Retailers, Homebuilders Offer Insights To House Committee On Regulatory Reform

By Jeff Moore
Carolina Journal

State lawmakers assigned to the House Committee on Regulatory Reform heard presentations Tuesday from the NC Retail Merchants Association (NCRMA) and the North Carolina Home Builders Association (NCHBA) recounting successful recent regulatory reforms affecting their respective industries and identifying pain-points the legislature could target for reform in 2025. The committee also heard from the Office of Administrative Hearings and the Rules Review Commission.

Presiding co-chair of the committee, Rep. Dennis Riddell, R-Alamance, introduced the guests as reliable sounding boards for issues affecting most North Carolinians, either directly or indirectly.

NC Retail Merchants Association
Andy Ellen, president and general counsel for NCRMA, told committee members that businesses large and small need clear, consistent rules at both the state and local levels to operate effectively, citing uniform inspection standards across the state as an example.

“As a business, you want to know what the rules of the game are in where to operate and be efficient and be effective in your business,” Ellen said.

He described the headaches and added costs suffered by business owners facing micro-managing regulations. Many of these rules escape the public eye, but make a difference in the bottom lines of retailers large and small.

Ellen spoke about the cost burden retailers were spared when lawmakers worked to reform regulations that required pervious pavement in store parking lots; regulations dictating how eggs are labeled on the store shelf; or, prohibitions on selling nursery stock in certain parts of a retailers parking lot. He further emphasized that a simple review of rules and regulations goes a long way toward preventing or removing onerous regulations that hinder the economy.

“The most important thing is probably the Rules Review Commission… they serve a very important role… to make sure that you have good rules, quality rules, and that the agency has the authority to do it,” he added.

Ellen also highlighted recent regulatory challenges, such as, during Hurricane Helene and COVID-19, a hodgepodge of local curfews and regulations that complicated emergency logistics — getting critical supplies to stores —and invites better coordination to simplify such regulations.

He further highlighted what NCRMA views as the overly broad application of the state’s price gouging law, arguing it needs reform. Reinforcing the point, Ellen noted the statute has been used in the aftermath of Hurricane Helene to go after ice vendors in Wilmington, far removed and unrelated to the disaster in question.

Going forward, NCRMA urged the committee to ensure all agencies use the formal rule-making processes, instead of changing policies arbitrarily in ways that hurt employers and employees.

One of the most common complaint NCRMA gets from retailers relates to the Alcoholic Beverage Control Commission (ABC Commission). Ellen described the current ABC permit system as “very difficult,” saying it makes the infamously slow DMV look like a “gold standard” of efficiency, often delaying business openings by a month or more, and causing businesses to lose hired employees who move on during the wait.

“We hold up the DMV and renewing your license tag as a gold standard over what we do for getting your ABC permit, and it’s a very difficult process, and what happens sometimes is you’ve hired people, and you’re trying to open a new store or a new restaurant or a new hotel, and it takes you a month to get your ABC permit—by that time, those employees are gone,” he said.

Ellen emphasized streamlining permitting and favoring market-driven solutions to better the regulatory environment in 2025.

NC Home Builders
The committee then heard from Chris Millis, chief of staff and director of regulatory affairs for the NCHBA, about the regulatory challenges builders face and the widespread impact of arbitrarily restricting housing supply in the state.

Millis noted the sticker-shock most North Carolinians are facing when trying to buy a home, revealing the median price for a home in the state has jumped six figures in recent years to approximately $420,000.

“We’ve had a tremendous increase to the cost of a residential dwelling in this state of over $160,000, and so the reason why that’s so devastating is because if you look at that 400-and-nearly-twenty-thousand-dollar mortgage — $40,000 to put down on a mortgage [as a down payment] — the required household income for traditional financing shakes out to be around $130,000,” he explained, before pointing out that the median household income in North Carolina is only $67,000. “It is estimated that the average North Carolina family cannot afford the median price residential dwelling in this state.”

This price gap, Millis told committee members, is a tangible issue felt by lawmakers and their constituents, contributing to the broader housing affordability crisis in the state.

Addressing the affordability issue means encouraging more supply, which means tackling bureaucratic burdens that disincentivize or even bar the construction of new homes, townhouses, and apartments across the state. Citing a study conducted by NC State emeritus professor and economist Dr. Michael Walden, Millis asserted the state would need to construct over 700,000 new residential units in the next five years to close the gap.

Standing in the way of housing construction are myriad regulatory issues at the local and state level. For instance, evelopers must navigate zoning and density restrictions, Millis said, often requiring a conditional zoning process to increase density, which is rarely achievable “by right.”

That conditional zoning process involves negotiations with local governments, where developers must “voluntarily consent” to conditions, even those conditions prohibited by state law (e.g., aesthetic controls, bedroom limits, off-site traffic funds not proportional to the development’s impact).

Additional due diligence hurdles Millis listed include environmental factors (wetlands, floodplains, riparian buffers, coastal regulations, protected watersheds) and utility availability (water/sewer capacity, fire flow requirements), adding significant costs and delays to construction. More, transportation improvements (e.g., intersections, turn lanes) and permitting processes (site plans, plats, flood plain requirements, tree ordinances, state/local road permits, DOT driveway permits, utility encroachments) further complicate and delay projects, often adding a year or more to timelines.

Stacking up all the hoops to jump through, Millis estimated that permitting and construction can take 18 months to over four years (for multi-unit developments) even with optimal conditions like good weather, timely inspections, efficient supply chains.

“At this point — just to get to the point where you can break ground, you can begin to go vertically and build the home, you can start to disturb the property that you’re looking at — and what we’re seeing is that [even if] there’s no rezoning required, no traffic improvements, no utility issues; the fastest that we’re seeing pretty much on average is at least 18 months.”

Millis urged members to take a look at reforming the conditional zoning process, limiting it to only lawful conditions and ensuring inly proportional and reasonable requirements are imposed for increased housing density; address “down zoning,” where developers are forced into conditional zoning that aggravates affordability issues; propose higher base densities for urban areas and reasonable “by right” densities in rural areas to avoid conditional zoning, reduce urban sprawl, preserve farmland, and support affordable housing.

“Every dollar that affects the price of a lot is a four dollar multiplier to the price of the home,” said Millis, describing the financial burden of regulatory and development costs. “If it costs you $100,000 for that piece of land, you at least have got to put a home on that piece of property that will appraise for $400,000.”

Both the NCRMA and NCHBA presentations to the committee highlighted the burdensome impact of inconsistent and overly restrictive regulations on their industries, urging lawmakers to streamline processes and ensure lawful, proportional conditions to enhance business efficiency and affordability for North Carolinians.

Jeff Moore is Carolina Journal’s deputy editor. Moore has worked extensively in conservative politics, policy, and media in North Carolina, including most recently as the North Carolina Republican Party’s communications director.