P-0320 - Impact Fee Reimbursement Policy for Affordable Housing 03-04-1998-9a

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Board of Commissioners 11 Page 3 June 26, 1996 Reimbursement: A decision by the Board to reimburse the impact fees for this housing project is less legalistic and would not require the analysis or the time that would be involved for an ordinance amendment. Presently Orange County has a policy permitting reimbursement of educational impact fees paid for housing units constructed by nonprofit corporations for home ownership by persons meeting an affordability test. These reimbursements are predicated on (1) a qualified applicant (nonprofit), (2) long term affordability and (3) Orange County using its general fund revenue to.satisfy a public purpose that is deemed as important as the educational impact fees. The line drawn by the Board concerning this policy can be redrawn. Its -- present location is analogous to the property tax exemption made for property used for charitable purposes. That tax exemption has two features. The entity seeking exemption must be qualified and the use of the property must qualify. A qualifying entity is a nonprofit corporation. A qualifying use is-affordable housing. Since the impact fee is not a tax, Orange County is not bound by the line drawn in the property tax laws, drawn for exempting property taxes. On the other hand, before the County can spend general fund money, it must do so for public purposes. Article V, Section 2(1) of the North Carolina Constitution -provides that "[t]he power of taxation shall be exercised in a just and equitable manner, for public purposes only." "The power to appropriate money from the public treasury is nQ greater than the power to levy the tax which put the money in the treasury. Both powers are subject to the constitutional proscription that tax revenues may not be used for private individuals or corporations, no matter how benevolent." [Citation omitted.] The definition of a public purpose is an evolving and perhaps expanding one. The government may "experiment with new modes of dealing with old evils, except as prevented by the Constitution." [Citation omitted.] Most recently we saw evidence of the North Carolina Supreme Court's view of the expanding definition of public purposes in the Mareadv case. The Supreme Court approved public money being spent for industrial recruitment°-_~nd generally economic development. Some of the language in.ahat decision, although not related to affordable housing or this affordable housing project, suggests to me that the line on reimbursing impact fees could be redrawn to include the First Centrum project. I have enclosed a copy of the Mareadv decision for your review. And, as we know, public money is spent on affordable housing projects and programs at the federal, state and local level. • .Unlike fee exemption, fee reimbursement requires a source of funds. That is, the fee must be collected and deposited in the