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1997-10-16 Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERS EMERGENCY MEETING, OCTOBER 16,1997 BOOK 26 PAGE 158 ASSEMBLY The New Hanover County Board of Commissioners called an Emergency Session on Thursday, October 16, 1997, at 9:00 AM. in the New Hanover County Administration Building, Room 501, 320 Chestnut Street, Wilmington, North Carolina. Members present were: Commissioners Buzz Birzenieks; Ted Davis, Jr.; Charles R. Howell; Vice-Chairman William A Caster; Chairman Robert G. Greer; County Manager, Allen O'Neal; County Attorney, Wanda M. Copley; and Clerk to the Board, Lucie F. Harrell Chairman Greer called the Emergency Session to order. He advised the purpose of the meeting was to discuss and inform the public of the negative impacts of annexation by the City of Wilmington on citizens living in the unincorporated County, Town of Carolina Beach, Town ofKure Beach, Town ofWrightsville Beach, and New Hanover County Schools. A financial loss will be incurred in distribution of the sales tax. The sales tax revenue is distributed on the amount of the ad valorem property tax levy. As the City extends its boundary, more property taxes will be collected within the city limits of Wilmington leaving less sales tax revenue to be distributed to the unincorporated county and beach communities. Since New Hanover County is responsible for providing space to the schools, courts, and jail as well as providing county-wide library services, inspections and operation of the Department of Social Services, Department of Health, etc., the County will have to continue to provide these services with less revenue received from the sales tax as a result of annexation. Commissioner Birzenieks objected to only one side of annexation being presented to the public and stated the responsibilities of the County will remain the same; however, revenue will decrease. When the budgetary process begins, a tax increase will probably have to be considered to offset the loss of revenue. The following chart was presented on the estimated loss sales tax after annexation by the City of Wilmington. The figures are based upon the assumption that in Phase I, the Ad Valorem taxes collected by the City will increase by $6,153,800 and by $3,562,897 in Phase II. Phase I Phase II Phase I & II New Hanover County Fire Districts Schools Carolina Beach Kure Beach Wrightsville Beach $1,499,089 $ 894,651 $2,273,658 39,426 23,529 59,797 327,058 195,187 496,047 50,569 30,179 76,697 12,412 7,407 18,825 53,796 32,106 81,593 Total Estimated Loss $1,982,350 $1, 183,059 $3,006,617 Phase I and II will require a three-cent tax increase in County taxes to cover the loss to the County and School District. Phase II will require more than a one-cent tax increase. Phase II will increase the taxes for the beach communities by one-half cent. Discussion followed on the loss of revenue to the beach communities. Commissioner Davis advised the beach communities would not suffer a loss of revenue if the County did not increase the property tax rate to offset the loss of revenue from annexation. Budget Director, Cam Griffin, advised the beach communities would suffer a loss of revenue from the sales tax distribution regardless of whether the County increased the property tax. As the City's revenue from the sales tax increases because of more ad valorem property taxes being collected from the annexed areas, the portion distributed to the County and beach municipalities will decrease. Vice-Chairman Caster expressed concern for the City annexing such a large portion of land at one time and stated unfortunately this action appears to be only for monetary purposes. If a systematic annexation had occurred where people were in need of water and sewer services, over NEW HANOVER COUNTY BOARD OF COMMISSIONERS EMERGENCY MEETING, OCTOBER 16,1997 BOOK 26 PAGE 159 a period of time, annexation would be acceptable. He commented on the video prepared by the City on annexation and stated it was cleverly produced. As a citizen being annexed without any need for additional services, he feels he should have a choice and not be forced into annexation of this type. Discussion was held on the draft resolution that was prepared to oppose the Phase II annexation by the City of Wilmington. Vice-Chairman Caster reported he felt the Board of County Commissioners had made every effort possible to encourage the N. C. General Assembly to amend annexation laws; however, this action did not occur during the last session. Also, the Commissioners have been involved in trying to combine the City/County water and sewer services under one entity. Even though these efforts have not succeeded, adoption of the proposed resolution would be of no benefit. Commissioner Howell agreed and stated the lack of cooperation between the City and County had to improve. Concern was expressed for the manner in which the joint City/County Utilities Committee had been unable to accomplish its goal. He recommended meeting with the City Council to discuss this issue. Commissioner Davis advised the Emergency Session was called to inform the citizens and taxpayers what will happen as a result of annexation. The citizens should be told that New Hanover County will have to raise the property tax to offset the loss of revenue. The City of Wilmington has the right by law to annex. Since, the Board of County Commissioners adopted a resolution on January 6, 1997, requesting the North Carolina General Assembly to amend the annexation laws, he could not see any benefit in adopting another resolution. He stressed the importance of strengthening the relationship between the City and County and stated each board must realize that cooperative goals cannot be accomplished if each government feels that an