MINUTES

STATE OF NORTH CAROLINA BOARD OF COMMISSIONERS

COUNTY OF HENDERSON OCTOBER 7, 2002

The Henderson County Board of Commissioners met for a regularly scheduled meeting at 5:30 p.m. in the Commissioners' Conference Room of the Henderson County Office Building.

Those present were: Chairman Bill Moyer, Vice-Chair Marilyn Gordon, Commissioner Don Ward, Commissioner Charlie Messer, Commissioner Grady Hawkins, County Manager David E. Nicholson, County Attorney Angela S. Beeker, and Clerk to the Board Elizabeth W. Corn.

Also present were: Planning Director Karen C. Smith, Finance Director J. Carey McLelland, Assistant to the County Manager Selena Coffey, Planner Josh Freeman and Deputy Clerk to the Board Amy R. Brantley.

Absent was: Public Information Officer Chris S. Coulson.

CALL TO ORDER/WELCOME

Chairman Moyer called the meeting to order and welcomed all in attendance.

PLEDGE OF ALLEGIANCE

Commissioner Ward led the Pledge of Allegiance to the American Flag.

INVOCATION

David Nicholson gave the invocation.

DISCUSSION/ADJUSTMENT OF AGENDA

Chairman Moyer recognized Representative Larry Justus who was present. He also recognized the local branch of Habitat for Humanity, which had recently received an award from the North Carolina Department of Commerce - Division of Community Assistance, North Carolina Small Cities CDBG Program. The award won was for the ABest New Housing Development - 2002.@ Chairman Moyer briefly discussed the project location and the criteria for the award, and thanked Habitat for their contribution to the community. He presented the award to George Shipley on behalf of Habitat for Humanity.

Chairman Moyer asked to add two items to Discussion Items: Item AE@ - Air Quality Strategic Plan Steering Committee, and Item AF@ - Naming of the National Guard Armory.

Chairman Moyer made the motion to approve the revised agenda. All voted in favor and the motion carried.

CONSENT AGENDA

Chairman Moyer made the motion to approve the Consent Agenda. All voted in favor and the motion carried. The CONSENT AGENDA consisted of the following:

Minutes

Minutes were presented for the Board=s review and approval of the following meetings:

July 24, 2002, regular meeting

August 29, 2002, special called meeting

Tax Collector=s Report

Terry F. Lyda, Tax Collector, had provided the Tax Collector=s Report dated October 7, 2002 for the Board=s information.

Financial Report - August 2002

Cash Balance Report - August 2002

These reports had been submitted by the Finance Director for information and the Board=s consent approval.

The County utilizes unreserved fund balance during the early part of the new fiscal year to cover expenditures over revenues in the General Fund. This is not an unusual financial position during this time of the year prior to property tax bills being mailed. However, we would normally see an additional $2 million in revenues during the month of August from the former Intangibles Tax Reimbursement that is being withheld by the Governor and the State of North Carolina.

Non-departmental expense included the annual property/liability and worker=s compensation insurance premiums paid to the NCACC Risk Management Pools. These costs will be allocated out to individual departments on a pro-rata share basis prior to fiscal year-end.

Henderson County Public Schools Financial Report - August 2002

This report had been submitted for the Board=s consent approval.

Petition for addition to State Road system

Staff had received a petition for addition to the state road system for Pine Valley Drive and South Stoney View Court. The County Manager recommended the Board accept these petitions and forward them to NC DOT for their consideration.

Van Syckle Property Addressing Appeal

This appeal was denied at the September 18, 2002 meeting and the proposed written decision was submitted for the Board=s consent approval.

Request for Improvement Guarantee for Rock Creek, Phase II

Southern Development, Inc., Developer/Applicant

Southern Development, Inc., had submitted an application for a subdivision improvement guarantee for road improvements in Phase II of Rock Creek Subdivision. The improvement guarantee was proposed to cover the cost of installing additional gravel, and paving portions of the roads in Phase II that exceed 15% in grade in accordance with the requirements of the subdivision ordinance. The Board of Commissioners approved an improvement guarantee (a surety performance bond) for Phase I of Rock Creek in February 2002.

The Planning Board granted approval of the Master Plan for the entire Rock Creek Subdivision on October 16, 2001. The Planning Department approved the Development Plan for Phase II of Rock Creek on May 7, 2002.

Pursuant to Section 170-38 of the Henderson County Code, a developer may, in lieu of completing all of the required improvements prior to Final Plat approval, post a performance guarantee to secure the County=s interest in seeing that satisfactory construction of incomplete improvements occurs. One type of permitted guarantee is an irrevocable letter of credit. The developer intends to secure a letter of credit from First Citizens Bank in the amount of $21,660, which includes the cost of the road improvements ($17,328) as well as the required twenty-five percent (25%) contingency of $4,332. The proposed completion date for the improvements is April 30, 2003.

A draft Performance Guarantee Agreement was attached for the Board=s consideration. If the application was approved, the developer would submit a letter of credit in accordance with the terms of the Agreement. The County Attorney must review the letter of credit and certify the Agreement as to form prior to its execution by the Chairman and the developer.

NOMINATIONS

Chairman Moyer reminded the Board of the following vacancies and opened the floor to nominations:

1. Equalization and Review - 1 vac.

There were no nominations at this time so this item was rolled to the next meeting.

2. Nursing/Adult Care Home Community Advisory Committee - 2 vac.

There were no nominations at this time so this item was rolled to the next meeting.

3. Zoning Board of Adjustment, Hendersonville City - 1 vac.

There were no nominations at this time so this item was rolled to the next meeting.

