Agenda - 03-30-1989 - Laserfiche WebLink

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Z• Impact Tax Public Hearing March 31, 1989 Good evening. I am Pete Thorn, President of Capricorn Construction Company, a Chapel Hill homebuilding firm and immediate past president of the Homebuilders Association. Tonight I am representing my views on the impact tax issue. Our firm is actively involved in building affordable housing for new home buyers in Chapel Hill. We are building the Tandler project for the Town of Chapel Hill and we have developed a private subdivision, Abbotts Colony, also in Chapel Hill, that offers new home buyers affordable single family detached homes two and three bedroom homes. At the present time, most of our homes can be financed with FHA backed loans and many of them can also be purchased with NCHFA financing. I am concerned because the impact tax proposal threatens to wo::sen the affordability of these homes. A straight square footage tax on new hones and commercial buildings, is clearly regressive to my homebuyers, since it adds a layer of cost to low and moderate income homebuyers that could knock them out of the market, by causing the price of homes to rise above the threshold levels of the financing. The maximum FHA loan limit for this hig:1 cost area is $101,250. Five of our seven Abbotts Colony models can now be bought with a low downpayment loan under this threshold. With the proposed impact tax in place, only three of those seven would still qualify for low downpayment FHA loans that are necessary for most moderate income homebuyers. The effect is even more drastic for the NCHFA financing, which has a maximum acquisition cost limit of $91,700. If enacted, this impact tax will have a rifle shot effect that will knock out some of our lower moderate income homebuyers who do not have large downpa'jments! I cannot believe that an elected official in Orange County would knowingly support a tax that so disproportionately hurts our low to moderate income homebuyers. Clearly, there is a need for additional revenue. The public has demanded more services from local government and the cost of these services must be paid. I believe that new development should pay its fair share. I also believe that new homes can actually provide a net positive impact on local government tax revenue. The Woodcroft subdivision in Durham is a good example. In 1985 the City of Durhamts Planning Department produced an Annexation Report on Woodcroft that estimated a total of $532,000 of needed capital improvements for Woodcroft and maintenance cost of the required infrastructure to be $80,000 per year. However, the annual tax revenues from Woodcroft at build out are $1,200,000 per year, a 200% return on investment in the first year! inemommenummy