Agenda - 11-15-2005-5n - Laserfiche WebLink

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a The General Assembly has shipped fionl school Uoatds the right to recover sales tax pa}nnents. hi response, counties and school Uoards have sought options for recovering sales tax payments on school capital projects to prevent the costs of those projects from in effect increasing Uy the amount of the sales tax payments. The different approaches to maintaining sales tax recovery on school pr%jects center on taking advantage of the continuing right of counties to file for sales tax reimUursements. This memo describes an option that Orange County and its school Uoards could consider. The County Board and each School Board would adopt a resolution approving documents that carried out the following procedures with respect to each school capital project that was to be covered Uy the agreements and subject to sales tax filing by the County. '~` The School Board would transfer to the County the real estate that is the subject of the capital improvement. "' The County would lease the property Uack to the School Board for the School Board's continued operation of the property as a school. ~' The School Board would agree to undertake the contemplated capital irnprovemenC as the County's agent. Contracts for- the project could be made either in the County's name, in the School Board's own name, or in the name of the School Board expressly as the County's agent.. Under this approach, each project would be the County's project and relate to the County's property, and should therefore qualify for sales tax recovery Uy the County. This approach is similar to the approach used routinely in the case of County installment financings for school projects, and was routinely used Uy other counties for non-financed projects in the time Uefore school Uoards were first made eligible for sales tax reimbtusements. To my Imowledge, the North Carolina Deparhnent of Revenue has never failed to honor a county sales tax reinrUursement request under this type of arrangement, Uut of course we camrot guarantee the Department's future regulatory outlook. I contemplate that these arrangements would Ue can°ied out under a "master agreement" approach,. Each Uoard would initially approve a single document that contained all the relevant terms, and then each board would later approve a resolution making a particular project, or set of projects, subject to the master agreement. The statutes require that a public hearing be held Uefore a school board transfers land to a county, and otrr master agreement would assign the responsibility for that hearing to a particular board (I would suggest this responsibility would most properly lie with the particular school Uoar'd)- This memo to this point contemplates trsing this type of arrangement only for real estate-related projects, Uut this approach could certainly Ue extended to apply to other projects and purchases with significant sales tax payments, such as vehicle acgtusitions. -- Sanford Holshouser LLP RoUert M. Jessup Jr. NovemUer 7, ?005