Report casts troubling shadows

Aug. 31, 2013 @ 09:43 AM

The story told by the sixth annual State of the Community report should have been a familiar one to the business and government leaders attending its presentation last week.

But it is not a comfortable familiarity. Rather, it’s a story that is equally – if not increasingly – unsettling with each retelling.

On the plus side, this year’s report noted an unemployment rate that has declined from its Great Recession peaks.  And the latest unemployment numbers released a day later showed just 6.2 percent of the county’s residents unemployed – the second lowest county rate in the state in July.

But the report holds many causes for concern.

The county’s consistent outflow of shopper’s dollars to other counties – and the sales tax revenue that goes with it – continues. Orange County has the highest per capita income of any of the state’s 100 counties, so there’s a lot of consumer spending potential – a retail demand of $1.68 billion last year, according to the N. C. Department of Revenue. Orange County, however, recorded only $950 million in retail sales last year. That means more than four out of every 10 of those dollars, however, is spent somewhere other than Orange County.

“That means that we are spending outside our market,” Aaron Nelson, president and CEO of the Chapel Hill-Carrboro Chamber of Commerce said in presenting the report at The Friday Center Tuesday.

The county’s narrow retail base – and scarce manufacturing – means that the county’s homeowners carry a large portion of the burden for government services. Of the county’s taxable property, 86 percent is residential.

As Nelson noted, the challenge is for the county to grow its commercial options. But that’s easier said than done. The county and Chapel Hill in particular have wrestled with how to balance an aversion to such fixtures as big-box retailers and a taste for stringent regulation with the need to draw more sales-tax-producing business.

Other troubling indicators in the report include:

* Overall, adjusted gross income in the county is eroding as some of it moves to adjoining counties. Remarkably, new-home construction has nearly vanished in Chapel Hill – only five permits for new home construction were issued last year. Anecdotal evidence suggests that Chapel Hill’s magnetism has dimmed as Durham’s, for example, has increased.

* Rental costs are going up, partly reflecting a shortage of mid-priced rental units. An inadequate supply of rental housing “is not good news in terms of recruiting talent into our market,” Nelson noted.

* A growing number of students in the Orange County and Chapel Hill-Carrboro public schools systems are qualifying for free and reduced lunch.

Despite the shadows cast by some aspects of the report, Orange County and Chapel Hill remain remarkably fine places to live, home to one of the top public universities in the country with a vibrant and diverse population.

But the report makes clear that the Southern part of heaven is not without its challenges.