Dare no longer in a rush to raise occupancy tax

By on April 8, 2012

Nags Head widened its beaches last year. (Rob Morris)

A 1 percent hike in the occupancy tax paid by visiting renters is on hold until the new Kill Devil Hills Board of Commissioners decides where it wants to go with plans to widen the town’s beaches.

The increase, which would bring the tax in Dare County to 6 percent, was authorized by the General Assembly almost two years ago specifically for beach nourishment projects.

Dare County, which has yet to enact it, pushed for quick passage to help pay off a loan for Nags Head’s nourishment project and to start funding a widening project planned by Kill Devil Hills.

But with a new majority on the KDH board since December, there does not seem to be as strong a consensus or sense of urgency to enact the tax increase.

Warren Judge, chairman of the Dare Board of Commissioners, says money already in the Shoreline Management Fund would cover the $2 million in annual debt payments that the county promised to give Nags Head.

“We were doing that based on a price tag that the town of Kill Devil Hills had given us, and at the time the expectation was they were going to be right on the heels of Nags Head and we were going to need that fund to grow faster than it was growing, even though there was a healthy fund balance ,” Judge told KDH commissioners at their meeting earlier this month.

“That’s why we sought out that additional penny. We chose not to activate it, not to levy it.”

At the meeting, the town Board of Commissioners heard a recap of options for getting started on a nourishment project from Ken Wilson of Coastal Planning and Engineering.

Widening the beach in Kill Devil Hills would cost between $16 million and $21 million. Moving ahead under a federal program could earn the town reimbursement of 65 percent of the cost.

But Wilson said that would take longer and reimbursement would not be guaranteed. The competitive federal 206 program would require aggressive public relations and lobbying by local officials, he said.

Regardless of whether Kill Devil Hills chooses the federal reimbursement route or to go it alone, Wilson said the town should begin moving on obtaining permits as soon as possible.

Some discussion centered on seeing how Nags Head’s project fares before moving ahead in Kill Devil Hills. Nags Head completed its 10-mile, $36 million project at the end of last summer, pumping about 4.6 million cubic yards onto its beaches.

At about the same time, Hurricane Irene blew through, followed by northeast storms. An analysis showed that while about half the sand was washed off the visible beach, the rest remained in the near-shore system as intended.

Kill Devil Hills took no action but plans to discuss beach nourishment again at its meeting Monday night.

“It’s pretty obvious what the position of the previous board is,” Mayor Sheila Davies said. “But now that there’s a new makeup of the board, we really don’t have that position. So we’re building that position, whatever that may be, and I don’t know that it’s completely there yet.”

The Dare County Shoreline Management fund already takes in 1 percent of the occupancy tax and stands at about $18 million. The occupancy tax is placed on vacation rental houses and hotel rooms.

Nags Head received $18 million from the fund in addition to $2 million a year for five years to help to pay off $18 million in bonds. The rest of the debt is being covered by town tax increases.

County Manager Bobby Outten said the board would need to have more specifics on the Kill Devil Hills plan to move on the additional tax, including the overall cost and cash flow needs.

“We can’t make decisions until they make decisions,” he said.

Judge said an increase would be targeted to start at the beginning of a calendar year so that rental management companies and owners can prepare to assesses the additional tax.

“It just makes it easier on the industry that collects it,” he said.

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