Loading...
HomeMy WebLinkAboutAgenda - 03-30-1989 IC PAGE 1 APPROVED 5/16/89 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING MARCH 30, 1989 The Orange County Board of Commissioners met in special session with the Towns of Carrboro and Chapel Hill on March 30, 1989 at 7:30 p.m. in the Courtroom of the Old Courthouse, Hillsborough, North Carolina for the purpose of hearing public comments on the proposed Impact Tax legislation. ORANGE COUNTY BOARD MEMBERS PRESENT: Chairman Moses Carey, Jr. , and Commissioners Stephen Halkiotis, Shirley E, Marshall and Don Willhoit. ORANGE COUNTY BOARD MEMBER ABSENT: John Hartwell. CARRBORO BOARD MEMBERS PRESENT: Mayor Eleanor G. Kinnaird, and Aldermen Jay Bryan, Tom Gurganus, Randy Marshall and Judith Wegner. CHAPEL HILL BOARD MEMBERS PRESENT: Mayor Jonathan Howes and members David Godschalk Joe Herzenberg, and Art Werner. ATTORNEY PRESENT: Geoffrey Gledhill. STAFF PRESENT: County Manager John M. Link, Jr. , Assistant County Manager Albert Kittrell, Deputy Clerk to the Board Kathleen Baker, Clerk to the Board Beverly A. Blythe, Finance Director Ellen Liston and MPA Intern Beth McIver. INTRODUCTORY REMARKS Vice-chairman Stephen Halkiotis made introductory remarks. He stated that Orange County's attorney Geoffrey Gledhill will make the presentation. At the conclusion of that presentation, public comments will be heard. Mayor Jonathan Howes of Chapel Hill thanked council members Werner and Godschalk for their participation on the committee that drafted the proposed Impact Tax Legislation. Mayor Eleanor Kinnaird thanked Aldermen Wegner and Marshall who worked many hours on the Impact Tax Legislation. She and her Board are interested in what the citizens have to say about this proposal. Vice-Chairman Stephen Halkiotis entered into the official record letters from Helen Urquhart supporting the legislation, and Blue Cross-Blue Shield opposing the proposed legislation. A telephone message was received from the Hillsborough Savings and Loan Association opposing the proposed legislation. PRESENTATION Geoffrey Gledhill, with the use of an overhead projector, gave an overview of the justification for the Impact Tax. He stated that the focus of this bill is to create a source of revenue to partially fund the planning, design, construction and improvement of public facilities which are necessary in whole or in part because of the development of land within Orange County. Orange County feels this kind of a tax is justified because historically and now public facilities for which local governments are responsible have been provided principally through the use of revenue from sales tax and property tax. The committee that drafted this proposal concluded that it is neither possible nor appropriate for the local governments in the County to rely solely on the methods that are presently available in order to construct all of the capital needs of the County. A tax on the impact of the development is an appropriate way to, in part, fund that portion of the cost of capital projects which cannot be precisely attributed to any one development and therefore cannot be made a requirement of development approval and cannot be reasonably taxed to the people of the County that were not responsible for the increased capital needs. This proposed legislation is intended to replace authorization that is now in place which allows the local governments in Orange County to impose impact fees as part of - • f PAGE 2 the bill. The local governments would like to make the impact tax a replacement for the impact fees because impact fees, where they are in place, have proven to be difficult to administer and inflexible to changing local priorities. The tax is easier to administer and the revenues can be flexibly applied to the capital needs on an ongoing basis. The legislation itself does not put the tax in place. Orange County would have to adopt an ordinance. The tax will be imposed on the impact of land development and the person responsible for paying the tax will be the owner of the property where the construction occurs. The method of applying the tax will be that it will be applied on each square foot of dwelling space in the case of a dwelling and each square foot of commercial building enclosed floor space. The tax will be collected at the time an occupancy permit is issued or at the time the building is occupied where someone occupies the building without obtaining an occupancy permit. Generally speaking the latter doesn't occur and the tax will be imposed at the time the occupancy permit is issued. The tax rate will be established annually by Orange County after consultation with Carrboro and Chapel Hill. The rate will be uniform countywide. It may vary depending on the type of construction. The bill also provides for a disclosure statement which is intended to provide notice to homeowners of the obligation to pay this tax. The authorization to impose this tax applies only to Orange County excluding the Town of Hillsborough. Michael Brough, Attorney for the Town of Carrboro, went through the provisions of the bill section by section. A copy of this proposed bill is in the permanent agenda file in the Clerk's Office. He reviewed some of the definitions that are stated in the proposed bill. He listed the types of facilities that would be exempt from the tax. Section III explains the purpose and relates to how the funds may be expended. Orange County can spend these funds for capital improvements related to specific areas as listed in the bill. Section IV deals with the mechanics of how the bill would operate and how the tax would be collected. Section V states that the Board of Commissioners will set the rate at budget time. Section VI establishes the distribution formula. It provides that Orange County will distribute Co Chapel Hill and Carrboro 75% of the net proceeds received by the county due to development that has taken place within those municipalities' corporate limits, extraterritorial planning jurisdictions and transition areas as has been established by the Joint Planning Agreement. Roy Williford listed some significant points of the Impact Tax. The estimated cost of all the capital improvements anticipated to occur within the municipalities and the County during the next ten years totals more than two hundred million dollars. Between 1980 and 1988, 1,626 units (housing and commercial) were constructed annually in Orange County, including municipalities. Using transparencies, Williford showed an example of what revenues would be generated by using fifty cents per square foot for residential and $1.00 per square foot for commercial development. The revenues generated annually by this tax would total approximately $1,500,000. Over a ten year period approximately $15,000,000 would be generated by this tax. This would be 7-1/2 or 8% of the total amount needed to fund the capital improvements that are anticipated over the next ten years. This tax will assist all the citizens in Orange County in meeting the expansion of the infrastructure for these new units being added in the county. THE PUBLIC HEARING WAS OPEN FOR PUBLIC COMMENTS LARRY CARROLL spoke representing the Home Builders Association of Durham and Chapel Hill. (His complete statement is in the permanent agenda file in the Clerk's Office). He stated that in general the Home Builders Association opposes impact taxes because of their negative affect on affordable housing and the long term economic health of the County. However, he recognized that any development should pay their fair share for the cost PAGE 3 associated for providing new or expanded facilities necessitated by new growth and development. However, any fees or taxes collected should be used to provide facilities or services to benefit those who paid for them. The funds should be earmarked for a particular purpose and they should not be held indefinitely. He noted that the County needs to encourage more industrial and commercial development. SHERYL LLOYD WYNN spoke on Ben Lloyd's behalf. (A