Mountain BizWorks to close Sylva field office

You know economic times are tough when the business that helps other businesses thrive shuts its doors, too.

The Mountain BizWorks office in Sylva, which serves would-be entrepreneurs and other small business owners in the state’s seven westernmost counties, will close next June.

Shaw Canale, executive director of the group, emphasized this is “a pause” by the group, not a full stop or retrenchment. Mountain BizWorks, headquartered in Asheville, has maintained a physical presence via the Sylva office in the westernmost counties for more than a decade.

“We need to figure out, how do we deliver what we need to deliver into very rural communities?” Canale said. “What’s the real impact we are having, and how do we measure that?”

Bottom line, financial issues forced the closure. The decision to close the Sylva office was made “carefully and systematically,” Canale said. “This very difficult decision was made to ensure that in time Mountain BizWorks can achieve a level of self-sufficiency that will assure that we remain financially healthy.”

One full-time staffer and one part-time staffer, as well as workshop leaders and business coaches hired on a contract basis, will lose jobs as a result of the shutdown in Sylva.

Resource specialist Sheryl Rudd is the part-time staffer at Mountain BizWorks. She and her husband, Dieter Kuhn, started Heinzelmannchen Brewery eight years ago with the help from the nonprofit where Rudd now works. She said Kuhn went through an eight-week course provided by the nonprofit to help determine whether a craft brewery could be successful in Sylva. Kuhn developed a business plan and figured out how to market the product he wanted to produce.

“It was critical,” Rudd said, “to deciding is this going to work, is it not going to work.”

Rudd and Kuhn also relied on Mountain BizWorks for a loan that, coupled with personal funding and investor dollars, allowed them to launch Heinzelmannchen Brewery. Rudd worries whether future entrepreneurs in the area will be able to find similar support in years to come.

Rudd said as the economy soured and grant dollars became increasingly difficult to attain, Mountain BizWorks found itself competing for an ever-smaller pot of money with organizations that provide food, clothing and utility-payment help.

“Of course if it comes down to helping small businesses or feeding someone, you are going to choose to feed someone,” Rudd said, adding that such an obvious need, however, does not mean small-business owners don’t deserve help.

The loss of Mountain BizWork’s local presence also worries and saddens Annie Ritota, who with husband, Joe, owns Annie’s Naturally Bakery in Sylva. The wholesale side of the bakery is based in Asheville.

The Ritotas turned to Mountain BizWorks for help about four years ago. The business, founded in 1999 in the couple’s garage, had grown into a success story “but we’d sort of lost our focus,” Annie Ritota said.

“They helped right our ship and get it turned in the correct direction,” she said. “We were at a place where we weren’t sure where we were going.”

Mountain BizWorks helped the bakery reduce the line of products offered, plus helped resolve cash flow and bookkeeping issues. Ritota said after that positive experience, she often recommends new business owners avail themselves of the nonprofit’s expertise.

Now, Mountain BizWorks has similar anxieties regarding its own purpose and focus. “We are not getting the type impact we want to see,” Canale said. “We want to do things in a much more thoughtful, durable way.”

“There are times when the best decision to make is to stop doing what you’re doing and to give yourself a clear space for reconsidering what to do,” she said. “That’s the situation we’re in now  — the answer is not to try harder and do more, but to stop and think and be sure that whatever we do next is right and that we can support and sustain our work.”

Canale said there is definitely a huge and growing interest in agriculture options in the western counties, as well as across Western North Carolina. Agriculture might well provide at least one area where Mountain BizWorks can continue to serve this section of the region.

Rudd said 35 people attended a workshop recently in Sylva, hosted by Mountain BizWorks, on forest-farm products.

The group is working on a three-year ag-biz pilot project to determine whether, and how, Mountain BizWorks would be helpful to small family farms in Western North Carolina.

From bankruptcy to riches, Phil Drake builds a business empire

Phil Drake acknowledges that he has two kinds of enterprises. There are those launched or purchased for strategic business reasons; others he owns to ensure family members in Macon County have places to work.

Drake has a lot of family, and he owns a lot of businesses: some 18 or so under the Drake Enterprises umbrella alone. These include a tax software company, an internet company, a performing arts center and a printing press.

Here’s how Drake and Drake Enterprises work, in what’s virtually a textbook model of a business practice dubbed “vertical integration,” or expanding within the core company’s supply chain of operations:

• Drake Enterprises was responsible for 75 percent of the work at Macon Printing in Franklin. Drake, once alerted to that fact by the shop’s owners, bought the business.

