Golden years, platinum prices

At last Wednesday’s Town Council meeting, viewers received a tutorial on municipal bonds, tax-exempt vs. Build America Bonds.

At last night’s meeting, we learned about continuing care communities. And for those who had not been heretofore aware, it was a real eye-opener to learn how much it can cost to live out one’s golden years.

Last night Carol Woods made a concept plan review presentation to lay out its plans for an expansion to Building 1, an apartment building on the 61-building campus, that would add 18 apartments, recreation space and an art studio. By slipping in a lower level on the same grade as the parking lot, the planned addition would eliminate what is now something of a climb from the parking lot to Building 1.

Overall, the council members’ initial reactions seemed to be approving. They liked that Carol Woods was building up not out, reducing sprawl, as it were, and including green features.

Matt Czajkowski brought up the idea of affordability. If Carol Woods were not a nonprofit, regulations would require a certain number of the 18 new units to be affordable.

Pat Sprigg, CEO of Carol Woods, explained that its residents aren’t buying real estate, they are buying a contract for care. The larger, more expensive units subsidize the smaller, less expensive ones. And since it opened in 1979, Carol Woods has never kicked out a resident who has outlived his or her assets.

For those who are not already familiar with the cost of aging, either through experiences with parents or through firsthand experiences in retirement, the figures that Sprigg bandied about were sobering. Forget about trying to live on Social Security – assuming that is even available by the time many of us retire. Each of us is going to need a nest egg of several hundred thousand dollars.

Donna Bell ended the meeting by underscoring the importance of Chapel Hill having pockets of affordable housing for seniors to be able to control their costs. But housing is only one factor. The main expense of aging comes in the form of medical and skilled nursing care, the extra help we will need as our bodies break down and we can’t do even basic daily living tasks. And don’t expect those costs to go down, even with President Obama’s health-care reform.
– Nancy Oates

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  1. Steve Brown

     /  September 21, 2010

    If I am not mistaken, Carol Woods does not pay any property tax on their rather large and beautiful site. Now that is interesting, isn’t it?

  2. Fred Black

     /  September 21, 2010

    Interesting? Carol Woods is classified by the Internal Revenue Service as a 501(c)(3) corporation. This not-for-profit classification exempts the organization from corporate income taxes and allows Carol Woods to receive charitable contributions that may be tax deductible by the donor. Under IRS regulations no earnings of the Corporation may be used for the benefit of nor distributed to corporate directors, officers, or other individuals. All excess funds remain with Carol Woods for use in its programs and services; and for on-going financial stability.

    Their model is replicated in other places in the US. Local retirement communities use different models, with each having advantages and disadvantages for their residents.

  3. Ed Harrison

     /  September 21, 2010

    At the end of 2007 and 2008 (based on letters I retained on my hard drive) Carol Woods sent the Town checks in the amount 0f 100,000. I can’t locate any such letter for 2009. One letter noted that there were two statutes which exempted them from paying property taxes. Another retirement village in Chapel Hill, the Cedars, does not come under these statutes, and declined to pay several years of property taxes to Durham County. (Contrary to what many believe, towns and cities do not collect tax in NC). Durham County sued and won in court more than once. The one-time payment in 2008 was so large that it lowered the townwide Chapel Hill 2009-2010 tax rate by almost 2 cents on the hundred.

  4. Steve Brown

     /  September 22, 2010

    So, they don’t pay property taxes, on what is a really big piece of land with a lot of buildings on it…..hmmm.

    I wonder how much the tax would be if they were required to pay.

  5. Ed Harrison

     /  September 22, 2010

    In regard to the Cedars, Bob Woodruff (developer of that community) called me to correct my memory. The Cedars did not ever participate in a lawsuit. It appealed the property’s appraisal by Durham County (for a number of years) all the way to the relevant state commission. The result was that the Cedars did have to pay back taxes to Durham County. That amount of back tax was of enough magnitude that, as I said, it lowered the overall Chapel Hill municipal tax rate by almost 2 cents on the dollar.
    As Fred points out, “…retirement communities use different models, with each having advantages and disadvantages for their residents.” The fact that the Cedars has an uncommon tax status (for a development applicant to Chapel Hill) did not appear to play any role in the Council’s analysis of its excellent concept plan on Monday night.

  6. Ed Harrison

     /  September 22, 2010

    Quick correction: Carol Woods, not the Cedars, had the concept plan on Monday night.

  7. Steve Brown

     /  September 22, 2010

    Well, Mr. Black, they may be non- profit but there is no limit on what employees are paid, correct? So the president could pay himself millions and the place could still be a non profit. This is often lost on progressives that love non-profits for some reason.

