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15 <br /> 1 Slide #3 <br /> Current Joint ILA for Municipal Tax Collection Charges <br /> • Original Interlocal Agreement made in 1978 in accordance with North Carolina General <br /> Statute 16OA-461 to collect taxes for Carrboro, Chapel Hill, and Hillsborough. <br /> • Updated in 2006—single agreement that included all three towns. <br /> • Municipal tax collection rate set at 0.5%of the annual amount collected for each of the towns <br /> with an expiration of agreement set not to exceed 99 years from July 1,2006. <br /> • Agreement requires unanimous approval from all three towns and County to make <br /> amendments and requires a one-year notice for termination. <br /> — Amendment to the current agreement is an option to make changes to take effect for FY 2027. <br /> • In 2009, an addendum was approved to add an annual surcharge for new software installed <br /> for the purpose of tax ownership, billing,and collection.This Annual surcharge addendum <br /> has not been utilized to supplement revenue for the County. <br /> ORANGE COUNTY <br /> s H cs. <br /> 2 <br /> 3 Vice-Chair Fowler asked why the surcharges were never used to supplement revenue for <br /> 4 the County. <br /> 5 Nancy Freeman said she believes it wasn't implemented due to turnover in leadership in <br /> 6 the Tax Office. She said she has wanted to work on this since she was appointed Tax <br /> 7 Administrator, but it has been complicated because it involves the towns and requires a one-year <br /> 8 notice for changes. <br /> 9 <br /> 10 Slide #4 <br /> Annual Software Surcharge <br /> • Since 2010, annual software costs have averaged $160,000 <br /> • Range of annual costs is from $48,000 to $224,000 <br /> • Agreed-upon method to calculate surcharge used the number of bills <br /> created annually, allocated by location in unincorporated County or in <br /> each municipality to create a percentage of the annual software <br /> charges: 2025 Annual Distribution Percentages <br /> Carrboro 5.2% <br /> Chapel Hill 13% <br /> Hillsborough 3.7% <br /> Durham 0.05% <br /> Mebane 1.6% <br /> Orange County 76.5% <br /> ORANGE COUNTY <br /> 4 NO WCH C'AIZC)[INA <br /> 11 <br /> 12 Commissioner Portie-Ascott said this slide shows a wide range of annual costs, between <br /> 13 $48,000 and $224,000. She asked for some examples of situations that would result in such a <br /> 14 large fluctuation. <br /> 15 Nancy Freeman said annual fees for service would constitute something like $48,000, <br /> 16 which would increase over time, but would still be relatively similar. She said they may see an <br /> 17 annual cost of$224,000 when there is a change in the software, like a one-time upgrade fee. <br />