Chatham tax idea supported, derided

Officials see a land transfer tax as a fair way to raise money. Groups disagree

PITTSBORO -- Chatham County's state representatives support letting Chatham levy a 1 percent land transfer tax to build schools and water and sewer systems in the growing county.

But an influential lobbying group, the N.C. Realtors Association, is using highway signs, TV commercials and a Web site called itsabadidea.org to fight the tax. Local groups are also forming to oppose the proposal.

Bills have been filed in the state House and Senate to give Chatham the power to levy the tax, which would apply to any real estate sold in the county.

"We just have such tremendous costs, and we can't meet those costs," said state Sen. Bob Atwater, a Chatham Democrat. "We're looking for other revenue other than raising the property tax."

Plus, Atwater said, seven northeastern counties already have the taxing authority. Dare County has raised more than $90 million since gaining it in 1985.

"It's a way of collecting revenue without hitting the local people," said Marcy Mann, Dare County's transfer tax administrator. The tax has helped pay for schools, court buildings, jails, libraries, water, sewer, health and social services, she said.

With more than 10,000 new homes coming over the next 10 years, Chatham commissioners say they face $500 million in infrastructure costs.

Right now Chatham charges developers a $2,900 school impact fee for each new unit of housing.

But Commissioner Mike Cross said that doesn't cover the county's needs.

A 1 percent land transfer tax would raise $7.08 million a year, according to the Chatham County Web site. That is about 10 times as much as a 1 cent increase in the property tax rate would raise. It also would allow the county to borrow more, Cross said.

Plus, a land transfer tax would be a fairer way to pay for schools because it would be tied to property value, commissioners have said.

If the land transfer tax is approved, Cross said, the county will repeal the impact fee.

If it doesn't pass, Cross said, "I don't know what Chatham County is going to do."

In all, state lawmakers have filed six bills that would give one or more counties the option to levy a land transfer tax.

Rep. Mickey Michaux, a Durham Democrat, has filed a bill allowing all counties to choose from a menu of local taxes such as the land transfer tax.

The state's 42,000-member Realtors Association, however, is against the proposal.

"Imposing taxes on new and existing homes will hurt working families by making homes less affordable," said Tim Kent, executive vice president of the Realtors Association.

Locally, the newly formed Chatham Conservative Voice is also fighting the proposal.

"Once the county enacts a 1 percent land transfer tax, there's nothing to say they couldn't raise it," said Mark Cares, president of the group.

Plus, he said, "most of the people moving here do not have children in schools."

Instead of raising taxes, Cares said, the county needs to cut its spending.