AN ACT to increase the carryforward of deferred property taxes for present‑use value properties from three years to six years, to create a local grant program using the excess funds created thereby to provide grants to eligible farmers, and to provide that prior to annexing certain present‑use value property, a city must obtain approval from the board of county commissioners.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 105‑277.4 reads as rewritten:

§ 105‑277.4.  Agricultural, horticultural and forestland – Application; appraisal at use value; notice and appeal; deferred taxes.

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(c)        Deferred Taxes. – Land meeting the conditions for classification under G.S. 105‑277.3 must 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 must be carried forward in the records of the taxing unit or units as deferred taxes. The deferred taxes for the preceding three six fiscal years are due and payable in accordance with G.S. 105‑277.1F when the property loses its eligibility for deferral as a result of a disqualifying event. event; provided, however, that the deferred taxes due and payable for each year after the most recent preceding three fiscal years, and ending with the most recent preceding sixth fiscal year, shall be deposited to the funds created by G.S. 153A‑466 or G.S. 160A‑499.11, as appropriate. A disqualifying event occurs when the land fails to meet any condition or requirement for classification or when an application is not approved.

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SECTION 2.(a)  Article 23 of Chapter 153A of the General Statutes is amended by adding a new section to read:

§ 153A‑466.  Farmers' Assistance Grant Program.

(a)        Definitions. – The following definitions apply in this section:

(1)        Agricultural land. – As defined in G.S. 105‑277.2.

(2)        Board. – A board of county commissioners.

(3)        County. – As defined in G.S. 153A‑1.

(4)        Eligible farmer. – An owner of agricultural land, horticultural land, or forestland that is taxed at its present‑use value in accordance with G.S. 105‑277.4.

(5)        Forestland. – As defined in G.S. 105‑277.2.

(6)        Fund. – A fund created by a board in accordance with subsection (b) of this section.

(7)        Horticultural land. – As defined in G.S. 105‑277.2.

(b)        Creation and Purpose of Fund. – The board of every county shall create a fund, in accordance with the requirements of the Local Government Budget and Fiscal Control Act, as amended, to provide grants to eligible farmers located within that county to support the continued vitality of the State's unique and historic agricultural, horticultural, and forestry‑related economies, in accordance with this section.

(c)        Source. – A fund created by a county under this section shall consist of the deferred taxes paid to that county in accordance with G.S. 105‑277.4(c).

(d)       Application Required. – Grants from the fund may only be awarded to eligible farmers that have submitted an application. A board shall use an application created by the Department of Revenue for purposes of complying with this subsection.

(e)        Administration. – The board of each county shall administer its respective fund and shall develop guidelines providing for the administration of the fund. The guidelines shall include the following provisions, which shall apply to each grant from the fund:

(1)        Grants shall only be awarded on an application‑by‑application basis.

(2)        No eligible farmer may receive more than one grant from the fund during a budget year.

(3)        Grant awards to an eligible farmer during a budget year shall be limited to the lesser of (i) ten thousand dollars ($10,000) or (ii) ten percent (10%) of the then available balance in the fund.

(4)        An eligible farmer may not receive a total of more than five grants from the fund.

(5)        Grants shall only be awarded and used for purposes consistent with the growth and sustainability of the State's agricultural, horticultural, or forestland economies.

(6)        Boards shall prioritize awarding grant funding under this section to eligible farmers that demonstrate the greatest financial need.

SECTION 2.(b)  Article 21 of Chapter 160A of the General Statutes is amended by adding a new section to read:

§ 160A‑499.11.  Farmers' Assistance Grant Program.

(a)        Definitions. – The following definitions apply in this section:

(1)        Agricultural land. – As defined in G.S. 105‑277.2.

(2)        City. – As defined in G.S. 160A‑1.

(3)        Council. – As defined in G.S. 160A‑1.

(4)        Eligible farmer. – An owner of agricultural land, horticultural land, or forestland that is taxed at its present‑use value in accordance with G.S. 105‑277.4.

(5)        Forestland. – As defined in G.S. 105‑277.2.

(6)        Fund. – A fund created by a council in accordance with subsection (b) of this section.

(7)        Horticultural land. – As defined in G.S. 105‑277.2.

(b)        Creation and Purpose of Fund. – The council of every city shall create a fund, in accordance with the requirements of the Local Government Budget and Fiscal Control Act, as amended, to provide grants to eligible farmers located within that city to support the continued vitality of the State's unique and historic agricultural, horticultural, and forestry‑related economies, in accordance with this section.

(c)        Source. – A fund created by a city under this section shall consist of the deferred taxes paid to that city in accordance with G.S. 105‑277.4(c).

(d)       Application Required. – Grants from the fund may only be awarded to eligible farmers that have submitted an application. A council shall use an application created by the Department of Revenue for purposes of complying with this subsection.

