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| County Manager |
| Mike Ruffin, County Manager |
| 200 East Main Street |
| 2nd Floor, Old Courthouse |
| Durham, NC 27701 |
| Phone: 919-560-0000 |
| FAX: 919-560-0020 |
| Hours: 8:30 AM-5:00 PM
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| Deputy County Manager |
| Carolyn P. Titus, Deputy County Manager |
| 200 East Main Street |
| 2nd Floor, Old Courthouse |
| Durham, NC 27701 |
| Phone: 919-560-0000 |
| FAX: 919-560-0020 |
| Hours: 8:30 AM-5:00 PM
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| Deputy County Manager |
| Wendell Davis, Deputy County Manager |
| 200 East Main Street |
| 2nd Floor, Old Courthouse |
| Durham, NC 27701 |
| Phone: 919-560-0000 |
| FAX: 919-560-0020 |
| Hours: 8:30 AM-5:00 PM
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Impact Fees FAQ
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Durham County Impact Fees |
| 1. What are impact fees? |
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Impact fees are one-time charges assessed against new development and are designed to recover some of the costs incurred by the County for school construction. If enacted, these fees will be collected when developers apply for building permits to construct single-family homes, duplexes, townhomes, condominiums, or apartments. The revenue generated would be used for improvements necessary to accommodate increases in student population. |
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| 2. Why impact fees? |
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Impact fees are a means of providing for the growing needs of Durham County while alleviating the associated burden on existing residents. This method of infrastructure financing is based on the principle that since new development has a significant impact on schools, developers should help pay for a portion of the cost of the additional facilities needed. Interestingly, impact fees are generally used as an alternative source of revenue to pay for future debt; however, some communities use impact fees to avoid debt altogether by paying for improvements on a pay-as-you-go basis. |
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| 3. Why not just keep raising property taxes? |
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Impact fees would provide Durham County with another source of revenue to help finance the cost of school improvements in as much as property taxes cannot accommodate the growing demand for school facilities. In fact, property taxpayers frequently complain about the unfairness of shouldering the burden for new school facilities that are constructed largely to accommodate residents who have purchased new homes, many of whom have never lived in Durham County. |
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| 4. Who pays? |
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The developer of a proposed development pays the impact fee, although the fee is often passed on to the purchaser. Since impact fees would be used to offset impacts that new development will have on the county school system, developments that do not generate an impact to the schools would not be assessed a fee. For example, commercial property or age-restricted communities where children do not reside will not impact school capacity and therefore would not be assessed an impact fee. |
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| 5. What about planned communities for "empty-nesters", or communities of elderly couples, both of which prohibit the housing of children by deed restrictions? |
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There is a Florida case that prohibits the imposition of fees on these types of developments. Consequently, the Durham County Attorney has opined that any ordinance imposing impacts fees in Durham County should provide a similar exclusion. |
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| 6. Are Impact Fees always paid by developers? |
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Homebuilders and realtors claim that impact fees are always passed on to the purchaser. However, most studies disagree. For example, a study emanating from The Ohio State University observed, "Another question that arises is the relative share of the impact fee paid by the seller and buyer. The answer depends on the elasticities of demand and supply curves. If buyers of new homes are not price responsive?, they will pay a greater portion of the impact fee. In the short term, both buyers and developers bear part of the burden unless developers offset their share of the fee by reducing lot or dwelling size, quality and amenities." |
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| 7. If revenues are not enacted what will happen to our schools? |
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Durham County schools are already overcrowded and many classes meet outside of the school building in temporary, portable classrooms. In addition, cafeterias, media centers, and other support facilities at some schools are no longer able to accommodate the recent increases of additional students. Additional growth will only add to the problem. Since property taxes cannot keep pace with school construction, there is a very real possibility that needed improvements will be delayed unless and until some other alternate source of revenue is found. |
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| 8. Will impact fees lower the tax rates on older residential properties? |
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If impact fees are imposed, Durham County would not have to raise property taxes as much to pay for the debt service associated with school improvements. The County's Capital Improvement Plan has four bond referenda planned over the next nine years. At present, the property tax rate will be increased 2.5 cents to pay for debt service associated with five issues that voters approved on November 6. Impact fees would enable the County to reduce the property tax rate increase necessary to pay for the increased debt service. |
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| 9. Can the impact fee be waived for affordable housing? |
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No, the law does not provide for impact fees to be waived; however, the County can establish an incentive fund to help developers who are willing to build affordable housing. Incentive payments would help to offset the cost of impact fees paid and avoid a negative impact on affordable housing in Durham County. |
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| 10. Why are we talking about impact fees when there's a bond referendum to pay for schools? |
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Voter approval of bond referenda enables the County to issue debt for school improvements. Normally bonded indebtedness is amortized over a twenty-year period, meaning the County would be required to make a payment every year for twenty years. Impact fees would be used to help pay for the debt associated with school bonds; however, impact fees can only be used to pay for improvements related to capacity (increasing classrooms, building new schools, enlarging supporting facilities due to student growth, etc.). In other words, property taxpayers would continue to pay for the cost of school improvements that have nothing to do with increasing capacity. |
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| 11. With all of the growth in our area, why is there not a surplus in the budget? Is the county spending its money appropriately and where is it all going? |
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One of the most common misunderstandings is that property taxes pay the full cost of County services. However, for the fiscal year ending June 30, 2001, the County collected almost $133 million from property taxes while general fund expenses exceeded $400 million. In other words, property taxes paid only 33% of Durham County's general fund expenses.
School funding in Durham County is already significantly higher than most other North Carolina counties. This year, for example, the Durham County Board of Commissioners approved a $72 million appropriation to the Durham Public Schools, which does not include a $15.5 million payment for bonded indebtedness incurred for school improvements. Citizens are often surprised to learn that Durham County spends $87.5 million a year for the Durham Public Schools, almost 66 cents from every property tax dollar collected in Durham County. | |
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