In a completely expected move, Orange County Commishes voted unanimously (4-0) to approve the Developer Dream Team development application for Buckhorn Village at I-40 and Efland. After having the county staff work diligently and assiduously for months to pressure the current Buckhorn Village landowner to sell out, the Commishes approved a sketchy plan that will bring economic salvation to Orange County.
Developer Dream Team leader and UNC Trustee Roger Perry thanked the Comisshes by saying ”The capital markets in this country have ground to a standstill.”
The Commishes approved the project on the “sugar plum fairy” representations of almost $6 million in sales tax revenue, $1.35 million in property tax revenue and 1,500 to 2,000 permanent jobs. However, the approval mandates none of these results
The local media dutifully hyped the “major concessions” of the developers, such as road improvements, tree and shrub requirements and a promise to make 15 percent of up to 200 planned housing units affordable. The media also dutifully left out that for that affordable housing promise, they could build more units. They also left out that there may be no actual units built, using the infamous PILO technique to subsidize the OCHLT affordable housing fiefdom.
In the words of Commish Barry Jacobs, ”I-40 and I-85 are the Main Streets of North Carolina.” (See Chapel Hill News Buckhorn Village Story.)
Hillsborough is the next hip, cool, progressive town in Orange County. Carrboro “groovitude” is slipping away to Hillsborough as more and more refugees flee from the rampant development brought to Carrboro by its developer mayor, Mark Chilton.
Part of Hillsborough charm is that it can live free from its impact on the environment. In the words of Ms. Margaret Wood Cannell, executive director of the Hillsborough Area Chamber of Commerce (HACC), “Tourism is a major economic force in Hillsborough and Orange County.” A solid waste trash transfer station is not exactly what the HACC is looking for in a member, even if it is a “state of the art”, clean and friendly one touted by Commish Mike Nelson.
According to a recent HACC resolution, ”A waste transfer station, along with its associated heavy truck traffic, is not the impression, appearance or aroma desired to welcome people to Hillsborough's entrances… placement of the proposed waste transfer [station] at any of the identified locations would negatively impact that industry.”
Pulp readers remember that it took the CY 2007 filing of a US Department of Justice environmental injustice complaint to trash the Commishes into reopening the trash transfer station site process.
The top two transfer station sites recommended to the county by a consultant, based on technical criteria, are just outside the town limits near Interstate 40 and Old N.C. 86.
In response to their progressive trash-making constituents, the Hillsborough Town Board reacted to the revelation of proposed trash transfer station near Hillsborough by pulling one of the favorite weapons out of the municipal governance arsenal - annexation. Hillsborough is offering to accept these proposed Hillsborough sites into town limits under the rules of voluntary annexation. The annexation option means the sites then have to undergo town zoning approvals in order to site a trash transfer station. The only cost to the owners is doubling their taxes with no legal guarantee that a trash transfer station can't be put on one of the sites anyway.
Unfortunately, the Hillsborough governance board hasn’t read the many North Carolina court decisions that have recognized that municipalities sell the protection of annexation for bad public puropses. In most cases, the town voluntarily annexes land way out in the country that contains an unwanted business, such as an asphalt plant. In a progressive twist, Hillsborough proposes annexing distant land to exclude an undesirable industry that it needs rather than to include it.
Curiously, although the Commishes have been holding public meetings in Hillsborough regarding the site for the proposed trash transfer station at locations around the county, according to the Hillsborough governance board, Hillsborough residents have been denied participation in the process. Although the Commish process has been remarkably transparent and open, it’s not transparent enough to have excluded any sites in Hillsborough due to the importance of tourism over environmental justice.
See Herald Sun Hillsborough Hypocrisy Story.
If you build an ED infrastructure, your taxes will be spent. If you approve a lot of office space to be built, will they come to fill it?
