Durham city officials are working on a loan program to help residents whose property taxes have gone up because of city-initiated revitalization, but it’s unclear still whether residents or the city would bear the costs of administering that program.
The idea sprang from a November city council work session in which longtime residents of the Southside neighborhood complained of an increase in their property taxes as a result of the city’s work to redevelop that area. Residents there saw their tax bills go up $314 on average in 2016.
At a work session yesterday, Mayor Bill Bell pitched a deferred loan program in which residents would get a loan for the difference in their property tax obligation from the previous year. They would only repay the zero-interest loan when they sold or transferred their home. Homeowners would be able to apply annually, but for no more than four years. No vote was taken.
Loans would be available to residents of Southside, Historic Northeast Central Durham, and Southwest Central Durham who have owned their homes for at least five years. There would also be eligibility requirements based on income. The tax increase must be a result of efforts by the city to revitalize a neighborhood or improve homes there.
But some council members took issue with the idea of asking already struggling homeowners to pay back these loans when they sell their homes.
Jillian Johnson said it “makes no sense” to ask these homeowners to pay back their loans when the city gives economic incentives to private developers—for example, the $100,000 given Monday night to a group seeking to redevelop a building on Chapel Hill Street.
“We will never recoup that money,” Johnson said. “We did it because we believe there are benefits to the city to having that corridor redeveloped that will benefit the community in different ways. We are not talking about one hundred thousand dollars. We are talking about very small amounts of money for these communities, and I think there are similar intangible benefits to community stabilization, to neighborhood preservation, to preserving affordable housing. I think nickle-and-diming people who are really struggling to stay in their homes when we are willing to give out thousands of dollars, millions of dollars to companies does not make sense.”
Charlie Reece added that it’s unfair to ask these homeowners to pay back the loans when they’ve done nothing to cause their property values to go up.
“I don’t ever, ever remember us asking anyone except these struggling homeowners to pay back money we’ve given to them for a reason we thought was good and right,” he said. “This city—and I think it was a defensible decision—invested millions and millions and millions of dollars in public money to rehabilitate downtown Durham. We reap the benefits of that, but these are the costs. This is the other side of that coin. For us to sit around this table and say we’re going to get all that public money back in increased taxes, that is not the measure of whether this is the right thing to do in my mind.”
Bell said his comments had been “totally misconstrued.” He argued that this project shouldn’t be compared to economic incentive programs. He said homeowners wouldn’t lose any money but would rather be able to stay in their homes longer because of the city’s assistance.
“Who thought about it? Who on this council made a proposal? Why did that person make this proposal? Because I had a concern about what happened to these individuals because of what the city had done,” he said.
City staff estimate that $116,844 to $141,144 would be needed to assist eligible homeowners in the targeted neighborhoods.
Reginald Johnson, director of community development, explained that there would be about $500 in administrative costs associated with each loan, including about $300 for a title search on the home and another $200 in filing fees. Council members seemed opposed to passing on the costs of the program to loan recipients if it could be avoided.
Council member Don Moffitt asked staff to look into the financial impact of the city paying the fees associated with the loan program, which he said were high relative to the small loans the city would be giving out and could be a burden on the people the program seeks to help.
After Durham properties were revalued about eighteen months ago, Moffitt said he visited Southside residents struggling to pay their tax bills. “They put their tax bills on the table and said you gotta help,” he recalled.
Moffitt said he didn’t see an issue with the city asking for the loans to be reimbursed. When residents sell their homes, he said, they will be worth more and paying back the loan won’t be a burden.