Ocean View Town Manager Kathy Roth presented three different five-year budget plans to the long-range financial planning committee on Feb. 15.
In version one, there were no rate increases. The town would stick with existing revenue sources.
In version two, the town would bump up building and commercial license fees. In version three, the town would add those fees, plus a $3,000 impact fee for new homes.
And the committee chose ... version 1.5.
The proposed budget that will appear at the March 14 town council meeting will slightly increase building permit fees, by five cents per 100-square-feet, but leave the other fees alone.
Roth anticipated the building permit bump would generate an additional $10,000 per year.
The increase in building permit revenues was initially designed to pump up the town’s contribution to the Millville Volunteer Fire Company.
Council Member Bill Wichmann said the town was getting more bang for its buck from that $5,000 annual donation than from any other budgetary outlay.
Mayor Gary Meredith suggested they double the contribution to $10,000 a year, but not specifically allocate the fees themselves to the fire company.
The committee sidelined the impact fee, although Roth planned to recommend it as a possible revenue source for future budgets.
Meredith said he had a problem with levying impact fees, when the town didn’t really have the services (sewer, or water — yet) that the county offers.
Council Member Eric Magill noted a general impact, as illustrated in the need for the new police station.
However, according to Wichmann, “We were going to build a new police department whether anyone else came here or not.”
Committee Member Marc Grimes said the original intent had been for the impact fee to cover some of the additional costs associated with that project. Magill noted several residents had expressed displeasure over those costs.
Wichmann said the town was bonding for the project, so in essence, people moving to the area would be paying the note, through their tax bills.
He suggested an impact fee might discourage neighboring developments, in the planned growth area, from joining the town through annexation.
“If we’re running this town like a business, then we’re missing a sales and marketing department,” Wichmann said. “If we’re not encouraging people to annex into the town, we’re missing out on some very large (real estate) transfer taxes.”
He suggested the town market the services it did offer, like solid code enforcement and land use planning.
As Grimes countered, the transfer taxes would be nice, but annexation would put more pressure on existing services, and require additional expenditures.
According to Magill, “As the transfer taxes dwindle, the property taxes don’t come close to covering expenses, and you get into this cycle where you keep annexing to pay for the last annexation.”
Wichmann asked Grimes how often the houses in town changed hands (thereby generating more internal transfer tax revenues).
Grimes said seven to eight years was the norm, but in a resort community, once every 10 years would be frequent.
“Also, 25 percent of turnover is people selling their house to buy something new in the community — but no one is building anything to the east,” he said.
Grimes said people were unlikely to sell their home in Ocean View in order to move closer to Route 113.
He also noted the big variable of a real estate slowdown. “We haven’t had one in many years, but growing up in the real estate business, I remember slowdowns in the 1970s and 1980s,” he said.
Magill suggested the state might start losing some if its gambling revenues as neighbors increase gaming. “If that happens, the state might start looking at our transfer taxes,” he said. “They’ve tried to take them away before.”
These revenue pressures notwithstanding, the consensus on the committee was to maintain the status quo (plus the five cent per 100-square-foot increase to building permits).