Building the Bureaucratic Field of Dreams
Over the past five years Pulp readers may have noticed an awful lot of activity on the economic development (ED) front in Orange County. No, there’s not been a lot of activity actually recruiting for profit businesses to Orange County. The activity has been to build ED bureaucratic infrastructure. First Carrboro had an ED official and a revolving loan fund. Then Orange County got a new ED official. Now Chapel Hill has an ED office too. Instead of a unified, regional governmental approach, southern Orange is spending over $500,000 a year in your taxes just to maintain a tripartite, divisive, and flaccid ED infrastructure.
Once you have a bureaucratic function, it must seek to justify its cost and expand. So now the latest buzz in Chapel Hill is to lament how the town failed to capture the latest ED prize catch in the Raleigh metro area, a company called Optimal Technologies. In the words of former Chapel Hill mayor, Developer Dream Team member, and real estate profiteer Rosemary Waldorf, “How are we going to fill all the space [recently approved by the Chapel Hill politicians]”. (See Chapel Hill News ED Story.)
In southern Orange there are few business conflicts of interest that aren’t tolerated. So it’s not surprising that Ms. Waldorf, involved in the mega retail project Buckhorn Village, is asking about government money possibly for her future tenants in Buckhorn Village as well as the spate of office buildings being built.
The One That Got Away
Optimal Technologies US Inc. (OT) is a software and technology provider for electrical utilities and consumers. It is moving its headquarters (18 jobs) from Canada to downtown Raleigh. It will invest $2.4 million over the next three years. It plans to create at least 325 jobs. The new jobs will include highly specialized circuit (ASIC) designers, software programmers, engineers and management and marketing positions. While wages will vary according to job function, the overall average annual wage for the 325 new jobs will be $71,250 not including benefits, which is higher than the Wake County average of $40,092.
The grant to OT is $325,000 from the One North Carolina Fund (Fund). The City of Raleigh matches that grant with another $325,000. OT must have at least 325 employees within three years in order to receive the full grant.
OT can spend the money on: 1) installation or purchase of equipment, structural repairs, 2) improvements, or renovations of existing buildings to be used for expansion, construction of or improvements to new or existing water, sewer, gas or electric utility distribution lines; or 3) equipment for existing buildings.
Readers should note that Fund grants are also available to existing businesses for adding jobs.
The Local Solution to Flaccid ED
Why use a more proven technique with bureaucratic controls to eliminate favoritism if you can create a more expensive and ineffective way that rewards those in the palocracy?
Instead of joining in Fund grant programs, Chapel Hill ED leaders (with an awesome track record of sub-par ED job growth) are taking the southern Orange Progressive approach. For example, according to Chapel Hill ED guru Dwight Bassett, Chapel Hill is discussing paying a percentage of a lease for downtown businesses, helping to inflate already high lease rates. Or town taxes might go to pay for merchant marketing programs as a matching grant, aiding the bottom line of local media businesses, the staunchest supporters of town politicians. Finally, Councilor Mark Kleinschmidt is eyeing the Carrboro loan revolver as a cure for stiffening local ED successes, despite the fact that Carrboro subsidized a business that moved to Chapel Hill when it got on its feet, Phydeaux Pulp Story.
No word on why Orange County ED leaders thought that a computer circuit hardware/software company associated with electrical power generation should prefer Chapel Hill's UNC over North Carolina State University, a renowned computer engineering school, located in… Raleigh.
Demand for transportation infrastructure is linked to population volume and density in the real world. However, the Pulp is concerned with how infrastructure demand is viewed within the microcosm of southern Orange County. Apparently, such factors don’t matter to The Village Project, southern Orange’s pro-growth, tax exempt, eco land development lobbying group.
After working local politicians diligently in order to get a piece of the Buckhorn Village project from the Developer Dream Team, the Village people have turned their sights onto demanding that a light rail system be built from Chapel Hill, a community with a stated population buildout of less than 150,000 people to Durham and on to Raleigh. In the words of Village people guru and Carrboro planning board chair James Carnahan, ”We generally think that rail transportation is really important for our region, both for dealing with existing highway congestions and significant dependence on the automobile as well as the emissions that result.”
