Dare approves occupancy tax increase

By on July 16, 2013

Nags Head beach nourishment project, August 2011 (Sam Walker).

Nags Head beach nourishment, August 2011 (Sam Walker).

Dare County commissioners voted unanimously Monday to implement an additional 1 percent occupancy tax beginning in January to help pay for future beach nourishment projects.

The move raises Dare County’s hotel, motel and vacation rental tax rate to the maximum 6 percent, with 2 percent dedicated to the Shoreline Management Fund.

The current set-aside of 1 percent generates about $3.5 million for the fund.

In 2010, the N.C. General Assembly approved the county’s request to raise the occupancy tax by 1 percent to help fund beach nourishment and other projects dealing with erosion and its after effects.

The county held off on implementing the tax because other towns, including Kill Devil Hills, had not decided to go forward with beach nourishment projects.

Board Chairman Warren Judge said that with only the Nags Head project looming two years ago, there was sufficient cash flow at the time under the 5 percent rate to not make the change.

In June, Kill Devil Hills began moving ahead with preparations to widen its beaches, voting to spend $322,780 to lay the groundwork for a 2-mile project.

The Town of Duck has also indicated it will pursue nourishment projects, and recently enacted new ordinances covering oceanfront structures like pools, gazebos and decks that would help better protect the dune system when a beach nourishment project takes place.

And Kitty Hawk has begun to actively explore a number of options, including protecting N.C. 12 and removing storm water accumulation that causes flooding along the Beach Road and U.S. 158.

Among those speaking in support of the increase were Duck Mayor Don Kingston, who read excerpts from a Town Council resolution supporting the additional tax, and Kitty Hawk Mayor Pro Tem Gary Perry.

Kitty Hawk originally opposed the additional tax in 2010 because the proceeds would only benefit Nags Head and Kill Devil Hills and only allowed use of funds for sand pumping or dune re-building.

But after Dare County commissioners expanded funds availability to all of Dare County and for multiple uses other than beach nourishment, Perry said Kitty Hawk’s council could now support the tax.

Holly Austin addresses the board on behalf of Hatteras Island rental management companies.

Holly Austin addressing the board in support of the change (Russ Lay).

A group of seven real estate rental management companies represented by spokesperson Holly Austin also endorsed the additional tax with some conditions.

The group asked the board to make sure the funds would be used for projects currently under study as well as future beach stabilization measures that would be deemed appropriate for public lands for the protection of dune systems, especially where it affects N.C. 12 on Hatteras Island.

They asked the tax not be implemented until Jan. 1 so that each rental company could start “clean” relative to lease documents without necessitating a mid-year change.

In addition, the group requested, “at least a representative percentage of the money be spent for Hatteras Island projects.”

Austin’s talking points indicated Hatteras Island contributes 25 percent of the occupancy taxes collected for the funds and should benefit from at least 25 percent of the proceeds.

Their preference was the tax not be implemented until January 2015 so the local economy could have one more year to recover from the 2007 economic downturn.

Finally, the group asked for Hatteras Island representation on any board that determines how funds will be spent and also requested no further increases in occupancy tax be contemplated for at least five years.

Tim Cafferty, owner of Outer Banks Blue, also spoke in favor of the tax increase but followed up on Austin’s comments by cautioning the board to be aware of reaching a “tipping point” on taxes that could adversely affect rentals.

Jeremy Adams, who owns a small rental management company, spoke against the increases, saying the current current rate gave Dare County a competitive advantage over the Currituck Outer Banks, which currently charges 6 percent.

Adams said he had convinced renters to come to Dare instead of Currituck by selling the lower occupancy rate.

He also suggested the “tipping point” had already been reached, recounting how potential renters were happy with rental rates when compared to northern beaches but were put off by the current 5 percent tax.

John Wasniewski, chairman of the Outer Banks Surfrider’s Association, asked the board to wait until the results of the second survey of the Nags Head project were released before deciding on new projects to fund.

He also said that if all of Dare County was going to endorse “artificial beaches,” the county and all municipalities should oppose offshore drilling.

Board members did not appear to see the connection Wasniewski was making between shoreline management and offshore drilling.

In other action, the board heard from Dominion Power officials on the recent Roanoke Island power outage and deferred action on the county’s Capital Improvement Plan budget until the August meeting.

Finance Director Dave Clawson told the board that because the state budget has not been finalized, he was unable to refine budget proposals for the board.

The board agreed that it would be better to wait until the General Assembly and the governor approves a budget before making final decisions on the CIP.

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