MINUTES

STATE OF NORTH CAROLINA BOARD OF COMMISSIONERS

COUNTY OF HENDERSON MARCH 16, 2004

The Henderson County Board of Commissioners met for a special called meeting at 3:00 p.m. in the Commissioners' Conference Room of the Henderson County Office Building. It was a joint meeting with the LGCCA (Local Government’s Committee for Cooperative Action which consists of leaders from Henderson County Government and the five Municipalities of Henderson County) for the purpose of discussing Sales Tax Distribution.

CALL TO ORDER/WELCOME

The joint meeting was called to order by the host for the LGCCA meeting, Laurel Park Mayor Henry Johnson.

PLEDGE OF ALLEGIANCE

Those in attendance joined in the Pledge of Allegiance to the American Flag.

Mayor Johnson welcomed everyone in attendance and explained that two of the Governing Bodies had called special called meetings for this date: Henderson County and the Town of Mills River. Mayor Henry Johnson reminded those present that unless they called a special called meeting, they would need to restrict their comments to the two members at the table so as not to be in violation of the Open Meetings Laws. He reviewed the Ground Rules in effect for this meeting:

1. Each governing body can have members at the table.

2. No public comment will be accepted at this meeting, this body has no authority to

act on any public input.

3. As we get into that portion of the meeting, he asked that the members feel free to

challenge other ideas but not other persons. As stated in the LGCCA’s charter, informally

adopted several years ago, we are a cooperative body pursuing common interests for the

people of Henderson County. Our members are only responsible to their governing bodies

and members will avoid using the LGCCA for political purposes.

PRESENT: Laurel Park Mayor Henry Johnson (host) and Councilwoman Dona Menella; Mills River Mayor Roger Snyder and Mayor ProTem Lois Pryor; Hendersonville Mayor Fred Niehoff and Mayor ProTem Ron Stephens; Henderson County Commission Chairman Grady Hawkins and Vice-Chairman Larry Young; Flat Rock Mayor Ray Shaw and Councilman Terry Hicks; Fletcher Mayor Bill Moore and Councilman Jim Clayton.

Also present were: County Manager David Nicholson, County Attorney Angela S. Beeker, Fletcher Manager Craig Honeycutt, and County Commissioners Bill Moyer and Shannon Baldwin.

APPROVAL OF AGENDA

Mayor Johnson explained that the agenda was short with three items under unfinished business and the only new business to be entertained should be added at this time. There were no adjustments to the agenda. Chairman Hawkins made the motion to approve the agenda as presented. All voted in favor and the motion carried.

APPROVAL OF February 24, 2004 LGCCA Minutes

Mayor Johnson explained that these minutes had been e-mailed to each governing entity. He mentioned one correction – that the title of Ron Stephens be changed from Councilman to Mayor ProTem of Hendersonville.

Mayor Snyder requested that the title of Lois Pryor also be changed to Mayor ProTem for Mills River. There were no other adjustments to the minutes.

Chairman Hawkins made the motion to approve the minutes as amended. Mayor Ray Shaw seconded the motion. All voted in favor and the motion carried.

Mayor Johnson stated that Kim Hensley, the Assistant Clerk of Laurel Park, would be taking minutes today.

MEDIACOM AD HOC COMMITTEE – Municipal Appointments

Mayor Johnson stated that briefly last month there was again discussion about what to do about the Mediacom franchises coming up for renewal. With the exception of the Town of Fletcher, the other renewals are pretty close together, within about 18 months. Mentioned was the possibility of constituting the ad hoc committee like was done several years ago and at that time each town was asked to come back, if they wished to participate in that, with a nominee to that committee. He asked for nominations at this time.

Mayor Ray Shaw stated that they had sent one in from Flat Rock to Chairman Hawkins. He did not state who the nominee was.

Mayor Johnson stated that the Town of Laurel Park would like to recommend Mr. John Crook for that committee and a previous member of the committee, Mr. Doug Jarvis, who lives in Laurel Park but also has extensive cable background. Mr. Jarvis said he would be interested in serving again if there was an open slot.

Mayor Roger Snyder stated that he would be interested in serving on the committee.

Chairman Hawkins stated that the Board of Commissioners hadn’t taken any action yet on the charter. He will be glad to collect the inputs from the municipalities and bring that information back to LGCCA after the Board of Commissioners takes action on the charter. The Mediacom audits have been received.

PUBLIC TRANSPORTATION UPDATE – WCCA

Mayor Johnson introduced David White from WCCA to address this issue. Mayor Johnson stated that WCCA had given input last month on funding for the bus system. There have been some changes since that time.

David White explained some good news from a letter dated March 8 which they received via fax, which hadn’t been mailed to everyone yet. The letter is from NC Department of Transportation announcing that they are providing Henderson County and Apple Country Transportation with $188,240.00 for this coming year which would be the year starting July 1, 2004 and would run through June 30, 2005. He further stated that it very much encouraged that we come up with a plan and is contingent upon the county and the municipalities and WCCA coming up with a plan to keep the system going when we get to July 1, 2005. They anticipate asking the County, Fletcher, Hendersonville, and Laurel Park for some help with the local match for this coming year. Last month they were asking for $95,000 but they are now down to around $25,000 to ask for.

This is good news and also gives some time to work on an agreement with the MPO and the local municipalities to keep the system going. Mr. White distributed a hand-out of their “Operating Budget” and reviewed that for this coming year (July 1, 2004 – June 30, 2005).

