AGENDA #4e

BUDGET WORKING PAPER

TO:                 W. Calvin Horton, Town Manager

FROM:            Roger S. Waldon, Planning Director

SUBJECT:       Exempting or Reducing Application Fees for Churches and Nonprofits

DATE:             June 5, 2000

At the Council’s May 17, 2000 Budget Work Session, we were asked to comment on the feasibility and impact of exempting churches and nonprofit organizations from the payment of development application fees.  This memorandum responds with two options that the Council may want to consider.

Exemptions for Churches and Non-Profits

Can we do it?  Yes, according to the Town Attorney, if it is done carefully.  (Please see attached 5/17/00 memorandum to the Town Council from Ralph Karpinos).   We believe that a defensible argument could be made that religious organizations and other non-profit organizations exempt from property taxes exempt operate in benevolent manner to promote the general welfare of the community, and should not have to pay application fees to the Town for the development of facilities that promote these community objectives. 

Accordingly, we believe the Council could reasonably add this footnote to the bottom of the fee schedule that it adopts for development application fees:  “Note:  Fees are waived for applications from private religious organizations and other private non-profit/property tax exempt organizations.”  This would mean that fees would still be charged for applications from other units of government, the school district, and the University.

How much revenue would be given up if this exemption were added?

We had 36 major development applications last year.  There is no telling, of course, what we might get in the 2000-01 fiscal year.  But, in our April 12 Budget Working Paper, we offered revenue projections for 2000-01 making an assumption that next year’s configuration of applications would be approximately the same as last year’s.  We also assumed that a typical Special Use Permit application would be of a size and nature that it would generate approximately $10,000 in initial fees, $5,000 in final plan fees.  An average Site Plan Review application by our Planning Board would pay $3,400 up front, and then another $1,700 in final plan fees.

Accordingly, I believe it would be reasonable, based on current trends and patterns, to assume that we might receive two “average” Special Use Permit applications and two “average” Site Plan Review applications from religious organizations and/or non-profit/tax exempt organizations during the 2000-01 fiscal year.  If these types of applications were to be exempt from application fees, then approximately $40,200 in application fees otherwise due would not be paid.  ($15,000 each for the Special Use Permit applications, and $5,100 each for the Site Plan Review applications).

Accordingly, I believe it would be reasonable to reduce my April 12 revenue projections for the 2000-01 year by about $40,000 if the Council decides to waive development application fees for private religious organizations and other private non-profit/property tax-exempt organizations.

Reduction in Fees for Churches and Non-Profits

As an alternative proposal, I would recommend that the Council consider a reduction in the fees for churches and non-profits to one-half of the regular fees instead of exempting them altogether.  This proposal would result in a reduction in estimated revenues of $20,000 from those originally proposed on April 12.