PINE KNOLL SHORES — The future of a special district tax to nourish Bogue Banks’ beaches – a tourism mainstay – may be in jeopardy under a Senate budget proposal.
A small percentage of town voters could petition for a ballot referendum to eliminate special district taxes, which brings in money for future beach nourishment projects here.
That’s if a proposal in the recommended state Senate budget is approved. Legislators return to Raleigh on Monday to start budget negotiations between the House and Senate.
Currently, it would take a city or town board to end the special tax districts through a majority vote in open session. Now that power may switch hands, if the measure passes.
In some areas of the state, the service district tax is used to raise money for downtown development. In Greensboro, where the proposal is coming from, the money is used to improve historic neighborhoods.
In Carteret County, the oceanfront and non-oceanfront special district taxes along Bogue Banks raise money for costly future beach nourishment projects.
The problem is that with the general absence of state and federal money for beach nourishment these days, Carteret County and Bogue Banks town officials have come to rely almost completely on local money for multi-million projects they feel are essential to maintaining the tourism industry that has come to drive the local economy.
Gregory “Rudi” Rudolph, County Shore Protection Manager, said the legislation didn’t take him completely by surprise, but quickly commanded his attention once it became a potential reality.
“Our antennae are certainly up,” he said. “As Joe Biden once said, this is a big, uh, deal,” referring to the vice presidents comment on the signing into law of the Affordable Care Act.
The potential change could be considered unfair to owners of second homes along the beach, many of whom are unable to vote in a Bogue Banks district, since their primary home is located elsewhere. They would not be able to vote in referenda under the proposal from Sen. Trudy Wade, R-Greensboro, even though they pay those taxes here, too.
“These second-home owners have always felt to some degree that they are not sufficiently represented in the beach towns, and this would just add to that,” Mr. Rudolph said. “We’ve all struggled with that at times.”
Brian Kramer, town manager of Pine Knoll Shores, informed the town board of commissioners of the Senate proposal at the regular board meeting Wednesday at town hall.
Mr. Kramer said the N.C. League of Municipalities is in the process of contacting the General Assembly to address the issue, but he recommended the town’s mayor, Ken Jones, contact the state legislature, as well.
Mr. Jones told the News-Times Friday that he’s been in touch with the General Assembly on the Senate bill, in particular, Sen. Norm Sanderson, R-Pamlico, who also represents Carteret and Craven counties.
Mr. Jones believes part of the problem is how the proposal was made and why.
“This was introduced in the budget bill by a senator from Greensboro,” he said. “I think they should have done a local bill. (S)he’s doing something to fix something locally that isn’t statewide. They (the legislature) do things like this and don’t understand the impact statewide.”
Commissioner John Brodman said at the Wednesday meeting because this is the first draft of the bill, he expects to see significant alterations to it before it becomes law.
The Bogue Banks special tax districts are an essential part of beach nourishment plans for the present and the future.
They are included in the county’s master plan developed with the U.S. Army Corps of Engineers’ concerning beach nourishment projects over the next 50 years.
“What the plan shows is that we’ll get anywhere from 66 to 75 percent of our money for projects from the county’s occupancy tax, and anywhere from 25 to 33 percent from these special tax districts,” Mr. Rudolph said. “The exact numbers vary, depending upon the needs at the time, but those (25 and 33) are very high percentages to lose.
“Then you factor in that everyone likes that plan and knows that it’s going to work,” Mr. Rudolph said. “There is a lot of work that has gone into this to get it to the point where everyone is comfortable with it. It’s frustrating to see this included in something that should have been specific to Greensboro.”
Although homeowners here once pushed back against the special district taxes, the concept has become more accepted over the years, according to Mr. Rudolph.
“If you look at it historically, back in the beginning, in the 2001 to 2003 time period, when the countywide referendum for beach nourishment funds failed and the towns did their own districts with a ‘sand tax,’ the numbers were high,” he said.
“I’m not sure exactly what they were, but in Emerald Isle, Pine Knoll Shores and Indian Beach, I think they were in the range of 45 to 48 cents per $100 valuation along the oceanfront.”
