing drinking water and waste disposal systems to ensure safe drinking water and sanitary 25
waste disposal systems for public health and economic vitality of rural communities of the State. 26
SECTION 3.4.(b) This section becomes effective July 1, 2025. 27
SECTION 3.5.(a) Article 4 of Chapter 105 of the General Statutes is amended by 28
adding a new section to read: 29
"§ 105-153.13. Credit for rural affordable rental housing. 30
(a) Credit. – A taxpayer that is allowed for the taxable year a federal income tax credit 31
for low-income housing under section 42 of the Code with respect to a qualified North Carolina 32
low-income building located in a qualifying rural area, is allowed a credit under this section for 33
each affordable rental unit for the taxable year within which the construction of the affordable 34
rental unit is completed. The amount of the credit is equal to the lesser of twenty -five thousand 35
dollars ($25,000) or thirty percent (30%) of the construction costs incurred. 36
(b) Definitions. – The following definitions apply in this section: 37
(1) Affordable rental unit. – A rental unit used as a permanent residence by an 38
eligible renter and subject to permanent affordability restrictions. 39
(2) Eligible renter. – An individual who occupies the affordable rental unit as a 40
primary residence and is a person of lower income, as defined by G.S. 157-3 41
(3) Permanent affordability restrictions. – Restrictions that have been 42
permanently imposed by the Housing Finance Agency on an affordable rental 43
units owned, operated, or managed by an appropriate nonprofit organization 44
Permanent affordability restrictions imposed or required by the Agency 45
pursuant to this subdivision may require a regulatory agreement with the 46
Agency or other affordability restrictions in recorded documents, provided the 47
Agency determines that such restrictions are enforceable and likely to be 48
enforced. 49
(4) Qualified North Carolina low -income building. – A building with between 50
five and 18 affordable rental units. 51
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(5) Qualifying rural area. – An area of the State with a population density of 50 1
or fewer people per square mile in the taxable year in which the credit is 2
claimed. 3
(c) Limitation. – The credit allowed by this section may not exceed the amount of tax 4
imposed by this Part for the taxable year reduced by the sum of all credits allowable, except 5
payments of tax by or on behalf of the taxpayer. 6
(d) No double benefit. – The credit allowed by this section does not apply to costs paid 7
with funds provided to the taxpayer by a State or federal agency or program . A taxpayer who 8
claims the credit allowed in this section may not, for the same activity, claim another credit 9
allowed in this Part." 10
SECTION 3.5.(b) This section is effective for tax able years beginning on or after 11
January 1, 2025. 12
SECTION 3.6.(a) There is appropriated from the General Fund to the Housing 13
Finance Authority the recurring sum of ten million dollars ($10,000,000) for each fiscal year of 14
the 2025 -2027 fiscal biennium to be used for a manufactured home supply program. The 15
program, using a competitive application process for units of local government, shall provide 16
funding for loans, grants, or both for replacement and repair of manufactured homes. The Office 17
shall develop an application process and detailed guidelines applicable to the program to 18
maximize the beneficial impact of, and number of homes and families assisted with, funding 19
provided. The process shall reserve funding for manufactured home assistance used as a primary 20
residence by persons of lower income, as defined by G.S. 157-3 and shall prioritize funding for 21
projects that maximize the number of families served. Financial assistance to a single 22
manufactured home shall not exceed twenty-five thousand dollars ($25,000). 23
SECTION 3.6.(b) This section becomes effective July 1, 2025. 24
25
PART IV. HURRICANE RECOVERY AND RESILIENCE 26
SECTION 4.1.(a) There is appropriated from the General Fund to the Department 27
of Public Safety, Office of Recovery and Resiliency (NCORR) t he nonrecurring sum of one 28
hundred fifty million dollars ($150,000,000) for the 2025 -2026 fiscal year to be allocated and 29
used as follows: 30
(1) One hundred million dollars ($100,000,000) to establish an emergency 31
housing response fund available to NCORR to respond to housing needs after, 32