copy of the statement she made is in the permanent agenda file in the Clerk's Office). She read a statement from Ben Lloyd which opposed the impact tax. FRED B. CATES, Mayor of Hillsborough, submitted two letters for the record. These letters are in the permanent agenda file in the Clerk's Office. The letters from Vietri Incorporated, Hillsborough and. Tricor, Charlotte asked that the impact tax not affect the Hillsborough area. Fred Cates stated he felt this would be a regressive tax. It has been commented that with Hillsborough excluded, the town would not participate in a fair share of contribution to the school system. He stated that on a per capita basis with developments of these sorts, that Hillsborough will contribute much more to the Orange County School systems than any other area of the county. He read a resolution from the Town Board of Hillsborough in which they requested to be exempted from the proposed Orange County excise tax on land development. PETE THORN (A copy of his complete statement is in the permanent agenda file in the Clerk's Office), stated his firm is actively involved in building affordable housing for new home buyers in Chapel Hill. He expressed concern because the impact tax proposal threatens the affordability of these homes. He believes that new homes can actually provide a net positive impact on local government tax revenue. He asked that the new home buyers not be burdened with any type of tax that is especially designed just for them. Rather, let everyone pay a fair share equally, since everyone benefits equally from the services that government provides. KENT SCOTT a local homebuilder, spoke in opposition to this tax. He feels that a lot of people cannot afford a home because already the cost of property is high. ALOIS CALLEMYN, local surveyor, spoke in opposition of this tax. He spoke in support of affordable housing. A lot of people live here because of their jobs and have no choice of going to other locations. He asked that if this tax is approved that there be an exemption for the lower end. Geoffrey Gledhill stated that the committee felt there were other ways to deal with the affordable housing issue. Callemyn stated that there should be a fair way to finance the growth coming into this area. He asked that the Board consider the small guy in this issue. BOB HARTFORD, Hartford Construction Company, questioned if there would be the same impact to someone adding to an existing structure. A lot of people would rather expand an existing structure than build a new one. Chairman Carey stated that, as the bill is written, additions also would be affected. However, the Board of Commissioners have not discussed additions to homes but he intends asking for an amendment that would exempt additions. SETH PARSONS, homeowner and property owner in Chapel Hill, stated concern with the title of the proposed legislation, which refers to part of the capital improvements. The purpose is to generate revenues to pay part of the cost of the capital facilities. He asked what part of the capital facilities this refers to and suggested why not 100%. For too long, the property owners have been subsidizing new development and new growth. He does not have the facts and would like to have the authorities make a study on just what - • . PACE 4 are the costs of new growth. He has seen figures which indicate that the cost of a marginal addition to the population is somewhere in the range of $3,000 to $5,000 per person. That is the capital cost of the roads, the police and fire protection, schools, water, etc. Citizens are entitled to know just what the cost of capital facilities are that are generated by the new population growth. He questioned page 2, paragraph 3, which states "person responsible for the impact of land development". That suggests that this person is an additional person moving into the area. He expressed concern for the problem young people have in financing a new home in Chapel Hill. Persons who have lived here all their lives are not contributing to the capital growth impact because they are already here. He asked that a clause be placed in the ordinance that would exempt such persons. He feels the governing authority should accept the offer from developers who have expressed several time this evening that they want to pay a fair share. He asked that a way be found to determine what the cost of new development is and hold the developers to that commitment to pay a fair share. He urged the Commissioners to go ahead and enact this legislation. THE PUBLIC HEARING WAS CLOSED. Chairman Carey spoke about the issue of affordable housing stating that everyone wants to continue to do everything possible to make housing as affordable as possible. While this tax will have an impact on the cost of housing, the cost of housing in this area is driven by forces far beyond the control of any of the Boards acting on this matter. He expressed concern about the cost of housing and assured those in the audience that the County will continue to do all it can to try to come up with a variety of ways to provide affordable housing. Chairman Carey asked that the Managers and Attorneys work with the Governing Boards in incorporating into the proposal those changes mentioned and come up with a draft that will be sent forward to the Legislature if the three Boards so approve. Contact will be made with the legislative delegation and any suggestions they may have will be incorporated into the proposal. With no further items for consideration, Chairman Moses Carey adjourned the meeting. The next regular meeting of the Board will be held on April 3, 1989 at 7:30 in the courtroom of the Old Courthouse, Hillsborough, North Carolina. Moses Carey, Jr. , Chair Beverly A. Blythe, Clerk • COLEMAN, -BERNHOLZ, DICKERSON, BERNHOLZ, GLEDHILL & HARGRAVE ATTORNEYS AT LAW P.O. DRAWER 1529 129 E. TRYON ST. HILLSBOROUGH, N.C. 27278 919-732-2196 April 24, 1989 919-942-8000 CHAPEL HILL OFFICE SUITE 20,FRANKLIN BUILDING 137 E.FRANKLIN STREET CHAPEL HILL,N.C.27514 919.929-7151 ALONZO B.COLEMAN,IR. Moses Carey, Jr. , Chair STEVEN A_BERNHOLZ DONALD R.DICKERSON Stephen Halkiotis ROGER B.BERNHOLZ John Hartwell GEOFFREY E.GLEDHILL DOUGLAS HARGRAVE Shirley E. Marshall G.NICHOLAS HERMAN Don Willhoit KIM K.STEFFAN NATHANIEL E.CLEMENT Orange County Board of Commissioners MARILYN E.TOMEI 109 Court Street Of Counsel Post Office Box 8181 BONNER D.SWYEAR (1902-1972) Hillsborough, North Carolina 27278 Re: Impact Tax Bill Dear Board Members: Enclosed is the revised Impact Tax Bill which includes both a district tax and a County-wide tax, the latter for school capital, per the action of the Board on Tuesday, April 18, 1989. Also enclosed is a copy of a letter of transmittal to Michael Brough and Ralph Karpinos providing each of them a copy of the Bill for consideration by the Town of Chapel Hill, the Town of Carrboro and the Town of Hillsborough. Very truly yours, 4,4"44 Gledhill GEG/lsg Enclosures COLEMAN, BERNHOLZ, DICKERSON, BERNHOLZ, GLEDHILL & HARGRAVE ATTORNEYS AT LAW P.O. DRAwER 1529 129 E. TRYON ST. HILts8oR0uGH, N.C. 27278 919-732-2196 April 24, 1989 919-942-8000 CHAPEL HILL OFFICE SUITE 20,FRANKLIN BUILDING 137 E.FRANKLIN STREET CHAPEL HILL,N.C.27514 919-929-7151 ALONZO B.COLEMAN,111. Michael B. Brough, Esquire STEVEN A.BERNHOLZ DONALD R.DICKERSON Carrboro Town Attorney ROGER B.BERNHOLZ Michael B. Brough & Associates GEOFFREY E.GLEDHILL DOUGLAS HARGRAVE Suite 1307, University Tower • G.NICHOLAS HERMAN 3101 Petty Road KIM K.STEFFAN NATHANIEL E.CLEMENT Durham, North Carolina 27707 MARILYN E.TOMEI Of Counsel Ralph D. Karpinos, Esquire BONNER 1 D.SAWYER Chapel Hill Town Attorney (1902-972) 306 North Columbia Street Chapel Hill, North Carolina 27514 Re: Impact Tax Legislation Dear Michael and Ralph: Enclosed is a. revised draft of Impact Tax Legislation which incorporates all of the changes suggested in my April 18, 1989 letter, together with a new concept of an impact tax, County-wide, the proceeds of which will be used exclusively for school