How should we pay for growth?

[c_harmons]

How indeed... From the article:

The "infill development" is still putting a strain on Chapel Hill's parks, etc., which led to the need for the new Aquatics Center, town Operations Center and Southern Community Park off U.S. 15-501. To say nothing of the increase in gas prices affecting the city's bus system.

A transfer tax would not have eliminated the need for a tax increase, but would have reduced it. But Orange County voters said no to the "home tax" so they have to raise the every year home tax known as the propery tax. Or say no to the new pool and park, but that choice has been made.

It is sad that the expanded tax base from "growth" doesn't pay for additional officers, etc. in Raleigh, but it doesn't, so everyone pays more to subsidize new devlopement.

[sax184]

"growth" and "development" may be two different things to the Mayor. There has been so little new development added to Chapel Hill it is silly. That is why homes there are so expensive. I think Chapel Hill is the perfect poster child for the fact that even without new development, taxes will increase. I disagree with the premise the all the woes of the world lie with new development. Chapel Hill never adds anything new and yet has some of the highest taxes in the State.

I also just read an e-mail that Chapel Hill sent out saying they have to raise water rates because their conversation measures have led to less water being used so their their income from that service is too low. So if people are going to use less water they must raise the rates on what they do use to get back the revenue. HUH!?

[Jones_]

"growth" and "development" may be two different things to the Mayor. There has been so little new development added to Chapel Hill it is silly. That is why homes there are so expensive. I think Chapel Hill is the perfect poster child for the fact that even without new development, taxes will increase. I disagree with the premise the all the woes of the world lie with new development. Chapel Hill never adds anything new and yet has some of the highest taxes in the State.

I also just read an e-mail that Chapel Hill sent out saying they have to raise water rates because their conversation measures have led to less water being used so their their income from that service is too low. So if people are going to use less water they must raise the rates on what they do use to get back the revenue. HUH!?

[ChiefJoJo]

c_harmons, maybe the Chapel Hill example was not the best in terms of growth being the primary cause for higher taxes, I'll give you that. Wake is the poster child for uncontrolled growth, so let's refocus here. I know you do not favor impact fees or transfer taxes, but I still say it's best for the development--especially on the fringes--to pay more of it's share of growth and the secondary burdens that it creates. Every time I hear Philip Isley (R-Raleigh City Council) utter the words "I firmly believe that growth does pay for itself" I just . All you have to do is look at where the money is being spent on roads and schools these days to the tune of hundreds of millions of dollars funded by Joe taxpayer to extend all these city services further out. Only recently, has the balance of power shifted (thanks to Meeker and his allies) to bring a few more projects downtown or nearby with F-St, the RCC, and Hillsborough St (pending). People who have lived ITB and a growing number living downtown are saying why are you spending all that money on the fringes when you could be spending money redesigning Moore Square, repaving downtown streets, burying power lines, hiring more police officers, re-connecting some of the lost grid over Capital, etc. The way I look at it, for every approval of a crappy Briar Creek on the fringes, that means more tax dollars wasted out there that could be spent down here.

[ChiefJoJo]

The Raleigh City Council adopted the budget with a 4.18-cent increase, instead of the 5-cent increase the City Manager had proposed.

The city's release has a bunch more detail on the budget. It appears from the release that raising impact fees allowed the council to lower the tax rate by 0.82 cents. Apparently, the Lightner public safety center and remote operations center (that would allow the sale/RPF of the Devereaux Meadows site north of Peace St) near Capital/440 will be fully funded.

Here's the N&O's story.

[ncwebguy]

I hope the city explores Stevenson's proposed impact fee to tie into the water and sewer system, but I don't think that was reason enough to vote against this year's budget. It would be nice if that leads to a sewer/water rate reduction, or at least no more increases for a while.

Koopman's argument against making up for 15 years of neglect is odd. If we wait till the economy improves, it will cause problems in the short term, and cost even more, which will be a hard pill to swallow even in "good times". And it begs the question of just *how* good does the economy have to be before the city starts making up for sins of the past?

In the city's press release, this is noteworthy, under General Public Improvements -- $1.3 million to fund construction of parking deck retail space that will be leased to private retailers in the downtown core.

Is this the space in the Edison/RBC deck, or maybe the old Convention Center deck at the corner of Cabarrus and Wilmington? It will soften up the "blank wall" currently there and extend the Wilmington Street district south toward Charter Square.

[Jones_]

I couldn't help but do the math on the 4.18 cent tax increase. $104.50 more per year on a 250 grand house. You must be quite the tight wad, or really living on the edge if you can't afford another $8.71 a month on your 1700-1800 dollar a month mortgage. That is two Lattes in coffee math. Per month. Sheesh. Funny how the N&O has to go into the 250k stratosphere to get any noticeable number.....$4.36 a month on your 125k house is, one less whopper combo.