and due to the event on which is based, a major disaster declaration by the 33
President of the United States under the Stafford Act (P.L. 93-288). The State 34
Building Code Council shall adopt rules establishing an expedited permitting 35
process and code flexibility for like-for-like disaster rebuilding. 36
(2) Fifty million dollars ($50,000,000) to establish a voluntary buyout fund. 37
Moneys in the fund shall be used to purchase homes undergoing, and located 38
in areas subjected to, repeated flooding due to natural disasters. NCORR may 39
purchase a qualifying home for up to one hundred ten percent (110%) of the 40
pre-disaster fair market value of the home. 41
SECTION 4.1.(b) This section becomes effective July 1, 2025. 42
SECTION 4.2.(a) The Department of Insurance shall study the feasibility, and the 43
best method of implementing, a low -interest loan program to provide loans to homeowners for 44
costs associated with strengthening residential structures to withstand hurricanes. As part of its 45
study, the Department shall investigate and recommend optimal loan terms, the administrative 46
structure for the program, and limitations on loan amounts and on uses of loaned funds necessary 47
to maximize safety and economic benefits and target funding support where need is greatest. The 48
Department, as a further part of the study, shall include whether, and to what extent, to use loans 49
to do one or more of the following: (i) supplement a quality wind -mitigation inspection by a 50
licensed home inspector, (ii) create a report for the homeowner resulting from the inspection that 51
General Assembly Of North Carolina Session 2025
Senate Bill 736-First Edition Page 9
provides information to contractors and insurance companies of recommended improvements 1
that will best improve and contribute to storm readiness and resilience, and (iii) offset the costs 2
to homeo wners of best practices for home improvements for storm resilience by licensed 3
contractors, including, but not limited to, strengthening roof -to-deck attachments, reinforcing 4
roof-to-wall connections, installation of secondary water resistance for roofs, window upgrades, 5
and exterior door upgrades. In addition, the Department shall determine and make 6
recommendations on appropriate levels of discounting insurance rates to further effectively 7
incentivize homeowners to undertake implementation of identified en hanced resilience 8
improvements for homes. The Department shall submit its report, including funding needs and 9
any legislative proposals, to the General Assembly and the Fiscal Research Division no later than 10
January 1, 2026. 11
SECTION 4.2.(b) This section is effective when it becomes law. 12
13
PART V. HOUSING AFFORDABILITY AND FINANCING MECHANISMS 14
SECTION 5.1. The Housing Innovation Office established by the Housing Finance 15
Agency pursuant to Section 1.1 of this act shall study methods of incentivizing the co nstruction 16
of, and increasing the affordability of, housing options for rent or sale. As part of its study, the 17
Office shall examine tax incentives to developers of, and renters and purchasers of, low-income 18
housing; tax increment financing options; local and State bonding initiatives; public private 19
partnerships to engage and maximize State or local dollars with private philanthropy; and any 20
other financial, regulatory, or compliance measures the Office determines can reasonably be 21
expected to increase th e availability and affordability of low -income housing. The Office shall 22
submit its report, including funding needs and any legislative proposals, to the General Assembly 23
and the Fiscal Research Division no later than January 1, 2026. 24
SECTION 5.2. Beginning January 1, 2025, and at least once every biennium 25
thereafter, the State Auditor shall audit all housing programs administered a State agency having 26
an annual budget of ten million dollars ($10,000,000) or more. 27
SECTION 5.3. This Part is effective when it becomes law. 28
29
PART VI. ADAPTIVE REUSE AND CONVERSION 30
SECTION 6.1.(a) Article 4 of Chapter 105 of the General Statutes is amended by 31
adding a new section to read: 32
"§ 105-153.14. Credit for short-term rental conversion to affordable housing. 33
(a) Credit. – An owner of a hotel or motel providing lodging accommodations for pay 34
located in this State with at least 30 rooms for short-term rental is allowed a credit against the tax 35
imposed by this Part for each affordable rental unit created from the conversion of one or more 36
