- By Deborah Goonan, Independent American Communities
Several recent articles have featured mature association-governed communities seeking annexation to a local municipality, or the establishment of a special district to assume important public services that the HOA is no longer able or willing to supply.
Here’s the flip side of the coin.
Enabled by a recent legislative amendment, Hillcrest Farms HOA recently decided to de-annex from the city of Kinston.
Residents and council members react to de-annexation of Kinston neighborhood
Posted: Wed 8:34 PM, Jul 05, 2017 | Updated: Wed 9:00 PM, Jul 05, 2017
KINSTON, NC (WITN) – Kinston councilmembers and community members are reacting to the decision by state lawmakers allowing a Kinston community to separate from the city.
The de-annexation for the private neighborhood of Hillcrest Farms officially took effect at the beginning of the month.
Some in Kinston are expressing shock hearing that a neighborhood was de-annexed from the city.
Kinston resident Pamela Nettles says, “They’ve opened up a can of worms cause now what’s going to stop other communities from wanting to be de-annexed from the city?”
It’s a move that’s frustrating for the city council members who say they felt blindsided by the decision.
Councilmember Robert Swinson says, “I wish we had he chance to have more conversation and dialogue before things went flying through.”
With this neighborhood officially out of the city of Kinston, the city could lose up to $150,000 in taxes.
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Reviewing several articles about Hillcrest Farms, it is clear that the private community was approved by Lenoir County in the 1970s. From the beginning, the upscale HOA of a few dozen homes surrouding a lake has provided maintenance of its own roads and storm water drainage.
But in 1987, at the time public water and sewer utilities were extended to Hillcrest Farms, the HOA was annexed by the city of Kinston. At the time, accoding to reports, homeowners were not in favor of annexation, but were not given the choice to opt out.
The HOA reportedly decided to continue its own road and storm water maintenance. However, in addition to providing public water and sewer access to Hillcrest Farms, Kinston also began providing services of its City Police and Fire Departments.
However, according to a report by Dustin George of The Free Press (see link to article at kinston.com below), a tax reassessment in the County resulted in higher tax values for Hillcrest Farms properties. Most other homes, located in less affluent neighborhoods in the County, saw a drop in assessed values. Shortly thereafter, the city of Kinston decided to raise taxes by 4 mills. That appears to be the motivating factor behind Hillcrest Farms HOA members’ desired to de-annex from the city of Kinston.
Searching public records on Zillow,there are several homes for sale in the private community of about 3 dozen homes. As the reader can see in the image above, list prices range from $235,000 – $530,000.
According to 2015 Census data, the median home value in Kinston – including homes in Hillcresst Farms – was around $105,500. Kinston’s population in 2014 was approximately 21,400, with median household incomes of $28,636.
So, reading between the lines, it appears that homeowners in Hillcrest Farms HOA were unhappy about subsidizing the cost of public services for city residents, while also paying for many of their own private services.
HOA members will now pay the city of Kinston higher water and sewer utility rates (because they now live outside city limits), and will need to rely upon the County Sheriff and a local Volunteer Fire Company instead of Kinston City Police and Fire Departments. But they will no longer have to pay property taxes to the city of Kinston.
Whether or not this new de-annexation arrangement will save homeowners money remains to be seen.
In the meantime, Kinston City Council seems to be shocked that their best taxpayers have decided to abandon ship, leaving a gaping $150,000 hole in the municipal budget.
Mayor of Kinston, B.J. Murphy, expresses concern that other private communities may now opt to de-annex, too.
Hopefully, the irony of this situation is obvious to readers.
Four decades ago, Lenoir County allowed a real estate developer to create Hillcrest Farms on relatively cheap land, outside city limits, under the condition that a homeowners association would fund and provide its own services in the exclusive, private community. Homeowners have been paying Lenoir County taxes for nearly 40 years.
The developer of Hillcrest Farms is long gone, but homeowners have grown accustomed to self-sufficiency in their neighborhood enclave.
The city of Kinston saw an opportunity to increase its tax base in 1987, as a condition of bringing public water and sewer services to Hillcrest Farms.
But, in the end, Hillcrest’s small group of homeowners possess ample financial resources, so they have decided that limited services provided by the city of Kinston are of little value. They can take care of themselves, thank you. To heck with contributing to city infrastructure and the welfare of more than 21,000 other Kinston residents.
Local government created private association-governed communities to help grow their tax base. But some would say that local government is growing too big for its britches. In the case of Hillcrest Farms, government has added an extra layer of taxation for the city on top of the county, and in addition to the HOA.
So, you see, the unintended consequence of creating private communities is that, sooner or later, many HOAs and the voters who own and reside in HOA communities, will lose interest in supporting public service. Cities and Counties have made themselves practically irrelevant in the lives of a small percentage of property owners who can afford the luxury of maintaining their own private communities.
Kinston neighborhood successfully de-annexes from city (WNCT)
Hillcrest Farms successfully de-annexed from City of Kinston The4thBranch.org)
Hillcrest Farms wants out of city of Kinston (Kinston.com)