Conflicting Priorities

Bonnie Hauser, founder of Orange County Voice, shares her insight into factors that affect housing affordability:

Last month the N.C. General Assembly (NCGA) took away Orange County’s authority to collect impact fees on new home construction. It was a low blow by Raleigh politicians but brings new insights into the important topic of affordability.

Thirty years ago, Orange County was authorized to collect impact fees to help fund new school construction. Over 30 years, Orange County collected about $45 million, or $1.5 million a year. The fees were used to help pay loans to build new schools like Northside Elementary.

Last year, the county commissioners started planning a new impact fee structure. They created new, lower fees for small luxury apartments and other units that likely wouldn’t have school-age children, and increased fees for 3-bedroom or larger apartments and houses. Under the new structure, impact fees would have added up to $9,000 to the price of a new home in the Orange County school district; $18,000 for a new home in the Chapel Hill-Carrboro school district.

The fee was based on the size of a home not its price or location. Impact fees are waived for low-income housing such as homes built by Habitat for Humanity.

An outraged developer complained about the new fees to an NCGA member from another county, and the politics started. Now the fees are gone, and new homes could be a little more affordable especially for working families. After all, impact fees are passed through to buyers and renters and are in addition to land, permitting and building costs.

But these fees are a small part of the affordability picture in Orange County. There are high taxes and fees for Cadillac services that many of us don’t need or will never use. Better public transportation would help for people who cannot afford cars. Then there are taxes.

Over the next few years, the county expects to increase taxes significantly in order to pay for the school bonds ($120 million) that voters approved last year. This has nothing to do with impact fees or the NCGA.

According to the county’s financial advisers, under the current planning assumptions, county taxes could increase by 7.5 points to pay for the bonds. That’s nearly 10% added to the county’s tax rate of 83.77 points. Since the schools need a lot more than $120 million (the original estimate was $330 million), it’s only the beginning. It’s neither affordable nor sustainable, and no one is talking about it.

I doubt that the NCGA cares about affordability in Orange County — but we do. It might help if we all paid more attention to how services, taxes and fees affect working families, seniors and others who are struggling to make ends meet.

For more information on county impact fees, see: http://www.orangecountync.gov/departments/planning_and_inspections/Residential_and_Commercial_Building_Fees.pdf.

— Bonnie Hauser

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16 Comments

  1. bart

     /  August 9, 2017

    It is crazy. Taxes and fees like this is simply robbing Paul to pay Paul. Since it is basically regressive, the people hardest hit are the same group supposedly helped. A family in my neighborhood who dared fix a 50 year old bathroom in their home was rewarded with a 65% increase in their property taxes (by far the biggest jump in the entire neighborhood and otherwise unexplained). That was nearly ten years ago.

    Those buses aren’t free. Your tax bill is simply not itemized to show the impact. If the argument is that paying for “free” buses lessens the impact those riders’ cars would have on the road (and that’s how we all benefit), then I would point to the fact that it also encourages more development along those bus lines and increases the load on all other infrastructure.

    There is no free – only different impacts. The problem with our local planning is that we don’t honestly talk about those impacts. It’s a superficial progressivism that doesn’t take all into account or it’s just lazy thinking. Either way, we aren’t well served.

  2. Bonnie Hauser

     /  August 9, 2017

    Its up to the public to be informed on the issues, including how taxes and fees are being used, and not get sidetracked with NCGA-bashing or other political distractions.

  3. Bruce Springsteen

     /  August 10, 2017

    That assume there is an atmosphere of free, unfettered political discourse, which hasn’t been true since at least when I started following CH/C politics ten years ago.

  4. Bonnie Hauser

     /  August 10, 2017

    Nancy – if you move CHW to Facebook – we could tag Mark Schultz on Bruce’s comment. Its a good point -and there’s growing interest in meaningful discourse that’s not fabricated political-issues-du-jour.

    At a county level, the board’s upset with Impact fees was one; the nonsense with the Chamber fees is another example of fabricated issues. In the meantime our taxes are going up quickly, our schools remain in disrepair, and our transportation dollars are going to Durham.

    I wonder if we can start a conversation on AH money going to small not for profits, while developers make millions$ flipping empty apartment buildings?

    Oh well.

  5. plurimus

     /  August 11, 2017

    Between impact fees, 49% of the county budget and additional taxes from Chapel Hill/Carrboro you would think the schools would be well maintained and up to date……but not so. Where does all the money go?

  6. Bonnie Hauser

     /  August 11, 2017

    Great question. The 49% is an arbitrary number and there’s no control or accountability. And then the commissioner raise taxes for partial school repairs which are also not controlled or managed to any standards.

