Here’s how Durham may try to help homeowners in gentrifying neighborhoods
This story was updated at 2:59 p.m. March 10, 2020.
Walter Best Jr. owns a 2-bedroom, 1-bathroom white house on Hart Street in East Durham. It has metal, floral columns on a small front porch and an attached, open garage on the side. He bought it in 2001 for $67,500.
In 2019 with new homes in the $200s being built in his area, Best’s home was reappraised, along with the rest of Durham County, and its tax value increased by more than 23%. His property tax bill went from $949 to $1,071, and a total of $161 more than before the 2016 reappraisal.
Best, who works at the VA Medical Center sanitizing surfaces and equipment, has a chronic condition called lymphoedema which causes his legs to swell. He has to pay for medicine and physical therapy appointments, so the higher tax bill causes financial strain when he has to pay it.
“An extra $150 or $300 can be a lot to take in for people,” he said.
A proposed property tax assistance program in Durham, from the The Coalition for Affordable Housing and Transit, aims to address this problem for Durham homeowners who meet income guidelines. City and county leaders will discus it at a meeting Tuesday, March 10.
Tax values rise, incomes don’t
In 2016, Durham County did reappraisals that increased tax values for the first time in years — the average home’s tax value rose by nearly 13%. And then in 2019, when properties were appraised again, the average home increased by more than 26%.
Some neighborhoods were hit harder than others, the average tax value of a home in the Southside community rose nearly 79% in 2019.
“Home tax values in Durham keep rising but incomes do not for many families,” reads the proposal.
The proposal caps property taxes, using household income compared to the area median income. In 2019 the Durham-Chapel Hill AMI was $84,800 for a four-person family.
Under the proposal a Durham resident who lives alone and makes $17,820 per year would pay a maximum of $178 in combined city-county property tax or 1% of their income.
Families making 31% to 60% of the average median income would pay 2% of their income, and those in the 61% to 80% would pay 3% of their income.
To qualify, a Durham resident would need to have owned their home for five years, or have acquired it through an affordable housing program.
There are no age requirements, and a homeowner could qualify regardless of physical condition, unlike other state tax relief programs.
The proposal says roughly 17,600 households in Durham fall into the three eligible low-income groups. It estimates 5,880 households would use the tax assistance, including almost 2,000 who are on the current tax exclusion program: Durham’s Longtime Homeowner Grant Program.
It would cost a total of $4.6 million, split between the city and county to bring on all current grant program users and new users — the county would pay $2.7 million and the city would pay around $1.9 million.
Replace, expand homeowner grant program
The program would expand upon the Longtime Homeowner Grant Program, previously funded only by the city and created in 2017 to help homeowner whose tax bills rose after reappraisals.
The grant program only paid the difference in taxes from the previous year. So if a person’s taxes increased from $1,000 to $1,200, the city paid the extra $200.
And the past program had much stricter requirements; to qualify, a resident had to live in Southside, Northeast Central Durham or Southwest Central Durham neighborhoods, and within 500 feet of a city housing investment. These areas saw the largest tax value increases at the time.
But Jim Svara, of the Coalition for Affordable Housing and Transit, said gentrification has increased property values in other areas of Durham now too.
In early 2019, Durham’s Community Development department recommended ending the homeowner grant program because the participation was too low. Over a year and a half, the city only awarded 24 grants for a total of $10,000, despite staff spending about 285 hours working on the program.
“If we’re going to phase it out, I want to be certain that we have exhausted all of our options,” City Council member Mark-Anthony Middleton said at the time.
Svara said the new program will improve upon the current one, which is so complex it has discouraged homeowners from applying if their taxes did not greatly increase. The Durham People’s Alliance recently endorsed the proposal in its recommendations to city council and the board of county commissioners.
Best expects his home’s tax value to continue to increase and said tax relief could help when he and others must decide between paying for medicine and the roof over their heads.
“All the gentrification in my neighborhood .... people are in hard times,” he said.
What’s next
City and county staff gave a progress report Tuesday at a joint city-county committee meeting. Many details have yet to be worked out, they said, including what qualifies as income and how long a person has owned their house.
One of the main things to figure out is how to pay for the estimated seven to more than 20 employees that would be needed to handle applications.
While most City Council members and county commissioners spoke in support of expanding the tax assistance program, there were worries about the difficulty and cost of implementing it and who should benefit from it.
“I’m really concerned about the complexity of the situation,” Commissioner Ellen Reckhow said.
Wendy Jacobs, chair of the board of commissioners, said the proposal needs a “reality check,” citing money that the school system will be asking for and “a lot of tough decisions to make.”
This story was originally published March 9, 2020 at 3:28 PM.
