What’s up with impact fees in Chatham County?

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What’s up with impact fees in Chatham County?Chatham is the only county in the state with school impact fees — fees that generate an estimated $2.8 million in school revenue each year. 


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“Connecting the curious across the county”
February 2, 2019

What’s up with impact fees in Chatham County?

By: Ari Sen

Some of our astute readers likely noticed in November when Interim County Manager Dan LaMontagne made alarming comments about impact fees during the presentation of the Capital Improvements Plan.

“We’re very worried,” he said. “We are not real interested in the magnifying glass being on our back.”

At the time, we noted impact fees are a big deal, but I wanted to keep digging. So I took a deep dive into the fees and why they matter. Here’s a quick summary:

So what the heck is an impact fee anyway?

Basically it’s a one-time special fee for residential developers.

Developers pay impact fees when they create new residential apartments, single-family houses, trailers and townhomes. The theory is for each new housing unit, a certain number of people will be generated, who will then utilize county resources. The revenue collected from these fees typically goes toward large expenses like water systems, sewers and schools. Under state law, school impact fees can only fund capital improvements such as new buildings or renovations.

Chatham charges $3,500 in school fees for each detached single family, mobile or modular home and $1,100 for each unit in multi-family residences. These fees generate an estimated $2.8 million in school revenue each year.

Why does all this matter now?

To understand that question, you have to take a step back.

On March 20, 2017,  N.C. Rep. Sarah Stevens (R-Surry), the speaker pro tempore of the General Assembly, introduced House Bill 406, which would eliminate all impact fees in Orange County. Two days later, she introduced House Bill 436, which targeted impact fees in municipalities statewide, including Carrboro, Cary, Chapel Hill, Pittsboro, Raleigh and Wake Forest, as well as Catawba and Chatham counties.

Despite lobbying efforts, House Bill 406 was ratified by the General Assembly on June 20. The bill was not subject to governor’s approval. So, upon ratification, it became law.

House Bill 436 was signed by Gov. Roy Cooper, a Democrat, on July 20, but only after an amendment was added by Orange County Rep. Graig Meyer to study impact fees statewide rather than ban them.

Recent lawsuits against Orange County and the Town of Carthage have also questioned the legality of municipalities imposing impact fees.

All of these efforts leave Chatham, the only county in the state left with school impact fees, worried about that money going away.

So why does Chatham need the money?

Chatham is growing. Fast.

A county estimate last year showed Chatham Park alone will generate enough students to require the construction of nine to 11 new schools.

The Chatham capital improvements plan for 2017 to 2025 calls for expanding Northwood High or finishing a new high school in the northeast part of the county by 2020. The Northwood expansion would cost roughly $27 million, according to the Operations Research and Education Laboratory (OR/Ed) at N.C. State. A new school would cost over $47 million.

The CIP also calls for a new elementary school in northeastern Chatham. The OR/Ed projections show that North Chatham and Perry Harrison, both of which have student enrollment of more than 500, will be over capacity in the next five years. The Board of Education recommended the elementary school open in 2019,  requiring an additional 1.6 cents per $100 added to the debt model.

Impact fees will likely to be a large part of the funding of these projects. The county estimates the fees will fund $42.8 million in debt payments between 2010 and 2020.

So wait, why can’t the state just fund all these new schools?

LaMontagne said that’s highly unlikely.

The main problem: state government considers Chatham to be wealthier than it actually is when it comes to distributing money for schools. Though some areas in the country are high income, others, like Siler City, are not. Siler City’s median household income is $27,124 — that’s less than half of Chatham County’s median household income, which clocks in at $57,770.

“That’s really something we are working to get changed,” LaMontage said. “It’s really not right when we have got 95-98 percent on free and reduced lunch in Siler City.”

Because the state won’t fund public schools, the county is forced to go it on their own. According to the most recent data, of North Carolina’s 115 school districts, Chatham ranked 86th in state funding, but sixth in local funding.

Still curious about impact fees, school funding, and county growth? Got a burning question that we didn’t answer? We base our journalism on reader questions, so send them our way if you would like to inspire further reporting on these issues.

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