    The impact fees are a nit in the big picture

  7. The CHCCS school board pushed for better explanation of where our current expense budget goes. You can see the 1st round of explanation in a 2 pager here — https://drive.google.com/file/d/0B4ThhOJ1AQ-lUHc5YzVkMDktM3c/view

  8. Bonnie Hauser

     /  August 13, 2017

    James- that’s a good start – but still to complicated for most people to understand where the money goes. I have a 2 page spreadsheet from CHCCS that’s simpler summary – for one it collapses all the teacher salaries in one line item. Yours has social workers. I Like that. I can send it to you personally – don’t know how to post it here.

    Neither school district provides any information on how things are going. Consider that Mecklenburg schools includes their racial equity progress in their budget package. I’d love to see something like that in our budgets.

    Neither spreadsheet (yours or mine) shows the capital. So all this money for schools and we’re not funding facilities maintenance. I don’t mind spending money for schools – but I really mind more taxes. The county is squandering funds on rural parks, county offices, and extravagant recycling services. Then when school buildings come up, there’s no money left and we get a tax increase. Oh well

  9. plurimus

     /  August 13, 2017

    James Barrett. Thank you.

    Now, why were the school buildings allowed to fall apart to the extent they have? Was it irresponsible management? Was it a calculated method to live beyond the budget?

    I have heard the fashionable rhetoric that the state cut funding and they took away the impact fees, but those excuses do not really wash when one looks at how long this has been going on. The problem is clearly systemic.

  10. Bonnie Hauser

     /  August 13, 2017

    Plurimus – I’m sure you noticed that the school maintenance is not in the budget summary that James provided. And impact fees – which are for new school construction – have never been allocated for school maintenance.

    If impact fees could be used for school maintenance (and they cant by ordinance), its about $1.5- $2 million a year. That’s about $8 million a year less than what’s needed to fund the first round of school repairs. Dont forget the $200 million more that’s still unfunded and a growing backlog as schools age.

    Doesn’t get much worse – and as fun as it is to blame the NCGA, this mess is Orange County’s own doing.

  11. Terri

     /  August 14, 2017

    The county is NOT wasting money on recycling. By doing everything we can to reduce recycling we cut back on a large portion of waste that would otherwise go to landfills, all of which are located in rural, historically black communities. If you believe in social and environmental justice, you should not oppose recycling.

  12. plurimus

     /  August 14, 2017

    Hi Terri,

    This not an “oppose or support” issue. Its not only an issue of social justice either. It is an issue of economics. There is such a thing as diminishing return https://sustainablydefined.wordpress.com/2010/10/13/the-law-of-diminishing-returns/

  13. plurimus

     /  August 14, 2017

    Hi Bonnie,

    Yes. That is why I posed the question. Money is fungible so I can see the point of impact fees offsetting other expenditures. It still does not explain why this problem seems to have been going on for decades.

    I am just trying to determine if I am missing some assumption, strategy or tactic that explains this?

  14. Terri

     /  August 14, 2017

    Hi Plurimus, very few arm chair economists understand how to review an issue from a broad socioeconomic perspective. They usually reduce benefit to money, like your guy does. http://www.economist.com/node/9249262

  15. plurimus

     /  August 14, 2017

    Hi Terri,

    Not sure I get your point.

    Do you deny that there are endless needs and scarce resources? Do you deny economic understandings should play a role? Do you think that additional recycling should take precedence over other needs? If so, which ones and at what cost?

    The article you cite is 10 years old. (Just for reference 2007 is the first year of the iPhone) The article describes single stream recycling which was just becoming general practice. A lot has happened in cell phones and in recycling since 2007, but the law of diminishing returns still remains.

    I do agree that waste is a design flaw.

  16. Bonnie Hauser

     /  August 15, 2017

    Thanks Plurimus – yes its never about whether or not to recycle – it’s why are we investing millions of dollars each year on excessive services like rural curbside and opulent convenience centers when hundreds of thousands would suffice. And despite the massive incremental spending, there’s been no appreciable improvement in recycling rates. Of course more of us compost and use digital media over paper – so that’s helping.

    And you’re right about the impact fees. They could offset a tiny bit of the school maintenance (with a legislative change – cause right now they are designated for new school construction only).

    Its easier for electeds to gripe about the NCGA than it is to get serious about budgets, priorities, and assuring that our schools are safe, heated and dry. School maintenance is a county responsibility – IMO – a top priority. And while we’re squandering money on excessive recycling and other expensive nice-to-haves, our schools are still falling apart and our taxes are going up.

    With all the “collaboration” meetings – you have to wonder what they are collaborating on?

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