• Drake needed more reliable internet service than was available in WNC, so he joined with the Eastern Band of Cherokee Indians to create BalsamWest FiberNet. The company, headquartered in Sylva, has built 225 miles of underground fiber in Western North Carolina.

• Drake Enterprises had extensive marketing needs; Drake launched PRemiere Marketing in response. PRemiere serves as an in-house marketing service for Drake Enterprises, plus handle advertising and marketing for “outside” companies.

• Drake’s companies use computers extensively. Today he owns TechPlace outlets in both Franklin and Hayesville, specializing in computer and cell-phone sales and repairs.

Not bad for a boy from Franklin whose mother used to come home from work with bloody fingers from making denim jeans for Wrangler at the local factory. These days, Drake owns that place, too — he turned the 56,000-square-foot building into a “Fun Factory” for kids, complete with arcade games and a go-cart track.

 

Buying into the Drake dream

More than 500 people work for Drake. Key employees, those he wants to keep in the company for life, are encouraged to buy stock in Drake Enterprises using money Drake loans them. These employees now own 10 percent of the company.

“I picked employees who are loyal, have the same vision I do, and who don’t have an exit strategy,” Drake said. “I hope to work there until I die; the employees I picked, I hope they’ll work there until they die.”

With that many employees, there are that many people in WNC who owe Drake their comforts and livelihoods. His legion of supporters view Drake as a man who takes care of family and community, pays his dues and debts, and gives proper homage to God.

“He has worked very hard for what he’s got,” said Ronnie Beale, a Franklin native and Democratic county commissioner who owns and operates a construction company in Macon County. “We might differ politically on some things, but Phil has a heart for Macon County and its people.”

Drake would like to branch out of the private sector and serve in Congress. To date, however, his wife has made it clear she’d rather he not. Drake was equally clear in a recent talk in Asheville to area business owners about his intention of honoring her wishes.

Don’t count Drake out of politics too quickly, however. When you examine his history, this is a man who has managed to do pretty much whatever he’s wanted, one way or another. Through sheer perseverance, an uncompromising business intellect and an almost uncanny ability to time his business deals, Drake has prospered, and the extended Drake family has prospered right along with him.

“If I can create a job, make a little money or break even, I’ll do it,” Drake said. “God put me in the right place at the right time, and I really hit a homerun in software. On some of these other businesses, I’ve gotten some singles and some doubles. I’m still out there trying to find that next homerun.”

 

From bankruptcy to wealth

Drake’s rags-to-riches, Horatio Alger Jr.- type tale takes something of an odd turn in 1981, when shortly before the age of 30 he plunged into bankruptcy. Drake, a proponent of small government who has spoken at area Tea Party venues, was forced to rely on food stamps to help feed his family. Today he expresses gratefulness for that particular program of the federal government.

Drake grew up on a farm. He went to Davidson College after graduating from Franklin High School, and then headed into neighboring South Carolina. Drake taught high school math for three years in that state before deciding he couldn’t support a family on take-home pay of $425 a month.

Drake returned to Franklin in 1976 and joined his father in the family tax business. These were the days when taxes were done with pencil and calculator — pre-computer and pre-computer tax programs. Drake said he just knew there had to be a better way of preparing people’s taxes.

Drake bought an IBM computer for $22,385 in 1977 using borrowed money. At his son’s urging, his father mortgaged a piece of property to cover the cost. Drake was confident he could program the new computer — which, in fact, he did. Drake developed an accounting program that he was soon selling to other accountants.

He remembers boasting to his wife, “I’m going to be a millionaire by the time I’m 30.”

There was one problem with Drake’s plan, however. Each year the computer needed updating. The updates required new, expensive computers — not the relatively cheap, internal fixes you’d get today. Drake kept borrowing and buying new, expensive computers.

“I was $100,000 in debt just from buying computers,” he said.

Then he left the state and went to Kansas City for a time to help another company automate its tax service, putting faith in an on-site manager to take care of his business at home.

That didn’t happen. The Internal Revenue Service didn’t get its due in the form of payroll taxes. One day a federal agent informed Drake the IRS planned to padlock the family’s office door and seize their business equipment if the government didn’t get its money.

Drake didn’t have that kind of cash. He instead drove to Asheville, retained an attorney, and filed for bankruptcy.