issue should be done their way. As a lawyer, the best settlement of a case is when both sides walk away unhappy because this means that both sides have given up enough to reach a mutually acceptable solution. He advised he was not interested in taking action that would create worse relations with the City; however, the City should be willing to fulfill its obligation on the unification of water and sewer services. Vice-Chairman Caster agreed with Commissioner Davis and stated he desired to improve the relationship between the City and County; however, he felt the citizens had not been well informed about the financial losses that will be incurred by annexation. Discussion followed on the petition opposing annexation filed by the residents living in Phase II. County Attorney Copley advised she spoke with Gary Shipman, the attorney representing the residents, and was informed that New Hanover County did not have "standing", which is a legal requirement that has to be met before the County can join the lawsuit. Adoption of the draft resolution would only be a statement opposing annexation of Phase II. Chairman Greer read the resolutions adopted by the Board of County Commissioners on October 7, 1996, and by the Wilmington City Council on October 15, 1996, which state that with the increasingly urban nature ofN ew Hanover County, unified City and County water and sewer services could maximize efficiencies and minimize costs. Both governments agreed to establish a committee comprised of two City Councilmembers and two County Commissioners to develop a specific plan of uniting all City and County water and sewer services, as is authorized by the North Carolina General Statutes. An interim report by the committee was to be presented to both governing bodies on or before May 1, 1997. The organization was to be instituted on or before December 1, 1997. Chairman Greer advised that Councilmember Laura Padgett, Councilmember Hamilton Hicks, County Commissioner Charlie Howell, and Vice-Chairman Bill Caster had been meeting since the adoption of the resolutions to develop a plan for uniting City and County water and sewer services; however, a plan has not been developed. A letter was written by the Board to Mayor Betz and members of the City Council offering to hold a joint meeting to discuss this issue. Within two days, a copy of a letter was received in the Governing Body office from Councilmember Padgett and Councilmember Hicks to the Mayor and City Council stating the NEW HANOVER COUNTY BOARD OF COMMISSIONERS EMERGENCY MEETING, OCTOBER 16,1997 BOOK 26 PAGE 160 County felt the efforts of the City/County Utilities Committee should be abandoned in favor of the immediate creation of an independent entity or authority that would own and operate both utility systems. Chairman Greer strongly objected to the letter inferring that New Hanover County wanted to abandon the joint Utilities Committee, which was not a true statement. The letter further stated that a consultant should be hired to study the issue. He advised this was another example of the City not cooperating with the County in trying to accomplish a goal. In October 1996, the City felt a unified water and sewer system would be beneficial. In October 1997, the City does not want to pursue the goal. He stressed the importance of the City and County working together for the benefit of the citizens. He stated it would have been better if the City Council had simply said they were not interested in combining the water and sewer services at the beginning of the process. Vice-Chairman Caster recommended sitting down with the entire City Council to discuss this Issue. Mr. Jack White, a citizen opposed to annexation, reported the City Council adopted a resolution upon a second reading on September 16, 1997, to proceed with annexation of Phase II. Residents were given 30 days to petition against the annexation. After discussion with the Clerk of Courts, the deadline for filing a petition is October 16, 1997, at 5:00 P.M. The proposed resolution is not strong enough; however, the Board can apply for an extension of time to file a petition opposing annexation by 5:00 P.M. today. Mr. White advised he filed a petition regarding the constitutionality of the annexation law in North Carolina because this law has not been proven to be constitutional. He filed the petition under the equal protection law for residents living in the areas to be annexed that are being denied their equal rights. The Board was urged to apply for an extension of time, particularly when New Hanover County will suffer a loss in revenue of $1. 5 million during the first year of annexation and $3 million during the second year. Discussion followed on the two-cent shortfall for the upcoming budget because of annexation and the need to amend the State annexation law. Chairman Greer informed the Board that letters had been written to the local legislators urging them to change the annexation laws without any success. He asked if the Board would like to adopt the draft resolution opposing Phase II annexation. Consensus: After discussing the fact that no benefit would be gained from adopting the resolution, it was the consensus of the Board not to adopt the resolution and meet with the Wilmington City Council to discuss the consolidation of water and sewer utilities. ADJOURNMENT Chairman Greer commented on the need to better inform the public about the negative impacts of annexation and stated hopefully some of the figures presented today would benefit the citizens. He stressed the importance of providing services in the most cost effective manner and stated this will require a cooperative effort between the City and County. The Emergency Session was adjourned at 9:55 AM. Respectfully submitted, Lucie F. Harrell Clerk to the Board