Agenda - 02-21-1989 - Laserfiche WebLink

Browse Search

. MEMO - Intergovernmental Work Group on Alternative Revenues February 01, 1989 Page 2 would have flexibility in the use of revenue derived from the new source. In reviewing the feasibility of implementing impact fees, our group identified a number of significant obstacles . For example, before proceeding with fees, we must develop a comprehensive long range capital improvement plan and schedule. Unlike property taxes, impact fees are an exercise of local power to regulate land development and do not represent a source of general revenue. Instead, the funds collected from these fees must be determined and used in accordance with a strict need/benefit standard. This standard or rational nexus criteria developed by the Courts results in a number of administrative requirements involving the earmarking of revenue for specific projects, elaborate accounting of fees collected and expenditure of revenue within strict time frames. In responding to problems with the impact fee, the use of an impact tax was suggested. At the group's request, a report contrasting the impact fee and impact tax was prepared which highlighted key advantages of the latter approach. In contrast to the fee, the impact tax represents an exercise of local taxing power. This distinction eliminates the nexus requirements , which make impact fee systems so administratively cumbersome. Like the fee, the impact tax is assessed according to the relative impact of each development, so the relationship between those who create the need and those who pay is still there. Essentially, by providing additional funds for capital improvements and by relieving pressure on the ad valorem tax, impact taxes achieve all four of the objectives underlying our criteria, while impact fees fail to achieve the two latter objectives relating to administrative feasibility. Aside from the advantages outlined above, the strong atmosphere of interlocal cooperation existing in Orange County is a primary factor in our decision to recommend the impact tax. Much of our projected growth in the County lies within the municipalities' extraterritorial areas and within the joint planning transition areas outside Carrboro and Chapel Hill. The municipalities within Orange County do not have, acting in and of themselves, the constitutional authority to levy impact taxes in these areas outside of their corporate limits. Under the system recommended by this group, however, the County would use its taxing authority to levy and administer the impact tax countywide. • 2. Who pays the impact tar and when? Our proposed legislation defines the impact tax as an excise tax on land development in Orange County. Under this bill, any individual or party responsible for the construction of