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Home My WebLink AboutAgenda - 02-18-2002 - 2 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: February 18,2002 Action Agenda Item No. 2 SUBJECT: Assessment of Proposed Carol Woods Payment in-Lieu of Taxes DEPARTMENT: County ManagerhASSessor PUBLIC HEARING: (YIN) No ATTACHMENT(S): INFORMATION CONTACT: 12103101 carol Woods Lefler Rod onsaeq ext 2300 02108102 Assessors Memo John Smith, ext 2101 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-0501 Durham Sell Mebane 336-22]-2031 PURPOSE: To receive a short report on the potential Impacts of the Carol Woods Retirement Community Center decision to file for property tax exemption for CY 2002. BACKGROUND: In a December 3, 2001 letter, Carol Woods Local firmer Patricia Stange wrote he Chair Barry Jacobs, Chapel Hill Mayor Kevin Foy, and DHCCE Superintendent Had Pedersen to announce Carol Woods' Intent to He for property tax exemption in 2002 for reasons outlined In her lever. She also Indicated that in view of the lost property tax revenue that Orange County, the Town of Chapel Hill, and the Chapel Hill Compete School system would a peq that Carol Woods Intends to make charitable gifts to the County,Town, and Schools to the benefit of Orange County citizens. In late January 2002, Carol Woods representatives indeed submitted b the Orange County Assessor applications that would exempt the property from ad valorem taxation. Thebasisof the request is fairly complex,and a sizeable amount of background materiel in support of the exemption application has been submitted and is under review by the County Assessor. Therefore, a final determination on the validity and extent of exemption that may be granted has notyetbaenmade. However,the attached memo ham the County Assessor reduce his preliminary evaluation of the matter and cites the approximate tax value and prospective Property,tax revenue losses to the County Town and CHCCS. Recent staff level discussions between the county and carol Woods Indicate that or the upcoming fiscal Year it is Carol Woods Intent to pay Orange County in donated funds the exact punt that would have been due in taxes on any property determinetl by me Assessor to qualify for exemption. Carol Woods has also indicated that for FY 2002-03 they do not intend to prescribe how any such donated funds should be spent by Orange County. Representatives of Carol Woods will be available at the work session to discuss this matter with the BOCC. Once the Assessor s final determination is made regarding the extent to which Carol Woods property qualities for exemption,decisions wall not needed regarding: • What should be the structure and elements of an agreement between the County and Carol Woods regarding future payments In lieu of taxes • What should be the timing of payments • To what specific County useslprogrem llserviws, if any, should future Carol Woods donations be earmarked FINANCIAL IMPACT: The exact financial impact on Orange COUMy(and likewise,on the Town of Chapel Hill and the Chapel HIII-Caobom City Schools)will be determined by the punt of property qualified for exemption from ad valorem taxation and the tax rates established for each entity for Hl'2002-03. However, H Carol Woods makes donations that match the amount they would have paid in taxes absent exemption, the Impact should be revenue-neutral for Orange County. RECOMMENOATION(S): The Manager recommends that the Board receive the repot for information, pose any questions to staff and Carol Woods representatives, and provide appropriate direction to the Manager.and staff. 3 CAROLWOODS REMENT � q JN NC UNITY W9/964g11 =PX9t9NB dP941WP Ocember 3,31b1 Row Foy.btIYOr ofol lml Tote,HIM,2°t Fbw 306N. Cdombin Swell Ch l=NC U516 ]i la[ob4 Cher, Oamge Cowry Com®eaiooara PO FliPsbmosban" 1 ugb,NC 27378 NNpeol SlWmmtendmt CFepel3 symbol City SohoW CheCha S.Merritt ALg Rend pd]LII,xC 27316 Mar Sirs: OnbehelfofCUO1 Woods,lam wrmvp Nus Imv to inform YOU tot to lewuy wJlSk offie lly6r pm Mvsl exemption wer<oNm[e si Ni Ust im Omeel iii I31A-31. Webtliwe[het NenmMeiatrery c4ar that fecSitia fiom[g6a+N MMical Cue Comadsson baodeare sell Gum property turtiu ] .sett Cmal Woo&best fmmad vbumind"of I%sw eperry with the prooeada oI Care COm®rvov b ende,we ere mmledm eucLprial.exgoptioa We btliere nW mfiekr aemplioOwwNbe to[ltirk wrfiLtci%1'resPOOVL'bty Wtila we are mindw allow oWigtia¢v to Your form rypoletiaµwe m e ly mmdgrl ofoer cbbess iP MIPO311ilM1ym OW ItHissr ulvH and oftimgood neighbor role went m colonel plo'. 