Opponents of a proposal to allow all 100 North Carolina counties to impose a tax on real estate transactions say it could stunt growth because it will curb home sales.

But counties where land transfer taxes have been imposed for some time— including six in the Albemarle — are reporting just the opposite.

"We've had (the land transfer tax) since 1990 and it has not stymied growth at all," said Pasquotank County M anager Randy Keaton. "We're the 19th-fastest growing county in the state. Our land transfer tax (revenues) have been growing steadily. All (counties) that have (the tax) are probably having the fastest growth in the state."

Indeed, the Census Bureau recently reported that Pasquotank's population has jumped 13.5 percent in the past six years. Similarly, Dare County, which was the first county in the state to impose a land transfer tax in 1986, was the state's 20th-fastest growing county over the past six years. It's grown by 13.2 percent since 2000.

The same is true in Camden and Currituck counties, both of which have land transfer taxes. Camden has grown at a 34.7 percent clip since 2000, the second-fastest rate in the state. Currituck, which had the third-fastest growth rate in the six-year period, saw its population grow by 30.7 percent.

All four counties, and Perquimans, Chowan and Washington, sought legislative approval a number of years ago for the right to impose a 1 percent tax on the sale of all real estate. All successfully argued that they needed the revenue from the tax to pay for schools and other infrastructure needs because they lacked the traditional types of property tax base — industrial and large commercial property —that help pay for those services elsewhere.

Land transfer taxes are paid by the buyer of real estate at time of the sale. At 1 percent, the tax would generate $1,000 for each $100,000 of a real estate transaction. For example, the tax on the sale of a $200,000 home would be $2,000.

Large real estate transactions can generate large amounts of revenue for counties with a land transfer tax. Last year, for example, Pasquotank County netted $106,000 in land transfer tax revenue when a Los Angeles developer bought the Port Elizabeth Shopping Centre in Elizabeth City for $10.6 million.

Land transfer taxes have had a significant impact on all six counties — Washington County voters rejected a referendum that would have imposed one — where they're being collected.

Camden County Manager Randell Woodruff recently told the Chatham Journal Weekly newspaper that Camden receives about $500,000 a year in land transfer tax revenues — a significant amount for a county with a budget of only about $10 million.

Currituck County Manager Dan Scanlon said his county garners between $5 million and $7 million a year in land transfer tax revenue.

Keaton said Pasquotank voters rejected the tax in a 1989 referendum but approved it in a subsequent referendum not long afterward. The county's revenues from the tax have increased nearly every year since.

"When we started it, we were getting about $500,000 a year," Keaton said. Now, the county earns about $2 million in transfer tax revenues, although the amount fluctuates with the growth rate.

Dare County collected $1.2 million the first year it collected the tax. In 2004, Dare collected $12.5 million, while issuing 3,464 building permits valued at $295 million, county officials told the Chatham Journal Weekly in May 2005.

That kind of success has caught the attention of state lawmakers, one of whom, state Sen. Bob Atwater, D-Chatham, now wants other counties to share in the wealth. Atwater has introduced a bill that would allow the other 93 counties in the state to hold voter referendums on a 1 percent land transfer tax. Atwater says the bill is needed because many are strapped by limited revenues in their response to explosive growth.

Atwater's bill is supported by the North Carolina Association of County Commissioners, because it is "tied closely to the real estate market and generates money to pay for growth at the time it is needed," according to the NCACC's Web site.

It is strongly opposed by the North Carolina Association of Realtors, however. The Realtors group believes Atwater's bill would create just another tax to be paid by homebuilders who then will pass it on to buyers, raising the cost of a home. The NCAR has launched a statewide campaign called, "Stop the NC Home Tax," urging lawmakers to reject Atwater's bill.

"I am very much opposed to further taxes on the backs of homeowners, especially in light of all the tax breaks that are being offered to big corporations to locate in N.C.," stated Tim Kent, executive vice president of the NCAR, on the organization's Web site.

Locally, however, officials said they've seen no proof that the tax has slowed growth or led to higher home prices.

"All of the counties in the northeast that have the land transfer tax are having problems with too much growth, instead of the reverse," Keaton said.

Scanlon agreed. He said the county's recent property re-valuation showed a tripling of land values over eight years.

"So I am hard-pressed to see where the transfer tax has had any negative impacts on the building practices here," he said.

If anything, the tax has helped boost growth, Scanlon said.

"Transfer taxes have allowed us to build quality schools — it enhances our development," he said. "One of the top things a person looking to move here looks at is schools and the infrastructure."

In all, Currituck has built four new schools — a high school, middle school and two elementary schools — thanks in large part to the land transfer tax, he said.

"If you didn't have the transfer tax, all you have to fall back on is the property tax," Scanlon said.

Perquimans County hasn't seen the rapid growth that Camden, Currituck and Pasquotank have experienced. Yet County Manager Bobby Darden still is thankful for his county's land transfer tax. The county has seen its revenue from the tax grow from 177,348 in 1997-98 to about $725,000 in 2005, he said.

Chowan County, the second county in the state to adopt the transfer tax, dedicates all its transfer tax revenues to capital projects. County Manager Cliff Copeland told the Chatham Journal Weekly that the county divides its revenues from the tax equally with the town of Edenton. By contrast, Pasquotank County doesn't share any of its transfer tax revenue with Elizabeth City.

Like Scanlon and Keaton, Copeland believes the tax has enhanced home sales, not stymied them.

"I believe all the real estate agents in the (Chowan) county will confirm that the transfer tax has not impacted real estate sales in a negative manner, but in fact has facilitated sales through improved infrastructure, schools," he told the Chatham Journal Weekly.

(Contact Bob Montgomery at

bmontgomery@coxnc.com)