capital. The part of the Bill concerned with the district tax now excludes school capital as a purpose for which the district tax proceeds can be used. This Bill will be considered by the Board of County Commissioners on Monday, April 24, 1989 . Very truly yours, 44,14 41p,, , E. Gledhill GEG/lsg Enclosure 4/24/89 A BILL TO BE ENTITLED AN ACT TO AUTHORIZE ORANGE COUNTY TO LEVY A TAX ON THE IMPACT OF LAND DEVELOPMENT FOR THE PURPOSE OF GENERATING REVENUES TO PAY PART OF THE COSTS OF SCHOOL CAPITAL FACILITIES AND TO CREATE AN ORANGE COUNTY IMPACT TAX DISTRICT AND TO AUTHORIZE THE DISTRICT TO LEVY A TAX ON THE IMPACT OF LAND DEVELOPMENT FOR THE PURPOSE OF GENERATING REVENUES TO PAY PART OF THE COSTS OF CAPITAL FACILITIES REQUIRED BY GROWTH THE GENERAL ASSEMBLY OF NORTH CAROLINA ENACTS: Part 1. Definitions. Section 1. The following definitions apply to Parts 2, 3 and 4 of this Act: (1) Commercial building enclosed floor space. All enclosed floor space used for any purpose except: a. Dwelling units and accessory structures to dwell- ing units. b. Recreational facilities constructed as part of a residential development and used primarily by residents of the development. c. Buildings owned by the United States, the State of North Carolina, any county or any municipal corporation. d. Buildings owned and operated by non-profit en- ' tities for noncommercial and nonresidential purposes. e. Schools or day care centers. (2) District. The Orange County Impact Tax District estab- lished by this Act. 1 (3) Dwelling Unit. An enclosure containing sleeping, kitchen, and bathroom facilities designed for and used or held ready for use as a permanent residence by one family. (4) Land development. a. Land development shall mean: 1. Construction of any dwelling unit (other than one excluded under subsections (b) and (c) of this section) for which a building permit was issued or should have been issued after the effective date of an ordinance adopted under this Act; 2. Construction of any commercial building enclosed floor space for which a building per- mit was issued or should have been issued after the effective date of an ordinance adopted under this Act; 3. Conversion of a building that adds one or more new dwelling units or that creates new commer- cial building enclosed floor space; or 4. The initial location of a manufactured home or other dwelling or commercial structure within Orange County for the school capital impact tax or within the District for the District impact tax. b. For purposes of determining the impact of land development for Part 2 of this Act, land develop- ment shall not include: 2 1. Construction of an addition to a dwelling unit; 2. The relocation within the District of any structure located within the District on the effective date of an ordinance adopted pur- suant to Part 2 of this Act or any structure with respect to which an impact tax adopted pursuant to Part 2 of this Act has been paid; 3. Within the District, the reconstruction or re- placement of one dwelling unit by another or the replacement or reconstruction of commer- cial building enclosed floor space that was in existence on the effective date of an or- dinance adopted pursuant to Part 2 of this Act or of any such floor space with respect to which an impact tax pursuant to Part 2 of this Act has been paid. c. For purposes of determining the impact of land development for Part 3 of this Act, land develop- ment shall not include: 1. Construction of an addition to a dwelling unit; 2. The relocation within Orange County of any structure located within the County on the ef- fective date of an ordinance adopted pursuant to Part 3 of this Act or any structure with respect to which an impact tax pursuant to Part 3 of this Act has been paid; 3 3. Within the County, the reconstruction or re- placement of one dwelling unit by another or the replacement or reconstruction of commer- cial building enclosed floor space that was in existence on the effective date of an or- dinance adopted pursuant to Part 3 of this Act or of any such floor space with respect to which an impact tax adopted pursuant to Part 3 of this Act has been paid. (5) Person. An individual, partnership, corporation, or other legal entity. (6) Person responsible for the impact of land development. The owner of any dwelling unit or commercial building enclosed floor space on the date an occupancy permit is issued for such dwelling unit or commercial floor space or, if no such permit is issued, the date the dwelling unit or commercial floor space is occupied. Part 2. The Impact Tax District. Section 1. There shall be an Orange County Impact Tax Dis- trict which shall include all of Orange County outside the cor- porate limits of the Town of Hillsborough, the Town of Mebane, and the City of Durham. Section 2 . The District shall be deemed to be a body politic and corporate and authorized and empowered: (1) To adopt an official seal and alter the same at will; (2) To sue and be sued in its own name; (3) To contract and be contracted with; 4 (4) To levy and collect a tax on the impact of land development within the District; (5) And required to keep its accounts on the basis of a fiscal year commencing on the first day of July and en- ding on the thirtieth day of June of the following year. Section 3 . The Board of Commissioners of Orange County shall be the governing body of the District. Section 4. (a) Except as provided in subsection (b) , the governing body of the District may adopt an ordinance levying a tax on the impact of land development within the District (hereinafter referred to as an "impact tax" ) . Orange County shall, on behalf of the District, provide for the administration, enforcement and collection of the tax. (b) The District may not adopt an ordinance pursuant to this Part if any ordinance adopted pursuant to Section 2 of Chap- ter 357 of the 1985 Session Laws (Carrboro) , Section 1 of Chapter 936 of the 1985 Session Laws (Chapel Hill) , or Sections 17-18.1 of Chapter 460 of the 1987 Session Laws (Orange County) is in effect. Section 5. The purpose of the tax authorized by this Part is to generate funds to partially offset the cost of constructing new capital facilities or replacing, expanding or improving ex- isting capital facilities necessitated in part by new growth within Orange County. Accordingly, the net proceeds generated by the tax authorized by this Part and distributed pursuant to Sec- tion 8 to Orange County, Chapel Hill, and Carrboro, respectively, shall be deposited by each local government in its capital 5 reserve improvements fund or funds established under Part 2 of Article 3 of Chapter 159 of the General Statutes and may be ex- pended only as follows: (1) Orange County may expend these funds to the extent otherwise authorized by law on capital improvements projects related to libraries, stormwater drainage, • open space and recreation, and on emergency and public • safety facilities, including jails. (2) The Town of Chapel Hill and the Town of Carrboro may expend these funds on capital improvements related to roads and other transportation systems , stormwater drainage, open space and recreation, and police and fire stations . The funds may be spent by each municipality only for improvements that are located within the corporate limits of that municipality or within its extra-territorial planning jurisdiction or transition area(s) as established under a joint plan- ning agreement with Orange County, except that Chapel Hill and Carrboro may by agreement expend funds on joint projects that transcend each other's jurisdic- tional boundaries, such as road or drainage improvement projects. Section 6. An ordinance adopted under this Part shall provide that: (1) A person responsible for the impact of land development shall pay an impact tax for each square foot of dwell- ing space and commercial building enclosed floor space for which an occupancy permit is issued or, if no such 6 permit is issued, for each square foot of dwelling space in an occupid dwelling and for each