rooms. The amount of the credit is equal to the lesser of (i) thirty percent (30%) of the cost of 37
conversion or (ii) forty thousand dollars ($40,000). The credit is a llowed for the taxable year 38
within which the conversion is completed. 39
(b) Definitions. – The following definitions apply in this section: 40
(1) Affordable rental unit. – A rental unit used as a permanent residence by an 41
eligible renter and subject to permanent affordability restrictions. 42
(2) Eligible renter. – An individual who occupies the affordable rental unit as a 43
primary residence and is a person of lower income, as defined by G.S. 157-3 44
(3) Permanent affordability restrictions. – Restrictions that have been 45
permanently imposed by the Housing Finance Agency on an affordable rental 46
units owned, operated, or managed by an appropriate nonprofit organization 47
Permanent affordability restrictions im posed or required by the Agency 48
pursuant to this subdivision may require a regulatory agreement with the 49
Agency or other affordability restrictions in recorded documents, provided the 50
General Assembly Of North Carolina Session 2025
Page 10 Senate Bill 736-First Edition
Agency determines that such restrictions are enforceable and likely to b e 1
enforced. 2
(c) Limitation. – The credit allowed by this section may not exceed the amount of tax 3
imposed by this Part for the taxable year reduced by the sum of all credits allowable, except 4
payments of tax by or on behalf of the taxpayer. 5
(d) No double benefit. – The credit allowed by this section does not apply to costs paid 6
with funds provided to the taxpayer by a State or federal agency or program. A taxpayer who 7
claims the credit allowed in this section may not, for the same activity, claim another credit 8
allowed in this Part." 9
SECTION 6.1.(b) The State Building Code Council shall adopt rules establishing 10
an expedited permitting process of no more than 45 days and code flexibility for the conversion 11
of hotel and motel rooms into affordable rental units (i) for which a tax credit is allowed under 12
G.S. 105-153.14, as enacted by subsection (a) of this section, and (ii) where the existing building 13
footprint is maintained. The flexibility allowed in this section shall not amend any provisions 14
required to maintain safety measures necessary but shall make allowances for any existing 15
structural or other constraints applicable to motels and hotels but not applicable to residential 16
structures. 17
SECTION 6.1.(c) Subsection (a) of this section is effecti ve for taxable years 18
beginning on or after January 1, 2025. Subsection (b) of this section is effective when it becomes 19
law. 20
SECTION 6.2.(a) There is appropriated from the General Fund to the Housing 21
Finance Agency the nonrecurring sum of two million dol lars ($2,000,000) for the 2025 -2026 22
fiscal year to be used for an accommodation conversion program. The program, using 23
competitive application process for developers, shall provide funding to offset certain costs 24
involved in converting hotels and motels i nto affordable rental units for permanent housing. 25
Costs which may be offset with funding appropriated in this subsection includes architectural 26
and financial feasibility assessment assistance. The Agency shall develop an application process 27
and detailed guidelines applicable to the program to maximize the number of affordable rental 28
units resulting from the funding provided in this section. 29
SECTION 6.2.(b) This section becomes effective July 1, 2025. 30
31
PART VII. TENANT PROTECTIONS AND RENTAL AFFORDABILITY 32
SECTION 7.1(a) There is appropriated from the General Fund to the Housing 33
Finance Agency the recurring sum of thirty million dollars ($30,000,000) for each fiscal year of 34
the 2025 -2027 fiscal biennium to be allocated to an Emergency Rental Assistance F und 35
established by the Housing Finance Agency. Funds in the Emergency Rental Assistance Fund 36
shall be used to provide temporary rental and housing assistance to persons of low income, as 37
defined in G.S. 157-3, and to persons experiencing homelessness. The temporary rental and 38
housing assistance provided in this section shall be limited in duration and shall not exceed six 39
consecutive months of provided assistance for any one person or family. 40
SECTION 7.1.(b) This section becomes effective July 1, 2025. 41
SECTION 7.2.(a) G.S. 7A-451 reads as rewritten: 42
"§ 7A-451. Scope of entitlement. 43