4. Zoning Board of Adjustment, Fletcher - 1 vac.

There were no nominations at this time so this item was rolled to the next meeting.

5. Transportation Advisory Committee - 1 vac.

Chairman Moyer nominated John Antrim to fill the vacated position. Commissioner Hawkins made the motion to accept Mr. Antrim by acclamation. All voted in favor and the motion carried.

6. Community Child Protection Team - 6 vac.

There were no nominations at this time so this item was rolled to the next meeting.

MILLS RIVER INCORPORATION

Roger Snyder presented the proposal for the Mills River Incorporation project. He introduced the following members, in addition to himself, of the interim town council: Linda Brittain, Elana Carland, Wayne Carland, and Jimmy Cowan. He also had the incorporation committee stand to be recognized.

Mr. Snyder outlined the AVision Statement and Goals@ proposed by the incorporation committee. He stated that the biggest question they get is AWhy do you want to incorporate?@ He discussed the Mills River Incorporation Committee Report which outlined the following findings discovered during the process of researching incorporation possibilities, and how those desires were being addressed.

1. The residents wanted a fair and responsive form of government.

2. Wanted to be informed at every stage of the Incorporation process.

3. ABig Government@ had no place in the formation of the Town of Mills River.

4. Protection of all of the historical Mills River Valley.

5. Protection of resources.

Mr. Snyder discussed agriculture in Mills River. He stated that the incorporation is a concern for the farmers. The farmers met with the incorporation committee to discuss their concerns, what they wanted, what they would like to see in the town. To become further involved, several of the farmers formed the AMills River Agricultural Advisory Committee.@

He then discussed the FY >04 Sales Tax Analysis for the County and other cities within the county if Mills River does incorporate. Based on the estimates provided $1,381,434 would be diverted from the county and cites which would go to the Town of Mills River.

Mr. Snyder presented a proposed time line to the Board noting the important dates to be met in the incorporation process. Chairman Moyer questioned one item which was listed as AOctober 28 Presentation to Commission@. Mr. Snyder clarified that this item was at the State level.

Mr. Snyder then discussed the development of the various town boundary maps presented. The original boundary had essentially been the area within a one mile radius around the Mills River Texaco. That map had been presented at the first town meeting, and had been met with complaints because of the areas not included. When revisiting the possible boundaries, the following conditions were considered.

1. To include as much as possible of AHistorical Mills River@

2. No land outside the present Mills River Fire Department District lines.

3. Once a Aproposed@ map was developed, get as much public comment as possible.

4. Giving the residents on the borders the opportunity to opt out.

5. Stick with one map with only minor changes.

6. Use natural and accepted boundaries, i.e. roads, rivers and fire district lines.

7. No present property parcels will be divided.

8. Make boundary agreements with other towns that included no Mills River residents.

Mr. Snyder answered several questions from the Board on instances concerning the above eight conditions. He then discussed at length the services that the Town would provide, who would provide them and how they would be provided. These included fire protection, police protection, street lighting and garbage collection. He also discussed planning and zoning, stating that Mills River would contract with Henderson County for two years for their present Aopen use@ designation, and for four years for ordinances.

Mr. Snyder stated that with respect to the incorporation committee expenditures, there was a line item named AFund-raising@ that showed an expense at about $500 more than the income generated. He stated that the figure appeared that way because they had purchased hats and coffee mugs that had been paid for that were currently being sold.

Commissioner Hawkins questioned the state=s required reserve fund and the capital reserve fund, asking how those funds would be accumulated especially with a street light project underway. Mr. Snyder answered that they would have three years to start the street light project. Carolyn Johnson stated that projected sales tax revenues had been used for their initial budgetary assumptions. Initially they plan to set aside monies needed for future projects, so they would be covered in the event of a slow down or decrease in income.

Commissioner Hawkins questioned whether in the future, the council anticipated providing more services than had already been listed. Mr. Snyder stated that they had not discussed such a plan, but that services could be added once the town is established. Commissioner Hawkins specifically questioned the possibility of water and sewer services being provided. Mr. Snyder stated that water was expensive, and Commissioner Hawkins did not press him for an answer.

Mr. Snyder then briefly discussed the history of Mills River, studies and projects that had been done, and a time-line of the boundary dispute with Fletcher. Commissioner Hawkins stated that the Henderson County Planning Department had done a study on Mills River, and questioned what the town=s feedback was on that document. Carolyn Johnson stated that they had the study, several people were starting to look at it, and it would be taken into consideration.

Mr. Snyder concluded by stating that the goal of the incorporation is to protect the entire Mills River Historical area. He thanked the Board of Commissioners, County Staff, and David Nicholson for their assistance in this process.

Commissioner Hawkins questioned whether by statute there was any action required on the part of the Board of Commissioners. Larry Justus stated that he did not believe there was any specific requirement, but he felt it would look better to the Legislative Commission if the Board endorsed the request for incorporation.

Chairman Moyer stated that an extremely important area would be with respect to the budget. He asked Mr. Nicholson to discuss how the sales tax is allocated, since that allocation is based on what is best from the County standpoint. Mr. Nicholson answered that there are two ways sales tax can be distributed: one is on a per capita basis and the other is on an ad valorem tax levy basis. They operate basically the same way, the entire population of the county is counted and then the populations of the cities are added back in. Thus far it has been most advantageous to the county to proceed on the per capita basis, but the method is studied each year.

Commissioner Hawkins made the motion that the Board go on record in support of the incorporation of Mills River.