SALES TAX DISTRIBUTION FOR TY 2004-2005

Mayor Johnson explained that the item on the table is the sales tax distribution for FY 2004-2005. “It comes to no surprise to anyone in the room what the issues are. Very briefly, the State collects seven and a half cents of sales tax from all of us in Henderson County each year and then they turn around and distribute it minus a collection fee of about two and a half cents back to us. The State gives the County the option, on an annual basis, to decide how those taxes will be distributed back to the municipalities and to itself. They use kind of a funny formula. I think Chairman Hawkins is – referred to this as the cities get a double share, a double dip or something like that but essentially if we assume for a minute in round numbers that there are 90,000 people in Henderson County and 30,000 of those people reside in the municipalities then they add those two figures and for purposes of dividing the sales tax they assume that there are 120,000 people in the county and they take the amount to be distributed this year, I think we’ve been using a planning figure of around $22 million. They divided that by 120,000 folks and basically the county gets 90,000 times whatever that number comes out to be and each municipality gets their population times that amount. That is the way we have been distributing sales taxes in Henderson County for a number of years. The State also gives the county the option of a second method of sales tax distribution and that is basically to distribute the money based on the ad valorem taxes that each governing body levies in their jurisdiction. Again and this is no real question to why that’s – this makes this a more controversial way although there are arguments for both sides is because we happen to have two governing bodies in our community that levy either none or a very small ad valorem tax. It is not unusual however, for that method to be used. There are some 40 out of the 100 counties in the state of North Carolina that use the ad valorem method for distributing taxes and the way the statute is written the county could go back and forth every year, I’m sure it would drive the tax department crazy and some of the rest of us but they could switch methods every year if that was their desire. With that sorta brief opening remarks I will open the floor for discussion. I guess as a starting point, my feeling has been all along, as the Mayor of Laurel Park, that I recognize that the county had the right to do that and I always felt that the county probably would and should act in what is the best interest financially for the county. That being said, I would like to come down the line or open it up for discussion and at some point during the discussion ask each governing body to either give a formal or an informal recommendation to the Commissioners. If you’ve talked about it and decided in council, feel free to make a formal recommendation to Chairman Hawkins and Vice-Chairman Young, otherwise feel free to give your personal opinion but make sure you clarify that as your personal opinion. And I guess I would start off with the City of Hendersonville, being the largest populus.”

City of Hendersonville

Mayor Niehoff stated that formally the City of Hendersonville will be discussing this at a workshop on Thursday morning and coming up with what they would like to see the County Commissioners do. Their informal discussions centered on two things, one is the impact on their budget and tax rate and the impact on the 11,000 city citizens as far as the county taxes are concerned. “Our discussion Thursday morning, I think will be pretty much based on OK in a sense of fairness to our citizens who are also county taxpayers and in fairness to the rest of the county taxpayers as a whole, I certainly would go along (this is my personal opinion Henry) with what you just said. I think the County Commissioners’ responsibility is to look out for the total county taxpayer situation and not necessarily worrying about what happens in each individual town. That’s my conclusion so far. Thursday morning we’ll discuss this and hopefully by Thursday afternoon there’ll be a letter from the City Council to Grady, Chairman Hawkins and stating our position.”

Ron Stephens had nothing to add to the Mayor’s comments.

Town of Fletcher

Mayor Moore stated that Fletcher Town Council had not formally taken a position on this. “I, like a lot of other people in the county, I know about this just what I read in the paper. We haven’t talked with anyone on this issue, haven’t met with anyone and that aspect of it. But I would say it seems to me like the county, whichever way they choose to go, a decision needs to be made. But in that decision I think it needs to be made that is equal across the board, for all the municipalities and certainly in the county’s involvement. I would, you know we talked about this what two years ago Grady? About this change? So it wasn’t any secret to anybody. But, now this is a personal opinion – I think a decision should have been made on this probably last July or last August and that would have give the people time to work with their budgets and see the direction that they were going and if a decision had have been made on that then the Town of Mills River would have had a clearer understanding is it gonna be population based or is it gonna be ad valorem. But whatever decision is made on this the Town of Fletcher will deal with it. But I just, my concern is that we do something that’s equal and equitable across the board.”

Jim Clayton gave his personal opinion on how he feels it should go and that is that it should remain population based. Unfortunately the Town of Fletcher hasn’t had the opportunity to call a special called meeting to discuss it.

There was some discussion about when the decision had to be made. We’re only about six weeks away from a deadline. The decision needs to be made in the month of April.

Jim Clayton asked Chairman Hawkins if he felt the Board of Commissioners would make a decision tomorrow.

Henderson County

Chairman Hawkins stated that it is a critical issue and reminded everyone “we at this table talked about it this same time last year and the numbers were clearly there. As far as how early you can make a call on which way you’re gonna go, we started a new sales tax – Article 44 this year and so you almost had to get a little tracking data on it before you had what idea of what was gonna be generated so that you could plug in some figures. We do have this on our agenda for tomorrow… there are a number of things in our agenda book for tomorrow. One of them is a first look at what we perceive the county’s capital needs to be in the coming fiscal year budget and there is a solution, if you will, offered that tries to address some of the questions that you all have raised as far as equity, how you might go about phasing in a shift to a different distribution of the revenue. Interestingly enough and Flat Rock brought forth some documents that indicates that you can stay the way you are but change so, you know it’s kind of a funny law and by that I mean for example the county could stay with the per capita distribution which means that there would be no change for the volunteer fire departments or for the municipalities as far as the amount of money you got but that you might receive, the county might receive some money back via some kind of memorandum of understanding so you really would be changing but you wouldn’t change, if you know what I mean. The Board will be taking a look at that and then it would be a question of whether or not the municipalities want to participate in that revenue sharing back. The numbers are pretty clear. They were very clear last year when we looked at it. It definitely means a net gain to the county, dollarwise to go to an ad valorem basis. As I indicated in our last meeting here though, I don’t think the county would switch to that method just to gain the revenue, I mean there should be some reason that we had an outstanding need for that additional revenue. When I talked to the volunteer fire departments and by the way if you noticed in your minutes Flat Rock asked at our last meeting to meet with county officials which we did and there was, Mills River wanted to dialogue with us as well as some of our volunteer fire departments so we did that. We had some dialogue on it. It would seem to me and one of the options that, in our agenda book for tomorrow to look at tries to deal with some of the things that we talked about. We looked at a percentage distribution that would be spread out over each of the municipalities for the coming year in the next year’s budget. In all cases the percentage was computed on a value of an additional $500,000 for county revenue, just take that as a benchmark. The total amount of money that we’re talking about here is about $1.2 – 1.8 million so it’s about a third of the drawdown. What that would do would enable the municipalities to budget their next fiscal year with pretty much knowing what amount of money they’re going to get. If every municipality participated in every case, each municipality would receive more money from sales tax than if we went to the ad valorem method. In the case of Hendersonville, as Mayor Niehoff indicated, they’re pretty much a wash. But they would gain some money. Fletcher would gain a good bit of money. And of course Flat Rock and Mills River would have money and it would provide a transition period where you could adjust your budgets accordingly to phase into what should be our ultimate goal which is for the county to distribute the sales tax that’s most beneficial to the county at some point down the street. And that would be two or three years away if you phased it in that way. But if you did it under a memorandum of understanding it still would not affect the volunteer fire departments, for example, ‘cause you’d still be doing it on a per capita basis… on a capita basis but with a pay back. That’s just one option to look at and the Board will be looking at that tomorrow along with some of the other information on it. One of the things that I looked at when I talked with both the people in Flat Rock and others is that if you make a sudden change withdrawing all the funds into the county’s coffers at one time you leave two municipalities very strapped for budget funds, just right now. They are just short. And I think in the case of Mills River they are just beginning to get up to speed, it would just be devastating. It would just be devastating. And I don’t see any need to do that nor do I see any need to jeopardize our volunteer fire departments and their funding and so that was some of the primary reasons that a phased in approach looked much simpler to me. And that’s my opinion. But the Board will look at that tomorrow. Along those lines, most of the Board is here to dialogue with any municipalities but at some point then that will need to come back to you and say you know here’s what we’re looking at – is that what you’re interested in for some dialogue. As Mayor Johnson pointed out, we do have a little bit more time than just the first of April to take a look at it so that’s kinda where we are.”