    And here is the data on the Carol Woods site, from Orange County GIS

    Building Value: $37,061,611.00
    Land (100 Ac): $ 8,987,623.00

    Total: $46,049,234

    This means at $0.60 per 100 which I believe is roughly the Chapel Hill property tax rate, Carol Woods is avoiding paying $276,295.00 in property taxes. Seems like they are good businespeople to get that sort of deal and still get “free” taxpayer supported buses right to their door.
    Kudos to Carol Woods for avoiding these taxes!

  8. Geoff Green

     /  September 22, 2010


    Yes, the organization could pay the president or other employees millions. As a matter of fact, another non-profit entity in Chapel Hill does do that. That’s why organizations are required to file IRS form 990, so donors and others can verify that they’re not abusing the non-profit status.

  9. Fred Black

     /  September 22, 2010

    Ed – for the sake of accuracy, it was the HOMEOWNERS, not the Cedars who appealed the appraised value of Cedars homes because the county included the 10% Membership Fee, which is non-transferrable upon the sale of the home and owners can retain the benefits of membership even after they sell their home. The county consolidated the appeals. After a hearing, The Board of Adjustment for Durham County rejected the appeals. The decision was appealed to the North Carolina Property Tax Commission and it found in favor of the county. Its decision could have been appealed to the courts but the owners decided not to appeal.

    The county said that it could not use the taxes paid on property under appeal and told our owners that they were not required to pay the taxes until the matter was settled. A few Members chose to not pay the taxes until the matter was settled, some paid 90% and most paid all. Any taxes paid on homes under appeal were put in escrow by the county until the matter was settled. That’s why the number was large.

    Mr. Brown, take up your issue with the Carol Woods board, the Town, the State of North Carolina and the IRS. When you say “avoid,” you sound like you are challenging the entire concept of non-profits exempt from taxes. How about UNC? Public schools? Churches? What is your real issue?

  10. Steve Brown

     /  September 22, 2010

    My real issue? You don’t get it.

  11. Geoff Green

     /  September 22, 2010


    I think many of us understand the consequences of tax-exempt status and the possibility that it can be abused. I’m not sure what your particular problem is, so I’d love to be educated.

  12. Steve Brown

     /  September 22, 2010

    A question for you Steve: How is it fair that some retirement homes are tax exempt and others are not? This is not, after all a Church we are talking about.

    Do you think some apartment complexes should be tax exempt if they are set up as a “non-profit”? Where does one draw the line?

    Doesn’t anyone see the irony in what is a relatively high-end retirement community using community services (such as the Town’s planning department, buses, etc etc) without paying ANY property taxes to support them?

  13. Fred Black

     /  September 22, 2010

    So Mr. Brown, do the Chapel Hill thing and form a group to get it changed. this has been discussed as long as I have lived here an I have seen no grass root effort to change it yet. Best of luck! BTW, are you aware of any other CCRCs in Chapel Hill that would pay OC taxes?

  14. Steve Brown

     /  September 22, 2010

    Yeah, right Mr. Black.

  15. Ed Harrison

     /  September 22, 2010

    The Chapel Hill municipal tax rate is “roughly” 60 cents on the hundred if being 21.5 percent high is “roughly” accurate. The tax rate has been 49.4/hundred for two fiscal years in a row. This is significantly lower than the municipalities on either side of Chapel Hill.

  16. Steve Brown

     /  September 23, 2010

    Whew! Thanks for the clarification, Mr Harrison- now it is only a measly $230,000 in taxes that they are avoiding.

  17. Steve Brown

     /  September 23, 2010

    Whew! Thanks for the clarification, Mr Harrison- now it is only a measly $230,000 in taxes that they are avoiding.

    Oh, and lower than Carrboro and Who??

  18. Mr. Harrison:

    You are being a little disingenuous regarding the property tax rate. Typically a portion of the overall property taxes collected fund local schools. In Chapel Hill there is that seperate property tax rate of 18.84 cents per hundred, that I am sure you are aware of, specifically for the schools.

    Therefore the TRUE municipal rate for living in Chapel Hill (excluding the OC property tax rate) is 68 cents per $100 and your answer was a 38% UNDERestimate.

    Chapel Hill and Carrboro just choose to seperate out a large share of the school portion of property taxes into a seperate rate while Hillsborough and Mebane do not.

    So Mr. Brown, the actual amount of Chapel Hill specific property taxes avoided is $313,135.

  19. Patricia Sprigg

     /  September 23, 2010

    In this country there is a need for not for profit organizations to fulfill a role that is mission driven and meets the unmet needs of society. Not all not for profits act like a true not for profit and, for that reason, are understandably under scrutiny. Carol Woods is property tax exempt because it is a necessary step in fulfilling its mission. We are exempt not under just one but two statutes and yet we have always believed in giving back to the Chapel Hill community, which we have and continue to do.

