Ad Valorem (real property) Tax Increase Frequently Asked Questions

My property (ad valorem) tax bill shows an increase in both the Dare County and the Town of Duck tax levy, is this correct?

My ad valorem tax levy increased greatly, why?

What is the average tax levy resulting from the Town of Duck ad valorem tax rate increase?


If the assessed value of my property went down, why did my ad valorem tax levy go up?


What was the average decrease of values of classified properties in the Town?

What is the revenue-neutral rate?


What is the additional revenue from the ad valorem tax rate increase being used for?

Why didn’t the Town just cut items and services from the budget to make up the difference?

Why should I have to pay for beach nourishment?

How does the Town’s tax rate compare to the other municipalities in Dare County?


Is there a limit to how much the Town’s ad valorem tax rate can be increased?


I am unable to vote in Town elections, how can I ensure that the Town Council is listening to my concerns about taxes and other issues and that this is not a case of “taxation without representation?

 

^ My property (ad valorem) tax bill shows an increase in both the Dare County and the Town of Duck tax levy, is this correct?

Yes, both the Dare County Board of Commissioners and the Town of Duck Council adopted ad valorem tax rates above the respective revenue-neutral rates calculated as a result of the recent county-wide real property re-valuation.  Dare County’s ad valorem tax effectively increased 3.25 cents over the revenue-neutral tax rate of $0.3975 to $0.43 per $100 of assessed value and the Town of Duck’s ad valorem tax rate effectively increased 3.66 cents over the revenue-neutral rate of $0.1734 to $0.21 to per $100 of assessed value.

Please note that this FAQ only refers to the Town of Duck portion of the tax bill.  For questions about the Dare County portion of the bill, please contact Dare County.  The Dare County website can be found at www.darenc.com.

 

^ My ad valorem tax levy increased greatly, why?

There are two main reasons that the ad valorem tax levy increased for the majority of property owners in the Town of Duck.  The first reason is that the county-wide revaluation of properties was completed and is effective for this tax bill cycle.  Town-wide property values decreased 27%.  The decrease in assessed property values was greatest for oceanfront properties and commercial properties, thus other classified properties take on a larger percentage of the tax burden.  In addition, the Town Council adopted an ad valorem tax rate for the current tax billing cycle that is an effective tax increase of $0.0366 above the revenue-neutral rate.  That is, this adopted ad valorem tax rate equates to a property tax increase of 3.66 cents.

 

^ What is the average tax levy resulting from the Town of Duck ad valorem tax rate increase?

The average tax payer in the Town of Duck see an increase of $211 in the taxes levied on their property by the Town.  5.2% of taxpayers will see no tax increase or a decrease in taxes; 16.35% of taxpayers will see an increase of $1 to $100; 15.23% will see an increase of $101 to $150; 20.46% will see an increase of $151 to $200; 14.5% will see an increase of $201 to $250; 22.78% will see an increase of $251 to $500; and 5.48% will see an increase over $500.

Again, please note that these figures only relate to the Town of Duck portion of the tax bill. 

 

^ If the assessed value of my property went down, why did my ad valorem tax levy go up?

94.8% of the taxpayers in the Town of Duck will see an increase in their ad valorem tax levy.  This is largely due to the 3.66 cent ad valorem tax rate increase. 

The reason that most properties will see an increase in the tax levy despite a lower assessed value of their property is that two main classifications of properties, oceanfront and commercial, saw larger decreases than other classified areas.  This means that other areas: ocean influence, sound/canal front, non-influence, and condominiums/townhouses, are more greatly impacted by ad valorem tax rate adjustments.

If you think there has been a mistake with the appraisal of your property, please contact the Dare County Appraisal Office at 252.475.5940.

 

^ What was the average decrease of values of classified properties in the Town?

Commercial:                                         -40%
Oceanfront:                                           -31%
Sound/Canalfront:                              -27%
Ocean Influence:                                 -26%
Non-Influence:                                    -26%
Condominiums/Townhouses:       -06%

^ What is the revenue-neutral rate?

The revenue-neutral rate is the ad valorem tax rate that is calculated after a property re-valuation that, if adopted as the ad valorem tax rate, would generate the same amount of revenue as would have been generated by the previous ad valorem tax rate had a property re-valuation not taken place.

