The Beacon is on hiatus for a week. We will return next week with news and opinion about a potential beach nourishment project in town and its financing, the search for a new town manager, and options for recycling.
We will cover today’s Town Council workshop in detail next week. The only actions the Council took were to delay for another two weeks the selection of a search consultant to assist with the hiring of a new town manager and to request that DEC Associates, whom the Council hired in October as a beach nourishment financial consultant, deliver figures on the tax-increase impact a potential project would have on property owners in various “municipal service districts.” This was information the Council expected to receive from DEC Associates at the workshop.
Former Town Manager Peter Rascoe gave notice of his intent to retire on Sept. 1, 2019 in mid-July. Town staff identified the three search firms the Council is considering now in early September.
Because there was some confusion today about Dare County’s anticipated funding contribution in a beach nourishment project, we reproduce below an excerpt from an article we wrote Nov. 9, 2019, after Dare County Manager Bobby Outten and Dare County Commission Chairman Bob Woodard appeared before the Town Council on Nov. 6, 2019 to speak about the county’s funding. I spoke with Mr. Outten by telephone on Nov. 8 to clarify some of the points he made at the Council meeting, which was held the day after the municipal election. The Dare County officials appeared at the invitation of the Town Council.
THE BEACON, 11/9/19:
$7.5 million is currently available in BNF for project(s)
Currently, Mr. Outten explained, there is $7.5 million in the Dare County Beach Nourishment Fund (BNF) that has not been allocated for other purposes, such as paying debt service and covering maintenance of the projects that have been completed. Part or all of this money is available to be given to a town for its beach-nourishment project.
As The Beacon explained yesterday (11/8/19), the county’s occupancy tax is 6 percent. One-third of the occupancy taxes collected is set aside for beach nourishment. This amount is often referred to as “2 percent,” but it’s actually one-third of the 6 percent. These “2 percent” monies can be used for no other purpose, but to “put sand on our beaches,” Mr. Outten said, and to maintain that sand fill.
The county puts a premium on maintaining beach nourishment, thereby protecting its investment, and anticipates, for planning purposes, that maintenance will occur every five years. In a given beach town, however, maintenance may not be necessary that frequently. Nags Head performed maintenance just this year of its 2011 beach nourishment project.
[UPDATE: On Monday (1/20/20), Mr. Outten informed Chicahauk homeowner Craig Albert that none of the three towns that did beach nourishment in 2017, in addition to Southern Shores at Pelican Watch–Duck, Kitty Hawk, and Kill Devil Hills–had committed to doing renourishment in 2022-23. Mr. Outten told The Beacon in a Dec. 11 meeting that Kill Devil Hills had expressed an interest in delaying its maintenance.]
The occupancy tax money comes into the county as it is collected, according to Mr. Outten, so the BNF “grows and grows, then we spend it down.” What this means is that the unallocated amount can be expected to increase.
Formula for determining how much each town should pay for nourishment
As Mr. Outten explained at the Wednesday Town Council meeting, Dare County paid about 50 percent of the costs for Nags Head’s 2011 nourishment project, which was the first one on the Outer Banks. According to online reporting by the Town of Nags Head, the project’s total cost was $37 million.
When Kill Devil Hills, Duck, and Kitty Hawk subsequently came to the county to ask about funding for nourishment of their beaches, Mr. Outten said he had to figure out “how to fairly allocate county funds” among them. The BNF had insufficient funds to support a 50-50 split for each town, as was done in Nags Head.
What the County Manager eventually did was ask: “How much did Nags Head tax its taxpayers” in order to pay its share of the beach nourishment project? Mr. Outten said he looked at how much Nags Head “spent out of its coffers,” and divided that number by its tax base, to arrive at a tax rate paid by “everybody” in town. It was about 7.85 cents, as he recalled, or 0.0785 per $100 of property valuation. [Today, DEC Associates of Charlotte reported a figure of 7.82 cents.]
When each of the three towns applied that formula—i.e., multiplied their tax bases by the 7.85 factor—it could afford a nourishment project, Mr. Outten said. The county then made up the difference in the costs of each town’s project . . .
Because its tax base is so large, however, when Kill Devil Hills applied the 7.85-factor formula, it “got virtually none of the occupancy-tax money”—because it could afford to do without it—“and that didn’t seem fair,” Mr. Outten said.
KDH and the county negotiated, arriving at a 5.2 factor instead, Mr. Outten said, so “they had skin in the game at some level, and we put some skin in, too, to make it fair.”
Of course, like Nags Head, the three towns didn’t actually apply the 0.0785 tax rate to every taxpayer because they used municipal service districts to tax oceanfront and oceanside property owners at a higher rate than other property owners.
DEC Associates provided no information today that The Beacon had not already learned from the power-point presentation it gave at the Town Council planning session Feb. 26, 2019 or from County Manager Outten’s talk on Nov. 6. In fact, in stating that the county will contribute a guaranteed 50 percent to a town’s beach nourishment project, it erred.
Ann G. Sjoerdsma, 1/21/20