Friday, December 9, 2022

Taxation without representation: Nonresident property owners in some towns are a majority, but have no vote

The state primary elections begin tomorrow morning (Port City Daily photo/MICHAEL PRAATS)
Non-resident property owners get no say in electing leaders to towns they own property in unless they claim it as their domicile. (Port City Daily/Michael Praats)

SOUTHEAST N.C. — No taxation without representation; it’s one of the most well-known phrases from the founding of the United States. In essence, it can be boiled down to the concept that people should not be expected to pay taxes if they don’t have a voice in their government.

At the federal level, this concept holds true with most adults over the age of 18 having a say in electing their representatives, but this isn’t always the case at the local level.

Beach towns and cities like Wilmington might be home for many, but they’re also where you find residences for tourists and second-home owners. In fact, in Carolina Beach, 54% of the housing is considered ‘vacant housing’ — that is, rental homes or second home.

But in North Carolina, non-resident property owners don’t have any say in the cities, towns, or counties they have decided to invest in, at least, not when it comes to taking direct action through voting. According to North Carolina’s constitution, a voter must “be a resident of the state and the electoral district one is voting in.” Further, law requires each of-age citizen to have only one domicile for voting purposes.

“The issue of legal voting residence versus homeownership does come up periodically. A person’s legal voting residence is their place of permanent domicile and where the person lays their head at night to sleep. Whenever that person is absent, he or she has the intention of returning to that permanent residence. A person can continue to vote in their usual NC county if he or she is temporarily relocated, New Hanover County Board of Elections Director Rae Hunter-Havens said.

“If a person moves to another county with the intention of remaining there, then they are no longer eligible to vote in their previous county. Similarly, if a person moves away from a residence and establishes a new residence for an indefinite period, he or she is no longer eligible to vote at their previous residence. A voter’s intent plays a critical role in determining legal voting residence,” she said.

In some communities in Florida, Massachusetts, New York, Vermont and Wisconsin, seasonal residents, with support from apartment owners and businesses, have launched taxpayer associations to protest perceived property tax inequities,” according to an article from the National Conference of State Legislatures.

Carolina Beach and North Carolina as a whole are far from an anomaly, the majority of the states do not permit voting by non-resident property owners.

According to the SCSL, “Three states allow nonresident voting in municipal or town elections:

Carolina Beach Mayor Joe Benson acknowledged the fact that more than half of property owners in the town have no official voice in choosing their representatives, but that does not mean their voices are not heard.

One of the most challenging parts of non-resident property owners is actually getting them involved in local government and making them aware of issues the town is facing, he said.

Using property tax notifications and utility bills could be one way for the town to do that, Benson said. Despite not having an official vote in the way the town is run, he does refer to non-resident property owners as ‘stakeholders’ whose input is important.

Possible impacts

The City of Wilmington's Planning Commission failed to reach an agreement on short-term rentals Monday night (Port City Daily photo/FILE)
Short-term rentals are a hot topic, but what if the majority of property owners get no voice in NIMBY issues? (Port City Daily photo/FILE)

It might seem like common sense to some, one person gets one time to vote, but with more and more second-home owners and investment properties, the lack of a vote could mean local leaders only need to cater to a select few.

For example, if a town has 5,000 homes but only 2,000 of those households actually have a say in who is elected, the will of the minority could determine the future of the town. If only 2,000 residents have a vote and do not even make up the majority of a tax base, special interest and ‘NIMBY’ (Not in My Backyard) issues could set laws. Of course, full-time residents are likely to see their stake in their municipality (or county) as more important than ‘part-time’ residents.

The topic of short-term rentals is one such issue that has been seen not only locally but across the country.

With the ease of renting a home online through apps like Airbnb, more and more investors and second-home owners have placed their homes up for rent to help offset their costs; plenty of investors do it simply as a business.

But as seen in the City of Wilmington, not everyone likes the idea of having new neighbors and ‘mini-hotels’ as neighbors, especially in residential areas. The Town of Carolina Beach has been working on updating its Coastal Area Management Act (CAMA) Land Use Plan and one of the main items of concern from public input has been short-term rentals.

Despite these rentals being an economic driver for the town, in theory, if enough residents were adamant about banning these they could, either by public pressure or by simply voting out existing officials and replacing them with likeminded leaders.

If this were to happen a major portion of the tax base would suddenly be put out of business without any recourse short of litigation.

In Carolina Beach, Benson said while he understands that there is interest in limiting these types of uses, specifically in more permanent residential areas, he is hesitant to take any action on it until the state sets out regulations.

While it seems unlikely that non-resident property owners will have a chance to vote for elected leaders in the places they have decided to invest in, staying abreast of local issues is important.

Note: Part two of this series will look at a specific case of an appeal right here in Southeast N.C. and the laws of ‘domicile.’ 

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