(a) An indigent person is entitled to services of counsel in the following actions and 44
proceedings: 45
… 46
(20) Proceedings for summary ejectment actions brought under Articles 3 and 7 of 47
Chapter 42 of the General Statutes." 48
SECTION 7.2.(b) This section becomes effective October 1, 2025, and applies to 49
actions for summary ejectment brought on or after that date. 50
General Assembly Of North Carolina Session 2025
Senate Bill 736-First Edition Page 11
SECTION 7.3.(a) Article 6 of Chapter 42 of the General Statutes is a mended by 1
adding a new section to read: 2
"§ 42-57. Alternative Security Deposit Payment Options. 3
(a) Definitions. – For the purposes of this section the following definitions apply: 4
(1) Security deposit insurance. – A policy or bond issued by an insur er licensed 5
to do business in this State, which guarantees payment to the landlord for 6
damages or unpaid rent up to an amount equivalent to the security deposit 7
otherwise required under G.S. 42-50 and this Article. 8
(2) Installment payment plan. – An agreement between the landlord and tenant 9
allowing the tenant to pay the security deposit in periodic payments over a 10
specified term. 11
(b) Tenant Options. – Instead of paying the full amount for a security deposit authorized 12
by G.S. 42-50 at the commencement of t he lease, a tenant may elect one of the following 13
alternatives: 14
(1) Installment payment plan. – The tenant may pay the security deposit in 15
installments pursuant to a written installment payment plan agreed upon by 16
the landlord and tenant. The plan shall include all of the following: 17
a. The total amount of the security deposit , not to exceed the amount 18
established by G.S. 42-51(b). 19
b. A payment schedule not to exceed the lease term or six months from 20
the commencement of the lease term, whichever is lesser. 21
c. Signatures of both the landlord and the tenant. 22
(2) Security deposit insurance. – The tenant may provide security deposit 23
insurance as a substitute for a cash security deposit. The insurance policy or 24
bond shall do all of the following: 25
a. Name the landlord as the beneficiary or insured party. 26
b. Remain in effect for the duration of the lease term, including any 27
renewals or extensions, unless otherwise agreed by the landlord." 28
SECTION 7.3.(b) This section is effective when it becomes law. 29
30
PART VIII. HOMELESSNESS PREVENTION AND SOLUTIONS 31
SECTION 8.1(a) There is appropriated from the General Fund to the Housing 32
Finance Agency the recurring sum of thirty -five million dollars ($35,000,000) for ea ch fiscal 33
year of the 2025 -2027 fiscal biennium. The Housing Finance Agency shall work with local 34
housing authorities to use the funds appropriated in this section to provide combined housing and 35
wraparound services to persons and families experiencing hom elessness. For purposes of this 36
subsection, wraparound services means the collective components of comprehensive and 37
individualized support for persons with serious mental health or behavioral challenges. 38
SECTION 8.1.(b) There is appropriated from the Gen eral Fund to the Housing 39
Finance Agency the sum of twenty million dollars ($20,000,000) in nonrecurring fund to be 40
allocated to a Rapid Rehousing Program established by the Housing Finance Agency. The Rapid 41
Rehousing Program shall work with the local hous ing authorities to use the funds appropriated 42
in this section to provide temporary, short -term rental and housing assistance and case 43
management services to persons experiencing homelessness. 44
SECTION 8.1.(c) Notwithstanding any other provision in this sec tion, funds 45
appropriated in this Part may also be allocated by the Housing Finance Agency to any local 46
housing authorities established under Chapter 157 of the General Statutes that request funds to 47
establish coordinated entry systems designed to ensure th at all people experiencing a housing 48
crisis have fair and equal access to the rental and housing assistance provided for in this Part. 49
The coordinated entry systems shall be designed to evaluate whether a person or family is 50
qualified for the rental or housing assistance funded by this Part and shall ensure that individuals 51
General Assembly Of North Carolina Session 2025
Page 12 Senate Bill 736-First Edition
and families are offered the most appropriate rental or housing assistance based on their needs. 1
The Housing Finance Agency shall establish guidelines and a process for applying for the funds 2