Money is no object for the Village people, as witnessed by their letter campaign. Recruiting a massive 530 signatures from fellow Weaver Street Market Birkenstock capitalists, the Village people asked if their pals want a light rail system. No mention was made as to cost. No mention was made as to who would pay the cost.
Sketchy local plans call for the rail starting at UNC Hospitals, moving roughly down Manning Drive toward NC 54, into Durham County, and looping back into Chapel Hill at the intersection of Interstate 40 and U.S. 15-501.
Assuming a system that stretched from Chapel Hill to Durham downtown and on to Raleigh, a minimal, nodal only system of 40 miles would cost (at a nominal cost of $40,000,000 per mile) only $1,600,000,000 to build. That price tag doesn't include the annual operating loss to be made up by local taxes. Southern Orange sales tax revenues are inadequate to fund such a project thanks to a two decade policy of driving commercial and retail development to surrounding counties.
Economic concerns are brushed aside by Mr. Carnahan ”It is an economic concern, and yes, it may be expensive. But that's in the short term. In the long-term, I don't see that we really have an option if we're going to continue with the quality of life we enjoy.” Apparently Mr. Carnahan hasn’t considered limiting population growth to curb the need for increased transportation infrastructure. Having escaped the truly urbanized northeastern USA corridor, Mr. Carnahan wants to duplicate that urbanization here in southern Orange, participating in the profits from eco land development.
No word on whose mommy and daddy will pay for the “light rail doggie” in the window.
As posted in the
Pulp in June 2008, Alderman John Hererra got mad when he stepped in dog turds on his lawn. Rather than talk to his neighbor, he decided to get a town ordinance passed so that the Carrboro police could talk to his neighbor instead.
Always willing to tell others how to live, the Boa responded by passing a civil pooperscooper ordinance on 7 October 2008. In the words of federal anarchist Mr. Herrera, “Most laws in this country are broken and that’s what they are made for.” Mr. Hererra is an expert on lawbreaking, as he advocates people break federal immigration law at will.
Speaking as a “town leader”, Mr. Hererra stated that he should “set the tone as to what’s rights and what’s wrong” as to acceptable public behavior in Carrboro.
Speaking with scatalogical certitude, Alderman Randee Haven O'Donnell wants the Boa to look next at ordinances to control cat feces in toddler sandboxes.
No word on whether the Boa will enforce federal pooperscooper laws.
In related business news, stock in Sparky’s Polishes went up sharply in early trading.
In most North Carolina counties, if a local state legislator ensured that the economic development engine of a new local airport was located in their county, the local governance boards would hail a job well done. But the Pulp focuses on Orange County, where the concept of taxable economic development is more shadow than substance, and where paybacks for personal affronts trump sound governance.
Some wounds never heal.
State House District 50 (covering northern Orange County and Caswell County) was created by local Democrats earlier in the decade in order to give part-time sports journalist, developer dream team promoter, and Commish Barry Jacobs a shoe-in promotion, rewarding a long time politico who has been a stalwart promoter of local land development interests over local taxpayers. Unfortunately, the southern Orange palocracy doesn’t extend far beyond I-40. A local Democrat personal injury lawyer, Bill Faison, filed for the position along with Mr. Jacobs, without asking permission from the palocracy. Adding injury to insult, Mr. Faison won the election and has done so since that first election. His reward has been constant enmity from local media sources, except the News of Orange. If Mr. Faison says “night”, then the local politicos and their lap dogs (aka local media) say “day”.
Since Mr. Faison’s election, what to do with the Horace Williams UNC airport in Chapel Hill has been bandied about by self-proclaimed, local ED experts like a shuttlecock at a teenage garden party. Will it be closed? Will it move to RDU? Will there be a replacement airport built?
A 2005 report by the airport engineering firm Talbert & Bright indicates that a general aviation airport in Orange County (as opposed to a commercial aviation airport like RDU) could generate from $40,000,000 to $53,000,000 into the local economy. However, it’s not an economic engine that can be dominated or tapped by land developers and their political minions. Moreover, Talbert & Bright report Chatham and Alamance county sites within 25 minutes of UNC Hospitals and 30 minutes or more from other airports, as well as sites in Orange County.
