A Proposed Source of Revenue

1
A Proposed Source of Revenue
Land Transfer Tax

• For Roads and Schools

2
WHAT IS THE LAND TRANSFER TAX?

• A one-time tax assessed on real property
  transactions
• Based on 0.4 of the property sales price
• Calculated like the current deed stamp tax
• Intended to aid counties with infrastructure needs

3
WHO PAYS THE LAND TRANSFER TAX?

• Land Transfer Act states that tax is payable by
  the transferor or seller
• Most likely included in sale price and paid by
  buyer
• One-time tax paid ONLY when real estate is sold
• This is NOT an annual property tax!

4
WHAT IS EXCLUDED?

• Cars, boats, planes and other personal property
• Gifts of real estate and inherited real estate
  transfers (family transfers)
• Will-related transfers of real estate
• Deeds of Trust
• Term Leases
• Consolidation and mergers
• Legally mandated transfers
• Any transfer where nothing of value is provided
  in exchange

5
WHY DOES BRUNSWICK COUNTY NEED ALTERNATIVE
SOURCES OF REVENUE?

• 14th fastest growing county in U.S.
• Priority growth related needs are Roads and
  Schools
• Growth should pay for itself
• Reduce reliance on property tax for
  infrastructure
• Better roads and schools improve quality of life

6
WHY THE LAND TRANSFER TAX INSTEAD OF THE 1/4 CENT
LOCAL OPTION SALES TAX?

• Transfer tax will produce more revenue
• Transfer Tax paid by people moving to Brunswick
  County
• Sales Tax unfair to Low Income and Fixed Income
  families

7
HOW MUCH WOULD IT COST?

• The Transfer Tax would be 0.4 of the property
  sales price
• Sales Price 100,000 200,000
  400,000
• Transfer Tax 400 800
  1,600

8
HOW MUCH MONEY WILL THE LAND TRANSFER TAX
GENERATE?Approximately 8 million per year on
averageEquivalent of 2.7 cents on the property
tax rate
9
IMPACT OF STATE MEDICAID RELIEF FOR COUNTIES

• State to Fully Take Over County Medicaid
  Expenditures By 2011-12 (County Paid 4,462,812
  for Medicaid in 2006-07)
• In Exchange State to Take Away All Article 44
  Sales Tax Revenue By 2011-12 (County Received
  4,286,661 of Article 44 Sales Tax in 2006-07)

• State Estimates Brunswick County to net 864,085
  in 2011-12 from the exchange of Medicaid
  Expenditures for the Loss of Article 44 Sales Tax
  Revenue

10
HOW WILL THE MONEY BE USED?

• Restricted Reserve Fund
• 100 for Road and School Capital Projects or Debt
  
• May Not Be Used For General Fund or Operating
  Expenditures

11
CAN THE COUNTY LEGALLY CONSTRUCT ROADS?

• YES
• House Bill 1399 allows Counties to construct
  projects on the Transportation Improvement Plan
  through an agreement with the NCDOT
• Senate Bill 1513 allows counties to construct or
  improve roads on the State highway system under
  agreement with NCDOT

12
WHICH PROJECTS MIGHT BE FUNDED OR PARTIALLY
FUNDED WITH LAND TRANSFER TAX MONEY?

• Roads
• Develop broad-based strategy in cooperation with
  municipalities and NCDOT
• Prioritize based on traffic congestion and safety
  ratings
• The County will not enter into agreements with
  NCDOT without assurances that money slated for
  Brunswick County will not be diverted
• Schools
• 6 out of 16 schools are currently at or over
  capacity
• Enrollment at 12 schools will exceed capacity by
  2011
• Land Transfer Tax revenue could be used to retire
  General Obligation Bond Debt.

13
LOTTERY PROCEEDS FOR SCHOOL CAPITAL OUTLAY

• Estimated Lottery Revenue for Brunswick County
  Schools
• FY 2007-08 757,078
• Funds approximately 10 million of debt principal
  for 25 years
• Equates to 50 of the cost of 1 Middle School in
  the next 25 years

14
WILL TAX BILLS BE LOWER IF THE LAND TRANSFER TAX
IS APPROVED?

• Alternate Source of Revenue for school building
  needs
• May reduce the burden on the property tax rate in
  the future

15
HAVE OTHER NORTH CAROLINA COUNTIES IMPLEMENTED A
LAND TRANSFER TAX?

• Six counties have implemented a 1 Land Transfer
  Tax
• Camden (1986), Chowan (1986), Currituck (1985),
  Dare (1985), Pasquotank (1989) and Perquimans
  (1989)
• 18 Years

16
WHAT IMPACT HAS THE TRANSFER TAX HAD IN THOSE SIX
COUNTIES?

• No decline in home sales or resales due to the
  tax levy
• Job and retail growth remains robust
• Residential growth is vibrant
• Schools are benefiting immensely
• Property taxes remain stable
• No adverse impact reported

17
ARE ALL REGISTERED VOTERS ELIGIBLE TO VOTE IN THE
REFERENDUM WHETHER THEY LIVE IN A MUNICIPALITY OR
IN THE UNINCORPORATED AREA OF THE COUNTY?

• Yes. All registered voters in Brunswick County
  can vote.

18
WHEN DO I VOTE?

• ELECTION DAY IS NOVEMBER 6TH
• ONE-STOP VOTING October 18th thru Saturday,
  November 3rd
• Board of Elections Office, Building F, County
  Complex
• Absentee Ballots available now - Deadline to
  return is Monday, November 5th at 500pm

19
BALLOT QUESTION

• First question on all ballots
• Only question on ballot of unincorporated area
  residents
• FOR
  AGAINST
• Real property transfer tax at the rate of up to
  four-tenths percent (4/10) of value or
  consideration.

20
IF APPROVED BY THE VOTERS WHEN WILL THE COUNTY
BEGIN COLLECTING THE LAND TRANSFER TAX?

• Earliest possible date is January 1, 2008.

21
WHAT WILL HAPPEN IF THE VOTERS DO NOT APPROVE THE
TAX LEVY?

• Current sources (Sales Tax and Property Tax) will
  continue to fund school construction
• Current sources not sufficient to meet identified
  needs of school system
• County will not construct roads