By Rob Morris on May 17, 2013Kill Devil Hills plans to move ahead with a $20 million beach widening project and ask Dare County commissioners to approve a 1-percent increase in the occupancy tax to help pay for it.
Monday night, the town’s Board of Commissioners rejected the idea of an unpredictable federal reimbursement program and opted to pursue the project on their own.
Commissioner Brandi Rheubottom voted against spending money on beach nourishment now because she said too many town residents are struggling with higher taxes, insurances rates and prices in a weak economy.
But her three colleagues argued that the alternative was to do nothing, which they said would cause more damage to property values and eventually mean even higher taxes for everyone.
“I think in the long run if we did nothing it would hurt more people overall,” said Commissioner Mike Hogan.
Commissioners pointed to Kitty Hawk’s loss of oceanfront houses — and property value — to erosion. By comparison, they saw Nags Head’s 10-mile nourishment project, which was finished in 2011, as a template for their own.
In a presentation late last month, Commissioner Bill Pitt outlined a plan to widen about 12,000 feet of beach on the northern end of town with tapering into southern Kitty Hawk by using 910,000 to 1.7 million cubic yards of sand pumped from offshore borrow areas.
The project would use $10 million from Dare County’s Beach Nourishment Fund, which is made up of a portion of occupancy tax collections, and borrow $10 million in the form of a five-year general obligation bond, according to the presentation.
To avoid a referendum, the town would have to pledge its share of occupancy tax revenue as collateral.
Adding another 1 percent to the county occupancy tax would generate half of the $2.1 million annual debt payment.
The other half would come from a town-wide tax of 3 cents per $100 of value and an additional municipal service district tax of 32.09 cents. The municipal service district would be the northern beachfront area where sand would be placed.
Commissioners voted unanimously to ask the Dare County Board of Commissioners to begin collecting the 1 percent additional occupancy tax that was authorized by the General Assembly in 2010 for beach nourishment. It was meant to help finance Nags Head’s project, but county commissioners found it was not necessary.
Now, several projects are in the pipeline, and there may not be enough money to go around. Duck wants to pump sand onto about 2 miles of beach, and the county has hired an engineering firm to design a project for Rodanthe and Buxton.
Kitty Hawk is also looking at ways to mitigate flooding and erosion.
Kill Devil Hills commissioners decided not to pursue a plan that would qualify the town for federal reimbursement. Federal involvement would be too time consuming, commissioners concluded, with no guarantee of reimbursement.
They voted instead to direct the town’s nourishment engineering firm, Coastal Planning and Engineering, to put together a detailed plan and timetable.
A $12.7 million operating budget request presented by Kill Devil Hills Town Manager Debora Diaz Monday did not include additional taxes for nourishment.
The revenue-neutral rate was put at 32.09 cents per 100 of value based on the 2013 countywide revaluation. Because property values declined by an average of almost 30 percent countywide, a higher revenue neutral rate would be necessary to raise roughly the same amount of money as the town did in the 2012-13 fiscal year, which ends June 30.
Some property owners will pay more, others less. Some will pay about the same amount in annual taxes if the value of their property declined near the average.
The current rate in Kill Devil Hills is 23.5 cents. That is paid in addition to a county property tax.