Commissioner Ward and Commissioner Messer both spoke in support of the incorporation. Commissioner Gordon stated that she knew this was inevitable, and had questioned how this would effect the county as a whole. After attending many of the meetings and watching the process, she whole-heartedly endorsed the incorporation. David Nicholson requested the Board reserve the right to continue to work with the interim town council and the legislative committee because there are some issues in the charter that still need to be straightened out.

Chairman Moyer also stated his support of the incorporation, briefly discussing how such efforts help keep Henderson County the wonderful place that it is. Following discussion, Chairman Moyer called the question on Commissioner Hawkins= motion. All voted in favor and the motion carried.

INFORMAL PUBLIC COMMENTS

1. Dick Baird - Mr. Baird spoke in opposition to the proposed 24 sales tax. He encouraged the Board to enter into the lawsuit currently being pursued by several other counties. He stated that with regards to the budget, he still felt the budget could be cut without cutting services. He spoke to the room tax rate, noting that it was up over last year, and felt that the Travel and Tourism department should be thanked for their efforts especially in such uncertain financial times. He spoke regarding the enforcement of traffic regulations, especially speed control. He finally discussed the case of a rabid animal that had occurred approximately a week ago, and urged the Board to assist county residents with such matters.

2. Mike James - Mr. James stated that he is a law enforcement officer, and spoke about the use of firearms in residential areas. He has a neighbor who uses firearms, the bullets of which are ending up on his property. He stated that while outside, he had heard bullets hitting the tin roof of his house. He commented that other counties and cities have ordinances in place to help protect people from such firearm use. He requested the Board consider such an ordinance before someone is hurt or killed.

3. Richard Hayes - Mr. Hayes is also a neighbor of the gentleman using firearms. He stated that the man claims the bullets do not leave his property, but that he only owns approximately 2 acre. Mr. Hayes has tried to speak with the man about the problem but to no avail.

It was the consensus of the Board to discuss a possible ordinance regulating the use of firearms at their next meeting.

PUBLIC HEARING ON PROPOSED AMENDMENTS TO THE HENDERSON COUNTY SUBDIVISION ORDINANCE

Commissioner Ward made the motion to go into public hearing. All voted in favor and the motion carried.

Karen Smith reminded the Board that scheduled for this meeting was a public hearing on a set of proposed amendments to the Henderson County Subdivision Ordinance (Chapter 170 of the Henderson County Code).

Following a public hearing and action on a set of amendments to the Subdivision Ordinance on March 11, 2002, the Board of Commissioners decided to ask the Planning Board to study several issues related to private road standards that were raised by surveyors and a developer during the hearing. The issues included site distance on vertical curves, centerline radius, cut and fill slope and shoulder widths on private roads.

The Planning Board asked a Subcommittee comprised of Planning Board members to examine the issues raised at the hearing and propose appropriate amendments to the Subdivision Ordinance, if needed. The Subcommittee met with surveyors William Patterson and Stacy Rhodes, developer A.J. Ball, County Fire Marshal Rocky Hyder, County Engineer Gary Tweed and Planning Department staff several times to discuss the issues and unanimously recommended several amendments to the full Planning Board.

At its August 20, 2002 meeting, the Planning Board reviewed the recommendations of the Subcommittee, made a few minor adjustments to the proposed amendments and voted unanimously to send the Board of Commissioners a favorable recommendation on the amendments as presented.

Ms. Smith noted that most of the amendments allow the Planning Board to have the ability to grant some reductions in some of the standards if certain conditions are met. Beyond that, a developer would have to apply to the Board of Commissioners for a variance. This is to provide some flexibility in the standards without actually changing the minimum standard under certain circumstances.

Ms. Smith reviewed the proposed amendments. Proposed Amendment #1 contains the language changes that relate to centerline radius, cut and fill slope and shoulder widths. The Planning Board did not propose any changes to sight distance on vertical curves. Ms. Smith discussed the standards the Planning Board would be able to grant variances for centerline radii, and the circumstances under which they could do so.

She also discussed changes to shoulder width. The minimum standard for a two-way private local residential road had been reduced from six feet to four feet. This proposed reduction to a four foot shoulder and a 16 foot travelway would be the new standard across the board. For two-way private collector and two-way private local roads, the Planning Board would have the ability to reduce shoulder widths depending on the existing cross-slope. They also proposed the Planning Board be able to approve shoulder widths of four to six feet if the existing cross-slope is greater than 10% but less than 20% on collector roads, and shoulder widths of two to six feet if the existing cross-slope is 20% or greater. On private local residential roads, the amendment would allow the Planning Board to approve a shoulder width of two to four feet if the existing cross-slope is 20% or greater.

In regards to cut and fill slopes, the Planning Board may approve a one to one cut and fill slope in each road category where the existing cross slope is 20% or greater. When approving reductions in cut and fill slopes, the Planning Board may set conditions regarding stabilization of such slopes.

Proposed Amendment #2 came about as result of the Subcommittee discussions on other proposed changes, and dealt with the plat notes for private roads. The purpose of such a note would be to advise parties of private roads that were not built to state standards and may not be taken over by the state for maintenance.

Commissioner Hawkins questioned a statement in the Minimum Curve Radius that discussed the Planning Board requiring lower speeds. He confirmed with Ms. Smith that the Planning Board cannot set speed limits, although some developers do post speed limit signs. He suggested a different choice of words in the amendment.