Jim Clayton again asked if Mr. Hawkins felt the Board would make that decision tomorrow or will it go into April.

Chairman Hawkins “I think if we done anything tomorrow we might look and the Board might say we’ll, we can live with this and then it would be contingent on whether or not the municipalities wanted to participate in it at that level.”

Jim Clayton “OK so once again what I’m saying is my personal opinion. I wish that all the municipalities had had an opportunity to be in that meeting, be represented. Laurel Park, Hendersonville, and Fletcher are going to be playing catch up as far as understanding what could or could not take place. Also, I think it’s a little dangerous, once again my personal opinion, a little dangerous for a municipality to base their services on sales tax revenue. As we all found out a couple of year ago, the State withheld their distribution of sales tax to us. It’s hard to make plans when the State can do that to you. It needs to be based on property tax, that’s the only sure method that a town has to budget for their services. So if we have to go the ad valorem way, I’d much rather see it be phased in. My personal preference is to remain as it is and part of the reason for that is the fact that our fire department, where we have contracts with Mills River Fire Department and Fletcher Fire Department. It’s gonna cost, the town will come out okay. We’re sorta like Hendersonville, we’ll come out sorta okay but our fire department’s gonna suffer greatly if you change the rate so.”

Grady Hawkins “Unless you adjust your rate accordingly.”

Jim Clayton “No, we wouldn’t be adjusting the rate. That would be the county adjusting the rate.”

Grady Hawkins “Yeh, but your contract is with, predicated off the county’s rate.”

Jim Clayton “but we pay one cent more than that. If the county, if you cut it to 5 1/2 or 6 and our current rate with them is 10 1/5 because we pay one penny more than what the county gives. If we don’t raise up that three or four cents, whatever it turns out to be, then our fire department’s gonna lose about $280,000 and Mills River’s is gonna lose because we have a contract with Mills River so I would be telling our citizens we’re not raising your taxes, Henderson County is raising your taxes to go to the fire department. So that’s the main reason why I’m for keeping it like it is, is so that our fire departments don’t suffer.”

Henry Johnson “But can’t the fire tax rates be set to be revenue neutral to the departments, you don’t have to cut them as much as was in those examples.”

Grady Hawkins “Well, as far as the amount of money that the county draws down to pay the fire departments it wouldn’t change under either method, they’d get the same money. The difference would be in the case of like Fletcher that had eight cents, if it rolled back to four cents and you stuck with your one penny above then it would make the impact. If you stuck with the same dollar amount that you paid it wouldn’t make any difference and that’s why I say that would be up to the municipality to adjust that. It’s just a, it’s a matter of where you put the percentages on it. But I think back to your more direct point you make, if you remain with the per capita method and there’s a memorandum of understanding that really adjusts those dollars down to the point where that the county is getting the revenue back as if it were on a sales tax distribution or on a ad valorem distribution then you’d seen no change in the fire departments, they’d stay the same rate because you’d still use the same procedure that you’re using now.”

Jim Clayton “Once again we’re playing catch up as far as understanding this whole thing. If we give you money back, where is that money gonna come from?”

Grady Hawkins “Well, it would come from what otherwise the county would have taken if they went to an ad valorem basis.”

Jim Clayton “So we have to budget in our budget to come up with x amount of dollars, whatever it is, to give back to the county for services or whatever you want to call it?”

Grady Hawkins “You would be budgeting to give back to the county what the county would have taken had they went straight with an ad valorem basis. In other words you wouldn’t have had that money to begin with. But it would allow you to remain on per capita but. As far as being part of the dialogue you know we covered in these minutes that we, that Flat Rock wanted to meet with the county and discuss that so if Fletcher had wanted to be at the meeting they were more than welcome as anyone else was.”

Jim Clayton “We might have been if we had known when the meeting was gonna take place.”

Grady Hawkins “If you had known you wanted to be there, you should have asked. We’d have been glad to have you there. But that not withstanding, there wasn’t, the real, I think the real thing that we tried to look at was, is there this other method and what could we use the money for. You could use it for anything the county needed, whether it be economic development or whatever.”

Bill Moore “Grady, help me with something if I’m not interrupting. Wouldn’t it be up to, in our case wouldn’t it be up to what the county set the fire tax, what the county did with that. I mean, you set the fire rate, is that correct?”

Grady Hawkins “That’s correct.”

Bill Moore “And we pay a penny above the fire rate so a lot of what would happen with Fletcher would be dependent on where you set that fire rate. Is that not correct?”

Grady Hawkins “It would be but that’s true now. I’m talking about just if you took an isolated snapshot at whatever it is setting, that could change each year ‘cause you may need to change your fire rate okay? But if you had your MOU where when the county looked at what the delta of the revenue was between per capita and ad valorem, if they had gone with the ad valorem method you wouldn’t have gotten whatever the monies were involved there either. It really is a zero sum game.”

Bill Moore “But you can tell, so we could tell the fire department that it wasn’t gonna lose, whichever way you choose to go on this. Would that be right?”

Grady Hawkins “If you took a memorandum of understanding so that you stayed with the per capita method which is what you do now, there would be no change to what they see or you see either one on their fire tax number. It would be whatever it worked out to be.”

