Wednesday, September 12, 2012

N.C. court to counties: 'Raise taxes, already'

In August,the N.C. Supreme Court threw out Cabarrus County's adequate public facility ordinance. Here's the Charlotte Observer article on the ruling: "Ruling favors developers." You can download a copy of the ruling here, courtesy of Joe Padilla at the Real Estate and Building Industry Coalition (REBIC). 

The ruling is of interest, of course, but as a practical matter APFOs, as they are known, were already virtually dead in North Carolina, as Mae Israel wrote in June for the UNC Charlotte website I run, (See "With ordinances dead or in limbo, planners ponder next steps.")

Under APFOs,  the local government sometimes assessed a fee on development if, for instance, local schools were already overcrowded and the county did not have the money to build new ones, or the planned new schools weren't yet built. Or the developers would delay building until new schools opened.

Since the ordinances were invented as a way to help counties (and a few municipalities) find some money to pay for the schools, parks, etc., the question arises: How does a fast-growing county like Cabarrus pay for the services its thousands of new residents require? A number of studies have shown that typical suburban-style large-lot subdivisions don't generally bring in enough property tax revenue to pay for the services they use. (More expensive houses, obviously, produce more property tax revenue, and at some price point the housing will start to pay for itself.)

 It's unusual to live in a state where developers essentially pay no impact fees. Whether that's fair or not depends, of course, on what "fair" is. Typically the cost of building, which would include impact fees, is mostly passed on to buyers, although sometimes it can work backwards and affect what developers are willing to pay for the land they buy instead of raising the price point of the houses.

But in opposing both impact fees and the adequate facility ordinances, the state's Home Builders Association and related lobby groups say it's more fair to spread the costs around the community rather than imposing them directly on developers and buyers of new houses. The Charlotte Observer article quotes Gary Embler, past president of the Cabarrus County Building Industry Association, who "praised the ruling, saying: 'Public education is the responsibility of the community at large, not just those building new homes.' "

The community at large? That would be the general county taxpayers.

The question of which is more fair impact fees for some or higher taxes for all a meaty tax policy question. But no one should be surprised if this ruling means property taxes will rise to pay to build more schools, maintain more streets and provide more police and fire services. Did the high court just tell counties to raise taxes and stop whining?


Anonymous said...

There is a cheaper alternative to impact fees or higher taxes-- stop approving so much cheap development!

Of course, that would require politicians to grow a backbone, refuse donations, and actually insist on higher quality from developers.

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