Public Input

1. William Patterson - Mr. Patterson spoke in opposition to requiring more notes be put on plats with regards to road maintenance. He stated that there is already a state statute that places requirements on developers in this regard. He discussed his opinions on the requirements for shoulder width, stating that he believed two feet was sufficient. He also discussed how ditch slopes come into play with the shoulder widths. He restated that he felt a two foot shoulder was sufficient, one to one side slopes, and a 60 foot minimum turn radius.

2. A. J. Ball - Mr. Ball stated that he is the project manager for Oleta Falls, and had worked with the subcommittee of the Planning Board on the Subdivision Ordinance amendments. In working on the Oleta Falls project, Mr. Ball stated that if the current standards were enforced, they would be at the tops of the mountains with the cuts. He did express a desire to maintain public safety, and to ensure that people had adequate roads in and out of developments. He felt the current standards placed an undue burden on both developers and the environment. He recommended the same standards Mr. Patterson had suggested.

Commissioner Ward made the motion to go out of public hearing. All voted in favor and the motion carried.

Commissioner Ward stated that the study of the amendments had come about based on a request by several people including Mr. Patterson and Mr. Ball. Now the amendments have been done, but the people requesting the amendments are not satisfied with what has been done. Commissioner Ward questioned whether the amendments should be looked at again, or if these amendments should be adopted. He stated that he believed it should be sent back to the Planning Board for further review.

Chairman Moyer stated that the subcommittee and the full Planning Board had voted unanimously to send these amendments to the Commissioner. He did not see the benefit in sending the proposal back to the Planning Board. Commissioner Hawkins stated that he would like to hear from the Planning Board as to why there is still such a difference of opinion between that Board and Mr. Patterson and Mr. Ball.

Commissioner Gordon stated the opinions of the people who are dealing with the direct impact of the Subdivision Ordinance should be taken into account. She pointed out that there was land that clearly should not be developed, and the standards should not be so lenient that a road could be built on any slope. However there are places where roads could be developed with minimal environmental impact if the standards were reasonable. She stated she was leaning toward a reasonable set of standards that everyone would have to meet rather than stringent requirements that result in many requests for variances.

Angela Beeker stated that from a legal standpoint, she had concerns about the enforceability of the amendments as written. She stated it is much clearer to set a standard, than to say Athe Planning Board may, in certain circumstances@. She felt it was just too vague as written, and discussed several wording changes that would improve the enforceability without changing the intent.

Commissioner Hawkins made the motion that staff be directed to revise the amendments for further discussion and possible adoption. Chairman Moyer questioned who Commissioner Hawkins referred to by staff. Commissioner Hawkins clarified that he meant either Planning Department staff or the Planning Board. He would like to first see the amendments go to Karen Smith and Angela Beeker, and when they are brought back to the Board he requested a Planning Board member be present to answer questions.

Commissioner Gordon stated that she would like to have staff look at it from a legal standpoint and cleaned up so it would be enforceable. She would also like to see some reasonable parameters set, and have those changes taken back to the Planning Board for further review.

Chairman Moyer clarified that there was a motion on the floor that Angela Beeker be directed to look at possible changes necessary to tighten up the amendments. It would then go back to the Planning Board to see if they were still satisfied with the draft, or whether there were any other changes they would like to make. Commissioner Hawkins amended his motion to include the draft going back to the Planning Board following staff review and further amendments. All voted in favor and the motion carried.

PUBLIC HEARING - Rezoning Application #R-03-02 (R-20 to RC) Mr. & Mrs. James R. Suttles, Applicants, Mr. Leon Allison, Applicant=s Agent

Commissioner Ward made the motion to go into public hearing. All voted in favor and the motion carried.

On February 4, 2002, and April 1, 2002, the Henderson County Board of Commissioners approved Rezoning Applications #R-06-01 and #R-01-02, respectively. Together, these two rezoning applications created a new R-20 Low Density Residential zoning district along Souther Road which is just southeast of the Town of Fletcher.

Josh Freeman informed the Board that Rezoning Application #R-03-02, submitted June 5, 2002, requests that the properties of Mr. and Mrs. James Robert Suttles be removed from the newly created R-20 district, and returned to the adjacent RC Rural Conservation zoning district. There are two subject parcels of Rezoning Application #R-03-02 which belong to Mr. and Mrs. Suttles. Subject Parcel #1, 0.46 acres in size, serves as a right-of-way to Subject Parcel #2. It fully conforms to the requirements of the R-20 district, however it is non-conforming to RC zoning with regards to lot size. Subject Parcel #2, 5.81 acres in size, is generally used for residential and agricultural purposes, and is fully conforming to both R-20 and RC zoning with regard to lot size. The residential structure on Subject Parcel #2 is a manufactured home, and is currently a pre-existing non-conforming structure under R-20 zoning; it would conform to RC zoning.

He stated that Planning Staff would prefer that Subject Parcel #1 remain under R-20 zoning in order to maintain a more regular delineation between R-20 and RC zoning and to maintain the conformance of that parcel with regards to lot size. Overall, however, Planning Staff suggested a favorable recommendation on Rezoning Application #R-03-02 as submitted.

The Henderson County Planning Board reviewed the application on August 20, 2002 and voted to send a favorable recommendation to the Henderson County Board of Commissioners on the application as submitted.

Mr. Freeman stated that the source of the application led back to a misunderstanding between the original applicant of rezoning application #R-06-01 and the applicant of #R-03-02. The Planning Board has appointed a subcommittee to look at the rezoning procedures currently in place, to determine if any improvements might be made.

