Town of Chapel Hill North Carolina Executive Summary
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NORTH CAROLINA


EXECUTIVE SUMMARY

Meeting Date: 1/14/2013
AGENDA #9


Title of Agenda Item: Consider Orange County Request to Enlarge Greater Chapel Hill Fire District.  (R-5)(R-6)

Background: In order to provide relief from exceedingly high homeowner insurance rates to the property owners in the area, Orange County is seeking to shift a portion of the Southern Triangle Fire District to the Greater Chapel Hill Fire District (currently a small unincorporated area of Winter Road & Meadow Lane). The area to be realigned encompasses Azalea, Bayberry Road and Chimeneas neighborhoods and would be covered by Chapel Hill Fire Station #5 which currently provides mutual aid to North Chatham for these residences. Information provided to the County Commissioners by their staff and previously to the Town Council can be found at the following link:http://www.co.orange.nc.us/occlerks/121113.pdf.

Within the last 24 months, homeowners insurance companies have significantly improved the accountability for the location of their insured properties through the use of G.I.S. and other technologies. As a result, identifying which fire department protects properties they insure is more precise, affecting Insurance Services Organization (ISO) ratings and insurance premium rates. The previous method for determining coverage was largely based on mailing addresses and proximity to any fire station.

The unincorporated neighborhood south of Chapel Hill, north of Mt. Carmel Church Road (known as the Southern Triangle Fire District) is being impacted by these improvements in determining fire protection coverage. Insurance companies over the years gave them credit for being protected by Chapel Hill even though they were actually protected by the North Chatham VFD. Since the discrepancy has been identified, their insurance rates have doubled, tripled or been canceled. Residents have petitioned Orange County to change their protection district to Chapel Hill from North Chatham to return to lower insurance rates. In response to this petition, options for the Town include:
  1. Refuse to provide the protection outside Town limits except for mutual aid responses. (No revenue for the Town for service provided; no financial relief for the property owners)
  2. Require that the affected residents petition for annexation in order to receive primary fire protection. This would be consistent with the stated plans for the area to become part of the Town as reflected in its incorporation in the Urban Services District and the Extra-territorial jurisdiction of the Town.
  3. As requested, enter into a service agreement with Orange County to extend our current fire district area to provide primary protection to the affected neighborhoods.

Fiscal Note: If the area is annexed (option 2), property tax revenues from the area would generate approximately $954,537.84 per year. The Town would also benefit from increased sales tax revenue, Powell Bill funds and other population based revenues. Accepting this Fire District and imposing a tax rate of $.15 (15 cents) (option 3) would generate about $289,839.43 for the Town of Chapel Hill. Because we are already responding to this area under mutual aid agreements, there would be no immediate impact on the Fire Department's budget. In consideration of equity for Chapel Hill taxpayers inside the Town, the recommended tax rate would distribute the proportional cost of fire service and future capital expenses to the residents of this area.

Recommendations: That the Council consider these options to determine appropriate direction.


ATTACHMENTS:
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Manager's Cover Memorandum
Staff Memorandum
Resolution A
Resolution B
Area Map
County Property Tax Revenue Projections
County Letter and ToCH Manager's Response
ISO Grading Comparison