Holly Springs’ draft budget lowers tax rate, increases some fees to accommodate growth | Raleigh News & Observer

Holly Springs residents will see a slightly lower property tax rate but an increase in some water and sewer fees in July if the town manager’s proposed budget is adopted.

These changes are symbolic of the benefits and the challenges associated with the town’s rapid population and development growth. Town officials and staff already are bracing themselves for a resident and building boom over the next decade and beyond.

For the 2016-17 fiscal year, Holly Springs Town Manager Chuck Simmons is recommending lowering the property tax rate to 43.25 cents per $100 valuation, from 43.5 cents. This is only a difference of a few dollars per year for a home valued at $100,000.

“It wasn’t an easy number to get to,” Mayor Dick Sears said of the tax rate.

Simmons was able to recommend a slight tax decrease, largely because of Wake County’s property revaluation last year. As a result, some residents and business owners may be paying more, less or the same in property taxes as this fiscal year, based on their reassessed property values.

Ultimately, the tax rate would remain revenue neutral, meaning Holly Springs would collect the same amount of money as this fiscal year, despite the tax decrease, because of an overall increase in property values and a growing population.

“While our finances have remained consistently robust over the last year, we still feel it prudent to budget conservatively,” Simmons said.

Growth and its consequences

The population of Holly Springs is expected to increase 58 percent in the next 10 years – jumping from about 31,000 to nearly 50,000 people. For every three people living in town today, there will be four people by 2020 and five people by 2025.

And more people brings more rooftops – an estimated 5,600 of them. More homes and businesses generate more property tax revenue, but also can put additional strain on town facilities.

As a proactive measure, Simmons is recommending an increase to water and sewer monthly access fees totaling $2 per month, or $24 per year. There would be no change in utility user rates.

The town now uses some of its water and sewer reserves to pay for related debt and interest. Simmons is proposing the fee increase to reduce the town’s reliance on these reserves so they will be available for unforeseen repairs and facility upgrades and expansions that are needed as the town continues to grow.

A large portion of the water and sewer reserves are earmarked for related projects that the town will have to undertake in the next five to 10 years, Simmons said.

“When you take out the earmarks … our reserves are going to be getting pretty low if we don’t take action now,” he said. “It could ultimately mean large (utility fee) increases in the future.”

With numerous capital projects facing the town in the coming years as it continues to grow, councilman Jimmy Cobb said town officials and staff need to continue to keep the future in mind.

“We need to maintain a healthy fund balance and fund reserves so in the future we are able to, as those projects go online, we are able to fund them without raising taxes if we can help it,” he said.

Looking toward the future

Simmons said the town typically is forecasting for 10 to 20 years in the future.

“We are consistently looking at what our long-term infrastructure needs will be,” he said.

Transportation needs continue to be one of the top priorities among Holly Springs officials and staff as population growth and commuter traffic continues to cause more congestion in town.

Two road improvement projects that will relieve congestion in one of the most traffic-congested areas in Holly Springs began in April after years of planning. They will cost more than $14.5 million. The town will be responsible for paying for one-third of that total.

Construction at the intersection of N.C. 55 and Avent Ferry Road, which will create a type of superstreet, is expected to be completed in October 2016.

The Main Street extension project will extend the road across N.C. 55 to Piney Grove Wilbon Road, which will help move traffic to southern Holly Springs. It is expected to reduce traffic turning left from eastbound Avent Ferry Road to northbound N.C. 55 Bypass by 25 percent. Completion is expected in September 2017.

Future traffic congestion also is anticipated primarily on state-owned roads, Simmons said.

But projects on state-owned roads can take years to come to fruition because the planning process, which involves federal, state and local agency coordination, can take anywhere from five to 10 years or more before construction can begin.

“The South Main Street extension project, by the time that it is completed … will have been close to 10 years since we first started talking to N.C. (Department of Transportation) about the project,” Simmons said.

“The town has to be really diligent in identifying and projecting what problems there are a decade from now and start working on strategies to address those issues.”

The Holly Springs Town Council plans to meet at 5 p.m. on May 17 to further discuss the proposed budget.