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Update on the 1% Land Transfer Fee proposal

By Mike Cross
Posted Sunday, February 6, 2005

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The NC General Assembly currently allows the 1% Land Transfer Fee (LTF) in seven counties: Currituck, Dare, Camden, Chowan, Pasquotank, Perquimans, and 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 this purposes.

The tax would apply to:

Without the 1% LTF -- the money to provide simply ain't there!

* 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 a 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.

While we certainly support the efforts of the NC Association of County Commissioners and the Triangle J Council of Governments for ALL counties to be afforded this revenue option, Chatham County is and will continue to face a unique and extremely heavy residential growth period as never experienced by any county in North Carolina.

The vast majority of our development is coming in the form of "bedroom" and "retirement" communities located in the Northeastern quadrant of the county as a result of proximity to good jobs in Orange, Durham (RTP) and Wake counties. 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 buyers... It 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 it!

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

Chatham County reportedly has 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 will skyrocket!

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 and approvals. I don't believe our incoming citizens are looking for false promises. They are looking for the "complete package": a high standard of living, and they can afford it and they will not hesitate to purchase because of a 1% LTF tax.

Without the 1% LTF -- the money to provide simply ain't there!

Our current annual debt service payments are $3.3 million. Our current needs include 3 schools, upgrades to existing schools, 2 public libraries, community college expansion, new judicial center, industrial park, government facilities, water plant, sewage treatment plant, affordable housing, etc. -- roughly $500 million dollars!

This would represent annual debt service payments of approximately $42 million. Our total current county budget is approximately $53 million -- that won't work!

In calendar year 2004, Chatham County executed $429,817,760.00 in real property transfers. Under the 1% LTF, that represents $4.3 million in revenue for capital improvements and/or debt service, which would allow us to double the county debt for these needed improvements with no impact on the property tax paid by current citizens. Also, this number will increase with county growth every year because it's based on the actual dollar value of transfers, so there is no subjective valuation and it doesn't require waiting for a quadrennial reassessment to levy the fee on current market values. It won't be enough to pay for everything, but it would allow us to move forward on our pressing capital needs.

The citizens of Chatham County must develop a tax base; I'd prefer that don't have to generate that revenue from each other in the form of increased property taxes!

 
Related info:
Mike Cross' Weblog
e-mail E-mail this page
print Printer-friendly page
 
 
 
Update on the 1% Land Transfer Fee proposal
Chatham County Commisioner Mike Cross shares his viewpoints with citizens on his weblog.


Related info:
Mike Cross' Weblog
 
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