square foot of occupied enclosed floor space in a commercial building. (2) The tax shall be due on or before the date an occupancy permit is initially issued for the dwelling unit or commercial building enclosed floor space in question or, if no such permit is issued, the date such dwelling unit or commercial floor space is initially occupied. However, no tax due shall be considered delinquent un- til sixty (60) days after the tax becomes due. There shall be added to delinquent taxes interest at the legal rate. (3) Taxes authorized by this Part may be collected pursuant' to G.S. 153A-147 or G.S. 160A-207. In addition, taxes authorized by this Part may be recovered in a civil ac- tion in the nature of debt including an award of reasonable attorney fees as part of costs. Section 7. The governing body of the District, after con- sultation with Orange County, the Town of Carrboro and the Town of Chapel Hill, shall establish annually at the time of the adop- tion of the annual budget of Orange County the tax rate to be levied per square foot of dwelling space and per square foot of commercial building enclosed floor space for the ensuing fiscal year. Different tax rates may be established for different types of commercial construction. • 7 • Section 8. As soon as reasonably practicable after the close of each quarter of the fiscal year, the District shall dis- tribute to Chapel Hill and Carrboro the net proceeds of the tax received by the District based upon development that has taken place within each respective municipality's corporate limits, extra-territorial planning jurisdiction and transition area(s) , as established in joint planning agreements. The remainder of the net proceeds, plus the cost incurred by Orange County in col- lecting and administering the tax, shall be remitted to Orange County. As used in this Part, the term "net proceeds" means the gross proceeds of the tax less the cost to the county of collec- tion and administering the tax. Section 9. The boundaries of the District may be expanded to include portions of Orange County within the corporate limits of the Town of Hillsborough, the Town of Mebane, or the City of Durham in accordance with the provisions of this section. (a) Upon a favorable vote of the majority of the membership of the governing body of the municipalities listed in this section, the entire area of that municipality that is located within Orange County shall be annexed (the "annexed area" ) to the District on the first day of the next quarterly period that follows the month in which the vote took place. (b) Consistent with Section 5 of this Part, if any of the municipalities referenced in this section vote to be in the District, the net proceeds generated by the tax authorized by this Part and distributed to any such municipality shall be deposited in a capital reserve 8 Improvements fund and may be expended only for the pur- poses authorized in subsection 5 of this Part. (c) When the District is expanded to include an annexed area, the consultation required under Section 7 of this Part shall include consultation with the governing body of the municipality within those corporate limits the annexed area lies. (d) When the District is expanded to include an annexed area, the District shall distribute to the governing • body of the municipality within whose corporate limits the annexed area lies the net proceeds of the tax received by the District due to development that has taken place within that municipality's corporate • limits, extra-territorial planning jurisdiction, and transition area(s) as established in joint planning agreements. (e) The governing body of a municipality covered under this section may not vote to become part of the District, if an impact fee ordinance authorized under special legis- lation comparable to that listed in Section 4(b) of this Part is in effect within such municipality and may • not adopt such an impact fee ordinance applicable to the area within the District while it remains within the District. Section 10 . This Part shall apply only to the District created herein. 9 Part 3. The Orange County School Capital Impact Tax. Section 1 . (a) Except as provided in subsection (b) , Orange County may adopt an ordinance levying a tax on the impact of land development within the County and provide for the administration, enforcement and collection of the tax. (b) Orange County may not adopt an ordinance pursuant to this Part if any ordinance adopted pursuant to Section 2 of Chap- ter 357 of the 1985 Session Laws (Carrboro) , Section 1 of the Chapter 936 of the 1985 Session Laws (Chapel Hill) , or Sections 17-18. 1 of Chapter 460 of the 1987 Session Laws (Orange County) is in effect. Section 2. The purpose of the tax authorized by this Part is to generate funds to partially offset the cost of constructing new school capital facilities or replacing, expanding or improv- ing existing school capital facilities necessitated in part by new growth within Orange County. Accordingly, the net proceeds generated by the tax authorized by this Part shall be deposited by Orange County in its capital reserve improvements fund or funds established under Part 2 of Article 3 of Chapter 159 of the General Statutes and may be expended, to the extent otherwise authorized by law, only for capital improvements projects related to schools. Section 3. A person responsible for the impact of land development shall pay an impact tax for each square foot of dwelling space and commercial building enclosed floor space for which an occupancy permit is issued or, if no such permit is such issued, for each square foot of dwelling space in an occupied 10 ■••=1/ dwelling and for each square foot of occupied enclosed floor space in a commercial building. (2) The tax shall be due on or before the date an occupancy permit is initially issued for the dwelling unit or commercial building enclosed floor space in question or, if no such permit is issued, the date such dwelling unit or commercial floor space is initially occupied. However, no tax due shall be considered delinquent un- til sixty (60) days after the tax becomes due. There shall be added to delinquent taxes interest at the legal rate. (3) Taxes authorized by this Part may be collected pursuant to G.S. 153A-147 or G.S. 160A-207. In addition, taxes authorized by this Part may be recovered in a civil ac- tion in the nature of debt including an award of reasonable attorney fees as part of costs. Section 4. Orange County shall establish annually at the time of the adoption of its annual budget the tax rate to be levied per square foot of dwelling space and per square foot of commercial building enclosed floor space for the ensuing fiscal year. Different tax rates may be established for different types of commercial construction. Section 5. As used in this Part, the term "net proceeds" means the gross proceeds of the tax less the cost to the County of collection and administering the tax. Section 6. This Part shall apply only to Orange County. Part 4. Provisions for repeal of other local acts, disclosure requirements and effective date. 11 1111=1•11■1111■■ Section 1. Orange County may repeal an ordinance adopted pursuant to Sections 17-18.1 of Chapter 460 of the 1987 Session Laws. Orange County may not adopt an ordinance pursuant to Sec- tions 17-18.1 of Chapter 460 of the 1987 Session Laws while an ordinance adopted pursuant to this Act is in effect. Chapel Hill may repeal an ordinance adopted pursuant to Section 1 of Chapter 936 of the 1985 Session Laws. Chapel Hill may not adopt an or- dinance pursuant to Section 1 of Chapter 936 of the 1985 Session Laws while an ordinance adopted pursuant to this Act is in effect. Carrboro may repeal an ordinance adopted pursuant to Section 2 of Chapter 357 of the 1985 Session Laws. Carrboro may not adopt an ordinance pursuant to Section 2 of Chapter 357 of the 1985 Session Laws while an ordinance adopted pursuant to this Act is in effect. Section 2. Whenever the sale of real property located in Orange County involves new construction, the seller shall prepare and sign, and the buyer shall receive and sign, a disclosure statement. The disclosure statement shall either be included in a contract of sale or contained in a separate document executed prior to the execution of a sales contract. This disclosure statement shall fully and completely disclose that the owner of the property at the time an occupancy permit is issued for the new construction or, if no occupancy permit is issued, the date the new construction is occupied, may be subject to a tax levied by the County and/or the District on the impact of land development. If a seller fails to make such a disclosure and the buyer suffers injury as a result of the seller's failure to 12 disclose, the seller shall be liable to the buyer to the extent of the buyer's injury. Section 3. This Act is effective upon ratification. 