Chapel Hill Town Council Work Session on 2025 Revaluation and FY2026 Budget – April 16, 2025
Chapel Hill Town Council Work Session on 2025 Revaluation and FY2026 Budget – April 16, 2025
The Chapel Hill Town Council held a work session on April 16, 2025, from 6:00 PM to 9:46 PM at Library Meeting Room B. The session focused on the Orange County 2025 property revaluation and the FY2026 budget development. Council members received data, discussed scenarios, and provided guidance to staff. No formal votes were taken; public comment was scheduled for the April 23, 2025, business meeting.
Orange County 2025 Revaluation Presentation
- Presenters: Nancy Freeman (Tax Administrator) and Chad Phillips (Deputy Tax Assessor), Orange County.
- Chapel Hill’s total tax base is 71.8% residential and 28.2% commercial. Residential values increased by 53.4%, commercial by 30.2%, resulting in an overall increase of 46.1%.
- The revenue-neutral tax rate for Chapel Hill is 44.2 cents per $100 valuation (current rate is 59.2 cents).
- Chapel Hill’s median home value post-revaluation is $692,350.
- As of the meeting, Orange County had received 1,366 total appeals, with 332 from Chapel Hill (290 residential, 42 commercial).
- The county has conducted approximately 10,000 field reviews since the last revaluation, targeting areas with high appeal rates.
- Council members expressed concerns about the disconnect between market-driven price increases and housing affordability, racial/class disparities, and the impact on long-term residents and fixed-income households.
- Staff noted that commercial growth in Chapel Hill historically lags residential growth, and that multifamily housing (apartments) is classified as commercial.
FY2026 Budget Development Update: Data, Scenarios, and Tradeoffs
- Presenters: Interim Town Manager Mary Jane Nirdlinger and Business Management Director Amy Oland.
- The projected budget gap is $6,762,207, driven by a $1.6 million decline in sales tax revenue, higher employee costs ($2,946,237), and rising operating costs.
- Total revenue is estimated at $86,613,138; departmental budgets total $89,335,305.
- Staff presented four main tax scenarios (cents over the 44.2 cent revenue-neutral rate):
- Revenue-neutral (44.2 cents) – requires $500,000 in cuts, no pay raise, continues fund balance appropriation.
- Revenue-neutral + 2.5 cents (46.7 cents) – includes 3% pay raise, $1 million in cuts, still appropriates fund balance.
- Revenue-neutral + 5 cents (49.2 cents) – “base budget” that stops appropriating fund balance, includes 3% pay raise, but departments must absorb inflation.
- Revenue-neutral + 8.5 cents (52.7 cents) – “base plus” addressing five-year plan needs.
- A new scenario was introduced: 2.5 cents for the general fund plus 1 cent for transit (total 3.5 cents; 47.7 cents rate) to address fleet, facilities, fire capital, and grant-funded positions.
- The value of one cent on the tax rate increased from $976,000 in FY25 to $1,321,000 in FY26 due to revaluation.
- Staff emphasized that an 8–10% across‑the‑board cut would require eliminating approximately 40 positions and deeply affect services.
- Council members discussed strategies such as discontinuing loose leaf collection (containerization), reviewing outside agency funding, holding NCDOT and private landowners accountable for road maintenance, and implementing a hiring freeze (except public safety).
Key Outcomes
- Council provided guidance for the Manager’s Recommended Budget (to be presented in May 2025):
- Tax rate: A majority supported a rate between 47.2 cents and 49.2 cents (approximately 3 to 5 cents over revenue-neutral). Several members leaned toward 3–4 cents over neutral; others advocated for 4.5 cents or higher to fully fund core services and avoid service cuts.
- Priorities: Strong consensus to avoid layoffs, fully equip Police and Fire Departments, fund street repaving, maintain social services, and support staff compensation (though some considered a 3% raise more feasible than the 5% in the pay study).
- Cuts and savings: Staff will identify $1 million in reductions, including possible changes to leaf collection, reduced training/travel, and reassessment of outside agency funding (e.g., Visitors Bureau, Downtown Partnership).
- Fund balance: Council agreed to work toward not appropriating fund balance for ongoing expenses, protecting the town’s AAA bond rating.
- No final decision was made; the next steps include public comment on April 23 and a recommended budget in May, with a final vote in June.
Meeting Transcript
Good evening, everyone. Welcome to Chapel Hill Town Council's HRL 16th work session. We're pleased to have you join us. This evening we have two items on our agenda. The first is a presentation by the Orange County Tax Administrator regarding the recent property tax revaluation. The second, which will build on that information, is a town council and staff discussion about next year's budget and setting a new tax rate. Before we get underway, there are a couple of logistical matters that I want to address. First, we want to remind our audience that the format of a work session is different than that of our business meetings. Work sessions are an opportunity for the council to dive more deeply into specific topics. These meetings are more conversational and less formal. And in this instance, this is the first time the council is hearing actual data on the new property values within Chapel Hill itself. Also, it is the first time we have real numbers to apply to questions about next year's budget and setting a tax rate. So our focus for tonight is just on learning as much as we can and having a good conversation. We do not vote during work sessions, and topics will come back several times during formal business meetings before we vote to approve a budget in June. Second, we know that many of you may have questions and comments based on what you hear tonight, and we value public input and do want to hear from you before we get much much further along in our decision making. So with that in mind, we have opened up time next Wednesday, April 23rd for people wishing to speak to us directly. That meeting will take place at town hall beginning at 6 p.m. Another good way to give us your input is by emailing mayor and council at town of choppable hills.org. Third, should you have questions for county staff about their revaluation process itself? There will be information about future outreach sessions and ways to get those questions answered at the end of the first presentation. So with that out of the way, council members, any announcements? Can't wait to get to budget. Okay. Item number one, Orange County presentation on the 2025 revaluation. Our presenters are Nancy Freeman, our tax administrator, and Orange County Chad Phillips, Deputy Tax Assessor. Thank you and welcome. Thank you for having us, and we appreciate the opportunity to share the information. I hope that we'll be able to answer some questions for you. And if not, we'll be taking notes and come back and bring you more information later. Excuse me, can you get a little closer to the mic? Can we set that up? Sorry, it's a little bit more. Okay, is that a better hair? We have an extra wheel for me. Sometimes that's easier to get thank you, Shepard. Okay, is this better now? Can you hear me? Much better. Don't push it away from you. Bring it towards. I think this is better. All right, so I need to put this up on the screen. Come on. There we go. So basically, this is a presentation about our revaluation. And what is our revaluation? It is actually the process of us updating our real property values to market value and also the present use value as of a single appraisal date. That appraisal date is January 1st of 2025 for this revaluation. The primary goal of this is to equalize our tax base. It re-establishes the fairness in the tax burden between properties because properties change values at different rates depending on things like location or property type.
openpublica.com