Chatham County and the City of Sanford have reached a unique tax-sharing agreement to augment Sanford’s construction costs of a wastewater line from Sanford to Moncure.
Chatham has agreed to pay Sanford 20 percent of any additional property tax revenue generated by commercial and industrial properties served by the line for a period of 50 years, according to the agreement, which one official called “an exciting regional partnership.”
The wastewater line is being built to connect the Moncure megasite to Sanford’s wastewater treatment plant, but will also serve other residential, commercial, and industrial customers in the Moncure area.
The Moncure megasite is one of two industrial sites in Chatham County. Officials in Chatham, Harnett, Lee counties and Sanford have been working collaboratively on the site for several years in hopes to lure a major industrial end-user to the area.
“The agreement between Chatham County and the City of Sanford to extend wastewater collection to the Moncure megasite is an exciting regional partnership,” said Diana Hales, chairman of the Chatham County Board of Commissioners. “This wastewater infrastructure will not only serve the megasite, but opens the door to existing industries and new residential development.”
Since 2016, Chatham County and Sanford have been working together to secure wastewater lines to the Moncure megasite. In 2017, the City of Sanford secured a $4 million Golden Leaf grant for the project. Chatham and Sanford agreed to split the remaining costs—approximately $3.5 million—to complete the wastewater line construction.
Estimates for construction costs, however, have exceeded the estimated $11 million total. Over a period of months, Sanford and Chatham County hammered out an agreement for payment of the additional costs.
Chatham will still pay the original $3.5 million and Sanford would pay the remaining costs. In exchange, Chatham will share the extra revenue generated by new business and commercial properties or those that expand due to the access to sewer.
“Because the Moncure megasite is so close to Lee County, Sanford was willing to make the lion’s share investment in building the wastewater collection infrastructure from their treatment plant,” Hales said. “We worked on a tax sharing plan that acknowledges this initial higher burden on Lee County taxpayers.”
Chatham has agreed to pay Sanford 20 percent of the extra taxes for 50 years. The tax-sharing would occur after any incentive package a company may have received from Chatham County has been fulfilled.
According to interim Chatham County Manager Dan LaMontagne, the agreement is unlike any other with which he was familiar. It may be the first of its kind in North Carolina, he said, but it’s definitely the first of its kind in Chatham.
Because the revenue-sharing agreement is unique for Chatham County, the agreement includes a specific example to ensure clarity.
The agreement contains an example which stipulates if Chatham receives “$X” in revenue from a property receiving the new service, the amount the county received the year before is subtracted. That amount is then reduced by the amount of any incentives for the same year the “$X” amount of as accrued, according to the example. Debt service paid by Chatham during that same year for the project is also subtracted. The remaining amount, called “$Z” in the agreement, is the amount used to calculate the 20 percent for Sanford.
The agreement was passed on the Chatham commissioners’ consent agenda last week though not discussed in open session.
“This was a successful negotiation that occurred over several months and was not made public until we were ready to amend our existing interlocal agreement with the City of Sanford,” Hales said. “Everybody benefits with this arrangement. Water and wastewater infrastructure are the drivers for attracting large scale development. This puts Moncure in that game.”
