A roofer living near Hillsborough now travels to Virginia to find work. A small local builder breaks ground for one of the few new area projects only to be visited regularly by subcontractors asking for any job. He cannot even keep his own subs busy. A local hardware and lumber store still sees tradesmen every day – but they are asking for work, not supplies.
Home construction is an integral part of our national economy that permeates every local community as well. Not just roofers, but graders, framers, carpenters, masons, plumbers, electricians, landscapers, laborers and a slew of other skilled professionals earn their livings building a house. One builder estimates he employs well over a hundred people during a single home’s construction. Then there are the local retailers and suppliers: wood, tile, flooring, carpet, paint and on and on.
The number of families, our neighbors, whose livelihoods depend on the construction business spreads broad and goes deep. Many of these hard working people are independent contractors, so they don’t have unemployment insurance to fall back. When this business slows, these low to middle income families feel it, quickly.
The real estate market has been slow, even here. And the segment under the most pressure is new homes. In 2008, the Orange County building community sold just half the homes they did in 2007. Project after project is being delayed or cancelled. Future construction plans have slowed to a trickle.
Congress and the Obama administration understand this. They criticized the Bush administration for not focusing more effort on stabilizing housing, which many think is critical to our economic recovery. The new stimulus package tackles the issue. Government officials across the country are trying to assist their local building community.
Except in Orange County, North Carolina.
In December, the Board of County Commissioners voted to add to our local housing community’s burden. The Commissioners increased the tax they impose, called an impact fee, on each new home built here. In Chapel Hill and Carrboro, where the increase will first be felt, the impact fee on a normal family home will grow two and half times over the next three years.
The Orange County impact fee collects money to be used for future construction of new schools. It’s such a controversial tax that, after a handful of counties were granted authority to levy it, the State Legislature has refused since 1991 to allow it anywhere else.
But today’s controversy is not about the impact fee per se. It is whether the tax should be dramatically increased in today’s economy. An examination of the benefits and costs suggests it should not.
If current new home sales trends continue, next year’s increase in the impact fee will fund less than a tenth of a percent of the cost of a new school. Its contribution to school construction is negligible, but the impact on each new home’s cost is consequential. Builders are working to cut costs, lower prices and spur demand. An increased impact fee will make those homes more expensive.
It is not even clear tax revenues will actually increase. After all, when you tax something, you often get less of it. The higher levies may drive buyers and builders away. Now more than ever, buyers are looking for value. When the banks start funding new homes again, where will builders choose to build with their limited resources? In high cost Orange County, or Durham or Alamance, which impose no impact fees at all?
The impact fee’s greatest impact will be on the people who build houses. The Commissioners cannot plead ignorance to this. Builder after builder testified about conditions they’ve never seen before. But their voices, and the hundreds of Orange County families with whom they work and for whom they spoke, were ignored.
The voters of Orange County were also ignored. Last spring they voted overwhelmingly to reject taxing the sale of homes as a means to generate new revenue. Rather than heeding that sentiment, the Commissioners raised the tax on the sale of those homes they could. That decision is democratically tone deaf and autocratically arrogant. They certainly weren’t acting as representatives of their constituents.
Worst of all is the statement this vote made. By increasing a burden on the beleaguered construction trade, it says ‘we don’t care what you’re going through.’ When President Obama calls on all of us to pitch in and work together to revive our economy, the Board of County Commissioners decide instead to pitch another shovel of dirt on many hard working folks’ efforts to dig themselves out from an unprecedented burden.
To those whose honorable trade is building the homes in which we all enjoy living, no amount of assistance right now is too little and any amount of additional burden is too much. The decision in December to raise the impact fee matters. It will have economic consequences. The Board of County Commissioners made a cold December all the more so for some undeserving families.
Mark Zimmerman is a small business owner in the real estate industry in Chapel Hill.
He can be reached at markzimmerman@nc.rr.com or his blog www.RealEstateTriangleBlog.com
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