Public Input

1. Leon Allison - Mr. Allison stated that he became involved in this matter through an attempt to contact Mr. Suttles for the Planning Department. Mr. Allison stated that Mr. Suttles had not wished to have his property rezoned, just thought he was assisting a neighbor when he signed the original petition. He pointed out that the manufactured home currently on the property would conform to the RC zoning, but it is non-conforming in R-20.

Commissioner Gordon questioned whether rezoning Subject Parcel #1 was critical as far as the owners were concerned. Mr. Allison stated that he believed they did wish to zone that back to RC.

Commissioner Ward made the motion to go out of public hearing. All voted in favor and the motion carried.

Commissioner Ward stated that he felt a simple mistake had been made and he felt the Board should rezone the property back to RC. Chairman Moyer stated that he felt it should be approved with respect to Subject Parcel #2, but not Subject Parcel #1.

Following some additional discussion by the Board, Chairman Moyer made the motion to adopt staff=s recommendation to re-zone parcel #2, but leave parcel #1 as part of R-20.

Commissioner Messer stated that he believed that the owners would prefer to have the property zoned as it had been originally. He did not wish to see Parcel #1 come back to the Board for rezoning some time in the near future. Chairman Moyer expressed concern over the precedent that might be set by rezoning both parcels, stating that Mr. Suttles had signed a clear petition. Commissioner Gordon stated that rezoning just parcel #2 makes the zoned area a hard line to follow. Commissioner Hawkins called for a vote on Chairman Moyer=s motion. The motion failed 3-2 with Chairman Moyer and Commissioner Gordon voting aye.

Commissioner Hawkins made a motion to rezone parcels #1 and #2 in accordance with application #R-03-02. The motion carried 4-1 with Chairman Moyer noting nay.

CLOSED SESSION

Chairman Moyer made a motion to go into Closed Session as allowed pursuant to NCGS 143-318.11 for the following reasons:

1.(a)(5) To establish, or to instruct the public body=s staff or negotiating agents

concerning the position to be taken by or on behalf of the public body in

negotiating (l) the price and other material terms of a contract or proposed contract for the acquisition of real property by purchase, option, exchange or lease; or (ll) the amount of compensation and other material terms of an employment contract or proposed employment contract.

2.(a)(6) To consider the qualifications, competence, performance, character, fitness, conditions of appointment, or conditions of initial employment of an individual public officer or employee or prospective public officer or employee; or to hear or investigate a complaint, charge, or grievance by or against an individual public officer or employee.

All voted in favor and the motion carried.

Fiscal Year - Valuation

Tax Assessor Eddie Mitchum reminded the Board that one of the first items of business he had been assigned to complete was an estimate of the tax base for the coming fiscal year. In dealing with a new, undocumented and proprietary system, he had discovered that he had over-calculated the tax base in a significant manner. He informed the Board that he had been working with the vendor to ensure such an error did not occur again, and apologized for the error.

David Nicholson stated that as soon as he was informed of the error, he had assembled budget staff to look at the effect on the budget. The collection rate for each area is different, so staff had broken down each category to get the true effect. Staff=s best projection of the shortage is $1,125,910. Mr. Nicholson presented the following options to the Board.

1. Offset with Article 44 Sales Tax - According to the NCACC, the expected receipts from this additional 1/24 sales tax would be $1,920,240. The levying of this tax would allow the offset of this loss of property tax as well as eliminate the need for the Appropriated Fund Balance in the current year=s budget and allow for the appropriation of some Contingencies.

2. Offset with additional Fund Balance Appropriated - The appropriation of an additional $1,125,910 would bring the total amount appropriated in the FY 02-03 budget to $1,888,477. This would leave $7.9 million in Undesignated Fund Balance. It would lower the percentage of Fund Balance as a percentage of the General Fund Expenditures to 10.5%. As the Board is aware the LGC=s minimum requirement is 8%.

3. Reduce County Appropriations - This could be approached in two manners. The first way would be an across the board reduction in the budget. This reduction would only apply to those line-items within the county=s control. An across the Board reduction would amount to approximately 2.44% including schools and the College or a 4.05% reduction excluding education. The other approach would be to focus the cut on specific departments. In his opinion, either of those alternatives would cause a reduction in staff and thus a decline in the services provided by County Government.

Mr. Nicholson stated that on a good note, the county did receive notification from the County Commissioners Association that Medicare had approved another in-county milage increase. An increase of $175,000 had been projected for this fiscal year.

Article 44 Sales Tax

Angela Beeker reminded the Board that the General Assembly had passed a version of Senate Bill 1292 to authorize the enactment of the Article 44 24 sales tax to be effective December 1, 2002. Under Senate Bill 1292, no public hearing was required but 48 hours advanced notice of intent must be given for the Board to enact the sales tax. She stated that the only action necessary at this meeting was whether the Board wished to direct staff to give the 48 hours notice. If the Board wished to have the tax be effective December 1, 2002, action would have to be taken by November 1, 2002.

Chairman Moyer asked David Nicholson what surrounding counties had done or planned to do. Mr. Nicholson answered that most counties had either taken action to initiate the tax, or would be considering it very soon. Chairman Moyer noted that he had received correspondence from the City of Hendersonville and Laurel Park supporting the adoption of the tax. Fletcher would be discussing it at a meeting held this evening.

Commissioner Ward stated that he was opposed to increasing the sales tax. He felt that for small ticket items, the increase would not effect retailers. However for the larger item retailers, in which category he included himself, the sales tax would drive their customers to shop in another state.

