Managing the County's Tax Base

The 2013 tax hike in Currituck was a wake-up call for mainland taxpayers.  Their tax bills went up by almost $3 million to make up for the $2.5 Billion loss of property value in the Currituck Outer Banks (COBX). Mainland property values declined at about the national average due to economic weakening, but COBX values dropped four to five times as much.  

Why are the County economics so sensitive to what happens in COBX, after all it is only 10% of the land area?  The primary reason is that this 10% has 24 miles of ocean beaches with property values 8-10 times that of anywhere else in the County.  The area provides 56% of County property taxes and about 65% of all tax revenues. The second reason is that this area requires very little of the cost of County services, so that much of the property tax income can be used to benefit other areas of the County.  Less than 1% of County school students, very little social services and only about 20% of public safety services despite the huge increase in summer population.

So what is the reason for COBX property value decline? There are three primary reasons: over development, beach erosion and waste of the Northern Beaches.  If these issues are not addressed soon by the County, mainland taxpayers can expect continued tax hikes as COBX property values will continue to decline.

The County Tourism department has conducted surveys of vacationers to document that the primary attractions of COBX are our wide beaches, beautiful natural setting, and the relaxed, uncrowded atmosphere.  Until 2005 this attractiveness justified high rental rates that drove up property values and attracted over $4 Billion invested capital to buy property, build vacation homes and generate tax revenues for the County, 90% of which came from non-Currituck County residents.  But in the past decade the three negative factors noted above continued to get worse, decreasing rental profitability and making investors wary.  This led to the sharp decline in property values and tax revenues.  Unless addressed, these factors will continue to get worse and property values will continue to decline, shifting even more of the tax burden to mainland residents who comprise more than 90% of the County’s population and voters.

Over Development– The summer population of COBX has more than doubled over the past ten years as more lots were developed, more bedrooms were built per acre and more renters were squeezed in per bedroom.  As a result there are more than 50,000 people in Corolla during the summer crowded into its 3.4 square miles of developed area.  This creates a population density larger than major cities like Philadelphia, Newark, Chicago or Boston. Traffic is bad, beaches are crowded and the attractiveness is declining.  Future development will make it much worse, if not managed well.  This has already cost the County millions per year in lost tax revenues.

Beach Erosion – State and Federal agencies monitor beach erosion and report a continuing loss of beach at between two and six feet per year.  Diligent efforts by oceanfront owners can maintain a protective dune, but the forces of nature have cut the beach width almost in half over the past twenty years. Coupled with population growth, the beaches are now four times as crowded as they were then.  Major storms flood oceanfront homes, a few lost from the tax rolls already.  COBX is only a decade or two from the situation now faced in Kitty Hawk with lost or compromised property and almost no beach.  If erosion continues unabated it will cost the County $8-$10 million in additional lost revenue per year.

Waste of the Northern Beaches– In COBX the northern beaches are half of all platted acreage and half of the beach area; but they have only a third the development and contribute less than 10% of COBX tax revenues. This is because the beach is used as a road and a 4WD vehicle is required.  And, once they arrive, their family beach experience is diminished by others who use the beach as a road and parking lot.  The lack of basic paved road infrastructure costs the County $8-10 million per year in lost tax revenues.

The County can reverse this decline, shield mainland tax payers from another multi-million dollar tax hike and eventually drive down tax rates with three high-payoff, near-term programs. 

- Tighten building and rental regulations to limit people density per developed acre.

- Plan to re-build Corolla beaches within ten years and the northern beaches thereafter.

- Invest in the minimal infrastructure to capture the value of the Northern Beaches.

Detailed planning and initial actions for these programs need to be started now while the County can afford the initial investments.  Acting now will assure outside investors, thereby increasing demand for COBX property, raising the tax base before the next valuation. Completion of the programs could increase projected tax revenues by $15-20M per year more than enough to cover the investment required.