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Growth taxes vs. 1% land transfer tax

By Mike Cross
Posted Sunday, April 10, 2005

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Chatham County faces a very unique and troublesome growth situation! We’re not talking about a town within a county growing itself at a responsible rate while providing infrastructure, jobs and services for it’s citizens. We’re talking about an ill-prepared county within the “Greater Triangle” about to be run over by residential development. No one knows exactly what our future holds, but it is most important that we be allowed options to generate the revenue necessary to address this situation and to do the best possible job for our current citizens, newcomers, and the Triangle…without taxing ourselves out!

To understand what we really face, we must look at our situation/reality with a “Regional Perspective”.

The vast majority of our development is coming in the form of “bedroom” and “retirement” communities.

We have Chapel Hill, Durham, RTP, Raleigh and Cary to our North and East along the I-40 corridor-universities, hospitals, research institutions, probably more PhD’s than anywhere in this country, over 200 Nobel Prize recipients, opera, theatre, museums, professional sports-all the things that put civilizations in the history books…short of a war. Property in these areas has outpriced itself for most residential development!

Now we have beautiful Chatham County stretching along their borders with reasonable property cost and relatively low taxes.

Add retirees from everywhere who are looking for such a mecca--a rural setting close to just about everything a person could possibly need or even want. Chatham County is the logical place for thousands of newcomers who desire to establish residency in the “Greater Triangle”!

This should not be just another problem for Chatham County alone! This has already become a regional problem!

The vast majority of our development is coming in the form of “bedroom” and “retirement” communities located in the N.E. quadrant as a result of proximity and good jobs related to Orange, Durham (RTP) and Wake Counties. It will be years before this residential growth will provide anything close to a tax base. This influx of residential development is already placing extreme pressures on our ability to provide required services and facilities. We are not recruiting this growth--it is driven by the desires of investors, developers, builders and most of all BUYERS!

Residential growth has nothing to do with and in most cases opposes the desires of the area resident citizens. But we will ALL have to pay for this!

The North Carolina Realtors and Home Builders Associations have successfully blocked such legislative efforts for well over a decade. They are proud of their success…reference their website and literature.

I do not believe their opposition to be wise in this particular case! WE must address this growth to achieve a community that is beneficial to our citizens, our home builder industry and our “Greater Triangle”!

Chatham County is a rural community with the #1 revenue generator being the Poultry Industry supported heavily by Latino immigrant residents. We reportedly have a median income of $73,000., because we are ranked with the Metro Area comprised of Raleigh, Durham and Chapel Hill. A more realistic number for Chatham County median income is $41,000. Most of us probably couldn’t qualify for the loan even if we wanted one of these fine homes. This market is certainly not relying on current citizens as buyers…but our property taxes are already increasing and will skyrocket without the 1% Land Transfer Tax.

Developers, some more than others, are portraying amenities such as schools, public parks, libraries, fire stations/EMS and law enforcement out-posts to promote sales. I don’t believe our incoming citizens are looking for false promises. They are looking for the “complete package”—a high standard of living—they can afford it and they will not hesitate to purchase because of a 1% Land Transfer Tax.

We currently have + 22 residential developments in various stages of proposal-approval and build out. This represents over 9,000 homes.

Our Board of Education has presented a request for 103 million: three new schools, additions, renovations and upgrades to existing schools.

The BOE further stated this does not include Powell Place, River Oaks, Booth Mountain or Williams Pond. They represent + 3,000 of the 9,000 homes to be built. We will need additional schools (other than those already requested) in the very near future!

We have 17 million in debt coming up on water projects.

We currently have General Capital improvement projects at 33 million.

That is 153 million dollars in need! Our borrowing capacity is currently limited to 65 million and that is already obligated!

We need your support for the 1% Land Transfer Tax!

Our General Assembly currently allows the 1% LTT option in seven counties:

* Currituck
* Dare
* Camden
* Chowan
* Pasquotank
* Perquimans
* Washington

This tax revenue is restricted to capital expenditures such as sewage systems, solid waste disposal, beach replacement, schools, county-operated buildings and related equipment as well as retiring debt incurred for these purposes.

The tax would apply to:

* ALL REAL Property sales (regardless of profit or loss)
* Exchange of property (whether exchange is for money, real estate, personal property, or any other consideration.
* Deeds from non-profit or religious organizations.
* Leases (or a memorandum of lease) that are for a term of more than 10 years or have an option to renew the lease beyond 10 years.
* Leases (or a memorandum of lease) that are for substantially the same property and parties of a previous lease(s), and when the term of the new lease added to the term of the old lease(s) exceeds 10 years.
* Timber deeds


The Tax would not apply to:

* Deeds of gift
* Foreclosure deeds or deeds in lieu of foreclosure to the mortgage holder
* Deeds from Local, State, or Federal Government.
* Certain leases with a term of less than 10 years (see above)
* Transfer in which no consideration is paid or due (consideration is an
inducement, something of value given in return for a performance or a promise of performance by another)
* Transfers by operation of law, by will, by intestacy, merger or
consolidation.


A 1% Land Transfer Fee will…

* enable us to maintain a low property tax rate.
* generate the revenue to support the staff-facilities-equipment-services and infrastructure requirements we must achieve to manage the growth of Chatham County.
* negate our need for a school impact fee.
* create an “industry desired” level playing field for developers and builders.

Growth is here and coming fast…we are responsible for the end results!

We must not put the financial burden of growth on the backs of our current citizens through increased taxes!

 
Related info:
Mike Cross' Weblog
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Growth taxes vs. 1% land transfer tax
Chatham County Commisioner Mike Cross shares his viewpoints with citizens on his weblog.


Related info:
Mike Cross' Weblog
 
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