13 • VIETRI INCORPORATED March 30, 1989 Mr. Fred Cates, Mayor Town Of Hillsborough P.O. Box 429 Hillsborough, NC 27278 Dear Mr. Cates, It has come to my attention that the North Carolina legislature has a bill before it to impose a $1 per square foot impact fee in addition to the current fee. As you know we have made an offer on 6.61 acres located in Hillsborough where we plan to build a 30,000 square foot warehouse/office facility. If this new proposed fee passes, our fees to build in Hillsborough will be as follows: Current fee at $1600/acre $10,576 Proposed fee at $1/sq.ft. 30,000 $40,576 This additional $30,000 fee is prohibitive to our current building plan and will cause us to abandon this plan and explore other possibilities outside the Hillsborough and Orange County jurisdiction. Vietri is a rapidly growing company, which we feel would be an asset to any community. We employee 25 people currently and have ever- increasing personnel needs. Hillsborough has proven a good environment for Vietri. We would like to relocate our business and remain in this comunity, but as previosly stated, cannot justify the additional expense if the proposed legislation is enacted. We hope every effort is made to see that this proposed tax does not affect the Hillsborough area. S. erely, Susan E. Gravely, Presiders SEG pk Post Office Box 460, Hillsborough, North Carolina 27278-0460, Telephone 919-732-5933 ‹N' fie)" iment_emb. IWO AIIIMMINSe. IMION/Nes. • z - 1111111111111■1111111111111111111=111 41111111•111111111, 41111111111111.1111A 1111111 INN NMI 71111111111111111~ IOW 'IMPS NNW INN - 1111111111kmag 111111•11111111111r111111? (1 - • • *MI SUMOMMOMMWM MEM 100/11111WIIIIIIIIi NM Mil /NW/111111111. /04,11111111 111110 INN IBS 11111111111111 11111•111~ ‘111111MININII NISI MIMI MN NINO 011101111111 '111.0111•'" .41011161.' mow was • CAROLINA CORPORATION Reply to: D 2101 West S.R. 434 _ Suite 100 Longwood, Florida 32779 (305) 774-8222 March 24, 1989 0 985 Bethel Road Columbus, Ohio 43214 614) 4578O00 • Ign 8307 University Executive Park Drive Suite 270 Charlotte, North Carolina 28213 , Mr. Fred Cates, Mayor - (704)547_-0440 Town of Hillsborough P. 0. Box 429 - Hillsborough, North Carolina 27278 Dear Mr. Cates: We have recently heard rumors of a new impact tax being proposed for the Hillsborough area. Being a developer, and property owner in Hillsborough, we - are obviously concerned. We have paid or are scheduled to pay over $31,000.00 in•capital facilities fees for our development currently_under construction in Hi 11 sborough. A $1.00 per square foot impact fee, as is currently being discussed, in addition to the• present development constraints, would have absolutely prohibited us from undertaking our current project. As you know, Hillsborough and Chapel Hill are markedly different communities. Such an impact tax might be acceptable in certain areas of Chapel Hill, but it would definitely have an adverse impact on the Hillsborough area. We have hopes of developing other projects in and around the Hillsborough area in the future. The projects would have to be looked at in a new light should such an impact fee be in place. Now that our center is taking shape and you • - - - can get 'a gl-impse of what the final product will look like, I hope you are plOased. We certainly appreciate your cooperation and efforts that will make it .a reality. _ Sincerely, • • . 4411.1741.1.41111V dfly Joe Looney President Tricor Carolina Corporation JL:je • tp • LLOYD'S DAIRY EFLAND, NORTH CAROLINA 27243 Orange County Commissioners. Margaret Dane. Hillsborough, N.C. 27278 Due to an out of town committment 1 am unable to attend tonight's public hearing on Impact fees. I will have my comments read and copies provided to be entered into the public hearing record. - The property tax on the average home in Orange County has had an out of.pocket . increase of over 20% per .year for the past 6 years.. 1927-reevaluati6n increasei • ., .1' , was a whopping 40% increase in one year. Such drastic increases are unparallel ' • in the entire of North Carolina. While serving as a member of the Board • : of. Commissioners many times I suggested that Orange County was living bekland . , its means and that in the future the young folks, old folks and those less fortunate would have to move out of Ohange County due to their inability to pay their property tax, thus leaving Grange County a place for the wa wealthy. Your proposal to levyAmpatt fees confirms that my thinking may become a reality. Affordable housing is one of Orange County's biggest problems. In today's Chapel Hill Herald it is stated that Orange County has had a 62% increase in homeless people during the past year. Another tax on a place for these and others to live kills any chance they might have had Lp have a roof over their heads. Nal Mart has stated that if impact fees were in effect they would not have coma to Orange County. Lane Kendig, your Chicago consultant for your Rural Character Study states that impact fees are inappropriate in Orange County. In surrnary, I would Suggest that instead of impact fees being in the best intent of Orange County, such fees would in my opinion be in our worse interest, as affordable housing would not exist. If such fees should be inplemented, I would suggest you disband our Economic Development Commission and.fire . • ' 1 its directors because with Orange oountys over regulations, .the.Proposed - • .g..rArjTollx,"rtntR1 '. uppl!aatudy we are almost dead to growth -an:impact •Zee and•Li' rriy opinicifillie. • toinb• 1S sealed.— • • • • • Ben Lloyd • • • . . • •s rp •_ - tw 426 West Cameron Avenue .. Chapel Hill, N.C. 27516 28th March 1989 To The Orange County Commissioners; This is to inform you and the members of the Chapel Hill Town Council that. I favour the propsed county legislation to levy an excise tax on the impact of land development. .� A Helen L. Urquhart • • "2'.. 1c—.y_ti? =.. —+`eloc;: •xcva•...op�.w...r.«.,ur.�::w-c�^w,:h.s..xr....a.:,:x.rcr. ;- �•n�n:aives,:>'�':�.r:.Etna•5!'.FS.,.;.Yrwx.�l.e-!n? .w_ , :?✓+.�'w++'N�•;..rl.