New sand plan calls for a townwide tax increase
Taxpayers townwide will share financial responsibility for pumping sand onto the beach under another new funding plan informally endorsed by the Nags Head Board of Commissioners and likely to be included in the upcoming budget.
The plan, which is similar to an approach rejected in a 2007 bond referendum, now calls for an extra 2 cents on the townwide property tax rate and another 16 cents in two special oceanfront districts.
Mayor Bob Oakes told a standing-room-only crowd at Wednesday night’s board meeting about the plan for funding beach nourishment as commissioners were moving forward with establishing the oceanfront districts.
The board seemed committed to the distribution of 2 cents and 16 cents but left open the possibility that it might be adjusted.
Meanwhile, Nags Head resident Reed Fisher, a consistent critic of beach nourishment plans, has filed a lawsuit with other individuals challenging the town’s procedure for quickly obtaining easements for the 10-mile project, Town Attorney John Leidy said.
The litigation is likely to complicate the town’s push to get the project started by early to mid-April of this year.
Oakes said the town would not settle on a new tax rate until it approves a budget for fiscal year 2011-2012, which starts in July. But he said the board had reached a tentative agreement on the tax rates at a retreat last week.
“There was consensus on our board that it is a project that benefits everybody in the town and everybody should have some stake in it,” Oakes said.
Property owners now pay 15.75 cents per $100 of value. Two cents would add $60 a year to the tax bill on a $300,000 house. That, plus the 16 cents in the special service districts would add another $1,800 to the annual tax bill for a $1 million oceanfront house.
The money would pay back a $10 million bond that the town needs to cover the balance of the estimated $36 million cost that will not be covered by the Dare County Shoreline Management Fund. The town is in the process of soliciting bids for the work, which entails pumping 4.6 million cubic yards of sand from offshore onto the beach.
In 2007, Nags Head voters rejected a $24 million bond referendum that would have added 5.54 cents to the townwide tax rate and another 32.08 cents along the oceanfront to pay for beach nourishment over a five-year period. At the time, the cost of the 10-mile project was estimated at $32 million and the town was planning to cover the bulk of it.
A bond referendum was required to guarantee that the town would be receiving the revenue to pay back the loan.
To avoid another bond referendum and still place more of a financial responsibility on oceanfront owners, commissioners have rolled out several proposals in the past year. The town was banking on a petition asking oceanfront owners to legally commit to picking up the tab by paying a little less than 19 cents per $100 of value annually for five years. But it has failed to reach the legal requirements for buy-in.
The latest plan has the town guaranteeing a bond with the share of occupancy tax revenue that it receives back from the county. The town argues that the occupancy tax revenue is historically consistent enough to use as collateral to guarantee a bond.
But the idea still has to pass muster with the state’s Local Government Commission, which keeps tabs on local budgets. The occupancy tax revenue is the equivalent of about 6 cents of the annual property tax. The new tax proposal is aimed at picking up that difference.
It would also build up a beach nourishment fund for future maintenance, Commissioner Renee Cahoon said. A maintenance plan, including funding, is required by the Federal Emergency Management Agency before a locality can qualify for federal money to rebuild engineered beaches after a declared disaster.
The estimated cost of the project is now $36 million. On Wednesday the town passed a resolution formally asking Dare County for $18 million out of its Shoreline Management Fund, which has grown to about $24 million from 1 cent of the occupancy tax.
Another $2 million year to pay back a $10 million bond would come from an additional 1 percent on the occupancy tax, which has been authorized by the General Assembly but not yet enacted by the county. The rest of the cost would be covered by the $10 million bond being financed by the town and which commissioners formally agreed Wednesday to seek.
The crowd had shown up for a public hearing on plans to divide a special oceanfront district established for the 2007 referendum into two parts. The town wanted to have the option to tax South Nags Head more because erosion is worse there and it will require more sand.
Nags Head Town Manager Cliff Ogburn said that the 260 easements out of 550 sent to oceanfront property owners had been returned. The rest of the 715 needed were signed previously when Dare County was working on a beach nourishment project. Those have been turned over to the town.
Fisher’s class-action lawsuit follows a mechanism concerning so-called quick-taking condemnations. The easements that were sent out basically inform property owners that the town will condemn properties if they are not returned within 30 days. A challenge to the process must be filed before that 30-day period is up.
It is not known how long it will take for the legal action to be resolved.
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