Commissioner Hawkins referred to the letter from Mayor Niehoff at the City of Hendersonville. Mayor Niehoff had stated in that letter that Aif the additional sales tax is not approved, then at some point down the road income from property taxes will have to replace that lost income@. He pointed out that the City was already operating under a balanced budget during the fiscal year when this would take effect. He also expressed some concern over language in Senate Bill 1292, stating that there was a clause in it that would already allow the state to withhold some of the funding. He questioned whether Henderson County might not make more money by not enacting the increase, once area residents know that Henderson County is a cheaper place to shop.

Commissioner Gordon stated that the valuation issue was the relevant issue that had to be considered. If the 24 is not enacted in December, what other options are available to ensure enough revenue to balance the budget. She felt county government could continue to provide the same services with the approved budget provided the anticipated revenue is received. It appears now that revenue might not come in from existing sources. She felt increasing the sales tax was in some ways fairer than increasing property tax, and that there was some consolation in that this tax would not apply to food. She felt the Board should initiate the notice so this issue could be placed on their next agenda.

Chairman Moyer confirmed that if the notice was given at this meeting, the official action would not be taken until the next meeting. He stated that he would support enacting the new sales tax. He noted it was very unfortunate that the State had put the counties into such a situation, that he was uncomfortable with the state budget for this year, and that he did not think they had a plan for the next year. The problem may well exist next year, and he was reluctant to pull money out of fund balance now, when they may well have to do it again next year.

Commissioner Messer stated that this was a hard decision. He agreed that the county could have run on the approved budget until the valuation error was found. Though it was a tough decision, he felt that this would help get the county through this year.

Chairman Moyer made the motion to direct staff to give 48 hours notice to enact the Article 44 Sales Tax with final action to be taken October 16^th. Following additional discussion, the motion carried 3-2 with Commissioner Hawkins and Commissioner Ward voting nay.

Lawsuit - Withholding of State Revenue

Angela Beeker informed the Board that several counties and towns had sued the Secretary of Revenue for lost reimbursements. The lawsuit claims that reimbursements for the previous fiscal year and this fiscal year should have been paid. When the legislature enacted the budget, they repealed the reimbursements for this fiscal year effective July 1, 2002. In terms of the lawsuit, that means the reimbursements for the current fiscal year are no longer owed. There are four reimbursements at issue: inventories, intangibles, homestead and food stamps tax. Ms. Beeker stated that last year the county had received all of those reimbursements except half of the inventories tax, and the homestead tax. The total of what the county did not receive from last year reimbursements was approximately $650,000. That amount would be the maximum the county would stand to gain.

Mrs. Beeker had a form resolution that everyone joining the lawsuit was being asked to pass. The maximum fee to join the suit for Henderson County was $1,000. Depending on how many counties and cities join the suit, the fee could go down.

The strongest case for the counties is with regards to the inventories tax. The Secretary of Revenue collects the corporate income tax, and from those collections is supposed to remit the payment for the inventories taxes to the counties per the statute. Those funds are not supposed to ever be co-mingled with regular state monies. She stated that she had spoken with the NCACC, and their opinion was that there was not much chance of success. She advised the Board that this was not a class-action lawsuit, and only named parties would partake of any settlement.

Commissioner Hawkins pointed out that the firm handling the case has a very good track record. He felt that for a $1,000 investment, odds of some type payback were good. He stated that one question was if the lawsuit is won, does the state have any money. His opinion was that based on recent action, there is plenty of money available in Raleigh.

Commissioner Hawkins made the motion that the Board direct legal staff to join in the lawsuit against the Secretary of Revenue, and adopt the Resolution. Following additional discussion with each Commissioner expressing their opinion, Chairman Moyer called for a vote on the motion. All voted in favor and the motion carried.

Regional Water Agreement Negotiations

Chairman Moyer informed the Board that at the last negotiating session, the City of Asheville put a proposal on the table that if Henderson County wished to end the agreement and terminate everything, they would give Henderson County the Bent Creek property, or the equivalent value of $2,000,000. That would terminate the agreement and Henderson County would lose all rights under that agreement. Basically, the City of Asheville would buy Henderson County out of the agreement for $2,000,000.

Chairman Moyer and Commissioner Gordon expressed a great deal of concern over what effect such a settlement would have on regionalism and our ability to work together in other areas. They met with Asheville Mayor Charles Worley and Jim Ellis after the meeting, and Chairman Moyer felt that they had negotiated in good faith and tried to represent Asheville as well as possible. He also felt that the City of Asheville was not willing to have serious discussions with respect to the creation of a true Authority. Various alternatives have been looked at, ways to move toward a true Authority, but no way has been found.

Chairman Moyer then presented an alternative proposal to the buyout. He stated that the goals were to limit Asheville=s exposure to build water lines, get away from the problems with net revenue, and try to simplify the process so that it would work for Henderson County but eliminate some of the problems Asheville saw with proceeding with a regional water line concept. Chairman Moyer distributed a copy of the most recently submitted proposal for discussion. The key points indicated in the proposal were:

C The Water Authority would designate $30,000 to build water lines for the first year, and would raise that amount $5,000 each year to build lines each year in northern Henderson County pursuant to the Master Plan. This amount would be set aside for ten years, and would come to $525,000.

C Water lines would be built pursuant to the agreed upon Master Plan, or for economic development purposes. Other lines could be built for private developers if Henderson County wished to allow it. Water lines would be become part of the Authority=s system, and they would maintain them and receive the revenues.

C Base rate for Henderson County customers would be the same as for the City of Asheville.

C Allows any jurisdiction to implement higher rates for other purposes.

C To create a regional infrastructure council. One of the keys to making this work would be to get the City of Hendersonville involved because they have lines in the northern part of the county.

