How should we pay for growth?

[ncwebguy]

After taxing ITB Raleigh for the last 30+ years to build north Raleigh's infrastucture, it is now "fair" to tax downtown even more to pay for things its existing tax base should cover? Maybe my definition of fair is wrong.

It will be interesting to see how this potential half cent tax for "transportation" would be split between mass transit and road construction. With Go! Triangle behind it, the vast majority, if not all, would go to road construction and maintenance. If Durham and Wake counties were on board, this could raise $100 Million/year. If this was split 50/50 for roads and mass transit, it would have a better chance of passing. I would rather have a gas tax than a general sales tax, but it would not be a large enough source of revenue.

The transfer tax/impact fee combo should contribute some to transportatoin, but it should also cover new schools, parks, etc. They should be an either/or proposition -- impact fees for new construction (reduced, but still present, for infill) and transfer tax for existing property.

Getting any of this past Big Real Estate would be an uphill struggle, to say the least. But I'll do what I can if anyone points me in the right direction.

[ChiefJoJo]

The whole impact fee/transfer fee thing is hard to read. Gurley will come out and say he's for it (Feb 7) and it seems to have traction, then we hear Bryan & Co are opposed to it (Feb 19)). Who knows.

I tend to think fees are better since they target growth almost directly, but the sales tax does hit transients & visitors too. Anyway, the NCGA is "the decider" so we'll probably find out this year what will be allowed. The best thing would be for the GA to allow a complete "menu of options" including impact, real estate fees, and sales taxes to all counties pending local voter approval. That would set up a scenario where even if we went the sales tax route inthe short term, future commisioners could allow impact fees.

[ChiefJoJo]

I was at the CAMPO meeting yesterday, and Joe Bryan (Wake Commissioner) said Wake favors a 1 cent sales tax to be split by transportation and schools.

$285M needed by 2010 to avoid mandatory yr-round schools. where is that going to come from Commissioners?

Amid budget crunch, Wake looks at leasing schools.

[sax184]

Wake County is never going to solve its school needs equitably without an impact fee. The homebuilders make $70-$90k profit per home; they can surely stand to make $65k to $85k per home without going under. All the other stuff being talked about are really second-best solutions to avoid having to confront the Real Estate lobby.

I recently had a pair of longtime Cary-dwelling friends say they can't believe it, but they are considering moving to Orange County if the mandatory year round and reassignment stuff continues like it has been. It's the unpredictability that's driving them nuts. That one of them, a reliable Republican/Libertarian voter who on principle has a very strong aversion to high property taxes is saying this, is quite an indicator to me of how frustrated some people are.

[ChiefJoJo]

WRAL story on Wake growth... 1 of 5 new NC residents moved to Wake since 2000 = 66 new people per day. Projected at 919,000 by 2010. Ouch!

The story is mainly about keeping up with social services such as domestic violence and mental health issues. So NC Homebuilders... still say growth "pays for itself?"

[sax184]

WRAL story on Wake growth... 1 of 5 new NC residents moved to Wake since 2000 = 66 new people per day. Projected at 919,000 by 2010. Ouch!

The story is mainly about keeping up with social services such as domestic violence and mental health issues. So NC Homebuilders... still say growth "pays for itself?"

[JDC]

Here's a wild idea: If you're one of the newly relocated NC residents who had a house built (as if there aren't enough existing houses) in some subdivision out beyond 540, you should be billed for each of the trees that were "cleared" to make way for your McMansion. What's a tree worth these days? Probably enough to encourage more infill and less sprawl.

[ncwebguy]

It shouldn't be tied to only trees... Impact fees should also cover the water and sewer lines that take decades to pay for themselves. Same goes for the new roads and the maientenance they require. And police and fire department coverage. To say nothing of schools, parks, the afore mentioned social services, etc. Property taxes alone DON'T cover these costs. Period. Growth does not pay for itself. Growth is paid for by taxing the existing population base, give them next to nothing, and spend that money to underwrite sprawl.

