Agenda - 12-01-1998 - 10b - Laserfiche WebLink

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Technical Report 23 By multiplying that portion of the tax rate [$0.2009 per $100 valuation] to be used for debt service and capital by the average value of each housing type, it is possible to identify the amount of credit to be given to each type of housing unit. These calculations are shown on Table 12. Sales Tax Revenues. Owners of undeveloped land do not pay sales taxes on that land. However, they do pay property taxes. If property taxes have financed facilities, even in part, local governments should determine the value of those payments [see discussion of "Property Tax Revenues" above]. On the other hand, if payments for facilities came from State sales tax rebates, they probably cannot be attributed to vacant land prior to development. Orange County presents a somewhat different situation. In 1984, the Board of County Commissioners adopted a one -half cent local option sales tax based on the provisions of Article 40 of G.S. 105. Although the statute indicated that 40 percent of the proceeds from the sales tax could be used to finance public school capital projects and/or retire debt on such projects carried out within the five preceding years, Orange County elected to use 80 percent of the proceeds for these purposes. Two years later, in 1986, another one -half cent sales tax was adopted based on the provisions of Article 41 of G.S. 105. Under the statute and the approved local option, 60 percent of the proceeds could be used to finance public school capital projects and/or retire debt. As shown in Table 9, Orange County expects to receive an average annual payment of $3,930,074 in Article 40 sales tax revenues from FY 1996 -97 to FY 2005 -06, the school improvement program period. In addition, Article 42 average annual payments of $2,934,544 are anticipated. Combined, the average annual amount of sales tax revenues that can be used for public school capital needs is $6,864,628. Although Orange County does use a portion of these funds for debt service payments and the remainder for capital needs, such distinctions are not considered in calculating the "credit" to be given for sales tax payments. To obtain projections of Orange County's population, long -term growth trends (1940 to 1990) were analyzed using the CAPP [Community Analysis & Planning Projections] computer model. Shown on Table 9 are the projections of the number of persons residing in the county during the FY 1996- 97 to FY 2005 -2006 period. For the ten -year period, the average annual population is 115,792. If the average annual sales tax revenue for public school capital needs ($6,864,628) is divided by this figure (119,814), the estimate of per capita sales tax revenue is $57. To calculate the present value of the per capita revenues, assumptions regarding the interest rate and term must be made. The current 5.5 percent interest rate on bonds is used, since almost half of the sales tax revenues are used to pay debt service on school capital needs. A ten -year term is used, matching the school improvement planning period and the time frame within which new school facilities are needed. The present value table in Table 10 indicates that the multiplier would be 7.53763. This means that the present value of the $57 annual per capita sales tax payment for ten years would be $430 ($57 x 7.53763). The per capita figure of $430 is of little use by itself. It must be converted to a per household figure, permitting it to be deducted from the total capital cost per student for school capital needs. Using 1990 Census information from the N.C. State Data Center, it is possible to calculate the average number of persons per household, by housing type. However, the use of the 1990 data may be