Bill Moore “OK”

Mills River

Mayor Snyder stated that their official position, formally was that they would like the county to stay with the present method in the per capita. “My personal opinion is that the county stay with what they’ve been doing over the years because the citizens in Mills River have contributed to that and we want some of that money back. The figure that we used last year was about $160 per person. If you take the sales tax that Mills River is getting, divided by the number of residents, it equals about $160 per person. Over the years we have not really gotten nothing for that and so we formed a town, it is our intentions of keeping a low tax rate, we want a lean government, almost invisible and that’s why our tax rate is at one cent. I would encourage the County Commissioners to stay with the current method of distribution and we would be happy to sit down with them and see if we could work out a contract to maybe put some money in some economic development. Since we have the industry land we’d be willing to sit down with them and talk to them about that.”

Henry Johnson “I don’t think it’s quite fair and correct me if I’m wrong, to say that you haven’t been getting anything back because you are members of the county and the county applied I think some $20 million or $17-18 million of sales tax to their budget to provide services to all residents in the county so in that sense”

Mayor Snyder “I’ll rebute … is that we don’t have no library, we don’t have no parks, we don’t have anything. We’ve got 70% of our land that’s controlled by someone else that we have absolutely no control over. We have to take what people has give us.”

Lois Pryor “Well the only thing I would add is that I feel like that’s it’s only fair that we divide it according to the populations of the towns, not on ad valorem and I think it’s unfair to us to expect us to keep raising taxes. It’s not going to help in the long run because if we raise our taxes 6% or 7% we’re gonna get the same amount back from the county and they’re gonna end up having to go back and raise the county taxes which they say they will have to do if they stay with this system we have now. And I also think it would be very helpful to all the cities, municipalities within Henderson County, if you set the sales tax, leave it as it is and set it for about five years so that we can make plans. We’re at Mills River, we’re a new town. We’d love to sit down and make a five year plan of what we want to do but as it is there’s no way we can make a plan because we have no idea about what we’re gonna have as far as monies.”

Roger Snyder “One thing I’d like to add is that I think the county went up a half a cent or one cent last year to make up for Mills River incorporating so our citizens is already paying for that.”

Flat Rock

Mayor Shaw stated that Flat Rock had known for some time that with the incorporation of Mills River the arithmetic and the formula would change and likely there would come out of that change perhaps a change in the method of distribution. “Within the past year we have had talks both with Chairman Hawkins and with Commissioner Moyer about the probability and what alternatives might be available to us. It would be devastating to the Village of Flat Rock if we were to change from the per capita to the ad valorem because the per capita distribution, the amount that we get from the current per capita distribution is 70% of our total budget. The position of our people is of course to keep the distribution the way it currently is and back in January we delivered to each of the County Commissioners a letter asking for the opportunity to sit down with them and see what could be worked out. We included with that an agreement, an interlocal agreement which is in effect in this state. We knew that agreement in and of itself was not applicable to our local situation but we thought we could take it and with a cut and paste operation, something could come out of it and I guess that’s how a lot of this got started. As far as taxes go, whether you’re talking about ad valorem or whether you’re talking about per capita distribution, Flat Rock is small. We have approximately 3% of the population of Henderson County. We pay 8% of the property tax. We’re not complaining about this. When the bill comes we write a check and pay for it. We just feel like that we would like to have some of the sales tax come back for the operation of our.”

Terry Hicks “I would like to clarify what I think I hear you say when you use the word zero sum. OK I assume that based on that statement that if Flat Rock were receiving $400,000 in this fiscal year and according to these numbers we would go to $509,000 next fiscal year that zero sum would mean that we would return the difference to the county. Is that what you’re saying when you use the word zero sum?”

Grady Hawkins “If you’re looking at a time period of phasing into the redistribution of revenues, yes. Because I think that the county eventually has to have as its objective to maximize the sales tax that comes back to the county, just as you would maximize your sales tax to come back. What I don’t think is that we can do that in a quick year of maneuvering. I think that it’ll take maybe a couple of years to phase into that while everybody makes their adjustments. And if you do that in such a manner that you basically are still with the, as far as the state’s concerned the per capita distribution it won’t affect the volunteer fire departments at all and won’t affect your, how your fire rates have been done at all. And that could be a long term solution of our particular situation here until Etowah incorporates and you know when that happens then Edneyville incorporates and then the formula gets all messed up again. I think one of the key things to remember is that, is this no matter what we end up doing all of our sales tax stays in the county so for now until the Governor decides to grab em again. So we’re looking you know at how to maximize the money that comes back into Henderson County, this geographic area, whether it’s into Fletcher or Flat Rock or the county as a whole so we don’t lose any of our money, it’s how we divide it up so how can we maximize the money that we get back to everybody’s benefit and I think that’s what we need to be trying to work toward.”

Terry Hicks “That’s, with that said I would state that I support and I think the Village of Flat Rock supports the same but different. But I think that in doing so that we should have a --- agreement that’s more than two years, be it four, be it five, to phase these things in. I think the newspapers and other articles have pretty well stated the concern we have in that Flat Rock feels like it’s being penalized because we’re being efficient government and obviously there are other things that we would like to be able to do that we’re looking at that our citizens we think are requiring of us and we’ll know better when we finish with our strategic study that we’re into but it looks like that regardless of what our citizens want that we’re gonna be forced not to be able to use our sales taxes they have paid or a portion of em but be forced to charge them additional taxes. Yes the taxes do stay in the county. It --- the question of whether you go into the county coffer or they go into the various municipalities’ coffers. All of us believe in a government that costs less and yet when you --- ad valorem we get into governments that cost more. And these are things that bother us a lot. But we certainly would like to see an agreement that covers over a 4 or 5 year period --- feels like while our citizens recognize that legally the county can do what, either way you wish to go. All of us are familiar with legislation that does not always feel fair and that’s what our citizens are struggling with.”

