Impact fees weighed in Wake

The debate heats up over how to pay for schools: a levy on new homes or a property tax increase

When Orange County leaders struggled with crowded schools in the late 1980s, they turned to some of the professors who worked nearby for ideas.

David Godschalk, who was teaching at UNC-Chapel Hill at the time, responded with a solution straight out of one of his urban planning courses: Impact fees.

The logic is simple: More homes mean more children, and that means more schools. To help build those schools, you charge developers a fee.

"It was not a new idea," Godschalk said. "Other people had been doing it for years in high-growth states, particularly in Florida."

It was new to North Carolina, however. Although Orange and two other counties easily got state approval to charge the fees, other counties have had no such luck.

Since 1987, no North Carolina county has had its request to levy impact fees approved, in part because of the lobbying of developers and others in the real estate industry.

Now some in Wake County are arguing that a fee could help pay for the massive growth in student enrollment that has led the school board to consider a $998 million construction plan.

By some accounts, an impact fee could help pay for enough of that debt to make a property tax increase unnecessary, at least for the near future.

Retired executive Stan Norwalk, a founder of the pro-impact fees group WakeUp! Wake County, said that a fee for schools would not solve everything, but it would keep property taxes from rising as quickly to pay for new construction.

"I think people are tapped out in terms of paying taxes," he said. "Most people I talk to -- whether they are involved in politics or not -- say that we should get developers to help build schools. And an impact fee is one way to do that."

But even Norwalk says that Wake is not likely to charge them any time soon.

It is not just the legislature. Wake commissioners also have been resistant to the idea, and members of a county committee on paying for schools dropped the subject after they couldn't come to agreement.

Still, the discussion over impact fees is far from over.

Routine, at first

As Rep. Joe Hackney recalls, impact fees were not a big deal when they first came up.

In 1987, he sponsored a bill that would give Orange and Chatham counties state approval to charge the fees. The bill passed without much problem that June, and a separate bill gave Catawba County permission the same month.

"It was more or less routine," Hackney said.

Home builders and real estate agents, however, were not happy. They argue that impact fees unfairly target their industry and make housing less affordable, causing people to buy homes in other areas instead.

In the early 1990s, the two groups hired lobbyists and began making major campaign donations to stop new impact fees from being passed.

Their efforts have been so successful that two counties recently decided to sidestep the legislature. In 2003, Durham County commissioners voted to begin charging the fees without state approval. Granville County followed suit in last year.

Durham County Attorney Chuck Kitchen said the county doesn't need anyone's permission. State law allows counties to charge homeowners fees for essential services such as water and sewer. Schools, he said, are no different.

Former Durham Mayor Nick Tennyson sees a crucial distinction from typical service fees. A home builder paying a water fee gets a pipeline in exchange, but a schools fee can be spent anywhere in the school district, he argues.

To Tennyson, who now heads the Home Builders Association of Durham, Orange and Chatham Counties, the bigger question is whether developers ought to be singled out to pay for a community benefit.