It is pathetic that conservatives fight incentives like Dell, Google, etc. yet champion them on the smaller scale of housing developments. Toll Brothers avereaged more *profit* per house last year than I make before taxes, health care, 401k, etc. in a year. I don't know what is worse -- the tax structure put in place by Big Development, or the [self deleted] of developers on citizens and while John Locke Foundation, etc. talking heads tell them its raining.

[Transplant]

My understanding was that it was up to a developer to build sewer and water lines from where an existing line is up to the new development. I may be wrong.

As far as paying for growth, it seems like we need to understand the cost of new services, and divide that by the number of new homes built. Getting a number should be easy, take a 5 year sample from 2000-2004 / number of new homes.

If this number is ubsurdly high, which it probably will be, we should at least use it as ammunition to raise the pathetically low impact fees.

On top of that, the tax rate should remain steady from year to year, but increased values on ones house should be accounted for.

So in :

year 1) a $150,000 house would pay (say) 1% tax= $1500

year 2) a 3% automattic increase * $150k = $154.5k; tax = $1545

etc.

Every 5 years a real appraisal would be done, and the tax value would be adjusted accordingly. If someone does not think their house goes up the 3%/year, they could appeal. Under this format, tax income would be automatic and should pay for current services.

[bullcity76]

WakeUp leaders believe another multimillion-dollar school bond is more likely to pass if voters' property taxes do not increase. Under their plan, the two fees would potentially raise nearly $200 million [per year].

Wake County supports a menu of options for all 100 counties. Those options include impact fees and real-estate transfer taxes. County commissioners, however, believe a better option in Wake, is a 1 cent sales tax to split between schools and transportation.

Of course the homebuilders stroll out their "good familes won't be able to afford the American dream" garbage. Not surprisingly alot of the commissioners themselves are funded by the homebuilders and realestate lobby. So a 1% sales tax makes more sense than a fee that is exactly tied to growth? oh, right... it doesn't, this is just politics as usual.

[DwnTwnRaleighGuy]

My two cents...

For schools: Real Estate Transfer Fee's! And Impact Fee's

I think that these two are the most impartial ways of taxing and self paying that we have.

Of course I could be really mean and say something like, (any person/s who have children in said county would be sent an extra school tax bill in the mail to help cover there part of the school's needs). Scary thought!!!

For transportation: An extra tax on gas! And an extra amount on sales tax!

These two would be split with all things transportation wise, (roads, light rail, bike ways).

To end let me say that my paycheck is very small compared to the Wake county average and I pay my fair share for schools even though I have no kids, (and that's ok). So yes I would be comfortable paying a little more to have better maintained roads and to be able to ride an alternative mode of transportation, (rail). I believe to have better systems, schools-transportation, you have to pay!

[bullcity76]

http://www.ajc.com/metro/content/metro/sto...01transtax.html

Interesting article concerning proposed legislation to implement a statewide 1 cent tax throughout Georgia to cover the gamut of transit options over the next decades.

[bullcity76]

One reservation that I have about Impact Fees is that as a cost to the builder...do they have markup margin for the Fees too? So for $3K in Fees does builder tack on an extra $5K or $6K? In that case, I think the tranfer tax would be cleaner. The builder would still pay the tax when he purchases the land or sells lots to other builders. Does anybody have detailed insight on this?

[Jones_]

One reservation that I have about Impact Fees is that as a cost to the builder...do they have markup margin for the Fees too? So for $3K in Fees does builder tack on an extra $5K or $6K? In that case, I think the tranfer tax would be cleaner. The builder would still pay the tax when he purchases the land or sells lots to other builders. Does anybody have detailed insight on this?

[tjoad]

One reservation that I have about Impact Fees is that as a cost to the builder...do they have markup margin for the Fees too? So for $3K in Fees does builder tack on an extra $5K or $6K? In that case, I think the tranfer tax would be cleaner. The builder would still pay the tax when he purchases the land or sells lots to other builders. Does anybody have detailed insight on this?

