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Will the City Tax the SOBs?


By Leslee Kulba- On Asheville City Council’s consent agenda were three items pertaining to the creation of “Municipal Service Districts for Urban Revitalization Activities.” MSD’s have been used elsewhere in the state, having been created under Article 23 of Section 160A of the North Carolina General Statutes. For the sake of communication, a “Municipal Service District” may be translated to “tax.”

Chris Chiaromonte, a regular at council meetings, was the only person to address the issue. He had missed his window of opportunity to speak on the items, but Mayor Esther Manheimer bent the rules to give him audience. After he complained that the city was trying to sneak a new tax over on its citizens, Councilman Cecil Bothwell explained the consent agenda only called for reports. Specifically, three resolutions “directed staff to prepare a report on Municipal Service Districts . . . and set public hearings for May 27, 2014” for the South Slope, the River Arts District, and north Charlotte Street. Whether the public hearings are intended to accept reports or establish the districts was not discussed. In the latter scenario, the new taxing districts could be up and running as soon as July 1.

Council approved raising property tax rates by three cents last year in order to fund capital improvement projects. They also approved contracting with Parker Poe and DEC Associates to “review financing options and strategies that would leverage the taxpayers’ new investment.” The city had previously been pushing the idea of a Business Improvement District, whereby an unelected board would have taxing power for various downtown projects.

The BID met with tremendous resistance from all sides. People trying to run small businesses felt they were being strangled by enough taxes without a new seven-cent increase. The homeless population interpreted the ambassadors that would be funded to be an un-deputized policing arm to be used against them. Even local anarchists got involved in the political process to oppose another layer of government. Eventually, in light of a bad economy and public opposition, the BID’s pursuit group formally announced they were pulling their plans off the table.

Another avenue for funding capital improvements would be the use of Special Obligation Bonds (SOB). The city could also revert to old-fashioned General Obligation Bonds, but that would require a vote of the people, and it is popular these days for governments to complain that the few thousand dollars it would take to print a referendum on the ballots is a waste of taxpayer dollars.

To float SOB’s, the city need only create Municipal Service Districts. The three areas were selected as “up and coming economic engines for the City of Asheville, Buncombe County, and Western North Carolina.” The South Slope was of interest because, “the Downtown Master Plan [recognized it] as a distinct place, and recommended cultivating that distinct place as a major southern gateway to downtown.” The River Arts District is deemed worthy of MSD designation because, “the Wilma Dykeman RiverWay Master Plan . . . recommends significant infrastructure improvements be made to support urban revitalization.” And north Charlotte Street is a candidate for special CIP status because, “city council desires to improve bicycle and pedestrian facilities in the corridor.”

The city plans to use the tax increases, along with funds already designated for debt service, to pay any extra debt incurred from floating the SOB’s. As Chiaromonte noted, though, just as Section 160A-543 authorizes municipalities to take out bonds to fund MSD’s, Section 160A-542 authorizes them to levy special taxes unique to the districts.

In Other Matters –

Council held a budget work session prior to their formal meeting. The city’s new CFO, Barbara Whitehorn, had a grand old time talking about numbers and making fun of city management as she went. Overall, the plan is to move forward with a continuation budget. Revenues are projected to increase slightly from all sources as the economy recovers. Presumably the new growth will not exact commensurate demands for services. The city’s fund balance, which shrank drastically during the economic downturn, is now growing slightly.

City Manager Gary Jackson said he hired Whitehorn with the express purpose of “digging deep” to find ways to restructure government more efficiently. One suggestion was to reinvest savings from underbudget projects rather than rolling them into the city’s capital improvement budget. Whitehorn commended staff for setting a conservative budget, and all department heads for looking for savings on top of that.

In the coming year, the city hopes to expand its human resources budget 3 percent, but how that will be distributed among employees is yet to be determined. The city continues to experience attrition attributable to not keeping up with market-rate pay. Also in the near future, the city will be investing in a lot of new rolling stock, which is expected to keep maintenance costs down.

Having ditched the golf fund, the city’s enterprise funds appear to be running well. The parking fund has always been a boon for the city, and this year the Civic Center has experienced revenues way above norms. SoCon was just one of its successes. How saving or losing the water system will impact the budget remains the big question, but the city has its contingency plans ready to go.

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