Fee increase dampens development
By Andrew Bell
Published in News on June 5, 2006 1:54 PM
Getting industries to consider locating new facilities in Wayne County has gotten $46 per pound harder -- and the change could threaten current and future projects here, economic development officials say.
The North Carolina Environmental Management Commission raised the nitrogen runoff fees for industries from $11 per pound per acre to $57 per pound per acre through an administrative ruling earlier this year.
And that is making it harder for economic development officials to get prospective clients to consider county sites, they say.
Wayne County Manager Lee Smith said the change, which went into effect March 1, came "in the cover of night." He added that the commission did not receive input from county and city governments and developers before making the fee change, which has already had an impact locally.
"One recommendation has slammed the door of growth in Wayne County," Economic Development Commission President Joanna Thompson said.
During construction at a new development, sediments, such as nitrogen and phosphorus, are washed away by rain, which eventually runs off into a local waterway.
The nitrogen runoff fee, known as the nutrient offset fee program, was established by the commission to help the state maintain strict nitrogen limits. The rules limit the amount of stormwater runoff leaving the site of any new development -- a move designed to protect local waterways and to keep them in nutrient balance.
The cap for nitrogen export is 3.6 pounds per acre per year. If a development exceeds that amount, the developer pays $11 per pound per acre. The money is placed into the environmental enhancement program, and the funds are used to construct nutrient controls within a local river basin to achieve the needed nutrient reductions.
Last year, the commission decided the rate was not sufficient enough to support the nutrient offset program, so the state's governmental operations committee approved the increase to $57 per pound per acre in February.
The change directly affects municipalities and governments along the Neuse River Basin and the Tar-Pamlico Basin. In Wayne County, Smith said the increase will completely shut down development.
In the past six months, two industries announced their intention to locate in Wayne County -- AAR Corp. and Andrew Corp.
AAR Corp., which will bring an investment of $10 million and create 135 jobs, would have had to pay about $44,000 in nitrogen runoff fees before the increase. Now, that amount has soared to more than $279,000, Ms. Thompson said.
The situation is similar for Andrew Corp., which will bring an $11.5 million investment and create more than 400 jobs. The industry's original fee would have been about $40,000, but would now be about $236,000, Ms. Thompson said.
If the industries are forced to pay the increased fees, one or both could decide to scrap its plans for Wayne County.
"It's not uncommon for an industry to announce, and it not come to fruition," Ms. Thompson said.
The increase has an effect on more than just major industries, she said.
"This has an effect on commercial development, school construction -- you name it. No one is exempt from this," Ms. Thompson said.
Sen. Richard Stevens, R-Wake, introduced legislation to reduce the nitrogen buy-down rate to $35 per pound per acre.
Although he appreciates legislators working toward lowering the rate, Smith said the rate must return to $11 per pound per acre.
"We want it to go back to its original rate for at least six months. Maybe we can have an informal committee to study the issue," Smith said.
Ms. Thompson said that committee should receive input from developers and county and city officials. Then, the committee could find a way to increase the amount over the next 10 years to ease the burden on Wayne County and local developers.
"That's the only fair way to do it -- get all of the parties involved and come up with a reasonable number. It can't be $57. That is not going to work," Ms. Thompson said.
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