NC lawmakers send sweeping regulatory reform bill to Stein’s desk

North Carolina lawmakers sent Gov. Josh Stein a 53-page regulatory package Tuesday that would advance supply-side housing solutions; create portable benefit accounts for independent contractors; and change dozens of business, environmental, and public safety laws.

The House voted 82-28 to adopt the conference report for Senate Bill 445, the Regulatory Reform Act of 2026. Eighteen Democrats and one unaffiliated lawmaker joined Republicans in supporting the measure, while all 28 opposing votes came from Democrats.

The Senate approved the final version 37-0 on July 29. The House vote completed the bill’s passage through the General Assembly, sending it to Stein for consideration.

“The less time people have to spend dealing with unnecessary regulations, the more time they can spend starting a small business or building affordable places to live,” House Regulatory Reform Co-Chair Dennis Riddell, R-Alamance, said in a statement. “These reforms clear away many of those obstacles, and that’s great news for all North Carolinians.”

Supply-side housing provisions

The bill would require cities with at least 50,000 residents outside the state’s coastal area to allow at least one accessory dwelling unit on property zoned for single-family homes.

ADUs, sometimes called backyard cottages, garage apartments, or in-law suites, are smaller homes built on the same property as a primary residence.

Under the bill, cities could not require special zoning approval, impose minimum parking requirements, charge higher permitting fees, or limit ADUs to less than 800 square feet. Cities also could not prevent the primary home and ADU from being rented to separate households on a long-term basis.

Local governments could still impose certain setback and placement requirements. The legislation would not override private covenants or apply to historic preservation districts, National Historic Landmarks, or units without the required water and wastewater connections.

The ADU requirement would take effect Jan. 15, 2027. Affected cities would have until July 1, 2027, to adopt local regulations.

The bill would also make it easier to convert previously developed commercial, business, or industrial property into single-family, two-family, or multifamily housing. Local governments could not limit those developments to less than 60 feet in height.

That provision would apply to cities with at least 80,000 residents in counties with at least 1 million residents. It would not apply to vacant land that has never been developed.

The final provision is significantly narrower than the version previously approved by the House, which would have applied to cities with at least 50,000 residents in counties with at least 275,000 residents.

Kelly Lester, a policy analyst for the John Locke Foundation’s Center for Food, Power, and Life, called SB 445 one of the session’s “most significant pro-supply housing reforms” in a July 13 Carolina Journal opinion column.

“Neither reform would solve the housing shortage overnight,” Lester wrote. “But the surest way to make housing more affordable is to allow more housing to be built.”

Lester noted that North Carolina is projected to face a housing shortage of 764,000 units by 2029. She argued that ADUs can provide lower-cost housing because they use existing land and infrastructure.

“Allowing housing in these areas creates opportunities for infill development without requiring costly infrastructure expansion or greenfield development,” Lester wrote.

Lester said neither provision would solve the housing shortage on its own, but argued that removing local regulatory barriers would allow the private market to add more homes as North Carolina’s population grows.

Portable benefits for independent contractors

The bill would also create a voluntary system allowing businesses to contribute to benefit accounts owned by independent contractors.

The provision revives a proposal that previously advanced as House Bill 1083, the Voluntary Portable Benefits Plan Act. The House passed that bill 79-33 on June 30, but it remained in the Senate Rules Committee before substantially the same framework was added to SB 445.

Under the proposal, independent contractors would have to opt in through a written agreement. The worker would choose the third-party administrator for the account and could opt out, change benefit plans, or transfer the account balance to another qualified provider.

The money could be used for health insurance, health savings accounts, disability and life insurance, income-replacement coverage, retirement accounts, and other approved benefits.

Contributions from a hiring business would not be considered evidence that the contractor should legally be classified as an employee. Supporters say that protection is important because businesses may otherwise be reluctant to offer benefits to contractors for fear of being subject to employment taxes, workers’ compensation requirements, or other labor laws.

Rep. Timothy Reeder, R-Pitt, one of HB 1083’s primary sponsors, previously estimated that the proposal could make benefits available to approximately 900,000 independent contractors in North Carolina.

“House Bill 1083 recognizes that today’s workers and businesses need more flexible benefit options than the traditional employment model alone can provide,” Donald Bryson, CEO of the John Locke Foundation, said when the proposal advanced in June.

“By creating a voluntary framework for portable benefits, the bill gives the market room to innovate — allowing employers, contractors, banks, technology providers, and benefit providers to develop new tools that better fit modern work,” Bryson added. “This is the right approach: protect worker choice, reduce regulatory uncertainty, and let voluntary solutions emerge to meet the real needs of both employers and independent workers.”

The portable-benefits provisions would take effect Jan. 1, 2027.

Additional regulatory changes

The legislation would prevent homeowners’ associations and condominium associations from prohibiting or unreasonably regulating the display of an American or North Carolina flag measuring no more than 4 feet by 6 feet, provided it is flown in accordance with the federal Flag Code.

Another provision would protect vested development rights when construction is interrupted by a declared emergency. State law generally allows those rights to expire when work on an unfinished development is voluntarily discontinued for 24 months. SB 445 would pause that period for as long as an emergency declaration remains in effect, giving developers additional time to resume projects delayed by disasters such as Hurricane Helene.

Additionally, the bill would give corporations, limited liability companies, and partnerships that are majority-owned by deployed members of the armed forces additional time to file annual reports. It would also waive deployment affidavit fees for those businesses and shield the information contained in those affidavits from public disclosure.

A separate provision would change how courts review state regulations. Courts and administrative law judges would be required to interpret agency rules independently rather than defer to an agency’s interpretation, allowing judges to substitute their own legal judgment when determining what a regulation entails.

“NC lawmakers send sweeping regulatory reform bill to Stein’s desk” was originally published on www.carolinajournal.com.