appropriated in this Part and may allocate the funds according to its discretion. 3
SECTION 8.1.(d) This section becomes effective July 1, 2025. 4
5
PART IX. CONSTRUCTION WORKFORCE DEVELOPMENT 6
SECTION 9.1.(a) Article 10 of Chapter 143B of the General Statutes is amended by 7
adding a new Part to read: 8
"Part 21A. Housing Advancement. 9
"§ 143B-472.124. Housing innovation and affordability advancement. 10
(a) Title. – This Part shall be known and may be cited as "The Housing Innovation and 11
Affordability Advancement Act". 12
(b) Definitions. – The following definitions apply in this Part. 13
(1) Department. – The Department of Commerce. 14
(2) Construction skilled trade. – Specialized careers requiring hands-on skills and 15
training to build and maintain structures but not requiring a four-year degree. 16
The term includes electricians, plumbers, carpenters, roofers, HVAC 17
technicians, and other similar skills applicable to and used in the construction 18
of residential structures. 19
(3) Institution of higher education. – Any public university, community college, 20
or technical training school in North Carolina offering programs in 21
construction skilled trades. 22
(c) Housing Const ruction Development Program. – There is established in the 23
Department of Commerce the Housing Construction Development Program (Program). The 24
Program shall be comprised of the following elements: 25
(1) Workforce development. – In conjunction with The University of North 26
Carolina and the Community Colleges System Office, the Department sh all 27
develop a grant program for institutions of higher education in this State to 28
expedite and facilitate the expansion of home construction skilled trade 29
training programs. T he Department shall (i) develop guidelines for an 30
application process for institutions of higher education for the allocation of 31
funds granted pursuant to this section and (ii) prioritize awarding funds based 32
on the degree to which the institution has shown in the application the 33
following: 34
a. A viable plan to partner and create lear ning synergies with industry 35
leaders and employers to align training and real -world home 36
construction needs. 37
b. The funding will be used for home construction workforce needs, 38
including construction skilled trades. 39
(2) Apprenticeship development. – In conjunction with The University of North 40
Carolina and the Community Colleges System Office, the Department shall 41
develop a grant program for subsidizing the costs of qualifying employers for 42
paid apprenticeship positions for students in institutions of higher education 43
in the State in order to promote direct -to-hire pathways for participating 44
students to be prepared for and immediately fill home construction industry 45
workforce needs. A qualifying employer is an employer currently licensed as 46
a contractor or subcontractor to construct or perform construction skilled 47
trades in residential homes in the State. The Department shall (i) develop 48
guidelines for an application process for qualifying employers for the 49
allocation of funds granted pursuant to this section and (ii) prioritize awarding 50
General Assembly Of North Carolina Session 2025
Senate Bill 736-First Edition Page 13
funds based on the degree to which the employer has shown, in the application 1
or otherwise, the following: 2
a. A viable plan to partner and create learning synergies and pre- and 3
post-graduation employment opportunities for student s attending 4
institutions of higher education in the State. 5
b. The funding will be used to subsidize the total cost of the paid 6
apprenticeship program created by the qualifying employer. 7
c. The funding will not exceed two thousand five hundred dollars 8
($2,500) per participating apprentice. 9
d. A history of hiring participating apprentices and students graduating 10
in relevant fields from institutions of higher education. 11
(3) Innovation assistance. – In conjunction with The University of North Carolina 12
and the Community Colleges System Office, the Department shall develop a 13
grant program for institutions of higher education in this State to offset costs 14
of researching and developing (i) building methods that show potential to 15
reduce construction time and costs , (ii) more affordable or sustainable 16
materials, or (iii) pioneering construction techniques that save resources while 17
maintaining or improving quality. The Department shall develop guidelines 18