[Jones_]

FAQ's about Impact Fees

Many feel the real goal of the impact fee is not to raise the cost of a house, but to make the developer absorb this cost. In the Triangle, developers have done very little to help pay for growth, while their profit margins seem to be getting larger.

[ChiefJoJo]

Latest from Bob Geary on Wake growth and schools in the current Indy--a good read.

So there is this bill (HB 153) in the House right now that will allow a "menu of options" to be assessed by all 100 counties. I've heard the homebuilder's arguments all along and I've heard the WakeUp! and others who champion good growth...

Let's set aside the admittedly important political factors for a moment; the intense lobbying that is going on to try to prevent this measure from being passed...

If the idea of these fees and taxes is so terrible, why not let the voters decide? Absolutely none of these measures would be implemented without a county-wide referendum, so the voters (the PEOPLE!) would have an opportunity to decide whether it's a good idea.

Why hasn't anyone asked the homebuilders to comment on that one? The reason, I suspect, is they know that it will probably pass!!! That's why. The only reason this won't go forward is if the BIG Real Estate lobby prevents it.

If you want better--or even adequate public facilities, including roads, transit, schools, police, etc--I would encourage you to talk to your house or senate delegate and make sure they support this measure. Go to the NC GA page and to the right there is a zip code locator to find your reps.

[ChiefJoJo]

I feel like I'm having a conversation with myself here but anyway...

This is a great post about lessons we should all learn from growth that very much belongs in this debate:

I think Charlotte [insert Raleigh here] is already falling victim to its own lack of sustainability. The city limits are enormous, with the farthest reaches having very low density. These areas are very difficult to cost effectively serve, with road mainenance, police and fire protection, and really all other types of city services. The high cost of serving this spread out area with a marginal tax base (let's face it, most homes along the city's perimeter aren't generating a lack of tax revenue) and it's no wonder people are back-lashing the rising tax rates. The average voter doesn't understand that their taxes are going up because of the relatvely conservative policy of the city on urban growth/city planning ordinances.

Compare that to Boston, where my property taxes are about 15% LOWER per home value, the sales tax is 30% LOWER, and the state income tax is 20% LOWER, while they provide MORE services. It's not because the cost of providing services here are lower, because they're certainly not (unions), but because the services are provided in a much more efficient manor due to the density.

If Charlotte [Raleigh/Triangle] wants to stay competitive, it is going to have to get serious about city planning. I started another thread on this over the coffee house, but the city continues to plan for this year, not for 20, 50 or 100 years. It doesn't seem that the city has an idea of what will be required to be an MSA of 5 million. Atlanta didn't know, and they still don't, as they proposed widening their suburban interstate to 23 lanes.

I suppose the problem is more political than anything, with city and county council members applying cheap band-aids to every problems to placate constituents, but a band-aid isn't going to cure a heart attack.

[cophead567]

i've followed this thread so i know whats going on, but really do not consider myself that educated on this issue. saying that, i had a thought on the school issue. now, this may be WAY out there so be easy, but i believe that the frustration felt by many people in the area may turn people on about the idea of private schools. when i first moved to the area, i moved to cary and went to high school there. i believe there is a significant population that can afford and is willing to put their kids into a private school. the consistency of schooling schedule and location is very valuable to some people. the biggest complaint i have noticed from most people is that they simply dont want to go to a year round schedule and hate being re-located what seems like every few years. so why couldnt the government and a private company work together to get a school built and be run privately, the govt. will then back off when up and running. this way, the school pays for itself, and alleviates congestion in the area. a study can be done, triangle-wide, to see the feasibility of this approach and how many are willing to enroll.

any thoughts or experts on this topic?