Costs versus rewards
What’s the airport cost Orange County? About 90% of the cost can be covered by federal grants.
To capture an ED engine, Mr. Faison amended a local airport authority bill (which created a board having eminent domain powers) to limit the authority's jurisdiction to Orange County. (Not widely reportd in the local media is the fact that Rep. Insko also sponsored the airport authority bill.) In Mr. Faison’s words, “I was really concerned if we didn't get [the airport] tied down to the county that they would subtly sabotage the whole process. The university's been trying to figure out how to close Horace Williams for 15 years or more. What I would have hoped is that our county commission would have been advocating for the economic impact in Orange County. This is an economic engine. The county should be taking the lead, rather than sitting around grousing about it. If you can invest $50 million and get that much back on an annual basis, you'd be crazy not to do it.” (See Chapel Hill News Faison Airport Story.)
However, Mr. Faison isn’t talking about your average county. Property taxes in Orange County contribute the overwhelming majority of moneys (69%) towards general fund for county expenditures. In addition, in the land of the non-profit, over 50% of county land is either tax exempt or taxed at a reduced rate for agriculture or timber production. Here ED is a concept for enriching your pals. The past fifteen years have been spent largely debating the evils of allowing national chains into Orange County.
Focus on the little picture
Commish Jacobs would rather complain about how UNC officials aren’t showing enough respect to the Commishes than explain why geographically disadvantaged neighboring Alamance County has a tax rate of about 58 cents per $100 of assessed value on lower median value residences while Orange County has a tax rate of about 95 cents per $100 on higher median value residences. Typically, the higher median value county should have a lower tax rate, not a higher one.
Mr. Jacobs is upset at ”already fighting a rear guard action” on the airport location. He wants respect for local zoning regulations. Translation, with no land currently zoned for an airport outside of Horace Williams, the Commishes can control whether or not an airport gets built.
As to his election nemesis, Mr. Jacobs kindly states, ”Mr. Faison speaks for himself”.
No word on whether or not Mr. Jacobs realizes that he also speaks for himself.
Pulp readers should be used to local government behavior towards those reporting embarrassing problems (read reality) to government authorities. If you report the problem, then you are the problem. The real problem is not the problem, so long as no one talks about it.
Back in February 2008, the Pulp posted about an N&O story on the toe tapping behavior out at nearby Jordan Lake. (See Pulp Wild Life Story.) The salacious aspects of rampant public lewdness were embarrassing to the North Carolina Wildlife Resources Commission (NCWRC).
Eight months later, the reward to the New Hope Audubon Society (NHAS) for reporting the “advanced sexual acts” to the NCWRC is to be told to leave the Indian Creek Trail area after 20 years and to move to another part of the lake.
According to the NCWRC they are unable to stop male homosexual encounters in a public park space. NCWRC Sgt. Reggie Barker, who oversees enforcement for Chatham, Lee and Randolph counties, ”It would become very frustrating. It's not something you can deal with every day, and it's a delicate situation to handle.”
The flaunting of public lewdness became openly flamboyant by the summer 2008. At least 25 Craigslist internet advertisements for men seeking sexual encounters were posted. Sgt. Baker reports at least 20 cars in the parking lot at once, backed up to the forest line to hide their license plates. Undercover NCWRC officers have been solicited for illegal public lewdness every time they walked in the area.
No explanation has been given as to why the NCWRC did not photograph the plates. Furthermore, the NCWRC gives no explanation why other law enforcement manpower hasn’t been assigned to stop the illegal public lewdness behavior. For example, public lewdness at nearby Umstead Park in Raleigh has been abated by using local police. See N&O Public Lewdness Capitulation Story.
In a classic governmental response, the messenger is the problem. The NHAS has been asked to move their legal birding activities to where they will no longer see the problem, thereby “solving” the problem without changing anyone's behavior.
