HAMPSTEAD — What would it take for Hampstead to become an official city? A steering committee of Hampstead residents has put a lot of time and energy into answering that question.
One major question: if Hampstead incorporated — that is, became a town or city — what would its tax rate be?
Preliminary findings of the Hampstead Area Study showed that a city tax rate of 20 cents per $100 would generate more than $4 million in city revenue over five fiscal years. This would provide the funding needed for certain non-county services offered by an incorporated municipality, and falls well below city tax rates of nearby Burgaw (48 cents per $100) and Surf City (41 cents per $100).
Due to the area’s booming population growth and development — and with suburban needs differing from those of the county’s majority rural population — the committee recommended localized police enforcement, planning and zoning, street maintenance, and waste and recycling collection.
Leading the committee is longtime community development guru Suzann Rhodes, who said the group is ready to go public with their research.
“We’re at the point where we’re finishing our research … getting ready to go towards meetings with community members and elected officials,” Rhodes said. “People need to have an informed choice — ‘informed’ being the important word here.”
As population grows, more localized services needed
The study said, that only five deputies from the Pender County Sheriff’s Office currently patrol the 870-square-mile county “per shift” — just two deputies patrol the county’s eastern region.
“Hampstead could have additional local officers and local patrols that are familiar with and focused on Hampstead,” the study said, adding that sheriff’s deputies would continue to cover the area.
To provide for local control of high-speed development currently approved at the county level, the study suggested that a planning and zoning department made up of Hampstead residents was crucial for controlling residential and commercial developments, stormwater runoff, public parks, and road and trail infrastructure.
“It’s time for smart growth, not just more houses,” the study said. “An incorporated Hampstead would control its own zoning, land development regulations, and ordinances.”
The study said that such local control could better organize economic development, identifying land for business, technology, and health care parks.
“We hear a lot about the needs and desires for commercial growth to keep up with the residential growth in Hampstead. Hotels, restaurants — all those things people have asked about and yet the county oftentimes can’t play a direct part in those things coming [to the area],” assistant county manager Chad McEwen said.
Because roads in North Carolina are not managed at the county level, the study showed that $450,000 of grant funds from the N.C. Powell Bill — which allocates transportation infrastructure funds for incorporated municipalities — could fund a city roads department.
“Hampstead is now leaving this money on the table,” the study said.
A city roads department would also relieve financial pressure from local homeowners associations that maintain private roads accessible to the public, according to the study.
Lastly, because three to four private household waste companies clutter residential streets by operating concurrently on multiple days of the week, a municipality could alleviate truck traffic by contracting with a single trash carrier, the study said. Although it would continue as an optional service for residents, it could help drive costs down and limit the number of trucks in residential neighborhoods.
On top of these services, Rhodes said it is important for residents to have its own city hall — the county annex building is not consistently staffed — and to elect officials who represent the concerns of Hampstead, not Pender County as a whole.
Leaving money on the table
“There are lots of taxes that come to a city that don’t go to a county, and we looked at that,” Rhodes said. “You’re not talking about 100 percent funding from city property taxes.”
A financial analysis performed in May 2018 showed the total home value of $2.2 billion in the Hampstead study area would generate more than $1 million per year in property taxes, using the required minimum tax rate of five cents per $100 — or approximately $100 a year on a property assessed at $200,000.
“City budgets vary based on the services provided. Annual budgets for cities with 14,000 to 16,000 populations are typically over $8 million per year,” the study said.
But the committee’s research found that, typically, 40 percent or less of the revenue for most cities of similar size to Hampstead was from property taxes. The study showed additional funding comes to such cities from shared revenues of sales tax, beer and wine tax, utilities sales tax, and funding from the Powell Bill (if the city chooses to have a streets department).
Leland, which incorporated 29 years ago and has a population of 17,956 — similar to the study’s estimated Hampstead population of 15,821 — recently pulled in a total revenue of $10,681,248. Forty percent of this budget came from property tax, 38 percent from sales tax shared by the state, 1 percent from beer and wine tax, and 4 percent from the Powell Bill for its roadways.
After the third fiscal year of incorporation — when a municipality is expected to begin offering at least four city services — the study projected annual estimated expenditures of $4.2 million, including the salaries of a city manager, clerk, police chief, 11 police officers, and other administrative employees. It estimated total revenues of $4.7 million to cover these costs.
Not an overnight process
“If incorporated Hampstead would be one of the larger cities and towns in southeastern North Carolina. It would be substantial,” McEwen said. “But it’s an uphill process to convince the people affected by it that incorporation is in their best interests — they have to educate the community on the benefits, and convince them that it’s something worth supporting.”
Rhodes said that challenges could even present themselves from within.
“There are people on the steering committee just plain against it — just plain about money, about taxes,” Rhodes said.
After the research is publicized and the first meetings are held in January to gather support with residents and locally elected officials — specifically Carson Smith and Frank Iler in the N.C. House of Representatives, according to Rhodes — the committee will need to get a petition signed by at least 15 percent of Hampstead’s registered voters.
From that point, representatives Smith and Iler will take the petition — along with key data, a draft charter that includes the stated form of government, and certification showing a minimum tax levy of 5 cents per $100 — to the North Carolina General Assembly. If approved, the General Assembly will, in turn, send it to the N.C. State Board of Elections for a referendum of Hampstead voters.
“That’s why the process requires a referendum — you don’t want to do anything that’s against the will of the people in Hampstead,” Rhodes said.
It is interesting to note, according to Rhodes, that if the petition gains 50 percent of registered voters’ signatures, the General Assembly often waives the referendum and can approve the incorporation of a town, city, or village (in North Carolina, there are no actual legal or population distinctions between them).
N.C. General Statute § 120-172 confirms that “any incorporation act passed by the General Assembly shall be submitted to a referendum, except if the petition contained the signatures of 50 percent of registered voters the [Local Government] Commission shall not recommend a referendum.”
(Editor’s Note: This is the second of a two-part series examining the Hampstead Study Area. The first explores how the area’s population growth and the widening gap between the needs of urban Hampstead and rural Pender County underlied the steering committee’s efforts)
Mark Darrough can be reached at Mark@Localvoicemedia.com