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10 <br /> MEMORANDUM <br /> TO: Carrboro Board of Aldermen <br /> Chapel Hill Town Council <br /> Hillsborough Board of Aldermen <br /> Orange County Board of Commissioners <br /> FROM: Intergovernmental Work Group on Alternative Revenues <br /> RE: Impact Tax <br /> DATE: February 01 , 1989 <br /> As a result of tremendous growth, the localities of Orange <br /> County, including the local school districts, are confronted with <br /> over $200,000,000 in capital needs- needs which are straining the <br /> property tax and other primary sources of general fund revenue. <br /> During the past year, the Intergovernmental Work Group has <br /> considered several alternative revenue sources to help finance <br /> the capital facilities and improvements needed to meet the <br /> demands of new growth. Initially, our discussion centered on <br /> the implementation of impact fees which are already authorized by <br /> local enabling legislation. Later, the Work Group discussed the <br /> merits of a land transfer tax. Finally, over the past several <br /> months, the group has focused on the impact tax. <br /> Recognizing the time constraints and other factors involved <br /> in gaining special enabling legislation, the group decided that <br /> we should recommend pursuing only one alternative revenue source. <br /> As a result, the group is recommending the impact tax, a concept <br /> that we have concluded is a preferable alternative to the impact <br /> fee, which is now widely authorized in North Carolina. <br /> Most of our discussion on the implementation of an impact <br /> tax concerned the following key questions and issues. <br /> 1. Why should we support an impact taw? <br /> A number of new revenue sources are talked about across the <br /> State, including local payroll taxes, personal income taxes, <br /> and a sales tax extended to services . Our criteria in <br /> choosing among these various options included several key <br /> interrelated objectives: ( 1 ) relieving our localities ' <br /> increasing dependence upon the ad valorem tax; (2) achieving <br /> a more equitable distribution of the financial burden asso- <br /> ciated with capital improvements necessitated by new growth; <br /> (3) establishing a revenue source which would be relatively <br /> easy and economical to administer; and (4) insuring that we <br />