•vodn"o9TSh• •• Z• Impact Tax Public Hearing March 31, 1989 Good evening. I am Pete Thorn, President of Capricorn Construction Company, a Chapel Hill homebuilding firm and immediate past president of the Homebuilders Association. Tonight I am representing my views on the impact tax issue. Our firm is actively involved in building affordable housing for new home buyers in Chapel Hill. We are building the Tandler project for the Town of Chapel Hill and we have developed a private subdivision, Abbotts Colony, also in Chapel Hill, that offers new home buyers affordable single family detached homes two and three bedroom homes. At the present time, most of our homes can be financed with FHA backed loans and many of them can also be purchased with NCHFA financing. I am concerned because the impact tax proposal threatens to wo::sen the affordability of these homes. A straight square footage tax on new hones and commercial buildings, is clearly regressive to my homebuyers, since it adds a layer of cost to low and moderate income homebuyers that could knock them out of the market, by causing the price of homes to rise above the threshold levels of the financing. The maximum FHA loan limit for this hig:1 cost area is $101,250. Five of our seven Abbotts Colony models can now be bought with a low downpayment loan under this threshold. With the proposed impact tax in place, only three of those seven would still qualify for low downpayment FHA loans that are necessary for most moderate income homebuyers. The effect is even more drastic for the NCHFA financing, which has a maximum acquisition cost limit of $91,700. If enacted, this impact tax will have a rifle shot effect that will knock out some of our lower moderate income homebuyers who do not have large downpa'jments! I cannot believe that an elected official in Orange County would knowingly support a tax that so disproportionately hurts our low to moderate income homebuyers. Clearly, there is a need for additional revenue. The public has demanded more services from local government and the cost of these services must be paid. I believe that new development should pay its fair share. I also believe that new homes can actually provide a net positive impact on local government tax revenue. The Woodcroft subdivision in Durham is a good example. In 1985 the City of Durhamts Planning Department produced an Annexation Report on Woodcroft that estimated a total of $532,000 of needed capital improvements for Woodcroft and maintenance cost of the required infrastructure to be $80,000 per year. However, the annual tax revenues from Woodcroft at build out are $1,200,000 per year, a 200% return on investment in the first year! inemommenummy If quality growth can provide this type.of net increase in tax revenue, does it need to be specially taxed? Please don't burden my new home buyers with any type of tax that is specially designed just for them. Rather, let's all pay a fair share equally, since we all benefit equally from the services that government provides. Thank you. irtmormer iI � • Home Builders Association of Durham and Chapel Hill ofDutham&thapelHin 21 W Colony Place • Suite 280 • Durham, North Carolina 27705 • Phone 919/493-8899 ISSUES CONCERNING THE ORANGE COUNTY IMPACT TAX LEGISLATION it is understood that the residents of Orange County object to the prospect of increasingly higher taxes as a means of accommodating new development and that alternative revenue sources are needed to help pay for the "impacts" of new development. However, it should be noted that all impacts are not created by new development and that a higher level of services requested by current residents necessitates the need, in part, for more tax revenue. Let us also remember the positive impacts of new development, such as additional property taxes, homeowners who will spend money in local shops thus generating more retail sales taxes to be collected by the County, and the creation of jobs. The question has been asked "Who should pay for the cost of new public facilities necessitated by new growth and development?" Obviously, new development should pay its fair share, but another question should be asked. "Are the expanded or new facilities and services solely for the benefit of new home buyers or will they serve the community at large?" Community -wide facilites and services should be paid by the total community. It is impossible to prove a direct cost impact of new residential development on schools, libraries, jails, etc. Consequently, these services should be paid through general taxation. The impact tax legislation requested by Orange County is very broad-based and open-ended. For instance, on what basis will the tax rate be established? Will there be a fiscal impact analysis that will be updated periodically, or will the tax rate be pulled out of thin air? A fiscal impact analysis should document the infrastructure necessitated by new versus existing development as well as costs associated with each. Any tax or fee should be reasonbly related to the cost of providing new or expanded facilities to serve new development. Furthermore, new development should not be required to pay for deficiencies in the existing infrastructure to meet higher standards than those applied to existing development, or to contribute to improvements that primarily benefit existing development. It is reasonable for the county to expect new development to pay its fair share in expanding or creating new facilities and services as they relate to the impact of the development. However, any fees or taxes collected should (Z1 /+ „��. „crin cl{f/ifiatG of[fie UVotionaC elksociation o/Q7omE 21.111. be used to provide facilities or services to benefit those who paid for them. The funds should be earmarked for a particular purpose and they should not be held indefinitely. Obviously, any additional taxes or fees on new development will make housing less affordable in Orange County. The County needs to make a concerted effort to promote affordable housing through additions and/or revisions in its zoning ordinances, subdivision regulations, and land use plans. The county also needs to encourage more industrial and commercial development. The tax revenues generated by these types of development outweigh the cost of providing services to them, thus reducing the tax burden on current home and landowners. Unfortunately, any impact tax or fee will discourage industrial or commercial development. Is the short-term, one-time impact tax collected worth chasing off potential long-term industrial or commercial tax payer who will also create jobs and other revenues for Orange County citizens? In summary, the Home Builders Association of Durham and Chapel Hill oppose impact fees and/or impact taxes because of their negative affect on affordable housing and the long-term economic health of the County. However, we do recognize that new development should pay its fair share of the costs associated with providing new or expanded facilities necessitated by new growth and development. Orange County already has enabling legislation for impact fees. Impact fees are more equitable than impact taxes because they should require the County to do a fiscal impact analysis that details the improvements for which fees may be imposed, documents the infrastructure necessitated by new versus existing development and reasonably relating the fees to them, and assures that the funds collected are used to provide facilites and/or services that benefit those who paid for them. . '• • • • DON'T O V ERLOO :t• ;,• BENEFITS W HEN FIGURING ti•• • fCOSTS OF •:�t:, revenues that fx•rtefit the existing NEW CON community, the reps[[[ finds. "1-he study, named for project di- :' STRUCTION i;,,�' ',•• � _ rector Dr. !)avid Listokin, showed that for a four-bedroom house, the ' What does projected city operating cost is ,! • 1 CS it new house mean I(, 334 1 ;t year. •Ibtal debt amortva- ''t ;;. ''�;;,,:'t•;::'.•,'�' a community? It means honlcotl'n- lion for the in(i:istructure to serve•:,,,,.'.,1,4,. ::j:::,.;:;)..;:,.:,.....:.,.,..:,..,...: ers who will spend money in local this house (including a new city 'a r,�,,• '�,•:.:- '';�' 'f•';',` shops (and more retail sales taxes hall yy ,ti.. ; for government to police department and all ?;, : ill ::4 g o collect), acldi- streets) will be $294, 7 y tax ,.,• ,' ��, tional proper[ taxes and job the c Total cost n, 'y ;f` : :. ,;';`' • j i lion. acrca- th city on an annual basis, then ; `; is $1128. At existing tax races, the ;:;<?r.;• � ., ,:-.1 :', annual r eve nee ft '" ,.,.f';'••t ys,j ,t { �'i tip• I alive with evidence is orTl this house •Y• r it•.,., , �. , i e idence of growth— the city wit! 181—producing to t. I`r:' 0,e'r 1.:t' :6;:1',:;';.,','::'..;i : A dr t new streets, a new city Iii II, n r, Y i s , to thcit . (; • ;'; : ':; fire stations, new schools, new a $a3 ;ulna;[) surplus to the city. (t,;i %:'; r t,'• •„f•:-.•I :;.d ti; C 1'o1• eV 1 '•''`"'•;`�'':''.i:' :••::;.;; ;f '• 1••:-' stores and, every 1000 square feet of ' •;; t _� t yes, traffic. retail space in a medium-size :`' ' : .i i ' • Development does T-size ,0 t•�i:f;;..'i.'