In the mid-2000s though, there was a countywide property revaluation that dramatically hiked property values, so to remain revenue-neutral, or as close to it as possible, the towns dropped those rates, Mr. Rudolph said, to somewhere around 15 or 16 cents per $100.
Eventually, the rates dropped even more, to 3 cents or even lower in some cases, in some of the districts.
“What happened is, we found rates that work and that don’t put too much of a burden on anyone, and people understand how it works and how important it is,” Mr. Rudolph said. “Then we get this, possibly.”
Since Indian Beach and Pine Knoll shores have two special tax districts – one for oceanfront property owners and one for non-oceanfront owners who still benefit from beach nourishment but pay lower tax rates – each of those districts would have its own referendum.
That means that in towns that already have very small populations, a tiny number of people would be able to change policy that affects the economic vitality of those towns.
Mr. Rudolph said the county is already working with Sen. Sanderson and state Rep. Pat McElraft, an Emerald Isle resident who represents Carteret and Jones counties, to fight the proposed change and is hopeful that they and others will be able to work out a favorable outcome.
Emerald Isle Manager Frank Rush said Friday that the town had two special tax districts for about a decade but eliminated one of them a couple of years ago.
Now, the one district taxes oceanfront property owners and a few property owners adjacent to Bogue Inlet at a rate of 4 cents per $100 of assessed value.
It’s expected to raise about $270,000 this year, Mr. Rush said, which is more than one-third of the roughly $700,000 the town needs to set aside to pay for beach nourishment projects it expects to be necessary.
Most of the rest comes from the general fund, which is mostly generated by the town’s property tax rate, which is 15.5 cents per $100 of valuation.
“If we were to lose that (special tax district) revenue, we’d have to make it up somewhere else,” Mr. Rush said, and the most likely place would be an increase in the property tax rate for all property owners. That would most likely be a 1-cent hike, since, coincidentally, a penny of property tax generates about $270,000 this year.
Mr. Rush said he’s hoping that the proposed change won’t get through the General Assembly and has already been in touch with Rep. McElraft.
“She’s a strong supporter of beach nourishment and understands how important this is to us,” Mr. Rush said.
He’s also hoping for some help from Sen. Sanderson, although as of Friday he had not been in direct contact with him.
“I understand that this was mostly intended as a measure for Greensboro, and maybe she (the Senator) didn’t understand the implications this would have for the beach towns,” Mr. Rush said. “But any time something like this comes up formally, either as legislation or as a part of the budget, it’s very concerning, and you have to take it seriously. We’re of course very much opposed to it.”
The beach nourishment money is important not only for the obvious reason – paying for nourishment – but also because it figures prominently in two other programs the town counts upon heavily, Mr. Rush said.
First, there’s the town’s beach monitoring and maintenance plan, which is necessary in order to ensure the town can get money from the Federal Emergency Management Agency to help pay for sand lost during hurricanes. Emerald Isle has used that source of money several times, including to pay for sand to be placed on the beach after hurricanes Irene and Isabel. To participate in that program, a town must have a plan, and it must be able to show that there are reliable funds available for that plan.
Second, Mr. Rush said, the town must show the state that it has a solidly funded beach nourishment plan in order to get what’s called a “static line exception” from the state Division of Coastal Management.
Normally, for the purposes of determining how far a structure must be set back from the ocean, the state measures from the first line of stable vegetation.
Because Emerald Isle’s beaches have been successfully and repeatedly nourished, that line is seaward of the old frontal dunes, where the first line of vegetation is found.
If the town couldn’t show it had a solidly funded nourishment plan, it might lose that “exception,” and the setback would have to be measured from landward of the current line.
That would almost surely make some oceanfront houses on the eastern, more erosion-prone end of town nonconforming, which means they could not be built back if damaged beyond 50 percent of their values.
All-in-all, Mr. Rush said, the tax district is a key part of the town’s short and long-term plans to keep a healthy beach and a healthy economy.
Atlantic Beach Mayor Trace Cooper, who is chairman of the county’s beach commission that oversees nourishment projects, was contacted for comment, but could not be reached by presstime.
Anna Harvey contributed to this report.
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