for an application process for institutions of higher education for the allocation 19
of funds granted pursuant to this section." 20
SECTION 9.1.(b) There is appropriated from the General Fund to the Department 21
of Commerce the recurring sum of fifty million dollars ($50,000,000) for each fiscal year of the 22
2025-2027 fiscal biennium for the Housing Construction Development Program established in 23
G.S. 143B-472.124, as enacted by subsection (a) of this section, to be allocated as follows: 24
(1) Fifteen million dollars ($15, 000,000) to be used for workforce development 25
purposes, as set forth in G.S. 143B-472.124(c)(1). 26
(2) Ten million dollars ($10,000,000) to be used for innovation assistance 27
purposes, as set forth in G.S. 143B-472.124(c)(3). 28
(3) The remainder to be used for apprenticeship development purposes, as set 29
forth in G.S. 143B-472.124(c)(2). 30
SECTION 9.1.(c) This section becomes effective July 1, 2025. 31
32
PART X. FAIR HOUSING AND EQUITY 33
SECTION 10.1.(a) There is appropriated from the General Fund to the North 34
Carolina Human Relations Commission the recurring sum of three million dollars ($3,000,000) 35
for each fiscal year of the 2025-2027 fiscal biennium. The funds appropriated in this section shall 36
be used by the Human Relations Commission to actively investigate, identi fy, and report to the 37
Attorney General discriminatory practices in the housing market that violate the State Fair 38
Housing Act. 39
SECTION 10.1.(b) There is appropriated from the General Fund to the Department 40
of Commerce the recurring sum of twenty-five million dollars ($25,000,000) for each fiscal year 41
of the 2025 -2027 fiscal biennium to be allocated to a special account established by the 42
Department to be known as the Equitable Development Account. Funds appropriated to the 43
account shall be used to identify historically underinvested neighborhoods and provide funds to 44
the local government units in which identified neighborhoods are located to construct, improve, 45
and repair water, sewer, electrical, transportation, and other infrastructure. For purposes of t his 46
subsection, a historically underinvested neighborhood is one that faces persistent challenges due 47
to discriminatory policies and practices resulting in limited access to resources and opportunities. 48
SECTION 10.1.(c) This section becomes effective July 1, 2025. 49
SECTION 10.2.(a) G.S. 160D-501 reads as rewritten: 50
"§ 160D-501. Plans. 51
General Assembly Of North Carolina Session 2025
Page 14 Senate Bill 736-First Edition
… 1
(b) Comprehensive Plan Contents. – A comprehensive plan shall analyze, evaluate, and 2
require the implementation of equitable distribution of affordable housing and may, among other 3
topics, address any of the following as determined by the local government: 4
(1) Issues and opportunities facing the local government, including consideration 5
of trends, values expressed by citizens, community vision, and guiding 6
principles for growth and development. 7
(2) The pattern of desired growth and development and civic design, including 8
the location, distribution, and characteristics of future land uses, urban form, 9
utilities, and transportation networks. 10
(3) Employment opportunities, econo mic development, and community 11
development. 12
(4) Acceptable levels of public services and infrastructure to support 13
development, including water, waste disposal, utilities, emergency services, 14
transportation, education, recreation, community facilities, and other public 15
services, including plans and policies for provision of and financing for public 16
infrastructure. 17
(5) Housing with a range of types and affordability to accommodate persons and 18
households of all types and income levels. 19
(6) Recreation and open spaces. 20
(7) Mitigation of natural hazards such as flooding, winds, wildfires, and unstable 21
lands. 22
(8) Protection of the environment and natural resources, including agricultural 23
resources, mineral resources, and water and air quality. 24
(9) Protection of si gnificant architectural, scenic, cultural, historical, or 25
archaeological resources. 26
(10) Analysis and evaluation of implementation measures, including regulations, 27
public investments, and educational programs. 28
…." 29
SECTION 10.2.(b) This section is effective when it becomes law. 30
31
PART XI. EFFECTIVE DATE 32
SECTION 11. Except as otherwise provided, this act is effective when it becomes 33
law. 34