.• r' ii:;., ,„.„ .f.' ,i: . .ezu develop- quire csuppottiny;cscrv_ ping center of 5U,QU0 to 100,0 0 �: "`'•: '' ' ices. feet, the city will realize ;► L ug-iinrctcsiderttsolr, $328. 'Thus, a 70,000- '•' ' '-:.:r.`: . • square-foot neighborhood shop- --. ':: .,,:�.:. ?�aents mitagate traffic community might see ping ' only overcrowding i area will produce a $22,960 ,.r yy and annual benefit to the city. , '' '. • . higher taxes. But ;( new ; Each 1000 square feet of r•e- tie-ups. And growth studylranafyriny; I lu• costs gional office space produces an an- .enelitc of ( toa1'th• Waal bench[ of $153. Even a Sillill dciiv1i5 50111e Sttt prising of lice of 8000 square feet gives the • . • returns cash to a conclusions, . . city tt benefit of n $1229 r ` on an an- A Rutgers U(iivctsity mural basis, the study finds. • study of the Chicago sub- The study also shows a develop � city S coffees orb of Naperville, shows [Went of 1001) housing units and a that growth more than 70,000-scluatc'-fi>rll shopping area pays !in its[ lf, hr tart; it will I>rochu'< a profit to the thy, even produc'cs sin plus evert with new infrastructure. '•. '... Do Communities Allow How They llo It ,•Inlovative Land Development Techniques? Du I • • ..J ;:K:4 • '; �;S3.L't/'�`rit i�'i°Fi�iil:L,`•qu�ift R? J t:. • :1:.';' :ra w,:?��1:.•al41Y.' ':;.,'I:�;:r;, • ,t,...- `r4„tom-}..IIt.G 114 .tYt:3:it''d"•, ,, i • I�' • • 1; :j ;t tti r ot40�:°t;:i'ii:i.(r. - . ; f — l.: r: "'rifby�,��( i Sit' ` r> ! j J' Y;wi,M f:l"(f`ai't:f��.y'r`i: ..s J .twit Y'.F'`'•�E t�:v.'t:,�,(.�� ;' ' • • ! ti 's iC Ye f• • 4 t,. L�,1!;•;t„r'iir.4l::' s 609'0 3U I'tltt Zera-tot • ntatter Source;National Association of/tome Clusters lorue l3nilrlers serve•of file lots California builders. ) f 1300 Safer,r: A"n/i ti/,j .1 rsor iafinJr nj/Thrill, Builders survey of 1300 • C:ulifbruirt huilders. • • 190/PROFESSIONAL BUILDER OCT 1088 MIIMMIIIKIElar VOL.95 OUftImAM,N.C..1UESUAY•Linty i i 21. I na'l , hr)• 17T. ii.iljnilillt.Orilill 14 9:11Ct i14 Richard J. Komar President And Publisher W(Iltato E. N. Ifawklns Jon C.Plant Johrl 11.Adonis • Executive Editor Managing Editor Edttnn.rr l at' )c Editor ID 13 ?41:rill I lit . .::: ,,,_ .... 0. A I seat ieiiing Pei'ioi-i i iai ice he city of Durham's strong performance in invest- Strong I1Ves • (ilt( (hCCle r irilt income is he:u'tc • Jng, but hardly,as Alaycir %Vin Cut- Helps 13u1 City i troth More ley concluded, treason to discourage an increasing tax base as a way to pay for the amenities the city wants. Last week, John Pedersen, the Invest in a nnn,lo'r of piniecls•–flue city's finance and.management ser• Arts Cotutr-ii 1men-anon. the civic vices director,issued a report show. center, the selirdi lcii renovation of ing that the return from city invest- the Carolina TIeati e, the N.C. Nu- , ments in the last fiscal year was the semi)of life and $r line e. the Little equivalent of a 20.7•cent properly tax River It"::rrt t it', the, ;a:hrdulcd itn- rate-1he best return among major pt•uvrnu•ni s:11 r'atui'Ii'; IIills llecrea- cilir;s in North Carolina. Lion t'crrtn Alayor Gulley said the report Growth has also ternable seemed to say the"conventional wis• to absnt I) losses that would Il i ihave don"--that an expanding tax base stun ter1 many cities—ilie(losing rif through growth offsets the need for Erwin Mills anti r\mini i':a) 'Ii,havu'0 higher taxes—(vas "completely Co„ for iri'dann'. I'M!lore hint e. it wrong." means that rt•qdrnts such as those But the report hardly justifies forme In ir•Ioc;de lrec';iui t:of the loss that conclusion or the poIRicol Met'it. of GTE Srnllli's iiill.,,,b, hrirtlgnar- of a no-grnwlh policy. Ices Will root hate to lake a be:rlhnpi For certain, the city should be on the-ale of iIi"it'h,nr.rs.And good( thankful that its investments have 111 myth is car Of the f:rims cssttntial been managed wisely and that they to haring.low Itrtei('St tates on bond are producing a handsome return. Proj('tts. Even Imlay, the city would But much of that income is based on be in iin position III Cmisitli•t' howls short-lean investment of bond for a $ln million ha:r•ball par k us ith- money. As the pond mono:y (lint is out r•ontiitu'd rxl,:trr•l,ri of its lax currenll1, hell In investment no- base, counts is spent on water, sewer, Liss than Ins rats:l n. the vniur roads, parks and other public proj- lion of private promoly itdliio the eels, the investment return will de- 1/..,up in thou limo o lint ham uas only cline.Then the city will need either $22 million.The I':rpl•:cSec-wily of. higher taxes or expansion to finance lice tower in duPOltr•it Uun lawn dtn1- iLs public works. 'there's no third bled that—and People's Seem ily choice.The slate and federal govern- helped rrcale the nnm,cnlum that menls are not going to take up the brought flit' Sitnmillion (in rid Dote!suck. to dott7dnnit bin h mi.'Jhe hotel, in Notably,the bonds were approved turn, climbed the pi" -.'Hilt• of the • by Voters who, for the most part, public citric center. '1 urn piujet'ts on were convince(( that Durham's ex- the boards nnu-, the Aiotaionu 'I•rr paneling tax base would enable the bacon (.'n, city to undertake the public projects Square,u lit tadd gin•:trlt-i$and lion a without major tax increases, year in city iaxes—loollr.• million a Expansion of the tax base, both help rcliur the Meals)for rrotther through annexations,•t•hith the Cil,v thirds the city wants. •Council has aggressively sought,and A decade ago, 1)n ham was flat, new construction, has enabled the Growth,particularly in the city,was . city to absorb ninny programs that paltry.That did not offer much hope were formerly financed by slate and for the aotrnitles or lierrssilies. federal governments.Cities that Of course,Durham dons not nerd have not had that kind of tax-base or (tan( an•an)(hin:f:7,• Gem:th expansion have had to have major policy. San,. f;r,u IIi—citr•h as flint increases in faxes.In Chapel)(ill, which requires cspemive extension town government faces an g5(H),(xl(1 of enter, t cr deficit inW •s SD.lgwhichmayrequite more than its mleiaul,rerusts a 12 perceul prnprl ty tax in,t','r'nse.It Put I)w ham ltas inn,,. t�ill uu' turf` n. should he noted That('lapel hill has G,rtny tt ill t t ih,• fore High reshit'ih,ii nil growth and has rausr it is;, ninon:e In ronify.'1 1. the highest housing tolls in North inn�Inu ttr ii''Iu ' is annnmil}.'l hf Carolina- Hinton^ is a tt•fltttinm of that nt Ili. not t ra nn In 1■0 bat Ic•Grouttl has enabled Durham to -tn,tc. a Ammoml ti K • VOL•95 • DURHAM, N.C.,SATURDAY, MARCH 4, 1989 NO. 15 . • Richard J. Kaspar '. President And Publisher • William:E:N. Hawkins • Jon C.'Ham • John H. Adams Ex utive err Editor Managing Editor. .:. .Editorial Page Editor . • * Im -axes 1 , ike public officeholders in - other counties in and munici- When Unreasonable, They • North Carolina --sand across the nation—the Dui Reduce Affordable Housing barn County commissioners want the General Assembly to give them taxes just as do other homeowners. more authority to make developers But he also pays additional taxes pay impact fees for such things as because impact fees were tacked roads, parks, schools and .police onto the price of his house and • and fire protection. property. Therefore, To some degree, impact fees are. owner in a new.development home • reasonable.New development costs have to pay a premium to use the• public. With federal funding roads, schools and :parks—the' for public projects virtually nonex- same services enjoyed by another. istent today,local governments are homeowner whose property is not rn strapped to make ends meet. New double-taxed. • . industry and residential develop- In some areas, the impact fees• merit require more roads, water, are enormous. A recent New York • sewer, schools and parks that can- Times story pointed out.that in not be financed on a pay-as-you-go Orange County, Calif., impact fees basis. Public financing through 'for a $200,000 to $300,000 house • bond issues requires voter approv- were