Time seems to have helped heal the sting of that decision, and there’s clearly balm on the wound from having, Drake emphasized, paid back every dime to every creditor involved. He estimated that took about six years.

Drake described learning some hard lessons during those times. About not using money you don’t have, and about not getting out on a limb and sawing it off behind yourself.

“You know the only thing my wife and I could talk about then? Money. We didn’t have any, and that’s all I could talk about,” Drake said.

He’s self-critical, too, of the 100-hour weeks he once worked, remembering tearfully how one of his three children begged him over the phone, “Daddy, please come home.” Drake described his younger, driven self as “ornery,” a perfectionist who had difficulty letting workers write some of the most basic software code the business needed.

Now, he said, he hires good people and gets out of their way.

“I’m getting easier to work for,” Drake said.

And, he turned to his faith.

“This was a life-changing experience for me,” Drake wrote of the bankruptcy in an article published by the National Christian Foundation, on whose board he serves. “I came to the place where I finally said, ‘God, I’ve messed this up. From now on, I’ll manage your business, and Lord, would you manage mine?’”

The National Christian Foundation is based in Atlanta, Ga. It is the largest Christian grant-making group in the world, self-reporting that it has received more than $4 billion in contributions since 1982 and given more than $2.5 billion in grants to thousands of churches, ministries, and nonprofits. While board members such as Drake are technically elected each year, they are expected to serve for life.

 

An ‘angel’ investor

In a downward spiraling economy that has seen countless businesses go under, Drake has instead thrived — these days he’s emerging as a self-described “angel investor,” a man with enough money at his command to select only those investments that interest him. He likes to buy-in low, on the promise that the sellers will get their money back, and more, if the targeted business turns around. That minimizes his risk, and promotes cooperation to get the invested-in business moving in the right direction.

“We don’t pay more than we can sell it for tomorrow,” Drake said.

Bob Dunn, director of consulting for Mountain BizWorks, said Drake motivates companies he invests money into.

“His deals are tough love, but they have an attainable upside,” Dunn said.

Cecil Groves, a former president of Southwestern Community College who is overseeing BalsamWest for Drake and the Eastern Band, described Drake as a man who reaches business decisions quickly and decisively. Groves also sees Sharon Drake as a true partner of her husband, in every sense of the word, including in the business side of his life. Sharon Drake handled accounting and human resources for Drake Enterprises for two decades.

In addition to an ability to sift through facts and data quickly, Phil Drake has that near perfect pitch when it comes to timing on business deals. He was among the first in the nation to start filing taxes electronically, for example.

Drake is also a stickler for customer service — in January, just as the tax season kicks off, his business gets 14,000 to 15,000 calls a day from customers needing support using his tax software. Drake has call centers in both Sylva and Hayesville.

He expects the support line to be answered in three rings, an eight-second wait on average. This, Drake said, compares to the 45-minute wait time of some competitors.

Ron Haven, a Republican commissioner in Macon County, is an unabashed fan of Drake’s and of the business empire he’s built.

“He could have picked up and moved everything away,” Haven said. “But he’s stayed here instead in Macon County, and helped this community.”

 

Drake’s political future, if there is one

On YouTube there’s a video from an April 16, 2009, Tea Party event in Franklin featuring Drake. He sounds familiar Tea Party themes, such as: “you cannot legislate the poor into prosperity; you cannot borrow your way out of debt;” “If you take the resources from successful companies and reward those that are failing, that’s a picture of our bailout, and that’s unacceptable.”

For the most part, Drake appears on the video reasonably polished and smooth during this minor political foray. But there’s an awkward intellectual straddle when he attempts to pin the U.S. deficit, in large part, directly on abortion, which as a fundamentalist Christian, he strongly opposes.

“We have killed 30 million people who could work today and pay into the social security administration,” he told the crowd.

Drake said though he certainly would love to serve in Congress, he’s not really willing to run.

“I think I’d have some trouble,” Drake said. “I’m somewhere to the right of Jesse Helms. So getting elected might prove tough.”

 

The Drake empire:

• Drake Income Tax and Accounting: founded by Phil Drake’s father in 1954, Drake sold it to employees in 2004 for $1 on the 50th anniversary of the business’ founding.

• Drake Software: Software for accountants and tax preparers. Headquartered in Franklin, with additional call centers in Sylva and Hayesville.

