By WILLARD KILLOUGH III
CAROLINA BEACH - The Carolina Beach Town Council held a budget workshop Tuesday morning, May 16th, to hear an update on proposed rate increases for the 2017-2018 fiscal year beginning July 1st.
Town Manager Michael Cramer explained, "One of the things that Council seemed to be interested in me doing this year was trying to figure out a way to reduce the current tax rate, increase fees in other locations to bring in the revenue that was necessary and increase - or start putting more funds in - our fund balance as we move towards a 50% fund balance goal."
Cramer said, "I think I've come up with a way to do all of that", and the revenue increases he is proposing will generate approximately $301,000 dollars. The proposal calls for a property tax increase along with raising numerous rates and fees for parking, water, sewer and other services.
Cramer proposed increasing parking fees and fines. He said, "The first one is the residential parking permit. That's the sticker that everyone comes in and gets. Those are annual passes."
He explained, "Right now the residential parking permit amount is $5. It is an annual permit. We currently only charge parking rates over six months time frame. We have not changed this program's rates for approximately eleven years. At the present time we bring in about $49,000 to $50,000 dollars in revenue for residential parking fees. That's 2.7 cents per day over that six month time frame that we actually charge for parking. So it's very inexpensive. Our recommendation is going to $10 for that same time frame. That would increase our revenue by almost two fold. So an additional $49,000 and it only brings the cost of the actual service to the residential public up to 5.5 cents per day."
Currently the Town only charges for parking in metered spaces and in Town lots during the busier summer months from April 1st to the end of October. The rest of the year, parking is free.
Councilman Gary Doetsch asked, "Would it be wise to maybe consider adding a month on to both side of our metered season?"
Councilman Steve Shuttleworth said, "We charge for parking six months out of the year. So what happens if we just say, you park year round. If you go down to Wilmington you park year round, you pay year round. Why are we only charging half the year?"
Cramer said, "I'm not real sure. Given the fact that we're doing a parking permit so it doesn't impact the citizens. I'm not real sure why it isn't done year round."
Doestch said he believes previous Council's wanted to offer free parking in the slower off-season months to help encourage people to visit local businesses. He said, "I think it was to spawn that increase on our shoulder seasons. And that discussion I think took place about three years ago in one of our earlier meetings. Even back as far as when I was on Council the first time it was centered basically around the summer season. If you really look at it now, that's only two and a half months. I'm thinking either do it full time or keep tacking on a month at either end of it until you get to full time at some point down the road."
Cramer said, "The one thing I would caution on that is, the amount of revenue that we will bring in during that time for those off-season or shoulder season months, isn't really going to pay much more than what we will have to have for staff to go and do the actual collections."
Shuttleworth said, "Is that just an educated guess? What would make you think that?"
Cramer said, "This year you may get better revenue and it may cover, but next year, it may not because of weather and things like that during those off-season times."
Shuttleworth said, "Well, I sure would like to think about it."
Doestch said, "Until we do that though, we will never know exactly how that's going to pan out."
Cramer said he can research the issue of requiring year round paid parking and eliminating free parking in the off-season.
Doetsch said, "Maybe because you have done such a good job with your budget we can get by without it this year and just have those numbers ready for next year."
Councilman Tom Bridges said, "I think it's something we have to consider in the future."
Cramer also proposed increasing permit fees for golf carts. He said, "They haven't been changed in about eleven years. We have two different tiers. One is for a state registered slow moving vehicle. It's $5 for registered and $10 for a non-registered standard golf cart. We don't bring in a whole lot of revenue from this, however we have been getting a large influx of golf carts into Town. They are mostly residential of course. They are used as residential transport and parking in the parking spaces. Our recommendation is to go up to $10 for the state registered and $15 for the non-registered golf carts. It's only estimated to bring us in about $2,500 but it will keep us consistent so that we are charging the same whether you are parking a vehicle or a golf cart."
Cramer also proposed increasing the rate for parking meters and for paid parking in Town owned lots. He explained, "It seems like our trend is about every four years, adjusting our meter rates. Naturally, they've been adjusted up. Our current rate is $1.50 per hour at a meter and that was established in 2013. We bring in approximately $225,000. Our neighbors to the north in Wrightsville Beach are at $2.50. Downtown Wilmington is at $2.00 now. Kure Beach is free."
