What could the proposed sales tax option mean for Chatham?

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PITTSBORO — Now that Chatham County staff have explored suggested possibilities for the Article 46 sales tax expansion in the county, we now know what that money could be used for in a practical sense.

The Chatham County Board of Commissioners has not yet decided if they’re going to put a vote on the ballot, although Chairman Mike Dasher said last week he’d like to have it for the March 2020 ballot. The board is not currently required to pass a resolution stating what the revenue gained will be used for, nor has it decided on a half-cent or quarter-cent tax. There are some legislative decisions still to be made on current law on the local option sales tax, so the board is likely to wait for that.

For now, let’s examine the six possibilities the board saw at its September 16 meeting in the context of Chatham County as a whole.

A reminder: If the board puts the question on the ballot, and citizens pass it, an additional quarter- or potentially half-cent would be added to the current sales tax rate of 6.75 percent. This tax would not be limited to just Chatham residents but to anyone who pays sales tax on items in Chatham County. Estimates from the N.C. Dept. of Revenue say the county could have brought in $1.6 million from the tax if it was in place in 2017 — equivalent to about a 1.5-cent increase in the property tax rate — and that number could increase as growth comes in and the county continues to develop.

We’ll tackle the items in alphabetical order, as they were presented to the board.

Affordable Housing

What to do about affordable housing, or the lack thereof, in Chatham County has been a popular discussion topic in the county and its municipalities in recent months.

According to a study produced by the Triangle J Council of Governments for the county, affordable homes are in short supply compared to demand, and some of that supply is considered to be of “poor quality.” What that means is residents making less than 80 percent of the area median income, about $58,000 a year, are having more difficulty finding housing in Chatham.

The affordable housing item was presented to the commissioners by Stephanie Watkins-Cruz, a policy analyst for the county who focuses specifically on affordable housing. She said a “dedicated revenue source” for affordable housing would “allow the county to both attract and plan for an affordable housing development.” The county is 2,304 affordable rental units short of the need, she said, and any newly-generated sales tax revenue could be used to help meet that need.

She pointed to the Henry Siler School project. The county provided the land the old school building rests on and a low interest loan to Third Wave LLC to repurpose the building for affordable housing. It cost the county $353,200 to pull that off.

The goal of the county’s comprehensive plan, Plan Chatham, was to create 100 new units of affordable housing a year. To do that, Watkins-Cruz said, the county would need around $1.5 million a year, and that’s without the land and low-interest loan.

Watkins-Cruz presented multiple ideas for stimulating affordable housing development, ranging from a risk mitigation fund for “landlords willing to reduce barriers for tenants who typically struggle to quality for housing” that would cost around $25,000 to infill redevelopment that would acquire vacant and abandoned homes and work with a partner to sell the units or use as affordable rentals. The latter program could be a one-time cost anywhere from $500,000 to $1 million based on estimates, but funds could be replenished through sales.

Agriculture/Land Banking

Proposed to the board by Commissioner Andy Wilkie on the recommendation of the county’s Agriculture Advisory Committee, agriculture was the next topic, and most of the presentation revolved around Phase II of work on the Chatham County Agriculture & Conference Center.

To study the feasibility of such a project — which could include an equine center for competitions and shows that would draw visitors to Chatham — the estimated cost is $15,000 to $20,000. Budget Analyst Darrell Butts, who was presenting the item, said the total project could cost, based on early estimates, anywhere from $10-15 million depending on what was asked of the project.

The county could also direct revenue toward recurring expenditures, like registering the county with the Visit NC Farms smartphone app, updating the Farmland Preservation Plan or securing conservation easements and permanent land preservation.

Broadband Access

Another topic long on the minds and lips of Chatham’s county and municipal officials, lack of broadband access in the county is noticeable.

According to a study by governing.com, about 65 percent of Chatham County residents reportedly have internet access, but county Management Information Systems Director Darlene Yudell told the News + Record last year that the number is misleading “because it reflects internet coverage as measured by census blocks, not individual access.”

