1991-05-28 Special Meeting
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MINUTES OF SPECIAL MEETING FOR DISCUSSION OF LAND TRANSFER TAX,
MAY 28, 1991
ASSEMBLY
The New Hanover County Board of Commissioners met in Special
Session on Tuesday, May 28, 1991, at 7:00 o'clock P.M. in the
First Floor Assembly Room of the County Administration Building,
320 Chestnut Street, Wilmington, N. C.
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Members present were: Commissioners Jonathan Barfield, Sr.;
Robert G. Greer; William H. Sutton; Vice-Chairman E. L. Mathews,
Jr.; Chairman Fred Retchin; County Attorney, Robert W. Pope;
County Manager, Allen O'Neal; Clerk to the Board, Lucie F.
Harrell.
PLEDGE OF ALLEGIANCE
Chairman Retchin led the audience in the Pledge of
Allegiance to the Flag.
Chairman Retchin called the meeting to order and welcomed
all persons present. He stated the meeting was changed due to a
malfunctioning air conditioner in the Courthouse.
ADOPTION OF PROCLAMATION DECLARING MAY 29, 1991, AS "GI NURSING
DAY. IN NEW HANOVER COUNTY
Before beginning the Special Session, Chairman Retchin
requested adoption of a proclamation declaring May A9, 1991, as
"GI Nursing Day" in New Hanover County.
Motion: Chairman Retchin read the proclamation and MOVED,
SECONDED by Commissioner Sutton to adopt the proclamation as
presented. Upon vote, the MOTION CARRIED UNANIMOUSLY.
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A copy of the proclamation is hereby incorporated as a part
of the minutes and is contained in Exhibit Book XIX, Page 7. <
Chairman Retchin stated the purpose of the Special Meeting
is to discuss the possible implementation of a land transfer tax.
Background information was presented on local bills presented to
the local legislative delegation in an effort to find additional
revenue sources other than the ad valorem property tax. He
requested the County Staff to present an overview of the proposed
land transfer tax, after which public comments will be received.
Chairman Retchin introduced Mr. Bill Wheeler, a realtor from
Dare County, and stated he has graciously volunteered to speak
later in the meeting with reference to the success of the land
transfer tax in Dare County.
OVERVIEW OF PROPOSED LAND TRANSFER TAX
Assistant County Manager, Dave Weaver, stated
implementation of a land transfer tax would generate
approximately $3 million of revenue per year. The proposed
legislation specifically states that monies collected from the
tax will have to be used in New Hanover County for expansion of
the sewer system and the possible purchase of water systems.
Passage of this local bill by the General Assembly does not mean
that the tax will be imposed; however, it will allow the County
to consider imposing a land transfer tax if so desired.
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The following major items were presented and discussed:
1. Need for Expansion of the Sewer System:
- Declining availability of land suitable for
conventional septic tanks. Emphasis was placed
on the shortage of buildable land and the need
to reduce the negative impact of septic tanks
on drinking well water throughout the county.
2. Need to provide sewer to accommodate affordable
housing:
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I MINUTES
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OF SPECIAL MEETING, MAY 28, 1991
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- Due to the shortage of buildable land, the
cost of land has increased which negatively
impacts on affordable housing.
Providing sewer service to the unincorpor-
ated areas of the county will provide more
buildable land, reduce the size of lots due
to septic tanks not being required and in
the long term reduce affordable housing.
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- Providing sewer service to the unincorpor-
ated areas of the county will also control
the location and rate of growth.
Funding Mechanism for Financing the Sewer System
Implementation of the land transfer tax is a method of
financing the expansion of the sewer system. At the current time
bonds, user fees, and 1/2 cent sales tax monies have been
utilized to construct the sewer system to date. In order to
continue construction, more revenues must be received than
expenditures. Currently, revenue is generated in the amount of
$5.6 million dollars with expenditures of $4.2 million dollars
for a balance of $1.4 million dollars which is utilized for
operating expenses. without additional revenue the sewer system
cannot be completed. The land transfer tax would be an ideal
method for financing the completion of this project.
Mechanics of the Land Transfer Tax
The collection of the land transfer tax would be handled by
the New Hanover County Tax Department before recording could
occur. The 1% land transfer tax would apply to all instruments
conveying certain interests in real property with the following
exclusions: (1) sales in government; (2) leases with a 10-year
term or less; (3) real estate transfers with no consideration of
pay (4) land transfers that would occur by operation of law or a
will; and (5) foreclosure transactions. Appeals for implementing
the tax can be presented to the Board of County Commissioners.
The distribution of the monies collected will be to New Hanover
County and the municipalities based on the proportions of the ad
valorem tax base. Municipalities can use the revenue generated
for any type of capital project; however, New Hanover County must
use the revenue for water and sewer projects for the first ten
years; thereafter, the monies can be used by the county for any
type of capital project. The land transfer tax can be repealed
by the Board of County Commissioners at any time.
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Mr. Bill Wheeler, a realtor from Dare County, commented on
the l% land transfer tax implemented in 1985. At that time, he
was president of the Board of Realtors and was violently opposed
to the implementation of a 3% land transfer tax due to the
negative impact on the real estate market. The Dare County Board
of Commissioners imposed a building moratorium since the central
water system could not be expanded without additional revenue.
After discussion with the Board of Real tors and Home Builders
Association, a compromise was reached for implementation of a 1%
land . transfer tax. In the beginning, some complications were
experienced; however, after four months, the real estate market
adjusted with little impact and as the County expanded the water
system new areas were opened for development and the real estate
market soared. The land transfer tax proved to be quite
beneficial to realtors and home builders as well to the County
coffers with the following revenues generated: (1) in 1986,
$2,600,000; in 1987, $2,500,000; 1988, $3,467,000; 1989,
$3,200,000; and 1990, $2,300,000. Mr. Wheeler stated due to
imposing the land transfer tax more property was developed and
sold due to funds being available to complete the central water
system.
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PUBLIC COMMENTS
Chairman Retchin asked if anyone from the general public
would like to comment.
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MINUTES OF SPECIAL MEETING, MAY 28, 1991
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The following persons commented strongly opposing
implementation of a land transfer tax and expressing concern for
the negative impact of this tax on the real estate market, home
builders, and affordable housing as well as having no assurance
that the percentage of the tax will not be increased in the
future. It was generally agreed that the sewer system should be
completed; however, another revenue source should be identified
to complete the system. A majority of persons present were in
favor of raising the ad valorem property tax.
Mr. Kenneth Parker
Mr. Nick Nicolaysen
Mr. Carlton Fisher
Mr. Bobby Harrelson
Mr. Jim Sandy
Mr. Frank Link, Kure Beach Councilman
Mr. Slim Wallace
Mr. Nello Filippini
Chairman Retchin expressed appreciation to the persons
present for their comments and challenged them to work with the
Board of County Commissioners in identifying an acceptable method
of generating revenue to complete the sewer system.
Motion: After further discussion, commissioner Sutton MOVED,
SECONDED by Commissioner Greer to discontinue the proposal to
seek authority to implement a land transfer tax. Upon vote, the
MOTION CARRIED UNANIMOUSLY.
ADJOURNMENT
Motion: Commissioner Barfield MOVED, SECONDED by Commissioner
Greer to adjourn. Upon vote, the MOTION CARRIED UNANIMOUSLY.
Chairman Retchin adjourned the meeting at 8:59 o'clock P.M.
~~ct~~d,
~~F. Harrell
Clerk to the Board
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