C Henderson County or it=s designee would retain authority over any extension into Henderson County.

C Representation on the Authority would be reduced to one (1) member.

C Bent Creek property would be sold and the proceeds divided between the Authority and Henderson County. The appraised value is $2 million, with the risk of sale being on Asheville.

C Henderson County wished to limit condemnation power for transmission lines. The language pertaining to this in the proposal would need to be clarified.

Commissioner Gordon pointed out that the money from the sale of the Bent Creek property would be used for construction of new water lines or sewer lines. They had wanted to ensure that Henderson County had flexibility with using that money.

Chairman Moyer stated he felt the options were down to being bought out or accepting this proposal. He stated he did not feel there was any way to get $2 million out of the second deal. The downside of accepting the buy out would be that it would terminate the water authority and Henderson County would be out of the picture. However, he stated that he was leaning in that direction because he did not feel Henderson County would ever get anything out of the agreement. He requested direction from the Board of where to go with the decision.

There followed much discussion among the Board, with the tendency leaning toward accepting the $2 million dollar buy out. Commissioner Hawkins spoke in opposition, stating that he would hate to negate a proposal that contained some vision and lofty ideas, and would take Asheville to court.

Commissioner Gordon stated that before the Board agreed to a straight buy out, there should be some provisions put on that buy out that would guarantee a base rate for Henderson County customers on the system that would equal City of Asheville customers. She felt that if possible, the Board should try to protect our residents in seeing that they get reasonable rates and the ability to hook onto that system. She also stated that the Board should be able to control property acquisitions, limiting them only to right-of-ways necessary for water lines.

Commissioner Hawkins spoke to the various options open to the county besides a buy out. He suggested seeing what kind of help the State could offer, either through state legislation or local bills. If the state is truly interested in regional approaches, they should pass state statutes that would allow designated plans of regional cooperation. He also suggested correspondence with the WNC Caucus legislators.

Following additional discussion, it was the consensus of the Board to consider the options and discuss them again at the October 16^th meeting.

David Nicholson stated that he had been contacted by several people from Asheville and Buncombe County in the past few days. He questioned whether the Board felt comfortable with his saying that the Board was leaning toward the buy out. Chairman Moyer said that he did not think anything could be said one way or the other at this time, except that discussion had been put off until the next meeting.

Business Personal Property Audit Agreements

Eddie Mitchum reminded that Board that in 1996, the county used a company called TMA to audit some business personal properties. Since 1996, the county had not audited any businesses. There are approximately 3,700 businesses in Henderson County, and the Department of Revenue recommends that all accounts be audited within a five year period.

In 1996, TMA audited 405 accounts, made discoveries on 172 of them, and generated approximately $140 million in discoveries. Mr. Mitchum stated that he would like to have TMA audit the large accounts, and a company called Turner Business Appraisers to audit the smaller accounts and locate unknown accounts. He stated that in the past year 300 accounts had been added, but he felt there were still unknown accounts out there to be added.

Commissioner Ward stated that he had been through the 1996 audit, and he did not feel that the audit was done fairly. He had received numerous phone calls from farmers about how the audits were conducted. He questioned how the property was going to be assessed, and stated that he had already had discussions about it with the previous Assessor. He stated that he had received 128 phone calls from people who felt they had been harassed during the previous audit.

Mr. Mitchum explained how the assessments worked, and stated that he would not be doing his job if he ignored the farm accounts. It is a requirement of the general statute that the Assessor is charged with listing and appraising all property located within their jurisdiction. If no audit program is done, the assessments are left up to the honor system.

Commissioner Hawkins questioned whether the Machinery Act, 105-283 and 105-317.1, mandated a time requirement. Angela Beeker stated that she would need to pull the Machinery Act and check. She added that in the 1996 audit contract, there had been language that would allow the Board to terminate the contract if the auditors were not treating people with respect and courtesy. She had included similar language in the current contracts being presented to the Board to address Commissioner Ward=s concerns.

Commissioner Gordon confirmed that the contracts were set up to base payment on the percentage of tax collected; if the auditors find nothing they get nothing. Angela Beeker informed the Board that they do not have to pay on a contingency fee basis, though it has become the standard fee practice.

Chairman Moyer stated that his opinion was the County had a legal obligation to do the audits. It would be the job of the Board to find the most efficient way to do so.

Commissioner Hawkins questioned a statement in the TMA contract that talked about a 36 month period. Eddie Mitchum stated that the audit could not be completed in three years. Commissioner Hawkins asked if the audit was started in 2002 and finished in 2005, would the next audit be due in 2010. Mr. Mitchum answered that he saw it as an ongoing thing, but that personal audits needed more attention than any other source of potential revenue. He discussed how the listing process currently works, and why there was a need to perform the audits.

Following additional discussion, David Nicholson suggested staff devise a program of how many audits would be done per year including a fee that would be paid per audit done. Chairman Moyer stated that he felt the Board would be more comfortable with such a plan and asked Mr. Mitchum if he was comfortable with that decision. It was the consensus of the Board to proceed with developing such a plan.

Naming of the National Guard Armory

Commissioner Hawkins reminded the Board that earlier in the year, the Board had received correspondence from the Chairman of the 50^th Anniversary of the Korean War Commemorative Program. That correspondence requested the local National Guard Armory be named for the first person from Hendersonville killed in action in the Korean War. That action had been endorsed by the Board and forwarded to Raleigh.

The Department of Crime Control and Public Safety had responded that to proceed, a committee would be formed by the senior commander and two other members of the National Guard, a representative of the City and may include a Commissioner if funds in the building come from the County. That committee makes the recommendation of the name presented.