For example, the Town of Duck’s previous ad valorem tax rate was 12.5 cents.  The Town’s real property values decreased 27% as a result of the re-valuation; therefore, to generate the same amount of revenue as before the re-valuation, the ad valorem tax rate would need to be 17.34 cents.  This is the revenue neutral rate.  The Town Council ultimately adopted an ad valorem tax rate of 21 cents; 3.66 cents over the revenue neutral rate.

^ What is the additional revenue from the ad valorem tax rate increase being used for?

Additional revenue from the ad valorem tax increase is needed for three major reasons; 1. after a one year respite in the loss of shared revenues (sales, occupancy and land transfer taxes shared with Dare County and the other five Dare County municipalities based on tax levy percentage), the Town is again in a position where a systematic decrease can be expected in these revenue sources, increasing the ad valorem tax allows the Town to mitigate against this loss in the future; 2. to position the Town for the future, an ad valorem increase is necessary to fund the Town’s operations and capital projects, and provide appropriations to the fund balance; and 3. in order to move forward with the erosion mitigation/beach nourishment project, it is necessary to increase the ad valorem tax rate to fund the permitting and engineering associated with the project. The Town Council approved the rate increase with the goal of not having to consider an increase in the ad valorem tax for at least five years.

In the FY 2014 Budget, of the $0.0366 ad valorem tax rate increase, $0.026 goes towards funding beach-related projects ($75,000 for expanded beach planting, fertilization and sand fencing, $300,000 for engineering and permitting for the beach nourishment/erosion mitigation project, and $31,650 for legal services to obtain easements for the erosion mitigation project) and $0.0106 would go towards general Town operations, including an appropriation to the fund balance of $126,871.

^ Why didn’t the Town just cut items and services from the budget to make up the difference?

As a part of the budget process, the Town Council examined the level of service being provided in all areas and determined that the level of service was appropriate.  The tax increase is largely a result of the need for a beach nourishment/erosion mitigation project and the cost of permitting and engineering for this project.  The Town Council determined that this expense should be shared throughout the Town’s tax base and that, because it is such a significant change in services provided by the Town, other essential services should not be cut to fund the project. 

 

^ Why should I have to pay for beach nourishment?

All property owners in the Town have a stake in maintaining it as a desired location to live, work and visit.  As such, it is believed that all property owners should bear a portion of the burden to ensure that the Town remains a premier destination and that it does not develop a reputation for poor beaches, thus helping to maintain all property values.  The Town Council determined that it was fair that all property owners share in the permitting and engineering costs of the beach nourishment project; however, it is anticipated that only those property owners within the proposed beach nourishment area will fund the construction costs of the project through a municipal service district (the portion not funded by the Dare County occupancy tax) not the entire Town.  

 

^ How does the Town’s tax rate compare to the other municipalities in Dare County?

The Town of Duck has the lowest ad valorem tax rate of the Dare County municipalities at 21 cents.  Southern Shores has an ad valorem tax rate of 22 cents, Nags Head 25.7 cents, Kitty Hawk 30 cents, Kill Devil Hills 32.09 cents, and Manteo 35 cents.  

 

^ Is there a limit to how much the Town’s ad valorem tax rate can be increased?

Yes, the Town Charter limits the ad valorem tax to no more than 10 cents above the rate adopted when the Town incorporated.  The ad valorem tax rate of the Town at the time of incorporation was 20 cents, so the Town is limited to an ad valorem tax rate of no more than 30 cents without approval through a referendum.  This limit does not apply to increases that are part of a municipal service district.

 

^ I am unable to vote in Town elections, how can I ensure that the Town Council is listening to my concerns about taxes and other issues and that this is not a case of “taxation without representation?”

Although only individuals who reside permanently in the Town are eligible to vote in Town elections as specified in the North Carolina Constitution, the Town Council takes seriously the positions of all of its stakeholders, whether they be full-time residents, property owners, business owners or vacationers.  The Town Council strives to make decisions that it feels are in the best interest of the community at large.  To ensure that you have an opportunity to weigh in on decisions of the Town Council follow the Town’s activities on Facebook, twitter and through its website.  In addition, provide an email and you will receive regular updates on all of the Town’s activities.