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Hendersonville committee presses county over disputed Adequate Facilities Tax demands
Summary
City staff told the finance committee that a county law director’s letter expanded AFT collection to some commercial projects; staff found errors and duplicates in the county’s list, the city will continue to reconcile records and facilitate developer meetings, and legal counsel said the city likely is not liable for the county’s claimed unpaid AFTs.
The Hendersonville Finance Committee on April 28 heard a detailed update from city staff and counsel about a county demand for unpaid Adequate Facilities Tax (AFT) on commercial development after the county’s law director issued a letter expanding the county’s interpretation of what projects are subject to the charge.
City codes director Greg Story told the committee the city first learned of the county’s change when he received a later letter in April saying the county expected the city to direct commercial applicants to pay the county’s AFT; Story said the city began directing applicants to the county on April 25 and has required applicants to provide county receipts before issuing permits. “We were going to send people to the county to pay the tax. And that’s what we do,” Story said.
The item matters because the county’s letter listed a multi‑hundred‑thousand‑dollar balance the county said remained unpaid. Committee members and counsel said the county also later reduced some amounts and extended short grace periods for major projects. Counsel Lance Ray summarized that a county action reduced an outstanding balance and allocated certain portions to specific developers; the committee discussed a listed reduction and a remaining total the county reported but noted several transcription and list errors in the materials provided to the committee.
Ray and other city counsel reiterated their legal view that, based on the documents and applicable law, the city is unlikely to be legally responsible for paying county AFTs on developers’ behalf. Ray said the city’s analysis had several bases, including the form of the county’s prior notices and the controlling authorizing act for the AFT. He recommended reconciling the county’s list and pursuing an interlocal agreement if the parties decide to formalize procedures.
Planning staff said they identified duplicates, charges that appeared to be miscategorized (for example, tenant improvements and small kiosks listed at commercial rates), and items already paid or associated with revoked permits. Jay Rbec of economic development said Lincoln Properties did not know the charge applied and paid an initial amount under protest to obtain occupancy; the county apparently granted a 60‑day grace period for that project. Staff reported Innovation Way and one other large project have paid portions of the disputed amounts, and that reconciling the county’s list could reduce the outstanding total substantially.
Committee members emphasized they do not want Hendersonville taxpayers to be held liable for county taxes. The committee asked staff to continue verifying receipts, compile and share (confidentially) the city’s spreadsheet identifying valid and invalid charges, and facilitate meetings between affected developers and the county. No formal action (ordinance or policy change) was taken at the meeting.
What’s next: staff will provide the committee’s requested reconciliation spreadsheet and continue outreach to developers and county staff; counsel said litigation could be an eventual option if the county and major developers cannot resolve disputes about liability or assessment method.
