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ORANGE COUNTY <br />BOARD OF COMMISSIONERS <br />ACTION AGENDA ITEM ABSTRACT <br />Meeting Date: May 4, 2006 <br />Action Agenda <br />Item No. ~rj _G <br />SUBJECT: Interlocal Agreement between County and Towns on Taxation Collection <br />DEPARTMENT: Revenue PUBLIC HEARING: (Y/N) No <br />ATTACHMENT(S): INFORMATION CONTACT: <br />Proposed Interlocal Agreement Jo Roberson, (919) 245-2727 <br />PURPOSE: To consider approving an updated Interlocal Agreement between Orange County <br />and the Towns of Chapel Hill, Carrboro, and Hillsborough with regard to tax and revenue <br />collection endeavors on their behalf. <br />BACKGROUND: In 1979, the County and the Towns entered into an agreement whereby the <br />Orange County Tax Collector would, an behalf of the Towns, bill and collect their annual <br />property tax levies, This agreement allowed for billing of the Towns for collection based on a <br />formula established within the actual computer software. The collection rate average aver the <br />last several years charged to the Towns has averaged 1/3 of 1%, inclusive of regular collections <br />and registered motor vehicle collections. <br />Under North Carolina General Statutes, there is no maximum amount which one unit of <br />government may charge another for the collection of regtalar tax. Generally, counties across the <br />State tend to charge municipalities about 1 % of proceeds for the collection of regular taxes. By <br />statute, the maximum that the counties can charge towns for collection of registered motor <br />vehicle tax is 1 '/2 %, <br />Staff representatives from the Towns and the County have reviewed the 1979 Interlocal <br />Agreement and removed those items that are no longer applicable. Additionally, corrections <br />and clarifications have been added, For example, beginning in 1993, counties were charged <br />under NGGS 105-330 with the billing and collection of the present registered motor vehicle tax <br />procedures, Orange County continued to charge the Towns at the same rate as charged for <br />regular tax collections, The County also began in 2001 the collection of gross rental vehicle <br />receipts by charge in statute. Since the inception of the gross vehicle receipts, Orange County <br />has collected on behalf of the Towns without there being any formal agreement, This is been at <br />no charge and under the new interlocal will continue to be at no charge. <br />Currently, the County is in the process of conducting a needs assessment of the overall taxing <br />system encompassing the Land Records, Assessor, and Revenue Collection offices, Within the <br />year or two, staff believe that a change in the existing computer system, which dates back to <br />the late 1970s, will need to be made, It has been agreed upon by staff of all jurisdictions <br />involved that at that time, the Towns should be billed a surcharge to be credited toward the <br />purchase and yearly maintenance of a comprehensive software package to support and <br />