No word on whether or not the NCWRC has informed the birds as to where to move to be observed by the NHAS.
In related business news, Johnson & Johnson stock and Church & Dwight stock traded up slightly.
For years the Pulp has kept you informed on how residential growth in Orange County is net negative to county finances, yet the county remains addicted to a policy of “growth for growth sakes”. Simple translation, your taxes had to rise every time a front door opened. Developers have been walking off with profits financed by you. Part of the problem is that impact fees have been unrealistically low, not reflecting the burden of a new residence on county infrastructure. Low impact fees have been good for developers, bad for taxpayers.
How Much Have Developers Been Underpaying?
Currently, city school impact fees are $4,407 for single-family and multi-wide manufactured homes, and $1,979 for multi-family and single-wide manufactured homes. County fees are $3,000 for single-family/multi-wide and $1,420, respectively. That means that city school district fees are 47% higher than county fees. Both fee rates have been unchanged for seven years, unlike your taxes.
In 2007 the Commishes authorized a study of impact fees and student generation rates between 2001 and 2007. Part of the study proposed new maximum impact fees supported by state law for each district, adjusted to account for the housing types found there.
The current maximum support impact fee of the city school district is $19,039. For the county district, that fee is $9,372. Developers have been underpaying impact fees by 77%, paying only 23% of what they could be charged by the county for a city district infrastructure impact fee. For the county, developers have been underpaying impact fees by 68%, paying only 32% of what they could be charged by the county. The difference has been paid by taxpayers, almost $15,000 per house.
Pulp readers should keep in mind that the city school district has built nearly twice as many schools as the county district in the last 20 years. The school cost for new students generated by new housing is a major portion of the impact fee.
Opposing School Boards Views
In September 2008, the city school board urged Commishes to increase impact fees ”in order to provide a source of funding to construct new schools to keep pace with the district's growing student population and the escalating cost of construction.”
However, at the same time the county school board doesn’t want to raise their impact fees.
County school board chair (and former Commish) Stephen Halkiotis said during a recent joint meeting with his Commish pals that impact fee revenues have stayed steady. In his words, it ”makes life a little easier when it comes to the revenue side of the picture.” See the Herald Sun Impact Fee Story.
Why Such Different Attitudes?
The county school district has spent the past few years complaining about how the rural county areas are subsidizing the urban areas for school construction. However, the reverse is true. Tax flows from the southern part of the county have built new schools in the rural north. If the city school impact fees increase, then the bias toward promoting county district growth over city district growth (a Commish goal) will be enhanced.
The city school district has been floundering under the burdens of a ciudad del sanctuario (sanctuary city) policy, i.e., don't ask, don't tell about someone's immigration status. As students from larger, economically disadvantaged immigrant families enter the city school system, the burdens are increased more than ever before. Although city school district residential growth has slowed to a crawl, student growth continues from rental families crowding former student housing units, in many cases with multiple families per housing unit.
Will the Barn Door Be Closed?
On 21 October 2008, the Commishes have scheduled a public hearing as to whether or not to adopt new student generation rates under the “Developer’s Right to Underfund Building Schools” ordinance (DRUBS), officially known as the Schools Adequate Public Facilities Ordinance (SAPFO). The Commish conundrum is simple, but hard. Do you keep impact fees low, promoting net negative growth and raising taxes? Or do you make impact fees equitable to existing taxpayers, slowing growth but making it tax revenue neutral? In simpler terms, will the maximum developer impact fee pig fly politically with Commish pals, local residential developers, and the local media aka real estate advertisers?
Imagine the following scenario.
A person builds a garage in a town with zoning ordinances and inspections. A permit is obtained for the garage. It’s built under the gaze of town inspectors. As part of the garage plan, an apartment with plumbing is built on a second floor. All is done with no hiding of any fact from the town staff. Only one problem, the zoning isn’t supposed to allow garage apartments.
Now consider that this error isn’t discovered for ten years. No one complains.