• WPFJ Radio: Commercial AM station, Christian programming, in Franklin. Donated this year to Toccoa Falls College in Georgia, a Christian college. The move will save Drake Enterprises $50,000 a year, Drake said, and the college plans to continue with the same Christian-based music and programs.

• WNCSportsZone: Sports equipment and athletic shoes and apparel. Stores in Franklin and Waynesville.

• Dalton’s Christian Bookstore: Stores in Franklin and Waynesville.

• Macon Printing: A commercial printer in Franklin. Publishes The Real Estate Buyers Guide in five communities.

• PRemiere Marketing: Advertising and marketing agency based in Franklin.

• Franklin Golf Course: Nine-hole public golf course, driving range, pool.

• DNET Internet Services: Dial-up, DSL, wireless, webhosting. Based in Franklin.

• BalsamWest FiberNet: A partner with the Eastern Band in building underground fiber.

• TechPlace: Computer and cell-phone sales and repair, stores in Franklin and Hayesville.

• The Fun Factory: Family entertainment center in Franklin. Includes the Pizza Factory and The Boiler Room Steakhouse in the same building.

• The Smoky Mountain Center for the Performing Arts: 1,500-seat theater in Franklin, with orchestra pit and full staging; 80 events per year.

• EPS Financial: Process banking transactions and debit-card transactions. Based in Easton, Pa.

• GruntWorx: Converts scanned documents into readable and searchable PDFs and can import data into tax software. Originally based in Massachusetts, Drake moved the company to Derry, N.H.

• Stellar Financial: Drake is an investor in this Stroudsburg, Pa., company providing software and integrated management services for nonprofit donors.

• Sylvan Sport: Drake is an investor in a Brevard-based company that builds the “GO,” a camper.

• Galaxy Digital: Drake is an investor in this Asheville company that creates digital campaigns and works on web communications.

• Drake Capital: Drake is a partner in this Matthews-based real-estate acquisition and development company.

U.S. Senator Burr gets back to basics with Waynesville businessmen

U.S. Senator Richard Burr, R-N.C., didn’t don kid gloves when addressing a cross section of Haywood County business leaders representing agriculture, tourism, banking, construction and professional sectors last week.

“Here’s the hard, cold reality. We’ve got to cut an additional 6 trillion in spending. That’s to get on a glide path so that 30 years out we can balance our budget,” Burr told about two-dozen businessmen at a private lunch at the Waynesville Inn.

The magnitude of what must be cut is staggering, and the results won’t be pretty, Burr said.

But, Burr said this juncture provides a rare critical mass to reform the corporate and business tax structure, something he hopes to see passed by Congress in coming months.

“All the tax loopholes, all the credits, all the deductions — gone,” Burr said.

Bad news for big corporations, but great for small business owners like those in the room, Burr said.

Burr sympathized with those who have fruitlessly tried to borrow capital to expand their businesses in recent years.

“You almost walk away and say ‘Gee, they’d lend it to me if I had enough money to where I didn’t need it,” Burr said.

But don’t blame the local bankers, Burr said. They are merely acting on orders from the banking regulators harping on debt-to-capitalization ratios.

Meeting with Burr was a little like sitting down with an economic analyst. He talked about currency and trade, foreign investment, the still frozen credit market, lack of capital, sovereign debt, how a new tax code could effect business’ bottom line. Europe’s financial crisis perhaps topped the list.

“Dominoes will fall from what happens in Europe. Nobody is smart enough to know what they are going to hit,” Burr said.

Burr was quick to joke and banter with those at his table as they introduced themselves.

“I should have given the caveat that for any brokers in the house, don’t trade based on my predictions. I don’t even take my own trading advice,” Burr told Larry East, financial advisor with Wells Fargo.

Students — and their wallets — return to Jackson County

Aside from the occasional “welcome WCU students” signs, there isn’t much visible evidence in Sylva that signals more than 7,000 students have flooded this community for the start of school.

The town isn’t awash in purple, the school’s official color. You won’t see many images of catamounts, the university’s mascot, splashed about.

But despite the lack of an obvious welcome mat, the influx of students is a critical cog in Jackson County’s economic engine — and merchants and elected leaders here know that.

But it’s not always about the direct exchange of dollars. The economic ties between the university and community are often subtler than that.

At Rick’s Full Service Car Wash, Manager Mark Harwood relies on students for a workforce. And, as a general rule, he said, the students are simply stellar in that role.

“They do a great job for us,” he said, gesturing toward the car washers busy cleaning out a line of cars. “I love having them.”