He explained, "It seems like between $1.50 and $2.00 seems to be the trend in most coastal municipalities. I'm recommending going up to $2.00 That will bring us in approximately an additional $72,000 just in our metered parking, on street."
Cramer explained, "In the parking lots, this is where we tend to collect our most revenue. It has always been equal to the on-street meter rate. I think keeping the consistency is important. Right now we are at a current rate of $1.50 an hour. $8 per day for a car and $10 for a limo or a bus. Once again, we've changed the rates about every four years and it's a little bit higher on the percentage, about 38.5% difference each time we do that. Mainly because of those differences between $8 and $10 and how long you can stay during the day."
He explained, "We've done no changes in our rates for buses and limos in twelve years. Our recommendation is to go to the $2 per hour, $10 a day for cars and $15 for limos. We are expecting that would bring in another $155,200 and bring our total revenue for increases for parking related to meters and lots up to about $230,000 is our estimate."
Currently the estimated revenue is $485,000. The estimated "Future Revenue" would be $640,200 according to Cramer's presentation.
Cramer said he's proposing increasing fines for parking violations. The current fine for a parking violation is $10. After seven days, it increases another $10 and after 25 days, the fine is $25. He proposed increasing the initial fine to $15 for the first seven days. After that, unpaid citations increase another $15. That proposal is estimated to increase revenues by $20,000 for a total of $70,000 annually.
Cramer explained, "It doesn't bring in a ton of money. It's much more the fear factor that controls that. It is trying to get people to pay a $10 penalty is not that easy. People will honestly look the other way for a $10 penalty."
He said currently the Town collects about 80% of the citation fines issued each year and, "The other 20% stays out there and after about three years typically we waive those because they are not debts that you are going to collect."
Cramer said another proposal is to increase the fee for camping in Freeman Park.
Freeman Park, located beyond the end of Canal Drive on the Northern End of Pleasure Island has been a popular destination for four wheel drive enthusiasts for many years. The Town of Carolina Beach manages the area as a park and charges for vehicle access and camping permits. The cost for the 2017 annual vehicle permit is $150 per vehicle and campsites are $10 per night with a reservation through the Town's website.
Cramer explained, "Currently we charge $10. We've been doing that since we started the camping program two years ago. We bring in approximately $125,000 in revenue. We are recommending going up to $20 per day instead of $10 per day. You'll notice it only brings in about $31,000 but that's me being uber conservative on how much we are going to bring in. I'm anticipating we will lose some participation in the camping program on Freeman Park. You can look at that a couple of different ways. That it's good that we reducing the number of people staying over night and the impacts to the beach over night. It also will limit the number of people that will actually pay to go out there so you are limiting access to some degree. So that could be seen as bad."
Councilman Doetsch asked, "How does that compare to the Carolina Beach State Park?"
Cramer said the State Park charges $30 per night, "That just depends on the amenities that you get."
He said, "At $20, that makes it $30 to get on the beach, $20 to sleep on the beach. So $50 a night. Typically during our prime season you can't rent a hotel room in Town for $50. So it is still a good inexpensive way to spend time at the beach."
Cramer also proposed raising rates for boats docked at the municipal marina on Canal Drive and Carl Winner Avenue. He said, "When I got here I was told the third rail of politics was the marina. Don't touch it. Needless to say we've been touching it and we've been making a lot of improvements in the marina. From our license agreement to the improvements we are trying to make around the marina with lighting and things of that nature. Naturally our bulkhead program has accelerated that because of the damage that we had" from Hurricane Matthew.
He explained, "One of the things that's also identified is, the fact that we will be spending approximately $3 million dollars over the course of multiple years improving the bulkheads around the marina. Somebody has to pay for that. That can be done where the Town just assumes that responsibility and that is part of what everybody's taxes pay for is the cost of those improvements just like we would do for roads or other things. Another way to do that would be to put it on the lease holders or do a combination of both."
Cramer explained, "What you have in front of you is sort of the combination of both. Where, it is an amenity for the entire community and the entire community could pay some of those costs. Right now, the past rate increases have been in the 2 to 3 percentage range and it has been sporadic. Our current rates for a charter boat are $4,000 per year and for the head boats, $11,800 per year. We bring in approximately $165,000 worth of revenue. What I'm recommending is, with the changes to the west side we will have some level of debt. Approximately $500,000 of debt. If we did a 6.3% increase for each of the next three years, that would make it so the debt for that $500,000 would be primarily paid for utilizing the leases. All future changes that we made to the bulkheads would be handled by the citizens through taxes and so fourth. What I'm trying to do is not make it so the entire burden is born by any one particular group."
