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ORANGE COUNTY <br />BOARD OF COMMISSIONERS <br />ACTION AGENDA ITEM ABSTRACT <br />Meeting Date: March 11, 1997 <br />SUBJECT: Reimbursement of Sales Taxes Paid for School Construction <br />Action Agenda <br />Item No. ~ <br />DEPARTMENT: Finance <br />PUBLIC HEARING: (Y/N) No <br />BUDGET AMENDMENT: (Y/N) No <br />ATTACHMENT(S): INFORMATION CONTACT: <br />Local Government Commission Memorandum Ken Chavious Ext. 2453 <br />NCGS 153A-158.1 <br />TELEPHONE NUMBERS: <br />Hillsborough 732-8181 <br />Chapel Hill 968-4501 <br />Durham 688-7331 <br />Mebane 227-2031 <br />PURPOSE: To discuss the potential for the County to claim sales tax refunds on School <br />Construction Projects. <br />BACKGROUND: The Local Government Commission (LGC) issued a memorandum to Counties <br />and Local Boards of Education in October 1997 covering issues related to the State School bond <br />and sales taxes. According to the memorandum, the Attorney General has issued an opinion that <br />Counties can claim refunds of sales taxes on school projects if certain conditions are in place. One <br />of the major conditions is that the County have statutory authorization to acquire and own property <br />for use by a School Administrative Unit (NCGS 153A-158.1). Orange County received this <br />authorization in 1994. <br />The County has received sales tax refunds on the McDougle Elementary School Project. The total <br />amount of refunds requested for this project was $190,119. Of these request the amount actually <br />approved by the Department of Revenue was $173,336. The County has been audited by the <br />Department of Revenue on two occasions with the auditor's focus mainly on the McDougle <br />construction project. These audits resulted in the differences between the amounts requested and <br />actual receipts. It is important to note that the County's sales tax refunds for school projects <br />occurred prior to the issuance of the Attorney General's opinion. The Department of Revenue <br />initially questioned the County's ability to request the refund on school construction. After <br />reviewing the documents establishing the relationships between the County and the School Board <br />the and property ownership, the auditors concurred that the refund request was indeed appropriate. <br />Approximately $126,000 of these sales tax refunds have been used in the McDougle project budget <br />to assist in some of the one time start up costs. <br />