In wake of school-fee ruling, Cabarrus studies options

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CABARRUS COUNTY — After more than a decade of forcing homebuilders to contribute to the bankrolling of new schools, Cabarrus County has learned a lesson:

The North Carolina Supreme Court thinks the idea deserves a big, fat “F.”

Last month, the Supreme Court ruled in favor of homebuilders when it upheld an appellate court decision that said it is illegal to force homebuilders to pay fees for every new home built to fund school construction.

Now, the county has a problem: How to fund school construction?

“This means to the extent we have to build more schools, we’re going to have to find ways to finance them,” said Richard Koch, the attorney who represented Cabarrus County in the lawsuit filed by Lanvale Properties and the Cabarrus Building Industry Association.

“Every school built since 1998 was partially funded with those fees.”

Koch said that the county has at least three options for funding new-school construction: increase property taxes, borrow money or dip into the county’s reserve funds.

But Mike Downs, Cabarrus County manager, said paying for projects in cash is always preferred over borrowing money. That fiscal philosophy is not good for property owners: Downs said the main way the county can generate cash is raising property taxes.

Still, he wouldn’t go as far as to predict an increase in property taxes.

“It’s going to depend on the direction the Board (of Commissioners) wants to go,” he said. “I can’t give you a forecast of when we might see a property tax increase. I can tell you, though, that we don’t have any plans to build more schools for four more years.”

Homebuilders despised the fees, which were required under the county’s adequate public facilities ordinance.

When the ordinance was instituted in 1998, homebuilders had to pay $500 for every new home they built. In 2008, the ordinance was amended and the fees were increased to $8,617 per single-family home, $4,570 per townhouse and $4,153 per multifamily unit.

Koch said the fee amounts weren’t arbitrary.

“The fee was statistically tied to building costs,” he said. “We didn’t just pull that number out of the air; it was developed on a statistical basis.”

Further, he said, the $8,617 impact fee, for example, didn’t cover 100 percent of the cost per student to build a new school. That figure is closer to $13,000 per student, he said. In other words, the impact fee covered only 66 percent of the per-student costs to build, he said.

According to Koch, on average, the cost to build an elementary school in Cabarrus County is $20 million, while it’s $40 million for a new middle school and $60 million for a new high school.

Since 1998, Cabarrus County has collected $8.45 million in school-impact interest and fees, Downs said. That money went toward buying property and designing schools, never for the actual construction of new schools, he said.

Payton Guion can be reached at [email protected], (704) 817-1344 or on Twitter at @paytonguion.