What’s next for the Dare County occupancy tax?

By on April 26, 2010

South Nags Head has become the focal point of the push for beach nourishment. (Voice photo)

A move to add 1 percent to the tax that vacationers pay on rental houses and hotels is making headway, but how far it will go remains uncertain.

Dare County commissioners are expected to vote next week on asking for the General Assembly’s permission to increase the occupancy tax to help pay for shoreline management, including beach nourishment.

Still unknown is whether legislators will even consider it.

The legislative short session, which begins next month, is reserved for money matters and non-controversial bills. It will depend on how legislators view the issue, which saw some rough sailing locally, and whether they are inclined to take it up as they deal with more pressing state budget matters in an anti-tax atmosphere.

The county’s Shoreline Management Commission finally reached an agreement on the issue last week, when language in a resolution included other erosion control measures in addition to pumping sand onto the beach. The Board of Commissioners had been waiting for a recommendation from the shoreline panel before scheduling its vote.

As for a consensus on the Board of Commissioners, that won’t be known until Monday, when a resolution to seek authorization for the increase is slated to be on the agenda.

“My sense is that there would be a majority that would make a recommendation to send a request to the General Assembly,” board Chairman Warren Judge said after last week’s shoreline commission meeting. He is also chairman of the shoreline panel.

A super majority of at least 5-2 on the Board of Commissioners in favor of the occupancy tax increase was recommended by the shoreline panel. But the resolution is advisory and the county board is not legally bound by it.

The shoreline commission is made up of representatives from the county and the six towns. State Senate President Marc Basnight indicated earlier this year that he wanted to see resolutions of support from all the local governments before considering support for an increase in the tax to Dare County’s legal limit of 6 percent.

While the shoreline commission became the vehicle for local government support, individual towns were cool to the idea at first — in fact two rejected it — and had to be brought around. If the county does not achieve the panel’s desired super majority, that could raise questions about how strong the consensus is or whether there even is one.

The shoreline commission’s resolution was modeled after one passed by Kill Devil Hills. It said the 1 percent increase should go not only toward beach nourishment, but also for moving threatened structures or for grants to help tear them down. It also said it should be used for other erosion control methods, such as terminal groins, if exceptions were approved by the General Assembly.

That language was intended to address concerns that the shoreline management commission was not doing enough to fulfill the broader mission its name suggests and was focusing solely on expediting beach nourishment for one or two towns. In fact, the commission was inactive until Nags Head announced its $36 million beach nourishment plan.

Nags Head had originally asked for $20 million of the $22 million Shoreline Management Fund, which has been built up by an existing 1 percent of the tax. Under the town’s plan, the first five years of an additional 1 percent would have gone toward paying off a $16 million bond.

Other towns balked at the idea of Nags Head draining most of the fund, even though the town has already invested about $1 million in its project and is close to getting the permitting it needs. A plan proposed by Judge ended that debate. It would use money from the shoreline fund to pay for 50 percent of Nags Head’s project and 50 percent of a project being considered by Kill Devil Hills that has been estimated to cost $20 million.

The extra 1 percent of the tax would generate $3 million to $3.4 million a year. Under Judge’s plan, $2 million would go toward debt payment for Nags Head for the first five years and $1 million would be set aside for Kill Devil Hills. Over time, there would be enough for other towns and unincorporated areas to take care of smaller shoreline projects and for emergencies.

Nags Head’s plan called for the increase to last only 10 years. The shoreline commission’s recommendation did not include a “sunset” clause and would commit the county to using the last available 1 percent only for shoreline management.

The town is still working through a final hitch in getting state permitting — a study of benthic organisms that live in the surf zone. The study threatened to delay permitting until fall, but Oakes said he has taken steps to speed up the process.

Look for updates in The Voice this week on the prospects for the occupancy tax.

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