Grady Hawkins “Well if I could just add onto that and I go back to what Henry said at the opening remarks you know for the 70,000 other county residents they see the municipalities taking a second serving at the table as a little bit unfair. I mean, you know, just think of that for a moment ‘cause they say well we pay just as much sales tax on whatever we got as you know as they pay in the City but yet we get to go through the line once and then if you’ve got a City sticker you get to go through the line and get a second helping and that’s the way the laws written. Whether that’s right, wrong, or indifferent that’s, you know that’s what we deal with. It was probably a law that was written in the State of North Carolina, probably back in the twenties or earlier when there was just one or two municipalities and it probably worked very well at that but, but then when you came along and had situations where it’s easier to incorporate and it’s easier to annex basically municipalities are pretty free reining in annexation and when those occur, particularly on the sales tax distribution it changes also. You could, you know you could annex enough to have an almost incorporated area. So whether or not that was meant to equal the playing field between counties and some of the things municipalities have, I don’t know. My guess is not. I don’t think the General Assembly would have ever thought of it and it may have just happened that way but that certainly I think is consideration. It’s probably an initially an unfair set up if you want to look at that and it’s very difficult to make it any better when you get to the other end of it but I still think it, it would be very difficult to make just an abrupt switch without considering a lot of these other facts. And you can make good arguments for either one of those things and in the case certainly of municipalities the taxes are there to provide some services and that’s the idea of an incorporated area in the State of North Carolina chartered in a county anyhow so at some point you have to weigh off those services that are rendered versus what you’re paying for them and those are, those get to be a matter of judgement call.”

Bill Moore “Grady, I think, not interrupting. I think it boils down to what your intent is --- the Town of Fletcher. Now we’re a fairly young town too, incorporated in 1989 but our reason was that we felt like our community didn’t have anything. We felt deprived but in order for us to have the Police Department that we’ve got and the Public Works that we’ve got, the services that we give and certainly we had nothing in recreation. We certainly didn’t have a million dollar park. In order for us to do that though we had to have a tax base to do that. We can’t, we can’t do what we do on sales tax and there again it’s just whichever way your town wants to go in. But I do know in Fletcher, I feel like that our tax rate is twenty-five cents and I feel like with what we give back to the citizens of Fletcher it benefits the Town of Fletcher and I think it benefits a lot to Henderson County. I think in our recreation area, I think we’ve helped Henderson County tremendous in that aspect of it in the county. I think we work with the Sheriff’s Department and with our law enforcement to make a much better, safer place and I just think the things that we do, the services that we provide not only makes Henderson County better but it certainly makes the Town of Fletcher better.”

Fred Niehoff “I’d like to talk about two things. First I wanted to talk about something that Lois’s earlier comment triggered in my mind but also Grady’s comment about, I don’t want to put it in a bad light, double-dipping. Our Police Department and something you just said Bill clarifies it. Our Police Department is probably twice as large as a City of 11,000 people in North Carolina because we have 40,000 to 50,000 people coming to town every day and so the sales tax helps pay for that and we are policing the activities or making the City a safer place for all the folks out in the county that come to town. I wish our Police budget was half of what it was. Our tax rate would be considerably lower but the real point I was, that intrigued me was something that Lois said earlier. All of the analyses are based on the present situation, either population based or ad valorem based but they don’t recognize one thing. If we switch to ad valorem and Flat Rock gets virtually no money, well they get no money from sales tax and you don’t get much, and you continue doing the way you have you’re gonna have to put an ad valorem tax on. In other words, you’re gonna have till July 1^st to have five cents, six cents, seven or whatever. You’ll have to add five, six, seven cents and I think it would be interesting before a final decision is made if that, what I consider a very realistic situation is factored into the numbers. We’ve looked at the ad valorem taxes collected as present rate but they don’t reflect what Flat Rock would be forced to do and what Mills River would be forced to do to raise the money that you would lose. So that and that’s gonna happen if we change to ad valorem tax. It’s gotta happen unless you want to go out of business or just not provide hardly any services at all. So I don’t know. I don’t think it would be that much work to sit down for somebody that knows better than I about how these things are calculated to say okay if Flat Rock had to initiate x amount of tax to make up for the sales tax loss, plug that in, if Mills River had to do the same, plug that in and to come up with a new more, I think a more realistic picture of what the distribution would be. And if that’s the case then it might be a no brainer to say let’s stay where we are. But see that isn’t in there yet. It isn’t in here. I don’t know how to put it in there.”

Grady Hawkins “Fred, I, David, let me, I believe we, you ran that out for a second year, did you not at one point on one of them?”

David Nicholson “I did for us but I haven’t run it out for the municipalities. I don’t have any idea what the --- I could guess but I ---“

Grady Hawkins “I know, I know for one thing we recognize that because as we indicated eventually the counties that switched to this, it takes about two or three years to, for it to level out and I know we did a little on the county but I didn’t know we hadn’t done the municipalities. That might be an interesting thing to see where it would go like next year which may be a part of phasing in the switch where we think is stabilized with the current incorporated areas that we have and just get that thing stabilized and, David do you think you can do that. Can Carey run, take an estimate on their tax if”

David Nicholson – off in the distance “To make up the whole amount?”

Grady Hawkins “No, if you looked at a phased in like we were looking at perhaps tomorrow of a dollar figure and then another year after that?”

David Nicholson “I can run the numbers, I don’t know what to use as a base, I mean that’s where I structured”

Lois Pryor “Well you could use the base that if Mills River is to collect enough taxes to make up for what we will be losing, then how much, it’s gonna cost the county the same amount.”

Ray Shaw “We, we have done this in Flat Rock and the answer is seven cents.”

Lois Pryor “Ours will be about”

Roger Snyder “Your’s is seven, ours will fourteen, ‘cause it would be basically double. I mean to make up for”

Lois Pryor “No, it isn’t because of the population”

Ray Shaw “Property evaluation”

Several people were talking at once here.

Larry Young “Let me, let me say something. I don’t think it’s the intention of the County to cause a hardship on any of the municipalities, especially Mills River and Flat Rock being the, especially Mills River being in the infant stage of incorporation but I hope that the municipalities understand that the county has got services that they have to furnish such as schools and police protection and stuff. So we’ve got a lot a, being on the joint facilities with the school system, they’re asking for a lot of money so we’ve got to have ways to pay. One of those things is the new addition to Mills River school, the cafeteria, the ten classrooms, running the sewer line over there so the same thing with Flat Rock. We’ve got to double the size of Hillandale Elementary and I think it would be better and it would give all the municipalities in the county a chance to work together too. It would create a better environment with them to enter a, keep it on a per capita basis and enter into a interlocal agreement that they, the municipalities in turn give part of that sales tax back to the county to do our infrastructure needs.”