    For those who believe Carol Woods serves only the wealthy, look again. Yes, some of our residents are financially very well situated, however not all. In addition, we have kept a large inventory of smaller units that are subsidized by the larger units in order to continue to speak to a larger base of individuals. We are home to librarians, teachers, social workers, homemakers, nurses, public servants – just to name a few. In addition we have offered subsidy to those who can no longer afford the high cost of long term care and in the past 32 years have never asked anyone to leave for inability to pay.

    Service to residents may be the most visible part of our mission, but by no means the full extent. Research, education and community research are all components. We play an important role in aging research. We serve as a training ground for over 200 students a year (workforce shortage in long term care is a critical issue for NC as we continue to be the 3rd largest senior population migration state in the nation). We are currently working to help seniors and older adults with disabilities to receive community service in a seamless and accessible manner. We have been instrumental in identifying and supporting the need for successful transition back to home from the hospital. We have financially support the Senior Centers. We’ve helped the Charles House pay their mortgage off so that they could offer more subsidies to their clients and list continues with numerous supports and programs that are in no way self serving.

    Each year we have made generous monetary gifts to the town, county and schools. Our residents and staff contributed over 50,000 volunteer service hours to the schools, to the hospital and to the community at large. We helped craft the Master Aging Plan and work diligently to help Chapel Hill be an aging friendly community. Yes, it is true that we are property tax exempt, but I dare say that if we only paid taxes, the money paid would not begin to address what we already and continue to contribute.

  20. Fred Black

     /  September 23, 2010

    Thanks for the contribution, Patricia. Some may not know that since 1992, you have been the President and CEO at Carol Woods Retirement Community. This whole idea that you are “avoiding” paying taxes and not understanding the vast range of contributions being made in lieu of taxes is sad. But as I have said before, this is an opinion gifted community and our opinions often have no factual basis.

    Carol Woods is an important institution because of its significant contributions it makes to our community.

  21. Mark Marcoplos

     /  September 23, 2010

    Blue Cross/Blue Shield is a non-profit isn’t it? Do they pay taxes?

  22. Ed Harrison

     /  September 23, 2010

    “Chapel Hill and Carrboro just choose to seperate out a large share of the school portion of property taxes into a seperate rate while Hillsborough and Mebane do not.” This is incorrect. The *Towns* of Chapel Hill and Carrboro had nothing to do with separating out the entire school supplement for the parts of the Towns in the school district. (Not all of Chapel Hill is in that school district, and much of the district’s land area is outside the Towns.) In almost all of NC, municipalities have no relationship to school districts, and this is one of those places. And therefore the governing boards of Carrboro and Chapel Hill have no role in setting a supplemental tax rate as the school district has. That tax is set by the Orange County Commissioners. My wife and I don’t have to pay that school supplement; we pay for the schools in the district where we live (along with residents of the Cedars and elsewhere) through the primary Durham County tax. The only tax in which the Town of Chapel Hill has a role (the total role) in setting is the current
    49.4 cents/hundred.
    I’m glad that Pat Sprigg got a chance to contribute to this thread.

  23. Mr. Harrison:

    Here is the OC property tax rate page.

    Since everybody who lives in OC pays the OC tax rate of 85.8 cents /$100, ignore that. Also ignoring the smallish special rural fire district property taxes of around 5 cents / $100, which are basically only relevant if you are a non-city county resident.

    Bottom line, if you live in Chapel Hill, you will pay 68 cents / $100
    Hillsborough – 62 cents / $100
    Mebane in OC – 47 cents / $100
    Durham in OC – 55 cents / $100

    However, the voters and/or city council decide to seperate that 68 cents / $100 into different little pockets is irrelevant. If you live in Chapel Hill and don’t pay 68 cents / $100 in property taxes, your home will get a tax lien placed on it.

  24. Fred Black

     /  September 24, 2010

    “If you live in Chapel Hill and don’t pay 68 cents / $100 in property taxes, your home will get a tax lien placed on it.”


    The point @WJ, was that everyone who “lives” in Chapel Hill and therefore pays CH taxes does NOT pay the school tax. Some pay taxes to Durham County. The Chapel Hill Town Council does NOT “decide to seperate that 68 cents / $100 into different little pockets.”

    I can’t understand why this is so hard to grasp!

  25. Joe Capowski

     /  September 30, 2010

    WJ, the towns of Chapel Hill and Carrboro have nothing to do with the 18 cent
    school tax. The towns didn’t vote to levy the tax, and the proceeds of the tax
    go to the Chapel Hill Carrboro school system via the county government.
    In NC, schools are county functions, and town governments have nothing
    to do with schools. In Orange county, we have two school systems which are
    sometimes loosely referred to as the county system and the city system, but these
    titles are misleading. Both systems are run by the county.