The county is a bit hamstrung, Butts said, by state law, which prevents governing entities from creating their own internet services. What was proposed was establishing an “anchor point” broadband site at Northwest District Park in Siler City. An anchor point, in Yudell’s words, would be “like a spider. You build the body and then the legs would come out from there.”

Butts said there’s already a provider in that area that is willing to partner with the county on the project and build lines from the anchor point. An estimate would cost the county $61,471 for the infrastructure and $27,160 requested by the provider — an initial investment of just under $89,000 — and an annual expenditure of just more than $1,300 to keep the service going. The private provider would chip in $34,311 for the construction of the anchor point.

The point would provide service to all of the park’s buildings, pool and open areas and would enable service to go along Woody Store Road and connected roads.

Providing this particular service at Northwest District Park would meet needs of both parks staff and parks goers, Butts said. Cell phones struggle with connectivity in the area, he said, creating potential safety issues; citizens often complain about not being able to make calls and a lack of connectivity prevents some events from locating at the park, which has an activity center, dining hall and two rental spaces on the grounds.

Economic Development

Chatham Economic Development Corporation President Alyssa Byrd submitted a projected use of sales tax funds if they were directed for economic development.

Fifty percent of the revenue could be used for utility funding, like extending wastewater to the Chatham-Siler City Advanced Manufacturing Site, more sewer in Moncure, paying off existing debt and even working on broadband. Another 15 percent would go to small and mid-sized business incentives designed to attract and grow industries in Chatham. Another 15 percent would be for the EDC itself, specifically expanding communication capabilities and provide more targeted business recruitment elements.

Ten percent would go toward improving the county’s Small Business Center, run by Central Carolina Community College, by increasing its funding and starting bilingual and small farm initiatives. The final 10 percent could go to the Central Carolina Business Campus in Siler City — Chatham Hospital is among its tenants — to complete site certification and develop a speculative or shell building to help recruit businesses to the site.

Orange County uses half of its Article 46 sales tax revenue for economic development initiatives.

Education

Each of the counties surrounding Chatham which have instituted this additional sales tax option use some or all of the revenues for education-related expenses. Lee, Moore and Harnett counties use their funds solely for debt or capital purposes; Durham County uses its revenue for public and community college education expenses; and Randolph’s Article 46 sales tax revenue goes to capital projects for its community college. Orange County uses the other half of its revenue for public schools capital funding.

Butts said the county is in the second year of a four-year process of transitioning its public school teacher supplement to a percentage of salary. To complete that move, he said, the county would need an additional $775,000. School district personnel regularly speak about the need to improve pay packages and other benefits and perks to recruit teachers to and retain employees in the area.

Chatham County Schools also has several facility needs, which the county is responsible for funding. To address all facility issues at one time, Butts said, the county would need to spent around $79 million. That’s not on the table, as not all needs are urgent, but the No. 1 priority is addressing mechanical and electrical needs at Horton Middle School. That project is estimated to cost $7 million.

Additionally, the system is in the midst of construction on both Chatham Grove Elementary School and Seaforth High School. Operating costs of the first year for the latter, scheduled to open for the 2021-2022 school year, are $2.3 million. There are other schools coming down the road, specifically the first elementary school in Chatham Park, that will need funding as well.

Parks & Recreation

Finally, the board is considering parks and recreation for the sales tax revenue on the recommendation of county staff.

The county approved a parks master plan in February 2018, orchestrating a 10-year vision for the system. Tracy Burnett, the county’s parks and recreation director, told the News + Record in July that the plan was “important to satisfy the desire for recreation needs and wants of the public, protect natural resources, preserve the rural character of the county and to plan for future growth.”

The commissioners have already approved master plans for two parks — Southwest District Park in Bear Creek at an estimated cost of $5.1 million and Earl Thompson Park in Bynum for an estimated $2.8 million. The county is planning to phase those improvements in over a yet-to-be-decided number of years.

At the board presentation, Butts added that there are plans in progress for a new Southeast District Park in Moncure and improvements to Northeast District Park in Chapel Hill.

Reporter Zachary Horner can be reached at zhorner@chathamnr.com or on Twitter at @ZachHornerCNR.