[DB78]

I couldn't help but do the math on the 4.18 cent tax increase. $104.50 more per year on a 250 grand house. You must be quite the tight wad, or really living on the edge if you can't afford another $8.71 a month on your 1700-1800 dollar a month mortgage. That is two Lattes in coffee math. Per month. Sheesh. Funny how the N&O has to go into the 250k stratosphere to get any noticeable number.....$4.36 a month on your 125k house is, one less whopper combo.

[ChiefJoJo]

$250K is just slightly higher than the average home price in Raleigh. $104 per year isn't jack squat really when factoring in inflation and wage increases, so this is no big deal in that respect. I think the big picture that people complain about is that there may continually be property tax hikes for one reason or another. $104 this year, a few hundred more another year when another school bond is up for vote, a few hundred another year when _________, ________, and so on.

Funny thing is, the State of NC had a huge surplus last year. Maybe the State could have decided to not automatically spend that amount and the theme of this thread wouldn't even be necessary.

[ChiefJoJo]

This bit of news shows just how far the Realtor's association in NC has gone to try to stop impact fees and transfer taxes. The NC Association of Realtors is trying to raise $10M for their various campaigns to stop the transfer tax from passing (or to have it repealed). Instead of having their members donate funds for the cause, the NCAR is requiring that every member pay a $50 fee towards this effort, and those that don't pay are threatened with elimination of access to the MLS. Kind of extreme, if you ask me, and quite a few realtors are revolting.

[Gard]

This bit of news shows just how far the Realtor's association in NC has gone to try to stop impact fees and transfer taxes. The NC Association of Realtors is trying to raise $10M for their various campaigns to stop the transfer tax from passing (or to have it repealed). Instead of having their members donate funds for the cause, the NCAR is requiring that every member pay a $50 fee towards this effort, and those that don't pay are threatened with elimination of access to the MLS. Kind of extreme, if you ask me, and quite a few realtors are revolting.

[JeffC]

Iinteresting article in the latest issue (Fall 2008) of Popular Government (the UNC School of Government's magazine) about estimated revenue to counties from the land transfer tax and the 1/4 cent sales tax options given to counties by the General Assembly in 2007.

With the recent decline in the real estate market, the Land Transfer tax is proving to be highly volatile, which is something counties don't want in forecasting their revenues for future years. The worst counties, as you might guess, are otherwise undeveloped counties at the coast and in the mountains where significant amounts of vacation property is located. The article includes a chart estimating revenues from each tax option for 2006-07 and 2005-06. Counties like New Hanover, Mitchell, Swain, Currituck, Carteret, and Brunswick all showed greater than 30% declines in revenue from the land transfer option.

On the other hand, more prosperous counties with broad tax bases didn't show this effect: Wake was actually up 5% over those two years, and Buncombe, Mecklenberg, along with suburban counties like Harnett, Franklin and Union showed increases also.

On the other hand, the article notes, sales tax also tracks the economy, and has less growth potential in the long term (8-10 years) than a land transfer tax, although it is unclear whether the land transfer tax projections are based on the sort of housing price increase we saw over the last 10-15 years and which has now proven to be unsustainable...

The article is online at this location

[cthayes75]

16 counties placed various tax increases on the ballot in November (some 1/4 cent sales, some land transfer tax, and Durham's meal tax).

All 16 lost.

[ChiefJoJo]

The counties that placed the transfer tax on the ballot in fall of 2007 were completely unprepared to allow time to educate their citizen on the issue and permit proponents time to mount a campaign that had a fighting chance vs. the $10M real estate & homebuilder warchest. Hardly a fair fight. Certainly the transfer tax is more volitile than other revenue streams, but to be fair, nothing is doing well at the moment. Perhaps the transfer tax is an option that the public isn't willing to support at this time. But I would still argue that it is a good tool in the toolbox to more directly target the causes of growth, that is the individuals and firms that by and sell buildings and land, and reduces the burden of the primary revenue stream of local govts in NC, the property tax. The realtors misled the public, telling them it was a "home tax," leaving out the fact that it's only imposed if you sell your home or land, and also that in places where it is already used (including in NE NC, where there's already a 1% tax), many home buyers simply pay the fee for the sellers in the asking price. Plus, the imposition of a transfer tax has not doomed the real estate market... I supposed that happened for other more complex reasons that we are all realizing now.

[ncwebguy]

Now the home builders and real estate agents want everyone else to pay for growth. Not only do they not want to pay for the increased burden on services their product creates, now they are asking every tax payer to subsidize that product. If they succeed and get the $22k per house they are asking for, how will existing home sales be able to compete other than cut that much (if not more) off the asking price.

If that isn't a "home tax", I don't know what is. And homeowners get the double whammy by having their taxes used to pad profits for the builders and agents. Interest rates are falling, yet the only people who can qualify for a loan already own a house, so it is not expanding the market, just reshuffling it.