Henry Johnson “OK, does anybody care what I think? I’ll repeat something that Mr. Young just mentioned and I’m very well aware of it, is the county does have some extraordinary capital needs. You know they have to provide the schools, the jails, the courthouses, etc. but I think also they have some mandated operational needs that they really have no --- control over whether it’s local Medicaid matches and those type of things. So there’s no question to me that anytime they use revenue, they’ve gotta look to make up that revenue somewhere, whether it’s increasing overall county property tax or if they can get an advantage off the sales tax, you know I don’t hold that against them. For a long time I think, Hendersonville was incorporated when 1847? Laurel Park came along in 1925. I’m not sure the reasons exactly for those incorporations but then we started in ’89 with Fletcher and I think whether it was true or not I mean you talk about really wanted to provide services for your people but it was also widely viewed by some of the county as somewhat of a defensive incorporation to keep Asheville from encroaching south and taking you in and I think the same thing could be said, whether true or not, of the Flat Rock and Mills River incorporations. They were looked at, one they wanted more control over their own planning and zoning, and also probably some fear of encroachment or annexation from the south, I guess from the north for both of you. So that being said, Laurel Park has been in a position to kinda sit back and watch this happen and the impact, let me just talk about this for a moment, the impact for example, because I don’t have the exact figures on when Flat Rock incorporated but the Mills River incorporation was effectively about a two cent property tax on the people of Laurel Park. We’ve lost the equivalent of one cent property tax directly on a sales tax transfer and also the county lost a little over a cent which means that for those two cents worth of services being provided it’s either got to be made up by the County and Laurel Park by either a property tax increase, a reduction in services, or raiding your fund balance if you’ve still got one. Okay, so I think that’s something that we see. The thing that I worry more about and the reason I would like to see and our Council has taken a formal position that we would recommend not this year, not today, and we didn’t put a time frame on it but the County consider going to an ad valorem tax system, not so much because of the dollars and cents involved right now but because you have a situation right now that is very attractive for other communities to incorporate. They have seen the example of where towns can incorporate, get a nice chunk of money from the State, and essentially not have to put any additional burden on their citizens. The other side of the coin is really not providing any services which are traditional municipal services. Uh, and I’ve got a lot of friends in Flat Rock and I’m meeting new friends in Mills River but I think the way cities are set up, at least under the General Statutes and other guidelines in the State of North Carolina, cities are set to provide the services beyond those which are provided by the counties. I think another thing that again when you look at numbers and of course these are all in the State Treasurer’s website but I was kinda surprised to see that Flat Rock which has been incorporated less than ten years now, has an annual, I think in 2003 according to that website, expenditures, net expenditures of $173,000 and they’ve got $1.8 million or more in the bank. They’ve got a fund balance of 565% or something which is extraordinary in this State. That could be efficient government. I might not be so kind as to call that efficient government.”

Ray Shaw “We use a lot of slave labor.”

Henry Johnson “I’ll call it, I would really call it you know not raiding the sales tax pool but basically taking that money with no intent of providing municipal services.”

Terry Hicks “Henry, I’m sorry let me say something that I think’s important. It is very interesting to me as ex-Mayor to have everybody else want to describe what the citizens of Flat Rock say they want. And I think that’s not exactly a privilege that belongs to the rest, anybody else. We’re trying to do what our citizens ask us to do. The numbers you have quoted are correct but it doesn’t talk about what we’re just engaging in now with a new City Hall, trying to do a major strategic plan, and other things that we’re encountering. If you look at those numbers a year from now, they’ll be substantially, substantially different but the point is we’re trying to determine what our citizens want and provide that service. We do not provide a water service because we’re able to have our citizens buy water from Hendersonville. Why should we duplicate that service? We do not have a separate sewer system because we contracted with Hendersonville as we built the system to give it to them. That was the way that we opted to do things without duplicating services. There are other things that we have to look at. We have to look at patrol services. There are other things we must do and we will do them in Flat Rock’s time but I don’t think it’s a priority of everybody else to tell Flat Rock how they should do this and when. We’ll let the citizens of Flat Rock tell us.”

Henry Johnson “Well I don’t think that it’s my intent to tell you what to do or when to do it. It was an observation that, I wish Laurel Park had $1.8 million in the bank but, I guess it’s not a crime. We have a fund balance of about 51%, 52% which is below the state recommended average but above what’s required so we’re somewhere in the middle.”

Roger Snyder “Excuse me, on the incorporation is that some of the past municipalities all over the State, they were not required to provide services. We are. We are required to provide four services and we got to pick those four. We have two years to provide those and if you look at our bank account, we’ve probably got a quarter or half million dollars in the bank but we know that coming this next fiscal year we’re gonna have to provide those services. Those are gonna cost money and that’s why we’re saving our money. No one else in here had to provide any services, we do. So it’s up to our taxpayers, our residents to tell us what tax rate that they are willing to pay and I’m the first one again that says if Mills River goes up on their taxes, the County’s gonna have to go up on their taxes and we’re setting here wobbling back and forth. Nobody wins. So at some point in time we have to stop. Mills River stopped. We have a one cent tax rate. It makes other municipalities mad but I really don’t care. I have to worry about what the people of Mills River want. I have to come out here and fight for the people of Mills River so it gets personal.”

Fred Niehoff “Going back to something you said earlier, Larry, about the needs of the county, especially the capital needs which we are all very aware of. And we’re all citizens in the County. If the County Commissioners said we have studied this and for the good of everybody in this county in the terms of our needs in this county we have decided that this is the way that we’re gonna go, and I don’t care whether it’s ad valorem or per capita, then we’ll live with it because that’s what we expect you folks to do. That’s your decision and we’re all 90,000 of us in the County. Now if it hits us a little bit in our budget okay but we’re also county taxpayers and that’s the thing that we have to look at also. As county taxpayers we look to you folks and I’m glad I’m not a County Commissioner wrestling with this problem right now. It’s all yours but whatever you decide is gonna be okay with us I’m sure --- agree that it was for the good of the total county government operation and the capital needs that you see coming up.”

Larry Young “When I said awhile ago I preferred the, leaning on the per capita, that was for this year to try to give Flat Rock and Mills River a chance to create whatever tax base they need and to be able to get, especially Mills River to get off the ground with some kind of a revenue. But I don’t see any way that the county is ever gonna be able to leave this on per capita. Sooner or later it’s got to go to ad valorem because we represent the whole county. It’s not right for, to, for us to go up on property taxes for people in Edneyville to pay for Mills River’s incorporation or Flat Rock’s or whosever and like Mr. Hawkins said we represent 73,000 more people so. Sooner or later it’s gonna have to happen, I just think we need to give Mills River and Flat Rock the time that they need to create their tax base or whatever that they’re gonna have to do to fund their municipality.”