13miffbi we wanted to make it bear tbat i wiN m¢intention to we &rG Wawa Ne pmpeH to solob n tot is inazrmdema Atibe law,we vi lbe mating cJbson ble III beck W the III to city eM dw aAOO,to"o,toe wmk end the am' tlen dhm6r edxlr NedtimmofOm�eCOwry. pwhwmore,wewsot to uvfmue t�nv mbnam ue NPPYort we Bae m mn�mn+wt ae[ety b®drt cb ewenr c.Ai WOaaxum�u,yxmLa,mH�iwT mmmuniy 4 P%,Juobg Pedurm Dee 3,2M1 Pogo 2 WewdwmethecA�Pwwork di�tlYwrth pu to nukedda Pasm aadb poa wm oPycrur aw!Wgim WxM3SM3& wxivc . uphod tramiathia avaucitay omrym me 0hn maI wokmPa to barxt were yo b ahowt me twq ands theta rnPaedblEtiee. Meek 6eaPNmEwm6 daa 9oa eahewtheLm way�betoemtthis P� Pu 6S, Pm&lch: gCEO P�eausceD M. John M.Liok Ir.,CouxwNl ager Cal Hodwq TO ofCb"M Mmaget Edith as Hawn,CAm,Carol Waadawtol oidstt Edith Wiggia,COUONMmberavd Caul WOaNBamd aflNaM1an 5 MEMORANDUM TO: Orange County Board of Commissioners John Link,County Manager FROM: John Smith, County Assessor DATE: February 8, 2002 RE: Carol Woods Property Tax Exemption Request Chapel Hill Residential Retirement Center, known as Carol Woods, has made appl'loation for exemption from ad valorem taxation. The exemption requests are based on part North Carolina statutes: N.O.GS. 131A-21 and NC.G 5. 105-2786A. NC G.S. 131 A-21 provides that when bonds or notes are Issued by the Commission (North Carolina Madical Care Commission)to provide or improve a health care facility,then until the bonds or notes are retired, the fa lity for which bonds or notes are issued Is exempt from properly taxes as provided Carol Woods has been partially financed with NCMCO bonds and therefore can qualify for exefnption on that portion. N.GG 5. 105-2786A provides that quelfad retirement facilities providing chanty rare ands community ideal can request exemption from taxation. Based on preliminary reviews, it appears that Carol Woods will q usury for exemption from the major portion of their ad valorem tax liability. Carol Woods is located on a 102.52 acre tract identified as tract 709834, and is located In Chapel Hill on Weever Dairy Road. The 2002 tax value for the 102 plus acres and improvements totals$33449,550. The business personal property value for 2001 was $1.351.460 The 2001 tax bill on this tract totaled$525,84338 and was distnbuted as Hill: • Orange County-$280,148.14 • Town of Chapel Hill-31]5.39].10 • Chapel Hill-Canbom Schools $70,29804 In addition,there Is also a 16-acre tract, identifed as tract 72A95,that o situated between the main campus of Carol Woods and 140,which according to the application for exemption, s used as a buffer. The 2002 lax value far the 16 acre buffer Is 3489,300. The 2001 tax bill is $5,17191 and was distributed as follows: • Orange County $393887 • Chapel Hill Canadian School Clstnd -598839 • New Hope Fire Method-$244.65 Of the six properties owned by Carol Woods, only the two above are included in their applications for exemption. 6 The 10252 acre firmament campus of Carol Woods,tract 709834 prourninadly appears ro fme 0ation of al hath ce acife dd lficelms or 10%exemp l el care facilities, a equipment, nand wi NCMCC bonds. For Carol Woods,this exemption would be effective for the 2002-2003 budget year and potentially w0uld exempt approximately 70%of Me$33,449,550 Its value. This tract also qualifies for a partial exemption under N.C.G.S. 105-278 GA. Based on preliminary review of audited financial reports,and their application, Cartl Woods appears to be pr itletl to a maximum 40%exemption on all property used In the operation of the retirement facility. In combination,the Mro$futures potentially will exempt between 88%and 100%of the taxable value M all real and business personal property aesocis ed with this trod. Based on the 2001 lax btu and tax rates,the Impact could be revenue losses of • Orange County-$246,530.36 to $280,148.14 • Chapel Hill-$154,34945 to 5175,39710 • Chapel Hill-Canboro Schools-$61,862.28 to$70,298.04 The total tax Iiabllily for Carol Woods,on this tract could drop from$525,643.28 to between zero and$63,100. The 16-acre other, tract 727795,was gifted to the retirement center In 1989 and has never been subject to bond financing and therefore can not be exempted under N.C.G.S. 131A-21. The 106 278G application describes this shut as being used as a buffer. This Is not an exempted use under 105-278.6A. Preliminarily, it appears that band 727795 will not qualify for exemption and will continue M be taxable This preliminary assessment Is subject to further review by the Assessor's Office and the County AHOmey. It may be product in the meantime to emceed with an assumption of full potential of loss will all the issues are settled and final numbers can be generated If we proceed for now she that conservative assumption and estimate losses of all revenues associated with both tracts 709834 and 727795, Oe total assumed loss (based on 2001 tax rates)for Orange County would be$284,087.01 and for all jurisdictions combined would be$531,015.19.