[ChiefJoJo]

I understand that a lot of folks are frustrated with Wake schools and the year round calendar and a lot of parents would say they might favor private schools or charter schools, but I don't think that's the issue here. Wake Co schools have been consistently rated among the best in the nation. Why would anyone say that we should disband a successful system by most measures, go to city schools and put thousands of kids in charter or private schools? The school system is working fine. It's just *not being funded properly*.

The biggest problem is that we are growing in a way that causes our tax base to be stretched thin every time that we approve another 30 or 300-acre subdivision. The math does not add up. Sure you get some more tax base in the short term (the polticians love this part), but the costs for roads, schools, police, fire, parks, water, sewer, etc are much higher... so that leads us to where we are now.

We could help out the situation by (1) growing more compactly and utilizing more existing public services and (2) when we do sprawl out, let's tax developers a little more via impact or real estate transfer fees... that would likely generate enough $ to avoid all this mess we are in now and put off another $1B school bond.

[ncwebguy]

It is funny how conservatives love to refer to Boston's state as Taxechusetts, yet taxes are *lower* there.

Wake county is already exploring public/private partnership schools. There are plans to rennovate the former Winn Dixie in Wake Forest near the Super Target to use as a 9th grade center. There has also been a constant push for an increase in charter schools. Students' time (and school budget's money) spent on buses is due more to the fact people are too spread out vs. the "economic balancing" busing. Another plan being suggested -- leasing schools -- is yet another short-sighted, low inital cost band-aid. Schools are magically built quicker and cost less over the course of a ten to twenty year lease. But when the least is up, the building is up for grabs on the open market. To keep this buliding as a school, the school board would have to bid against other potential tenants for the building, driving costs up.

A lot of "taxpayer groups" would be happy to get government out of the school buisness. This is completely short sighted, as people who can't afford an education will not get one. This uneducated base will require more social services -- welfare, rental assistance, etc. -- than the cost of proper schooling would require. An uneducated workforce is not attractive to employers, so the number of jobs in the area declines or incentives are handed out. Either scenario reduces the tax base.

If social service programs are cut, crime goes up dramatically and law enforcement budgets go through the roof. Raleigh and Durham's police departments are already spread thin in outlying areas, and the lack of connectivity and density increases the response time for officers.

[ChiefJoJo]

Janet Cowell has proposed a 1 cent sales tax increase to go to schools. At the very end, they mentioned that it would also allow real estate transfer taxes. I can't really understand why anyone would be against this when the county is proposing $B bond issues left and right. The counties can't continue to pay for the growth on the back on the property tax.

[bullcity76]

Janet Cowell has proposed a 1 cent sales tax increase to go to schools. At the very end, they mentioned that it would also allow real estate transfer taxes. I can't really understand why anyone would be against this when the county is proposing $B bond issues left and right. The counties can't continue to pay for the growth on the back on the property tax.

[ChiefJoJo]

Raleigh city council will be debating a local options resolution tomorrow. BTW, it's not just impact fees, but it would be in support of a local options bill to include a sales tax, impact fees, and real estate transfer fees.

[tjoad]

Tuesday,Raleigh City Council unanimously passed a resolution offered by Councilor Russ Stephenson supporting Fair GrowthFunding options for Wake County. This is a victory and demonstrates increasing support for growth paying its fair share of the costs of growth! The city council resolution endorses NC Senate bill, S 610, a Wake County specific bill introduced recently by NC Senator Janet Cowell (D-Wake), and co-sponsored by Senator Vernon Malone (D-Wake). S 610, would enable Wake County to hold public referendum for a county-wide 1% transfer tax, an impact fee, and a 1% sales tax as means to help pay for growth. WakeUP Wake County supports "growth paying for growth" options, such as the transfer tax and impact fees, and we're excited about the possibility that these options may go before Wake County voters, if the bill is approved by the N.C. General Assembly.

This is from an email I got from WakeUp Wake County. Hopefully this will move us closer to having a "menu" of options, and not just the usual sales and property taxes!