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13 <br /> 1 Commissioner Bedford asked if staff would come back to the Board if there is a need for <br /> 2 additional funding for the new position. <br /> 3 Kirk Vaughn said any reclassification of the position would happen administratively. <br /> 4 <br /> 5 VOTE: UNANIMOUS <br /> 6 <br /> 7 b. Update to Interlocal Agreements between County and Towns on Tax Collection <br /> 8 The Board: <br /> 9 1) Received information on the current interlocal agreement (ILA) between Orange <br /> 10 County, Chapel Hill, Carrboro and Hillsborough for municipal tax collection charges <br /> 11 and the potential need for an update to the agreement; <br /> 12 2) Considered authorizing the Tax Administrator and Budget Director to begin <br /> 13 discussions with Chapel Hill, Carrboro and Hillsborough on the current ILA and <br /> 14 potential actions to meet the County's costs related to billing and collecting taxes for <br /> 15 the municipalities; and <br /> 16 3) Considered authorizing the Tax Administrator and Budget Director to initiate <br /> 17 discussions with the cities of Durham and Mebane based on pending expiration of <br /> 18 those respective tax collections agreements <br /> 19 <br /> 20 BACKGROUND: In 1979 the County entered into an agreement with Chapel Hill, Carrboro, and <br /> 21 Hillsborough whereby the Orange County Tax Collector would, on behalf of the Towns, bill and <br /> 22 collect their tax levies in accordance with North Carolina General Statute 160A-461. <br /> 23 <br /> 24 In 2006 the agreement was updated, and the municipal tax collection rate was set at 0.5% of the <br /> 25 annual amount collected for each of the towns. The expiration was set not to exceed 99 years <br /> 26 from July 1, 2006. The agreement requires unanimous agreement from all three towns to make <br /> 27 amendments and requires a one-year notice for termination. <br /> 28 <br /> 29 In 2009, an addendum was approved by all parties that, in addition to the 0.5%tax collection rate, <br /> 30 updated the agreement to add an agreed-upon annual surcharge for new software installed for <br /> 31 the purpose of tax ownership, billing, and collection. However, the annual surcharge addendum <br /> 32 has not been utilized to supplement revenue for the County. <br /> 33 <br /> 34 Research by Tax Office staff indicates that the current 0.5% municipal tax collection rate is below <br /> 35 the state average and does not sufficiently sustain the costs incurred by the County to bill and <br /> 36 collect municipal taxes, including software costs. <br /> 37 <br /> 38 The Tax Office proposes the following plan to the realize the revenue originally envisioned by the <br /> 39 annual software surcharge: <br /> 40 1) Meet with the towns staffs to discuss the current ILA and potential actions to meet the <br /> 41 County's costs related to billing and collecting taxes for the towns. <br /> 42 2) Discussion would include the possibility of an amendment to the current ILA to for a <br /> 43 proposed increase of the fee as of July 1, 2026 and the possibility of replacing the current <br /> 44 joint ILA with separate ILAs that follow a shorter expiration schedule. <br /> 45 <br /> 46 The County separately has agreements with the cities of Durham and Mebane that are both <br /> 47 scheduled to expire on June 30, 2026. The Tax Office proposes to initiate discussions with both <br /> 48 jurisdictions to address the pending expirations and also in order to potentially standardize the <br /> 49 fee schedule and expiration schedule between all of the municipal collection ILAs. <br /> 50 <br />