The reasonable solution is to allow the apartment to be legal, regulate it, tax it, and move on.
Not in southern Orange, land of the palocracy, where reasonable solutions are reserved for pals. Here the powerful sue the weak for the sins of the mighty.
On 2 October 2008, the Carrboro planning board will consider such a mess, compounded with the burden imposed by town staff that a helpless, non-pal, non-resident must sub-divide their watershed farm against their will. The local media remains silent.
The Odious Barn Apartment on a Farm
Carrboro’s Developer Service Department aka (town planners, zoners, or inspectors - PZI) has the ability to tell people who don’t live in Carrboro how to live their lives. It’s called extraterritorial jurisdiction (ETJ), a power to make second class citizens, approved by the General Assembly.
Unfortunately, Ms. Marilyn Kille owns a 19.47 acre operating farm at 219 Old Fayetteville Road that falls within the clutches of the Carrboro ETJ. According to her, in 1997 she had a 3,600 square foot barn built in which an auxiliary apartment was included. The barn is for animals, not cumbayah circles. The apartment is for an animal caretaker, not a trustafarian.
In her words, “Extensive photos, receipts and other documentation, and the testimony of contractors support that the apartment was constructed at the same time the overall barn was constructed; and thus existed throughout the five-month inspection process and at the time of the final inspection. Specifically, all plumbing and electrical installations were embedded in the concrete floor poured in October 1997 and, thereafter, were readily visible during weekly inspections.”
The Slowly Grinding Wheels of Misjustice
Ten years went by with no problems.
Then without explanation, in 2007 the Developer Service Department alleges that the barn apartment was completed after the final inspection in late December 1997. That’s a no-no.
Ms. Kille responds by alleging that the Town had a personnel problem in 1997. Her barn was the first ever inspected by Town staff. She believes they made errors, alternatively applying the Residential and Commercial Codes in lieu of the Farm Building Code.
Sympathetic Carrboro officials, such as Town Manager Steve Stewart, showed their compassion by suing Ms. Kille alleging willful violation of the urban Residential Code (by a rural property).
Bureaucrats don’t make mistakes in progressive Southern Orange County.
The Bureaucratic Flim-Flam
In December 2007 the Town’s Planning Administrator and Associate Counsel acknowledged that the barn apartment could comply with the Residential Code via the text amendment process. Ms. Kille was told this change would be “a routine procedure”.
Ms. Kille responded by submitting a text amendment application on 2 January 2008,
On 15 January 2008 the Town refused to consider a text amendment. (Ms. Kille is not an Hispanic immigrant, and thus, can’t receive the special treatment afforded lonchera operators, see Pulp Lonchera Safety Story.)
The local court, which almost invariably backs the local municipal jurisdictions, a smart move for a locally elected judge, ordered that a solution be found by 26 August 2008.
The town now imposed the bait and switch. Instead of a simple text amendment, Ms. Kille would have to submit a Conditional Use Permit, the most onerous and costly application possible and subdivide her property, even though she doesn’t want to do so.
The Infamous Carrboro Hypocrisy
Carrboro spends a lot of energy developing position papers. Not what the Town will do, but what it wants to say it’s doing. (For instance, claim your growth is environmentally friendly while clear cutting the last mature hardwood forest in town). One such paper is the 20/20 long-range plan. Part of that plan calls for preserving remaining farms within Carrboro’s jurisdiction. The reality is that Carrboro is forcing Ms. Kille to subdivide her farm unnecessarily which will raise her taxes, an interesting farm preservation technique.
Ms. Kille contends that the barn apartment surrounded by the smell of manure is “critical to providing security and safety for and maintaining the well-being of my farm’s livestock”. She doesn’t understand why other farms outside Carrboro can have such apartments but she can’t without subdividing her property.
All Illegal Apartments Aren’t Created Equal
Ms. Kille notes that town officials have acknowledged that “innumerable illegal apartments are known to exist throughout the Town’s jurisdiction.” One can hardly walk down any street in older Carrboro without running into an illegal apartment. Yet no official explanation has been given as to why these illegal apartments aren’t shut down or brought into compliance.
