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Town Eyes New Tax Districts for Sand Project

A beach renourishment project underway in 2015 at North Topsail Beach. File photo

Posted on December 14, 2020

Revenue from a possible town-wide property tax increase in North Topsail Beach next year will not likely be funneled solely to pay for a joint, 50-year federal beach project.

North Topsail Beach aldermen reached a consensus last week to create two municipal service districts within town as a way to bring in funds to cover its portion of the estimated $672 million project.

The consensus reached during the board’s Dec. 3 meeting was to give the town’s financial advisers a path to follow in hashing out a plan to be presented to the Local Government Commission. The board did vote on the matter. Mayor Joann McDermon was not at the meeting.

Municipal service districts are used by local governments to pay for projects by collecting additional property taxes from the property owners who stand to benefit most. Money the town would collect from an additional property tax that would be levied in each of the districts – one soundside and one oceanside – would contribute to the estimated $3 million-a-year price tag of the proposed 50-year project.

The board has not determined how much additional property tax would be charged in the districts as it moves forward with plans to initiate paid public parking at its beach accesses and request legislative approval to increase the town’s occupancy tax – all of which would be collected to fund the federal project.

Under the proposed project, North Topsail Beach will enter a project partnership agreement with the U.S. Army Corps of Engineers and Surf City to renourish 10 miles of Topsail Island’s oceanfront shore every six years for the next half-century. The project would nourish all 6 miles of Surf City’s beachfront and the southernmost 4 miles of North Topsail’s beach.

Under the agreement, the Corps would pay 65% of the project’s initial construction. The towns and state would pay for the remaining 35%.

North Topsail Beach aldermen have been discussing how to pay their town’s portion of the proposed federal project, pay off an outstanding loan the town received for a previous beach project, and generate revenue to cover the cost of capital projects, including a building for the town fire department.

Alderman Tom Leonard said he was not opposed to a “slight” property tax increase across the board to beef up revenue in the town’s general fund.

“I’m not in a favor of a town-wide increase for the federal project,” he said during the meeting.

If the board puts money generated from a town-wide property tax increase into its beach fund then that money would go straight toward the payment of the town’s U.S. Department of Agriculture loan, Leonard said.

Costs for a proposed a joint federal beach renourishment project with the Army Corps of Engineers and Surf City have soared since first proposed a decade ago. Image: Corps of Engineers

The town is paying down the $16 million loan it received for a renourishment project known as Phase 5 along the southernmost portion of its beach, the same part of shoreline that is included in the proposed federal project.

The town is paying about $900,000 a year on that loan.

Doug Carter, president and managing director of the municipal consulting firm DEC Associates Inc., told the board that he was updating a financial model on paying off the loan by fiscal 2026 to present to the Local Government Commission.

“We’re very near on that,” he said.

Alderman Richard Grant said he favored establishing two municipal service districts and imposing a town-wide tax increase, the latter of which he would want to see go to the general fund.

Mayor Pro Tem Mike Benson said the federal project should be considered a town-wide project because previous beach projects, including Phase 5, were paid for with town-wide taxes.

The occupancy tax rate on vacation rentals, rooms and accommodations in North Topsail Beach is 6%. Revenues from that tax are split equally between Onslow County and the town.

Onslow County officials have said they will support the town’s request of the North Carolina General Assembly for an occupancy tax increase.

Aldermen have to decide whether to ask for a 1%, 2% or 3% increase.

Getting any one of those may be an uphill battle.

Leonard said he and fellow members of the Topsail Island Shoreline Protection Commission had a conversation before the meeting last week with Connie Wilson, the towns’ lobbyist, about possibly raising the occupancy tax. The commission represents the three towns on Topsail Island, including Topsail Beach.

He said Wilson indicated getting legislative approval to raise the occupancy tax may be difficult.

DEC Consulting advisors is expected to present financial data to the board at a specially scheduled meeting Dec. 15. That meeting is set to begin at 10 a.m.

Source: coastalreview

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