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SB 695

Requiring higher education institutions to accept Classic Learning Test

2025 Regular Session Introduced by Patricia Rucker

SB 695 grants a 90% property tax exclusion for qualifying new, unsold builder-held development in approved incentive districts, lasting until sale or 10 years.

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Bill Summary · SB 695

SB 695 — Incent Development Finance District Funding (North Carolina)

Status: Reported Favorably (Reptd Fav)
Introduced: Feb 21, 2025
Primary sponsors: Senators Lazzara and Johnson
Subjects: Local government, property taxation, economic development, construction, real estate

Purpose / Intent

SB 695 is intended to encourage private developer involvement in targeted development areas (“incentive districts”) by creating a temporary property tax exclusion for certain new, unsold development held by builders. The Legislature’s stated goal is to grow the property tax base of local governments by facilitating private investment in project developments.

Key provisions

  • Adds a new section to Article 12 (Chapter 105) — § 105-277.03 — establishing an “incentive district property tax exclusion.”
  • Eligible property:
    • “Qualified development” located in an approved incentive district and held for sale by a builder.
    • “Qualified development” means land and unoccupied improvements constructed by a builder (excludes remodeling, renovation, rehabilitation, refinishing).
  • Incentive district definition:
    • Area designated by a developer, submitted to and approved by the local governing body.
    • Must be an area where the unit could apply for project development financing under Article 6 of Chapter 159.
    • An incentive district may comprise no more than 5% of the local government’s total area.
  • Tax exclusion:
    • Ninety percent (90%) of the appraised value of qualifying property is excluded from taxation while the property is held for sale by the builder.
    • Property that receives this exclusion may not receive property tax relief under G.S. 105-277.02 (other inventory/deferral relief).
  • Duration / expiration:
    • The exclusion ends at the earlier of sale of the property or ten years from the time the property first received the benefit.
  • Administration:
    • Builders must apply for the exclusion under the normal assessor application procedures (G.S. 105-282.1).
    • Statutory cross-references updated to list the new special-class provision.

Who is affected

  • Builders and developers: can receive a 90% exclusion on the appraised value of qualifying unsold developments in approved incentive districts.
  • Local governments / taxing units: will grant reduced tax assessments on participating parcels during the exclusion period — potentially lowering near-term tax receipts on those parcels while aiming to stimulate development that grows the tax base in the medium-to-long term.
  • Homebuyers / occupants: exclusion applies only while property is unsold and held for sale by a builder; it ends upon sale.

Fiscal and timing notes

  • Effective date: the act applies to taxes imposed for taxable years beginning on or after July 1, 2026.
  • Fiscal impact: not specified in the bill text. The exclusion reduces taxable value for qualifying parcels (near-term revenue loss for local taxing units on those parcels) but is designed to encourage development that may increase the overall tax base over time.
  • Administrative impact: local assessors will need to process applications and track expirations; local governing bodies must adopt and approve incentive districts.

Bottom line

SB 695 creates a targeted, temporary property tax exclusion (90% of appraised value) for new, unsold builder-held development in locally approved “incentive districts” (areas up to 5% of a jurisdiction). The policy aims to spur private development and expand the property tax base, with immediate tax relief for builders and potential longer-term benefits for local revenue and development activity.

Compiled from official sources — confirm details with the bill’s official record.

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