In one instance of note, an illegal garage apartment (off Poplar Avenue) was brought to the attention of town officials, the response was not to sue or to impose subdivision, but to suggest that offended neighbors should go to the local (you guessed it) tax exempt, spread-the-love, Carrboro mediation center to get quiet enjoyment of their homes.
No word on how much taxpayer money (in addition to the six figure retainers) has been spent on the town’s outside attorney suing one of the last operating farmers in Carrboro.
No word on whether or not the slowdown in residential construction in Carrboro is leaving town staff feeling the need to justify a $1,000,000 a year Developer Service Department.
No word on whether or not a lonchera will be invited onto the farm, thereby making a second class citizen into a pal.
Taxes?? Why Should the Well-Off Pay Local Taxes?
Carol Woods is a lovely, bucolic retirement home community that organized in 1972 and opened for business in 1979. During its founding years, it specialized in attracting retiring UNC professors and their spouses. Located in the northern wooded end of the town of Chapel Hill, Carol Woods is a place to which you would want to retire. But Carol Woods has a dark secret. Its well-off 400 or so residents pay no property taxes, unlike lower socio-economic retirees in their less desirable homes in Chapel Hill.
Carol Woods has an interesting business model as yet another of the many tax exempt southern Orange businesses. To be admitted to live at Carol Woods, one must be screened for your financial qualifications, i.e., how much you have in net worth. Carol Woods is not for median net worth retirees. You must transfer a sizeable chunk of money to Carol Woods before you can enter the hallowed halls of Carol Woods. Admission fees for a two bedroom cottage range from at least $184,000 to over $295,000.
Even assuming you can pay the entrance fee, there’s the small matter of qualifying for the operational fees. Again, Carol Woods is not affordable to your ordinary retiring homeowner in North Carolina. Monthly fees after admission range from about $2000 to over $3000 a month.
Carol Woods may not see you through your entire retired life. If you need more than assisted home care, then you must leave Carol Woods for a nursing home. Should you want to leave Carol Woods, it’s not like selling an equity share in your house or a housing project. The refunding of your entrance money declines by 2% per month. After about 4 years, if you leave Carol Woods, then you get no money back.
Curiously, Carol Woods tells prospective residents that it’s a good thing that they aren’t buying equity in a home at Carol Woods, because then they aren’t responsible for property taxes. They don’t say that no one is responsible for property taxes because they don’t exist for Carol Woods.
It’s Good to Have Friends in High Places
Carol Woods didn’t start out life not paying municipal property taxes. From its inception in 1979 it paid the county and town taxes just like a low income retiree in a single family house down the street. But Carol Woods directors felt that as a non-profit with noble purposes, it should not pay for its use of municipal services. So almost as soon as its doors opened, its directors sued to get an exemption from property taxes. Carol Woods lost.
The NC Court of Appeals ruled that Carol Woods didn’t qualify as being exempt under GS 105-278.6 as a charitable home for the aged or infirm. Carol Woods hadn’t presented any evidence either that a resident was unable to pay the entrance fee or the monthly fees charged after admission or that such a resident was being helped with payment as a charitable contribution. (See 60 NC App 294.)
Carol Woods didn’t give up. It got the law changed. By lobbying in the General Assembly, the governing law was changed so that Carol Woods could qualify for a property tax exemption. (See S.L. 2001-17.) The General Assembly passed laws (NCGS §105-278.6A) making it easier for retirement homes to obtain tax-exempt status for their property. It failed to pass laws to increase the property tax exclusion for low-income elderly or disabled homeowners in their own homes. Retirees who couldn’t qualify for Carol Woods were left out in the woods.
At about that time, Carol Woods was paying the town of Chapel Hill about $500,000 a year in property taxes, based on an assessed valuation of about $36,000,000 for the 120 acre paradise. That’s about $90,000 per resident.