Grady Hawkins “Henry, let me just make I guess a comment. Let there be no mistake, what we’re dealing with here, what we’re really dealing with here is trying to treat the symptom rather than the cause. The cause that’s causing this is we have inadequate annexation laws, incorporation laws, and sales tax laws out of the State. That’s why we’re all sitting here today trying to figure out what to do to straighten up what should have been straightened up in the State Legislature twenty years ago and that’s, that’s just you know it’s none of our fault and certainly nobody in Raleigh but that’s what you’re dealing with. That’s the way the law is written and it’s, they’s good arguments on either side of it but it still belies the fact that you know it’s just an awkward situation to have to deal with ‘cause everybody that’s in your municipalities are county citizens and you know we feel responsible to them just like you do your group so the people that’s put in the most awkward of all position then is the Board of County Commissioners.”

Lois Pryor “Well, I think, I think that’s true but I still think that if you changed to ad valorem you’re encouraging towns to grow larger, to charge more taxes and be big government instead of keeping small government which is what the people in Mills River want and I think that’s what the people in Flat Rock want. They don’t want us telling them everything to do and a lot of services. They just want to be left alone but it’s encouraging us to raise the taxes and then”

Larry Young “But the more you grow that’s not gonna happen because people are gonna demand services. The more people that moves to Mills River, the more services they’re gonna demand.”

Lois Pryor “I, I doubt that. I have my doubts about that.”

Larry Young “Does any other Commissioners have anything to say.”

Henry Johnson “I was gonna ask. Mr. Moyer, Mr. Baldwin, do you have anything to add?

Shannon Baldwin “I think most of what has been said are my thoughts in that, that I represent the folks in Henderson County and I think, I’ve said this time and time again the first thing we have to do is to realize what our needs are, look at our cost and then we choose basically what gives us the advantage in raising revenue to provide service to Henderson County and sometimes that doesn’t work out for a particular municipality, I know in the case of Mills River and Flat Rock. But on the same note, I don’t think it’s fair to the person who lives in Dana or Edneyville or the folks in my district to have to go back to them and say well this year we’re gonna have to raise your taxes because we’re gonna take some of this sales tax revenue and give it to two municipalities that have a very low tax rate. That’s not about efficiency, that’s about subsidy and I think that has to be considered. Efficiency is doing a lot with what you’ve got and there’s a measure there but subsidizing the operation to me is not fair to those who live outside a municipality and it’s complex and it’s much more sophisticated than that but I think you kinda get a feel for where I am.”

Bill Moyer “I’m not sure you wanna start letting every public official here speak.”

Henry Johnson “Only those that declared public, special called meetings today.”

Bill Moyer “Obviously this is a very very difficult balancing question for the county, for the municipalities and I think unfortunately we are late in the game in addressing this issue and preparing for all of our budgets as to where we, where we stand. I think and I agree with the comments that already have been made that as County Commissioners we have to look at the overall good of the county and the overall effect on all residents of the county and if raising the rate for all residents of the county without balancing this appropriately it is obviously a problem. I, my personal opinion is, based on where we stand now we should have an interlocal agreement. It should be for a four or five year period, and we should gradually transition from where we are now ‘cause I also agree with what Larry said if the way things are going this issue’s only gonna get worse as we go forward and the spread is gonna get greater and there’s gonna be more and more pressure and I think as you all well know, even in your municipality, but certainly if the County every two years the world can change and these issues can change and the agreement lets anybody opt out at the end of one year, to me doesn’t give any of us the kind of long-term protection that, that we would need. So I think we would need a four year, four or five year agreement, interlocal agreement. I think we need to look at our needs to service all of the county projects, all the county expenses. I think you need to look at your budgets and then before the end of April, come up with a transition dollar amount with each, would go to each of the, with each of the municipalities would give back, stay on the per capita for now but go through a transition period where some of the money would come to the county to help defray the cost of schools, parks, and things like that and I think if we work together we can come up with that transition, those transition dollars. I think we’ll all be better off and I think will serve all of our citizens better.”

Ed Glenn “I didn’t come prepared to speak but maybe it’s better I didn’t. I’m Ed Glenn from Mills River. I do have one question, is adjusted, I think it’s the figures that’s in front of you now where if this was changed, we’d go to $166,000, that’s based on one cent. Now, for instance if we increased our town tax to ten cents would our take be $1.6 million? You just move the decimal, is that what you do?”

Henry Johnson “Pretty much, your ad valorem, a penny of tax rate is --- every penny brings in the same amount.”

Ed Glenn “Brings the same amount so if we went to twenty cents we would expect to get $3.2 million so what is that gonna do to the county? Then you would raise your taxes.”

Grady Hawkins “I don’t think what, what your ad valorem tax rate is would be a percentage off of the sales tax so you’d had to have some raise in the sales tax before you got anymore as far as the numbers increased other than what the, what the basic number was and I don’t know what that. It’d be a percentage of what the sales tax was that period. Obviously if you had a higher ad valorem tax you’d get more. The exact number I don’t know what that would turn out to be.”

Ed Glenn “So let’s think about what the total taxes a citizen has to pay. What’s it take four or five months now in order to pay your federal tax, your state tax, your county tax, your town tax. Here this person’s concerned about his job, the price of gas, his health insurance. We need to take into consideration the burden of the citizen on the street. They are the ones that create the sales tax and I can understand them concerned about, they have other bills to pay plus we have people that’s on a steady income. Inflation goes up, taxes go up. These people choose between food and medicine. I think you folks can be fair and take all this in consideration. I support Mills River stand that we keep it the way it is at this time. Thank you.”

Jennie Hernandez “I’m Jennie Hernandez and I’m from Mills River too and I support our, our official stand also. I think by, if I’m not mistaken it doesn’t cause any hardship on the other municipalities to stay with the per capita and form some intermunicipality agreements, gives us a chance to acclimate and since it doesn’t cause any hardship, I don’t see that, why that shouldn’t be a good compromise to allow us time. It provides the tax money that the county needs while it still allows us some leeway to work with our budget. I think it’s a good compromise. I don’t see that, since it’s not causing a hardship on the other municipalities I don’t see that it should be a problem.”

Wayne Carland “I’m Wayne Carland from the Town of Mills River. The only thing I’ve got to say is I’d like to address one thing Mr. Hawkins had to say about how easy it is to be incorporated in the State of North Carolina.” --- lots of laughs here --- “It took, I would hate for you to go tell these people in the Town of Mills River that worked a year and a half and we had to go over to the table in Asheville and beg and the question was how high do we have to jump?”