Commissioner Hawkins had also received correspondence from a Mr. Kuykendall, suggesting that that name be considered from the Revolutionary War. Commissioner Hawkins had sent a letter to a Captain at the National Guard Armory requesting the committee be formed in accordance with army regulation. He was still awaiting a reply regarding when that committee would be formed and how they would go about locating the name of the first person from Hendersonville killed in action in the Korean War.

Air Quality Strategic Plan Steering Committee

Chairman Moyer stated that in the Regional Visioning 2010 Plan adopted by Land-of-Sky, there were four Strategic Planning Committees established, one of which was Air Quality. The plan identifies air quality as a significant issue for the area, and suggests development of the steering committee to make recommendations on what should be done. When he saw the proposed local and regional government representatives, he became concerned with respect to the balance on the committee. He asked the Board how they felt this should be dealt with. The County does have an Environmental Advisory Committee from which someone could be appointed, or a Commissioner could serve.

Commissioner Hawkins stated that he felt the Environmental Advisory Committee should be involved in this issue. Following additional discussion, it was the consensus of the Board to ask the Environmental Advisory Committee to get involved with the Air Quality Strategic Plan Steering Committee on behalf of the Board of Commissioners to ensure Henderson County representation.

EMS - Southeast Station

David Nicholson reminded the Board of a previous discussion with regards to developing a southeast substation. He informed the Board that he had received an updated proposal in which Park Ridge proposed to work with the county under the same type of agreement used for the Mills River location. Park Ridge owns some land on Upward Road and Commercial Blvd. on which they would like to incorporate an EMS substation into a medical facility which they are getting ready to build. Park Ridge would provide $130,000 toward that substation.

Mr. Nicholson requested the Board accept the offer in principle and allow staff to begin working with them to develop a contract. Mr. Nicholson discussed several issues that might affect the project including funding and staffing. It was the consensus of the Board to have staff begin working with Park Ridge on a contract.

HIPAA - Electronic Transactions Compliance Plan

Russ Burrell stated that the Board must approve the Compliance Plan, because the State did not yet have a plan in place to deal with Medicaid transaction code. This plan states that the County is waiting on the state to get complete development of the plan. The Board had been presented a Resolution, passage of which would adopt the plan.

Commissioner Hawkins made the motion to adopt the Resolution. All voted in favor and the motion carried.

Update on Pending Issues

Legislative Update

Angela Beeker stated this would be the last legislative update until the general assembly goes back into session. She presented to the Board several bills that had passed which she felt might be of interest. She informed the Board that she had copies of all the bills presented if anyone wished to see them.

Update on Human Services Building

David Nicholson reminded the Board that at their meeting on April 4, 2002, they had given staff direction to proceed with development of the human services building. He stated that staff had completed the tasks assigned by the Board, and were ready to proceed, with the Board=s approval, to the bidding process. All plans had been approved by state and local agencies. Mr. Nicholson stated that he still felt the county was in the $7.7 million dollar borrowing range. He requested direction on how the Board wished to proceed with the project.

Commissioner Hawkins stated that there was a demonstrated need for a Health Department and DSS building. With the current budget situation, there was a lot of question about whether this project could be undertaken in the future. He felt it would be helpful to have some bids come in, to see what firms are willing to do the renovations for.

Chairman Moyer agreed that it might be a good time to proceed with the project. There had been wide differences of opinion on what the project might cost, but getting the bids would add some helpful information.

Commissioner Gordon stated that it was unfortunate that the building had gotten tied up in the political arena. She felt it would be very beneficial to have real world numbers to look at in making a final decision. Many of the numbers used by the media and press had been very distorted, and did not give an accurate reflection. She stated that when time comes to make the decision, the Board should be dealing with real numbers.

Mr. Nicholson had presented a schedule which the Board could consider. Chairman Moyer questioned whether that schedule allowed sufficient time to have a pre-bid conference and get the bids back. Mr. Nicholson stated that the submitted time schedule would be adequate. Chairman Moyer requested staff make every effort to present those bids to the Board on November 20, 2002.

Chairman Moyer made the motion to approve moving ahead with the schedule for the purpose of finding out what the projected cost of the building will be. All voted in favor and the motion carried.

David Nicholson then reminded the Board that right across the back of the property of the human services building, is a major power line. The line has been an issue for a long time. The original cost to move the line was well over $250,000. Staff had worked with the Hunters, who own property next door, and Duke Power. The cost had come down to $120,000, and the Hunters had offered to split that cost. The total cost to the County would be $51,364 to move that line from the building. He requested the Board allow staff to proceed with an agreement with Duke Power to move the line.

Commissioner Hawkins made the motion to authorize staff to proceed with negotiations. All voted in favor and the motion carried.

IMPORTANT DATES

Set Public Hearing - Public Hearing for FY 2002 LLEBG Grant Funds

David Nicholson stated that each year, for the past several years, the county gets a Local Law Enforcement Block Grant. The grant requires a public hearing to allow the community to appear before the Board concerning the grant. He requested the Board set the public hearing for October 16^th at 11:00 a.m.

Commissioner Hawkins made the motion to set the public hearing for October 16 at 11:00 a.m. All voted in favor and the motion carried.

CANE CREEK WATER & SEWER DISTRICT - no business

ADJOURN

There being no further business to come before the Board, Commissioner Hawkins made the motion to adjourn the meeting at 11:13 p.m. All voted in favor and the motion carried.

Elizabeth W. Corn, Clerk to the Board William L. Moyer, Chairman