‘It’s complicated.’

Published on August 11, 2013 in Asheville, City - County Gov., News Stories, Roger McCredie

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The City intends to spend $2 million on its art museum at Pack Place. What about repairs to the Pack Place building? Who actually owns Pack Place anyway? And what’s it all mean to the taxpayers?

By Roger McCredie -

Second in a series

“It’s complicated.”

That comment from City Councilman Marc Hunt appeared to sum up what city officials feel most inclined to say about the relationship between the City of Asheville and its Pack Place cultural center – as well as the city’s justification for handing one Pack Place tenant, the Asheville Art Museum, $2 million dollars for expansion that other tenants feel put the squeeze on them.

And lurking in the background of this conundrum is the question: What’s the bottom line for the citizens whose tax dollars are ultimately paying for that $2 million Art Museum grant, plus – directly or indirectly – upkeep of the whole Pack Place complex?

These issues, some of which have lain coiled up under the table of city government for years, were prodded into life in late June, when former Asheville mayor and long-time city manager Ken Michalove, who had been serving as a consultant to Pack Place, Inc., announced his resignation from that post so that he could “speak freely.” Michalove then issued a lengthy and detailed criticism of Pack Place’s operations in general, and the city’s $2 million award to the art museum in particular. (That grant is the city’s contribution towards a $24 million capital fund drive the Art Museum has been conducting for several years.) Michalove made two further appearances before city council, each time adding further charges to his indictment of city-Pack Place interactions. His objections centered on two main topics: the alleged inappropriateness of the Art Museum grant on several counts, and the city’s intention to draft a new, separate lease arrangement with the art museum, which he called “a path to destroying [Pack Place].” (See “The Art of the Matter” in the August 1 Tribune.)

On Sunday evening, August 4, Michalove sent an e-mail to Asheville Citizen-Times reporter John Boyle, with copies to city council members, Pack Place and art museum staff, and several other media outlets. In it he referenced a July 28 article by Boyle on the art museum grant, in which Boyle quoted art museum Executive Director Pam Myers, Vice Mayor Esther Manheimer and Councilman Marc Hunt, who is the city’s representative on the Pack Place Board of Directors. In Boyle’s article, all three officials downplayed the art museum per se and instead seemed to imply that the grant money would in part be spent on what Myers called needed “refurbishment of the infrastructure of this city-owned building.” Manheimer said “The city owns Pack Place and is responsible for its capital maintenance.” Hunt said, “As the owner of the land and building, that brings more responsibility to the city.”

“John,” said Michalove in his e-mail, “I know you are a facts person. The purpose of this memo is to provide you with some facts.” One fact, according to Michalove, is that the City of Asheville does not own Pack Place. Not the physical plant, anyway.

Michalove cited an opinion by Pack Place’s own attorney: “Pack Place leases the land from the City, currently pursuant to a lease agreement entered into on August 10, 2004. According to the City lease, Pack Place ‘owns’ the improvements to the property – the Center …” For Michalove, this means that:

– Myers “was just spouting words to satisfy the interview.”

– Hunt, “at numerous Pack Place Board meetings advised the Board that it should budget $25,000 plus annually to take care of capital needs and not look to the City to fund those capital needs. [He] speaks with forked tongue! It’s in the Board minutes!”

– Manheimer “is an attorney and should know better about the ownership of the Pack Place Center. And, if she believes that the City owns the building why doesn’t the City fund the leaking roof, upgrade the HVAC system and perform other capital needs for all of the tenants, rather than just one tenant [the Art Museum]?”

But that’s exactly what part of the $2 million art museum grant will go for, according to Councilman Hunt, who maintains that, ownership technicalities aside, the City has a maintenance obligation to Pack Place anyway, and that the art museum grant, therefore, is appropriate not just because it benefits the museum itself, but the center as a whole.

“Between the city’s enactment of the [1983] bond issue [of $3 million] and the county subsidies that helped fund Pack Place to begin with, there’s an enormous amount of public money already invested here,” Hunt said in a lengthy phone interview with the Tribune. “There’s definitely a stewardship duty [on the part of the city].”

However, in response to Michalove’s “forked tongue” remark, Hunt said, “It’s true – the lease does say that Pack Place should be doing that [seeing to its own repairs]. During my entire time on the Board, I’ve been pretty insistent that Pack Place attend to its own needs as much as possible and that parties should work hard to resolve any disagreements among themselves. I plead guilty to tough love,” he said. He acknowledged that as a board member he has called repeatedly for budgeting of capital needs, but said, “I’ve never picked out a specific figure [such as $25,000].”

Self sufficiency aside, Hunt reiterated that although the City “shouldn’t be called in in all cases” where Pack Place needs assistance, it is “on the hook to keep the building habitable.

“There is a complexity as to the ownership and stewardship obligations,” Hunt said. “It’s complicated.”

Michalove’s e-mail to Boyle also laid out what he says will be the projected impact of the Art Museum grant on city taxpayers. “A CPA friend of mine,” he said, “did the following analysis:

“City taxes rose by 9.52% [from $.42 per $100 to $.46].  If $.02 is the Art Museum Tax [premised on the tax increase necessary to raise $2 million] then every city tax payer can look at their bill in September and figure that 4.35% of their City taxes is going to the Art Museum [.02/.46 = 4.35%].

“ ‘Additionally, the County approved a new tax of $.035 for the Cultural & Recreation Authority on top of raising its own rate from $.525 to $.569.  These two increases comprise a 15.05% increase in County taxes [.525/(.569+.035)=15.05%].  The CRA tax will comprise 5.79% of the tax bill for County residents.

“ ‘ Both the Art Museum Tax and the CRA tax will equal 5.17% of each City Residents tax bill.  For a resident with a $250,000 house the tax bill will be $2,660 of which $137.52 will be for a combination of CRA and Art Museum Taxes.  The Art Museum Tax alone will be $50.03 of the $137.52.

“ ‘For residents of Asheville this means – if you rent your rents could rise by $4.17 per month or more since your landlord will pay this tax, and – if you own property you are paying $20 [$100,000 house] to $100 [$500,000 house]  or more per year just for the Art Museum Tax.’

“Additionally,” Michalove said, “the money to the Art Museum is only paid once. However, it is entirely likely that the tax will remain until the next revaluation in (possibly) eight years … What is the City’s plan for the Art Museum beyond the current budget year?”

Next: Following the Money.

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