Grady Hawkins “Well easy is relative.”

Wayne Carland “So that’s one question I have and the other thing is I have that the Town of Mills River set out to not duplicate services. This happened in some of the other municipalities. We have a wonderful law system in the Sheriff’s Department. We will work with these people. We don’t have to be another police station. We just want to work with the county to provide a place for our young people to work.”

Henry Johnson “Dona Manella who is the Mayor ProTem of Laurel Park has a couple of comments.”

Dona Manella “I didn’t get a chance when we went around the table. Since we’ve been incorporated for such a long time we’re in a different position than a couple of the towns here. Our services have developed over a period of twenty-five years, uh seventy-five years so we’ve had to have gone from probably the way you all were to what we have now not relying on sales tax for the major part of that. It’s always been the property tax. I see in the future, you all maybe that way. Just taking his example, what if all of us decided well we’re just gonna rely on the Sheriff’s Department and none of us are gonna have Police Departments. What would that mean? The Sheriff’s Department would have to probably triple to handle everything that the Police in the towns are doing now so by abdicating providing services, abdicating to the county to provide them, you’re not doing your residents a service and you’re not doing the other long-held incorporated towns a service either. Getting back though to what I wanted to say is, oh one other point about making a five year plan. The Town of Laurel Park had a five year plan. We tried to set the tax rate so it wouldn’t have to be changed for five years and lo and behold the fifth year, the fifth year or the fourth year, (Henry Johnson “the fourth year”) the fourth year the State took the money away from us and so we had to change our plan so you can’t be guaranteed a five year plan regardless of what the county decides to do. My last point is I would like to see that if we do change that we have, the towns all have plenty of notice. I think six months notice is not too much to give a town for the county to say okay we’re going to do this by the end and not this year definitely but by the end of December say for whatever year it is that they’re gonna make this change to at least give the towns six months to get their plans in order before they have to submit a budget.”

Henry Johnson “I believe everyone who basically was, who had the opportunity to speak has spoken. Are there any other comments around the table? Grady and Larry, I don’t envy your position and for each of you I thank you for your inputs. I know that we can hopefully agree if we agree to disagree on things like this but thank you for your attention. Is there any other business or any other town or governmental input. Anything going on in your city you’d like to let us know about or the county? Fred.”

Fred Niehoff “I just wanted to pass out to all of you a letter I wrote to Charles Taylor regarding the franchise, CableVision and so forth. It’s not anything I’d like to discuss today. I got a call from his office. This letter was written February 5 and I got a call from one of the staff today saying they just found it --- of the anthrax scare all the mail had been help up for a long time and not to worry --- getting back to me and answering it but it does involve the franchise agreements and the ability perhaps to do some regulation. I just raised a question that I asked Mr. Taylor to check with the appropriate people in the FCC so, just for your information. Can I run? I’ve got to go to Raleigh right now. It’s a long drive.”

Several people recognized Henry, stating he did a good job today. This appeared to be the biggest turn-out ever for the LGCCA meeting.

New Business

Jim Clayton “We’ve agreed that we will talk about possible annexation-type issues, if all of you remember the truck stop in Naples had petitioned us to annex them and we, at our last Council meeting, denied that petition. And we gave them the reasons for that and I believe that, if they haven’t, they will repetition a second time and try to address some of the concerns that we had so I just wanted to let everybody know about that.”

Ray Shaw “Henry, the only thing I’d do is reiterate what Terry mentioned a while ago about the study that we have underway, a strategic plan. We’ll certainly keep the LGCCA informed as it goes along but this is something that we’re excited about in Flat Rock and it’s designed to help us deal with the growth that we know is coming and it does have price tags beyond the cost of the study associated with it, we just don’t know what they are at this point.

Roger Snyder “The world’s changing out there. Sue Powell, there she is. We hired her officially the first of March. We hope to have a new Town Manager by the first of May, hopefully two or three weeks earlier than that. There’s paperwork everywhere. If the State --- that they have a reduction in paperwork, they’re lying.”

Terry Hicks “I would like to --- a little bit on what Ray was saying. We just budgeted about 80,000 over the next, rest of this calendar year to do some detailed strategic study and planning because we continue to want to know what our citizens are wanting and we think that out of that we will find that there are a number of things that we will probably do differently but it’ll cost us some money but that’s something that we’re, in addition to a new office building we’re in the middle of.”

Henry Johnson “In Laurel Park we are getting towards the end of a year-long effort, an engineering study to look at sewering the unsewered portions of Laurel Park which are about half the households. That project, we’re starting to look at a bunch of financing and managerial options. Coincidentally it’s about a $1.9 million project so if you’ve got any spare out there we’ll take it. But I think that’s gonna be good for the long run for our town because as we all know when you’re on a self contained septic system it’s not a matter of if it’s gonna fail, it’s a matter of when it’s gonna fail and so I think that will be a long-term benefit to Laurel Park.”

LarryYoung “Let me say something, I went to a economic seminar today that Senator Dole had at the Haywood Community College and there was several municipality Mayors there and several County Commissioners from different areas and it was real informative and she had senior Administrative Staff there from the USDA, from EPA, several different, the Forest Service, and the Justice Department and it was real informative to the fact that they discussed a lot of grants, a lot of low interest loans that a lot of people are not aware of to start with and a lot of people are not taking advantage of and they’re begging the municipalities and the governments to take advantage of these services from the federal government so it may be that, I’ll try to get copies of some of this stuff to you all so that it will inform the municipalities of what they can do to help themselves to the federal pie I guess.”

Grady Hawkins “Probably for each project you’ve got going, the counties got five. We have a number of projects on-going. I’m not going to try to go into all of them Henry but we’ll eventually get em all done in one fashion or another.”

Next meeting

Henry Johnson announced that the next LGCCA meeting would be Tuesday, April 20, 2004 with Mills River hosting in this same room.

Adjourn

Mayor Moore made the motion to adjourn. All voted in favor and the motion carried.

Chairman Grady Hawkins made the motion to adjourn the Board of Commissioners’ meeting. All voted in favor and the motion carried.

Mayor Roger Snyder made the motion to adjourn the Mills River special called meeting. All voted in favor and the motion carried.

Attest:

Elizabeth W. Corn, Clerk to the Board Grady Hawkins, Chairman