Cramer said the first year would equal a $252.00 per year increase for each boat captain and generate an additional $10,436 in annual revenues.
Cramer also made recommendations regarding residential and commercial building and facility permit fees. He explained, "Basically, for the building permit aspect, what we are trying to do is make it simpler to understand and simpler to figure. Not necessarily going for more revenue or less revenue, just trying to make it more logical."
Cramer also proposed increasing water, sewer and storm water rates starting July 1st. He explained, "When we went out for our Revenue Bonds. The Revenue Bonds were sold under the premise for each of the first three years of the bonds we would need an 11.5% increase in our utility fees. The last two years would be 5% and then after that we're not sure because things change. At this point, once again I'm trying to split the baby so to speak and do a little bit less of an increase in the fees and less that we have to pull out of fund balance. So it may end up increasing the amount that we have to increase in the last two years or we may have to go to six years of increases but it won't be so significant each one of the years."
He explained, "Last year we did an increase of 11.5%. What I'm recommending for this year is that we do an increase in our water and sewer rates of 10%. One and a half percent savings. Somewhere down the line that savings may have to be made up. It could be in the fourth, fifth or sixth year, we will just have to see. Right now, we can bring in enough revenue with 10%, keep our bonds paid and meet the obligations that we have for maintenance and operations with a 10% increase."
Cramer said the same method applies for increasing the monthly stormwater fee by one dollar per month for a residential home. The increase would bring that monthly rate to $12.10 per month. He is also recommending a 2.1% solid waste fee increase. He explained, "Our contract with Waste Industries basically states that each year they can go up on the rate that they charge us - which we charge the residents - by the South Eastern Region CPI (Consumer Price Index Cost) for solid waste. Each industry has a CPI and each region of the country has a different CPI. The current CPI for that industry is somewhere in the ballpark of 6% however the actual was more around 2%. They suggested to us a rate increase of 2.1% so our cost for each different type of service that we provide for solid waste would go up by that 2.1%. I have a follow up meeting with them later on this week to see if there isn't something else we can do for that."
The contract expires at the end of the 2017 calendar year. Cramer said the Town will consider a plan later this summer to take bids from contractors to provide solid waste services to the Town.
New Hanover County recently completed a county wide property revaluation that took effect January 1st 2017. The last revaluation took effect in 2012 and brought an overall reduction in property values from $34 billion down to $29 billion. That reduction followed a previous revaluation that was conducted during a spike in the real estate market that later collapsed.
Over the past two and a half years, the County has undertaken a full tax revaluation of more than 104,000 parcels. The purpose is to fairly reflect the value of all property and to help ensure that property owners pay an equitable tax based on the value of their property.
That resulted in an increase in property valuation in the County.
Following the last revaluation in 2012, the Carolina Beach Town Council increased the property tax from 17.5 cents to 26 cents per $100 of property valuation in order to remain revenue neutral. The increased tax rate was a result of the revaluation showing reduced property values in Carolina Beach by around 35%.
In order to account for the reduction in value for the tax base (all property values in town) the Council had to raise the rate to generate the same level of revenue they received from taxes the prior fiscal year.
Once the revenue neutral statement is made, a local governing board can vote to raise the rate higher depending on their budgetary needs.
Shuttleworth asked, "You said if we agreed to all these changes here, the budget is balanced. Give me the other two components. How much would you still need to take out of the general fund to make that gap?"
Cramer explained, "In the general fund, if we were to adopt all of these changes and accept 1.5 cents of the increase for revaluation which we would be over revenue neutral by 1.5 cents, we would actually gain approximately $570,000 worth of revenue and we would end up having to pull out of fund balance approximately $990,000."
Shuttleworth said, "We had a reval and in order to get to revenue neutral we would have to come off our .235 to .21. What you're saying is let's split that difference. We can't get quite to revenue neutral at .21. So it's a decrease in the rate but the net effect to most people will be a small property tax increase in their payment. We've gone from an annual budget gap of $1.2 or $1.3 million... and in this case you say you can get that down to about $900,000."
Cramer said, "What you will see in our next budget workshop which is on the 1st of June is the actual total budget and these numbers. I'll get those to you early so you can digest some of them."
Mayor Dan Wilcox and Council member Leann Pierce were not present at Tuesday's workshop.