AN ACT to grow the property tax base of units of local government by facilitating private developer involvement in certain project developments.

The General Assembly of North Carolina enacts:

SECTION 1.  Article 12 of Chapter 105 of the General Statutes is amended by adding a new section to read:

§ 105‑277.03.  Incentive district property tax exclusion.

(a)        Classification. – Qualified development (i) located in an incentive district and (ii) held for sale by a builder is designated a special class of property under Section 2(2) of Article V of the North Carolina Constitution and is taxable in accordance with this section. Ninety percent (90%) of the appraised value of property classified under this section is excluded from taxation. Property receiving an exclusion under this section may not receive property tax relief under G.S. 105‑277.02.

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

(1)        Incentive district. – An area (i) designated by a developer, (ii) submitted for approval to the governing body of the unit of local government in which the area is located, (iii) determined, by that governing body, to be an area for which the unit could apply for project development financing debt instruments pursuant to Article 6 of Chapter 159 of the General Statutes, and (iv) approved by the governing body as an incentive district. An incentive district may comprise no more than five percent (5%) of the local government unit's total area.

(2)        Qualified development. – Land and any unoccupied improvement by a builder to the land, other than remodeling, renovating, rehabilitating, or refinishing existing structures or buildings.

(c)        Expiration. – The exclusion authorized by this section ends at the earlier of the following:

(1)        Ten years from the time the property first received the property tax benefit provided by this section.

(2)        Sale of the property.

(d)       Application. – The builder must apply for the exclusion under this section as provided in G.S. 105‑282.1.

SECTION 2.  G.S. 105‑277.02 is amended by adding a new subsection to read:

(e)      Property receiving an exclusion under this section may not receive property tax relief under G.S. 105‑277.03.

SECTION 3.  G.S. 105‑282.1(a)(2)c. reads as rewritten:

c.        Special classes of property classified for taxation at a reduced valuation under G.S. 105‑277(h), 105‑277.02, 105‑277.03, 105‑277.1, 105‑277.1C, 105‑277.10, 105‑277.13, 105‑277.14, 105‑277.15, 105‑277.17, or 105‑278.

SECTION 4.  This act is effective for taxes imposed for taxable years beginning on or after July 1, 2026.