Chapel Hill Town Council members say a 1-cent property tax rate hike is needed in the coming year to help the town add to its debt capacity and build big projects sooner.
Chapel Hill faces more than $158 million dollars worth of unfunded capital needs, yet the town can’t borrow money until 2017.
With that in mind, Town Council members on Wednesday informally agreed it is time to replenish the town’s debt management fund by raising the property tax rate 1 cent next year, to 52.4 cents per $100 of valuation.
Council member Matt Czajkowski said this will help pay for amenities like parks, greenways and bike paths that town residents want sooner rather than later.
“Those elements, to me, are very significant quality-of-life considerations, what make people feel good about where they live,” said Czajkowski. “For them to be deferred many years into the future I think makes them more of a dream than a reality.”
A penny on the tax rate generates about $755,000 in revenue for the town. Business Management Director Ken Pennoyer told the Council each penny’s worth put into the debt fund translates into approximately $10 million dollars in additional debt capacity.
Other big-ticket items on the capital projects list include a new police station, new fire stations, a waste transfer station and park improvements.
The Council also wrestled with the question of how to raise money to support affordable housing initiatives. Ultimately, Council members settled on a plan that falls just short of the $755,000 funding goal, but doesn’t add to the tax rate.
The Council agreed to delay a solid waste transportation pilot project worth $145,000 and spend $355,000 worth of development fees from the Ephesus-Fordham area in addition to the $188,750 already set aside for affordable housing in next year’s budget.
This is the second property tax rate increase in two years for Chapel Hill residents. Last year, the council approved a 2-cent increase that was split between Chapel Hill Transit, solid waste transportation expenses and the newly expanded public library.
The Council will formally vote to adopt the 2014-2015 budget on Monday.