(e)        Administration. – The council of each city shall administer its respective fund and shall develop guidelines providing for the administration of the fund. The guidelines shall include the following provisions, which shall apply to each grant from the fund:

(1)        Grants shall only be awarded on an application‑by‑application basis.

(2)        No eligible farmer may receive more than one grant from the fund during a budget year.

(3)        Grant awards to an eligible farmer during a budget year shall be limited to the lesser of (i) ten thousand dollars ($10,000) or (ii) ten percent (10%) of the then available balance in the fund.

(4)        An eligible farmer may not receive a total of more than five grants from the fund.

(5)        Grants shall only be awarded and used for purposes consistent with the growth and sustainability of the State's agricultural, horticultural, or forestland economies.

(6)        Councils shall prioritize awarding grant funding under this section to eligible farmers that demonstrate the greatest financial need.

SECTION 3.  No later than December 1, 2025, the Department of Revenue shall create and provide counties and local governments with copies of the application required under G.S. 153A‑466(d) and G.S. 160A‑499.11(d), as created by Sections 2(a) and 2(b) of this act. The Department may consult with any other relevant State agency or local government for the purpose of creating applications under this section. The applications created by the Department under this section shall be uniform statewide and shall, at a minimum, provide for the following:

(1)        Certification that the applicant is an eligible farmer as defined in G.S. 153A‑466 and G.S. 160A‑499.11.

(2)        Certification that any grant funding awarded under G.S. 153A‑466 or G.S. 160A‑499.11 will be used by the applicant for purposes consistent with the growth and sustainability of the State's agricultural, horticultural, or forestland economies.

(3)        Certification that the applicant intends to remain an eligible farmer for a minimum of one year following receipt of each grant awarded to the applicant under G.S. 153A‑466 or G.S. 160A‑499.11, as appropriate.

(4)        A requirement that the applicant submit documentation detailing the applicant's need for grant funding and the intended uses by the applicant of any funds awarded.

(5)        A requirement that the applicant provide the county or local government, as appropriate, with any relevant financial or other documentation necessary to determine the applicant's eligibility and appropriateness for a grant under G.S. 153A‑466 or G.S. 160A‑499.11.

SECTION 4.  G.S. 160A‑58.2 reads as rewritten:

§ 160A‑58.2.  Public hearing.

(a)        Upon receipt of a petition for annexation under this Part, the city council shall cause the city clerk to investigate the petition, and to certify the results of his investigation. If the clerk certifies that upon investigation the petition appears to be valid, the council shall fix a date for a public hearing on the annexation. Notice of the hearing shall be published once at least 10 days before the date of hearing.

(b)        At the hearing, any person residing in or owning property in the area proposed for annexation and any resident of the annexing city may appear and be heard on the questions of the sufficiency of the petition and the desirability of the annexation. If the council then finds and determines that (i) the area described in the petition meets all of the standards set out in G.S. 160A‑58.1(b), (ii) the petition bears the signatures of all of the owners of real property within the area proposed for annexation (except those not required to sign by G.S. 160A‑58.1(a)), (iii) the petition is otherwise valid, and (iv) the public health, safety and welfare of the inhabitants of the city and of the area proposed for annexation will be best served by the annexation, the council may adopt an ordinance annexing the area described in the petition. The ordinance may be made effective immediately or on any specified date within six months from the date of passage.

(c)        Notwithstanding the provisions of subsection (b) of this section, prior to the public hearing, the city council shall direct the planning department to determine whether zoning the area for residential use will increase the number of students attending public school in the county in which the area is located to more than one hundred percent (100%) of the county's current capacity if the area meets all of the following:

(1)        Is agricultural land, forestland, or horticultural land, as defined in G.S. 105‑277.2.

(2)        Is not contiguous to the city's primary corporate limits.

(3)        Is not within the city's extraterritorial planning jurisdiction.

(d)       If the planning department finds that zoning the area for residential use will increase the number of students as provided in subsection (c) of this section, the board of county commissioners with jurisdiction over the area must approve the annexation prior to the city council adopting the annexation ordinance. If the board of county commissioners does not approve the annexation, the city council may not proceed with the adoption of the annexation ordinance unless it is willing to pay the county the amount necessary to come back into compliance with school capacity.

SECTION 5.  The extended carryforward of deferred property taxes under G.S. 105‑277.4(c), as amended by Section 1 of this act, becomes effective for taxes imposed for taxable years beginning on or after July 1, 2026. Properties already having three or more years of deferred taxes under G.S. 105‑277.4(c) as of the date this act becomes law shall phase in to the first year of the extended carryforward (year four of six), beginning July 1, 2026. Sections 2 and 3 of this act become effective upon the earlier of (i) the date this act becomes law or (ii) October 1, 2025. Section 4 of this act becomes effective July 1, 2025, and applies to petitions for annexation received on or after that date. Except as otherwise provided, this act is effective when it becomes law.