Cities, towns and counties would lose the power to charge developers for infrastructure and school construction costs under a pair of bills that cleared an N.C. House committee Wednesday morning.
Rep. Sarah Stevens, a Mount Airy Republican who sponsored the bills, argued that the impact fees have created unfair costs on developments, and that some counties have broader powers than others to charge the fees. One of her bills specifically strips the power from Orange County, while the second bill affects the entire state.
“Orange County has really gone sort of hog wild with their fees,” Stevens said, pointing to new UNC student apartments in Chapel Hill where the developer is facing fees of up to $1.6 million to fund school construction. “We’re looking at some bills that will give every county the same type of authority to help with their infrastructure.”
The House State and Local Government Committee approved both bills with a voice vote, although some legislators voted no.
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The change faces opposition from the N.C. League of Municipalities and N.C. Association of County Commissioners. “Completely eliminating all impact fees is not the right answer,” said Johanna Reese, a lobbyist for the county commissioners’ group. She added that her group is working on other legislation to address school and infrastructure funding options.
Orange County officials also appeared before the committee Wednesday to oppose the bills. They argued that eliminating the development fees would likely result in property tax hikes, and they said they’re working with developers of the student apartment complex to lower the project’s fee burden after increasing fees last year.
“Impact fees provide our community with additional options to address growth,” said Todd LoFrese, an assistant superintendent for the Chapel Hill-Carrboro school system.
Only Orange and Chatham counties have authority to charge impact fees specifically to fund schools, while other counties use fees to fund water, sewer and other infrastructure projects. Rep. Bill Brawley, a Mecklenburg County Republican, said that unusual authority likely stems from the power of former House Speaker Joe Hackney, a Democrat who represented Orange and Chatham.
“It messes up affordable housing” by making residential construction more expensive, he said. “It avoids increasing the property tax, so you can brag about your low tax rate while transferring the costs to people who can’t vote.”
Chatham County leaders said the county needs impact fees for schools because it’s a unique county where some areas are experiencing rapid residential growth, while other communities aren’t. “We don’t have many options,” said Debra Henzey, community relations director for Chatham County, adding that the change would mean property tax hikes that “will shift the burden to parts of the county that are quite poor.”
Stevens said House legislators will likely file a proposal similar to a bill filed this week by Republican Sen. Paul Newton of Cabarrus County, which would give all cities and counties the ability to charge impact fees for water and sewer costs but limit it through a formula that would determine how much they can charge.
Stevens’ impact fee bills now go to the House Finance Committee for a vote.