Rather than continue to pay taxes, Carol Woods embarked on a building program. It built two 9,000 square foot garden homes, twelve 1,855 square foot cottages, a $1,000,000 dining room renovation, and a 1,200 square foot crafts shop.
The Shroud of Profit About a Tax Exempt Business
In 2006 Carol Woods (more accurately known as the Chapel Hill Retirement Center, Inc.) reported gross receipts of $20,178,839 and total assets of $78,977,794, making it one of the wealthiest organizations in Chapel Hill, outside UNC. It received annual program service revenues of $16,922,234, or about $42,000 per resident. It made an annual gain on securities sales of $2,532,928.
Yet Carol Woods pays nothing in state income taxes, as well as being exempt from local property taxes.
How does Carol Woods spend its money? According to its tax form, it spends $9,710,516 on employee compensation, or about $24,726 per resident. The officers make about $500,000 per year without benefits. The rest is mostly for providing a comfortable lifestyle for the Golden 400 who reside there.
As for assets, Carol Woods manages over $38,000,000 in securities, or about $95,000 per resident. It lists its untaxed land and buildings as being worth $56,509,742, or about $141,000 per resident. How much would Carol Woods owe in property taxes if it was like the low income retiree paying taxes. At a town and county rate of .01809 per dollar of assessed value, the taxes today would be $1,022,261 annually. Even at a one half “homesteader’s rate”, the taxes would be about $500,000.
How much in charitable care is given annually out of the over $21,000,000 in expenditures? About $117,000.
Back in 2001, Carol Woods President Patricia Spriggs agreed to make a “contribution” to the town for the loss of the property taxes, about $125,000. In Ms. Spriggs’ words “I don’t think we want to get into a situation where we’re committed to a certain amount forever.” (Chapel Hill News Dec. 30, 2001). By 2005 Carol Woods was no longer making any ”contributions.”
But financial contributions have followed the Carol Woods leadership. Ms. Spriggs makes over $228,000 annually, and that doesn't include all benefits.
Recently, the Pulp reported on the average 10% increase in water rates. (See Pulp OWASA Rate Increase Story.) Readers asked, what about the sewer rates?
OWASA’s monthly rates for water and sewer combined will increase about 17% on 1 October 2008. With the new rates, the monthly bill for an individually-metered residential customer using 5,000 gallons will increase $10.06, from $58.18 to $68.24.
Why a 17% increase? Two reasons are given. First, water demand is expected to be 13% below past projections. OWASA customers responded to OWASA's higher conservation rate structure of last year by implementing conservation practices. OWASA never publicly acknowleged how its structure would create a need for even higher fees. (What a fantastic business model. Charge more for a product. When your customers use less product in response to your price increases, charge even more!) Second, new development connection fees are expected to remain about 40% below normal due to the local residential housing slowdown.
You are being hit with the consequences of an unusual accounting practice. OWASA has been using capital revenues (connection fees) to offset operating expenses. Why? If you believe that the local residential growth machine can never stop (a premise supported by the pro-growth governance boards of local municipalities) and your number one customer (UNC) is more interested in lower usage fees than connection fees, it's no surprise that such creative accounting is used.
The extent of the capital revenue transfer can be seen by the fact that OWASA has only 90% of its authorized employment positions filled, and has admirably reduced FY 2008 costs by $1,360,000. Even so, OWASA must raise basic residential water and sewer rates by 17% on average.
| OWASA New Rates
|Monthly gallons of water/sewer||Total Bill||$ Increase||% Increase
|2,000 || $36.71||$5.11 ||or 16.2%||
|3,000 || $47.22|| $6.76|| 16.7%||
|4,000 || $57.73|| $8.41|| 17.1%||
|6,000 || $79.94|| $12.07|| 17.8%||
|8,000 || $103.34|| $16.09|| 18.4%||
|16,000 || $214.12|| $36.34|| 20.4%||
No word on when the Assembly of Governments will announce that “sustainability” includes the concept of “carrying capacity”.
No word on when local governments will limit residential development to conserve water.