Town grapples with how to pay for services when so much of municipality’s land is owned by Elon University and three other non-profit organizations that therefore don’t pay any property taxes
Elon’s board of aldermen considered the possibility of raising the property tax rate when it convened for its day-long annual retreat on February 12.
Though the prospect of raising the current rate of 45 cents per $100 valuation was put forward by town manager Richard Roedner last year, the hike was removed by the aldermen when it came before them for review last spring.
While Alamance County municipalities, like Elon, managed to rake in significantly more sales tax dollars than they had anticipated amid the pandemic, Roedner expressed concern during this year’s retreat that Elon’s finances were too much at the mercy of the local economy since the town’s sales tax revenue far outweighs that of its property tax.
During the 2019-2020 fiscal year, the total sales tax revenue for the town was $3.2 million. Town staff estimates that the town will receive about $2.7 million at the end of this current budget year. Meanwhile, the estimated property tax for the current year is $2.6 million, Roedner told the newspaper last week.
In order to shift the balance to have property taxes comprise the majority of the town’s revenue, Roedner told the aldermen that property taxes would have to be raised by 10 cents, a move he didn’t advise. A single cent added to the tax rate would generate $65,000.
“My goal wasn’t to say we need to raise property taxes to be comparable with sales taxes,” the town manager said.
“Property tax, year in and year out, you know you’re going to get it,” he explained. “Sales tax, year in and year out, you’re hoping you’re going to get it.”
Though the town is preparing for the arrival of 250 homes across two developments in the coming years, the new projects, which have been annexed into the town, will require additional town funds for water and sewer, public safety, and public works services, among others, he said.
Town’s four non-profits are exempt from paying property taxes
The issue of securing revenue is also complicated by Elon’s position between Burlington and Gibsonville, which allows the town to only grow, for the most part, to the north. Within its already developed areas are Elon University and three retirement facilities: Twin Lakes, Blakey Hall, and the Oaks. Being non-profit entities, none of the institutions pay property taxes, though the students and facility residents contribute to the town’s sales tax earnings.
Roedner did note, however, that the university and Twin Lakes voluntarily contribute about $145,000 and $50,000, respectively, on an annual basis. As non-profits, none of the entities are required to pay anything to the town.
Most of the donated funds are dedicated to the town’s public safety departments, which cover the taxpaying residents along with those attending the university or living in the retirement facilities.
For the fire department alone, chief Alva Sizemore explained, about half of calls for service in 2019 — 864 out of 1743 — came from the four non-profit institutions.
Additionally, the university’s student population comprises over half of the town’s population, with 6,291 undergraduate students residing in the town this school year. As of 2019, the town was estimated by the federal census bureau to have 12,232 residents.
Alderman reintroduces idea for fee for students
Acknowledging the initial backlash she received from students and university officials last year, alderman Emily Sharpe again floated the idea of having students pay a fee per semester to contribute to the town’s police and fire departments.
That fee, she reiterated, could be $100 to $200, the former of which would bring in almost $1.3 million per year. Additionally, she suggested, the fee amount could be adjusted to be equitable to students with lower incomes.
Remembering the phone calls she received from students and university officials following her original pitch last February, Sharpe said, “In my discussions with the students, the more that they understood the fact that the university wasn’t contributing in the way that we thought they should, I didn’t have a single student that I talked to — and I talked to several — say to me that they thought it was a bad idea.
“They actually liked the idea, and they thought that they should be paying for some of those services and didn’t realize that they’re not paying for those services,” she added. “I don’t think it’s inappropriate to ask the university to contribute greater than a million dollars a year.”
Other recent Elon news coverage from The Alamance News/alamancenews.com:
Town of Elon department heads have long (and expensive) wish list for new projects, spending, personnel (March 4 edition): https://alamancenews.com/elon-dept-heads-request-3-new-staff-members-during-annual-retreat-looking-for-even-more-in-years-ahead/
Elon neighbor voices concern over littering by partying students in residential areas of town (February 25 edition): https://alamancenews.com/littering-by-university-student-neighbors-prompts-elon-homeowner-to-demand-tougher-ordinance-and-or-enforcement/
Elon University names new campus police chief (February 25 edition): https://alamancenews.com/elon-university-names-new-police-chief-for-campus/
