House committee substitute to the 2nd edition replaces the prior edition with the following. Makes conforming changes to act’s long and short titles.

Enacts Article 4B, “Deannexation of Corporate Limits,” to GS Chapter 160A, to provide a uniform procedure for the contraction of municipal boundaries in a transparent, fiscally responsible, locally accountable, and fair manner. Specifies that the deannexation process is a legislative function of the municipality.  Requires, in new GS 160A-58.101, that the municipality prepare a legible map of the area to be deannexed, a statement showing how the proposed deannexation will affect the municipality's finances and services, and a plan for the services to the area proposed for deannexation prior to holding any hearing on the matter. Establishes the following procedure for deannexation initiated by a municipality in GS 160A-58.102: (1) the adoption of a resolution containing the property description as specified; (2) at least 30 days prior to the public hearing, approval of the report discussed above along with public posting of a summary of the report as described; (4) a public hearing on the resolution, held only after separate notice of that hearing has been provided; (5) adoption of an ordinance with the five described components authorizing the deannexation, held at any regular or special meeting held after the hearing.  Provides for delivery of the adopted ordinance together with the list of the real property owners of parcels and registered voters within the area described in the deannexation ordinance within five business days to the tax assessor and the county board or boards of elections of the county in which the deannexed area lie. Provides for simulataneous proceedings if the municipality is considering deannexing multiple areas.

Specifies that from and after the effective date of the deannexation ordinance, the deannexed area and its citizens and property are not subject to any debts, laws, ordinances, and regulations in force in the municipality except to the extent that such debts, laws, ordinances, and regulations, may apply to other similarly situated citizens and property outside the corporate limits of the municipality.

Provides for challenge to the deannexation ordinance by referendum in GS 160A-58.103. Requires a petition signed by 25% of the registered voters residing in the area described in the deannexation ordinance. Requires city clerk to validate the signatories as described before the question of deannexation is placed on the ballot. Directs the municipal governing board to notify the appropriate county board or boards of elections of the adoption of the deannexation ordinance and provide a legible map and clear written description of the proposed deannexation area. Requires a municipal resolution setting the date for the referendum, notice of the referendum to be run by county boards of election containing a statement on the referendum, and a deannexation ballot. Limits voting to voters in the deannexed areas. Specifies that if less than a majority of the votes cast on the referendum are for deannexation, the deannexation ordinance is void and the municipal governing board may not proceed with a separate deannexation process with respect to that proposed deannexation area for at least 24 months from the date of the referendum. If a majority of the votes cast on the referendum are for deannexation, the deannexation is deemed valid.

Authorizes deannexation to be initiated by citizen petition in GS 160A-58.104 signed by the owners of all the real property located within the area proposed for deannexation. Provides for form for petition, signature verification by the city clerk, and a public hearing on the deannexation petition upon at least 10 days’ public notice. Authorizes the municipality to adopt a deannexation ordinance after the public hearing. If it chooses not to do so, then prevents the municipality from proceeding with a separate deannexation process with respect to that proposed deannexation area for at least 24 months from the date of the municipal governing board's findings. Specifies that, except as required by a contractual relationship between the property owner or tenant of real property in the deannexed area, the municipality could, but is not required to, continue to provide services to all or part of the dennexed area and would not be liable for ceasing services to the deannexed area.

Provides, in GS 160A-58.105, that if deannexation of an area from the corporate limits of a municipality would transfer service obligations to any (1) other unit of local government, (2) nonprofit volunteer fire department or rural fire protection district, or (3) any district, commission, or authority created under GS Chapter 153A, then the municipality or property owner initiating deannexation must obtain the consent of the governing board for the entity to which a service obligation would be transferred. Directs the party responsible for obtaining the consent to deliver evidence of the consent to the city clerk.

Specifies, in GS 160A-58.106 that deannexation of property under the Article becomes effective on the first June 30 at least 90 days following the adoption of the deannexation ordinance. Directs, in GS 160A-58.107, that real and personal property in a newly deannexed area as of January 1 of the year in which the deannexation becomes effective is not subject to municipal taxes for the taxes levied for the fiscal year beginning July 1 of that year. Specifies that any liens of the municipality for ad valorem taxes or special assessments outstanding before the deannexation's effective date may continue to be collected or foreclosed upon after the deannexation's effective date.

Authorizes a municipality to continue, transfer, or discontinue municipal services to a deannexed area in GS 160A-58.108, as specified. Authorizes the municipality to revise its service rates by provided by a public enterprise (defined). If the municipality has accepted ownership of or maintenance responsibility for roads that serve or connect to an area to be deannexed, exclusive of those with debt financing, then the municipality may determine to discontinue those services, as specified. If the municipality owns or is responsible for facilities that are subject to the  requirements of a Municipal Separate Storm Sewer System (MS4) permit, the city may recover the undepreciated costs for publicly-owned facilities located on or providing service to the area to be deannexed in the same manner provided in Article 10 of GS Chapter 160A, as described. Instructs that if the municipality decides to discontinue providing police, fire protection, emergency management, or other public safety services to an area to be deannexed, then a municipality is not liable for any act or omission related to a delay in responding to a call for public safety services, in referring the call to another local government or public safety agency or in refusing to respond to a call for public safety services.

Tasks the mayor of the municipality to cause an accurate map of the deannexed area, together with a copy of the deannexation ordinance duly certified, to be recorded with the five departments listed, including the Secretary of State, in GS 160A-58.109.  Provides for judicial review in GS 160A-58.110 for any holder of interest in real property located within the corporate limits of the municipality including the area to be deannexed who believes they will suffer material injury because (1) the municipality failed to comply with the procedures set forth in the Article, (2) the governing body acted arbitrarily, capriciously, or without statutory authority, or (3) the governing body violated the State or federal constitution may file a petition seeking review of the governing board's action.

Effective January 1, 2027.