From: Roger Stancil
Sent: Wednesday, May 14, 2008 6:05 PM
To: Frank Tew; Kevin Foy; Manager; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]
Cc: [email protected]; Carlo Robustelli; Carol Abernethy
Subject: RE: tax increase

 

Mr. Tew,

Thank you for your questions. I asked our Business Management Director to research your question so we could assess the situation and provide a response to your concerns.  He provided the information below which I believe is useful and helps explain the different environments in the communities referenced.  It is unfortunate that municipalities in North Carolina are limited by the State to such a great dependence on the property tax for revenue.  The Council constantly seeks additional revenues sources from its legislative delegation, but the General Assembly has kept our options limited.

 

 

The WSJ article does not provide enough information to make a valid comparison of tax rates.   If you look at what $ 400k buys you in each of the three locations, the discrepancy in the tax numbers looks more understandable.

 

 

Chapel Hill

Cambridge

Boulder

Price

 $                       399,000

 $                        419,000

 $                       415,000

Sq Footage

                               2,021

                                    931

                               1,052

Rooms

4 bed/2 Bath

3 bed/1 Bath

2 bed/2 Bath

Description:

Single family house on wooded 1/2 acre lot close to medical center

3rd floor walk-up condo overlooks park near subway (175mo. Maint. Fee)

Single family home - 1911 bungalow convenient to town & university

 

These homes are comparable in price only!  A quick check of real estate listings in Cambridge suggests that a 2,000 square foot home similar to the one in Chapel Hill will cost between $700-800k.  I imagine that the same is true in Boulder.  As I  mentioned previously, Massachusetts has a very different tax structure that allows commercial property to be taxed at more than double the residential rate.  In addition, Cambridge has a residential exemption for owner occupied homes that further reduces the residential property tax.  This allows Cambridge to generate 63% of its tax levy from the commercial sector allowing them to keep the residential tax rates relatively low.   Add to that the fact that their two major universities are on their list of top 10 taxpayers with MIT number 1 on the list contributing 10.5% ($24mil) of their annual tax levy.  In the City of Cambridge’s publication “Understanding Your Taxes” they list the Tax bill on a $400,000 home as $1,466 and the Tax Bill on an $800,000 home as $4,458.  If you bought a comparable house in Cambridge your taxes may be 20-30% lower than Chapel Hill, but given a tax structure that favors residential property over commercial, that makes sense.  If you look at the tax structure in Boulder you will find that they have a larger menu of tax options that allows them to keep their property taxes low.  The chart below shows some of the taxes levied in Bolder.  Because of this progressive menu of taxing options Boulder gets only 10% of its operating revenues from property taxes and 39% from sales taxes.  In contrast we get more than 50% of our revenue from property taxes.  I can only speculate as to what Chapel Hill would do given the taxing options available to Boulder, but it is a safe bet that the difference in the real estate taxes paid for comparable homes between the two jurisdictions would be very different.

 

I think a comparison of local government expenditures per resident and an analysis of services may provide a more accurate “apples to apples” comparison of efficiency.  Let me know if you want me to take this comparison further.                 

 

 

Boulder 2008 Taxes

Type of Tax

City %

State %

County %

*RTD %

Total

Sales

3.41%

2.90%

.65%

1.20%

8.16%

Use

3.41%

2.90%

0

1.20%

7.51%

Construction Use

3.41%

2.90%

.65%

1.20%

8.16%

Food Service

3.56%

2.90%

.65%

1.20%

8.31%

Accommodations

5.50%

2.90%

.65%

1.20%

10.25%

Admissions

5.00%

0

0

0

5.00%

 

 

 

 

Roger L. Stancil
Town Manager
Town Manager's Office
Town of Chapel Hill
405 Martin Luther King Jr Blvd
Chapel Hill, NC 27514-5705

Phone: (919) 968-2743
Fax: (919) 969-2063

 

 

Note:  Mail sent to or received from the Town Manager is subject to publication under the provisions of the North Carolina public records law.

From: Frank Tew
Sent: Tuesday, May 13, 2008 4:04 PM
To: Kevin Foy; Manager; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]
Cc: [email protected]
Subject: tax increase

 

Dear Mayor Foy,  Mr. Stancil, and Council Members:

 

The recent suggestion of a property tax increase in Chapel Hill is alarming.  The current property taxes seem to be too high;  now there is a proposed increase of 11%.   A column this past week in the Wall Street Journal showed just how high OUR property taxes are compared to other places.

 

The Money's Worth: College Towns piece by Beth Decarbo had similar priced residences in Cambridge, Mass. (Harvard), Chapel Hill, NC, and Boulder, Colorado (U. of Colorado).  Compared to the other two areas, our property taxes were in the stratosphere.  

 

Here are the comparable residences property taxes: 

Cambridge, Mass.------$1.094/year

Boulder, CO--------------$2,078/year

Chapel Hill---------------$5,026/year

 

I appears that our property taxes are 460% greater than Cambridge and 240% greater than Boulder when comparing residences that are in a similar price range (around $400,000).  

 

Property in Chapel Hill is expensive and the property taxes are too high already.  At this rate, one thinks that only the very rich and the homeless can live here.  There will be no diversity.

 

Please rethink your approach to the Chapel Hill budget:  vote no on a property tax increase.  Recall that the transfer tax was soundly defeated at the polls by a margin of 2 to 1.  

 

Sincerely,

 

Frank Tew 

 

PS I have emailed the article to many of you but it was rejected by Mayor Foy's email.  I have a copy if any of you want it.