as high,as $17,000, The same al, and while the recent record of story noted that impact fees for the bond approval in Durham is excel- average new house in Florida now lent,there are no guarantees. ' run between Therefore, communities are in- They often amount$3,700 amount ,'than and creasingly using impact fees $2,000 per new home iii Virginia. , taxes, really—to• get money up, In Durham, before adding' on. front. new fees the coun But there should be caution.Im- should examine the f Wake pact fees in Durham should be fair Orange and other nearby comities.' and competitive with what other They should also consider the ef- counties and munipalities are feet present impact fees have'had charging. The'fees are not ulti- on housing costs and whether Dur, mately paid by the developer, but =ham is'closing the door, to afford- by the people who buy and use the 'able housing. • property,including homeowners. It may be politically .easy' to There is an issue of fairness. .charge' developers for additional Consider•a homeowner in a new costs of• public services.' But tax development that was affected by fairness and affordable housing impact fees. That homeowner pays should be considered as well. is • 4- ii6/r4w/ek9L J- 23e)—ri • Justification and Features of Impact Tax Legislation Orange County seeks authorization from the North Carolina General Assembly to levy a tax on land development. The revenue from this tax will be shared by the County and the municipalities within the County, and will be used to partially fund the planning, design, construction and improvement of public facilities - facilities necessitated in whole or in part by the development of land within Orange County. . Orange County thinks the authorization requested is justified because: 1. Historically, and now, public facilities for which local governments in North Carolina are responsible have been provided using revenue from property and sales taxes . Where appropriate, these public facilities have been and are con- structed by developers of new development through what are known as development "exactions. " 2. It is the view of the governing boards of the local governments within the County that it is neither possible nor ap- propriate for them to rely solely on the methods available now to fund or otherwise construct all capital needs. 3. It is further the view of the governing boards that a tax on the impact of development is the appropriate way to, in part, fund that portion of the cost of capital projects which: A. cannot be precisely attributed to any one develop- ment and therefore cannot be "exacted" from that development; and B. cannot be reasonably taxed to those people of the County not responsible for the increased capital needs. 1 - - • 4 . The impact tax authorization is intended to replace legislation now in place authorizing Orange County, Chapel Hill and Carrboro to impose fees on new development. it is the view of the local governments of the County that an impact tax is su- perior to an impact fee. This is so because impact fees, where in place, have proven to be difficult to administer and in- flexible to changing local priorities. An impact tax is easy to administer. The revenues from it can be flexibly applied to needed capital projects. 5. The impact tax also aids a consistent approach among the local governments within the County to meet the capital project needs of the residents of the County. 6. The important features of the legislation authorizing an impact tax are: A. It is not self-executing. The imposition of the tax will require an Orange County ordinance. B. The tax will be levied on the "impact of land development. " The person responsible for the tax will be the owner of property whereon construction occurs. Certain impacts are exempt, including those associated with the construction of governmentally-owned buildings and buildings owned and operated by nonprofit entities not used for commercial or residential purposes. C. The purpose of the tax is to generate funds to partially offset the cost of new and replacement capital facilities within Orange County. The funds collected by the County will be in part retained by the County and in part distributed, according to a formula, quarterly to Chapel Hill and 2 simminEwmor Carrboro. The funds will be maintained by each local government in capital reserve Improvement funds until spent for the capital improvements specified in the Bill. D. The excise tax will be levied on each square foot of dwelling space and each square foot of commercial building enclosed floor space. The tax will be collected at the time an occupancy permit is issued. The Bill provides for collection of the tax by civil action if necessary. E. The tax rate will be established annually by Orange County after consultation with the municipalities within Orange County. The rate will be uniform county-wide but may vary for different types of construction. P. The Bill provides for a disclosure statement in- tended to provide notice to the property owner of the existence of the tax and notice that the owner is responsible for its payment. G. The Bill applies only to Orange County, excluding Hillsborough. It is intended to replace impact fee authorization previously given to Orange County, Chapel Hill and Carrboro. As such, once impact taxes are in place, the Bill does not permit the County, Chapel Hill or Carrboro to implement their impact fee authorization. 3 Blue Cross Blue Shield r_s> of North Carolina (7:64V '11 0 g Legal Department P.0.Box 2291 Durham,N.C.27702 919/489-7431 - March 29, 1989 Orange County Commissioners P. O. Box 8181 Hillsborough, North Carolina 27278 Re: Levy of Excise Tax on the Impact of Land Development Dear Commissioners: I am writing on behalf of Blue Cross and Blue Shield of North Carolina to express our concern regarding the Proposed Legislation to Levy an Excise Tax on the Impact of Land Development in Orange County. Blue Cross and Blue Shield of North Carolina is one of the largest private employers in Orange County. In 1988, we paid approximately $472 ,000. 00 in property taxes to Orange County. We are opposed to the proposed Legislation to levy an excise tax on the impact of land development based upon the fact that the purposes for which this excise tax is to be levied are duplicative of the purposes of the County's levying of a property tax pursuant to the Constitution of North Carolina and G.S. S 153A-149 and prohibited by G.S. S 136-98. Specifically, it is our opinion that G.S. S 153A-149 provides that the County may levy property taxes for those purposes outlined in Section 3 of the proposed Legislation. The proposed excise tax would therefore be duplicative of the County' s collection of property taxes. Furthermore, G.S. S 136-98 specifically prohibits a county from levying "any taxes for the maintenance, improvement, reconstruction, or construction of any of the public roads in the various and several counties of the State. . . ." In that one of the stated purposes of the proposed Legislation is to provide the towns of Chapel Hill , Carrboro, and Hillsborough with funds for the improvement of "roads and other transportation systems", it is our opinion that the proposed Legislation is in violation of the above-cited Statute. We also believe that this proposed Legislation will serve to dampen the opportunities for the corporate citizenry of Orange County to grow and expand. In point of fact, due to the ----Assemmemomeas Orange County Commissioners March 29, 1989 Page Two onerous nature of various ordinances recently enacted by the Town of Chapel Hill, we have found it necessary to begin exploration of our options regarding relocation outside of the Town. If the proposed Legislation is enacted, we may well find it necessary to explore the possibility of relocating outside of Orange County, North Carolina. We appreciate your consideration of our concerns. Sincerely, 0 3:34) C4:i5:. Mark ayne Assistant Corporate Counsel SMP:vj cc:- J. E. Dye Senior Vice President Corporate Systems