Impacts of New Home Construction or Remodeling Expansion

(2015 - presented to Commissioners and the Planning Director during discussion of Large Homes on COBX)

At the present time about 80% of residential area in Corolla has been developed.  The existing homes support a summer population of over 50,000 people resident on our 3.2 square miles of space, creating a population density equivalent to some of the most crowded cities in the US.  There are arguments that this level of crowding coupled with on-going beach erosion has weakened the natural attractiveness of Corolla as a vacation destination.  Thus, these effects have led to declining profitability for owners of rental property and been a major contributor to the sharp decline in property values.

As Currituck County government considers regulation of the remainder of Corolla development and future development of the off-road area they must consider two opposing factors and seek a reasonable balance. The first factor is the desire of a property owner to develop their land to their best economic advantage.  The second factor is the potential for a negative impact of that development on: adjacent property owners, the immediate neighborhood and the County as a whole.  

In Corolla the development trend is to build larger homes with more bedrooms and to build many smaller homes in close proximity on undeveloped lots. There is also a trend to add bedrooms to existing homes. Further, many rental properties are advertised and populated with sleeping occupancies in excess of their Health Department and Fire and Safety authorized limits.  These actions are aimed to extract greater rental income for the capital investment of their owners, but they also increase the population density with potential negative impacts to the rest of the community.  Most subdivisions have Restrictive Covenants (Covenants) that provide some regulation of development, but many of these Covenants date from the first platting of a community when many of these issues were not anticipated.  Given the high percentage of absentee owners in all communities it is difficult to make Covenant changes to impose limits.  Thus, much of the burden of keeping property values high falls on the County.

Given the important stake that mainland taxpayers have in the continued economic health of Corolla it is reasonable for the County to consider regulation to best protect taxpayer interests in any further development.  This paper is an attempt to capture the discussions of possible impacts of the trend and potential ways for the County to mitigate them.

The hypothesis is that development of the remaining 20% of Corolla and potential re-development of existing homes at densities above the current average density of occupants per square mile can further degrade the quality of the Corolla experience and thus further undermine the rental profitability and property values of other homes in Corolla.   Thus the positive impact of the increased taxes of new development may be more than offset by the decline in taxes from remaining properties.

The tables below describe the types of negative impact on adjacent property owners, the immediate neighborhood and the County as a whole; and the possible mitigation approaches the County might use to ensure net benefit of new development to the County as a whole.

Impacts on Adjacent Property Owners

The third area of the negative impact of higher density development in Corolla is on the County as a whole.   The County provides many services to this vacation community and over time has assumed responsibility for other services from developers.   It needs to be more widely understood that the provision of these services is very inefficient, and thus more expensive, for a community that has 50-60,000 residents for 3-4 months of the year and less than a thousand for most of the remainder of the year.

In particular, sewer and water service require expensive treatment facilities that must be sized to meet the anticipated peak demand.  Further, when the peak use reaches the peak capacity, either through over using existing homes, or by the expansion of the number of homes served, then additional capital investment is required to expand or build new facilities.   Some of these extra costs may be recovered through connect fees and pricing structures, but the County must invest first, deferring investment opportunities elsewhere in the County.