Without WCU’s students, Harwood said he’d be hard pressed to find the dozen or so workers he needs to keep the 15-year business running. Students don’t usually have enough extra cash to get their cars cleaned here, he said, but they are vital to the car wash’s economic wellbeing nonetheless.

“With the economy the way it is, we are a bit of a luxury item,” he said.

At Super Wal-Mart in Sylva, displays cater to students and parents to shop for go-back-to-college items. That money returns to the community in the form of retail taxes.

“It’s a really big deal,” said Jackson County Commissioner Charles Elders of the economic ties between this county and the university.

Elders owns a gasoline station on U.S. 441 between Sylva and Whittier. Students headed west, or commuting in from outlying communities, help make up his business clientele, too — though gamblers headed to the Cherokee casino are even more important on a day-to-day basis, Elders said.

But at the Exxon service station on N.C. 107 in Sylva, students make up most of the business, and on this day WCU student and worker Samantha Talbert is rushing to keep up. It’s 9:30 a.m., and she oversees both the main cash register and drive-thru area.

Even at this early hour, people are driving though picking up six-packs of beer. It’s a Saturday, and people are eager to start their day of fun.

“It’s mostly locals during the day, and college kids at night,” Talbert said between customers.

Talbert eats at local restaurants and shops at local stores. Though she’s more frugal than many — she prefers to make her own meals most days, for health and economic reasons — Talbert still, like other WCU students, helps bolster Jackson County’s economy.

Hotel a tombstone for WNC’s once booming real estate industry

When construction on the lofty Clarion Inn started in 2008, the town of Sylva thought it was finally going to get a recognizable name-brand hotel to help attract visitors and commerce.

Three years later, and the Clarion Inn is instead the town’s biggest eyesore, defacing the viewscape high atop a mountain along the main commercial corridor. If the unfinished hotel today serves any useful purpose, perhaps it’s as a visual reminder that when granting regulatory breaks, beware of big-talking dreamers bearing big plans.

The developers, TJ Investments — father and son team Thomas and John Dowden — went into bankruptcy. Alpharetta Community Bank of Georgia, which seized the property after the men failed to payoff a $5 million loan, now owns the unfinished Clarion Inn.

In turn, however, the bank is being sued by Cooper Construction Company, which the Dowdens left $1.9 million in the red after failing to pay the firm for all its work. DeLaine DeBruhl, vice president and field operations manager for the Hendersonville-based contractors, declined to comment about the situation here in Sylva, citing the pending litigation.

Court records indicate the case has been stalled since February, when one of the parties involved had a lawyer withdraw as counsel. The two case files at the Jackson County Clerk of Court on the hotel litigation are some six inches thick, including depositions and court motions. But there is not the smallest sign to be found of possible resolution, and in the meantime, finding a new buyer to take over the project seems remote given the lien against the property.

 

Hindsight 20/20?

A tangled, drawn-out court battle over an abandoned building sure wasn’t the economic development the town’s leaders dreamed of when they granted that building height variance to the father-and-son duo.  

“We were so thrilled to be getting a big chain hotel there,” Sylva Commissioner Harold Hensley said of the town’s decision four years ago to allow the Clarion Inn a fourth floor instead of holding it to three.

The developers claimed the hotel required a 75-foot maximum height instead of just 45 feet as mandated by town regulations.

Hensley, Stacy Knotts, Ray Lewis and then-commissioner-now-Mayor Maurice Moody voted in favor of the variance; Commissioner Danny Allen missed that meeting and an opportunity to vote yes or no.

On paper, at least, things looked good: plans called for a restaurant, convention room and 78 guest rooms.

Instead the economy crashed, and the hotel never opened. In fact, the hotel was never even finished. Today it’s a hulking, depressing presence on top of a steep cutout bank, with boarded-up windows, a surrounding chain-link fence to deter derelicts, and landscaping consisting of waist-high weeds.

“Obviously it didn’t turn out how it was expected,” Knotts said. “I didn’t envision it would be sitting there vacant. We’ve been waiting a long time for something to happen.”

You do the best you can do at the time, make the best decision that you can, and move forward, Hensley said.

“I don’t know that (it’s particularly useful) to go back and regret anything you’ve done,” he said. “Hindsight is 20/20.”

Chris Matheson, a council member who was not on the board at the time of the variance, said she could sympathize with how the situation must have appeared then.

“Had the economy not taken a turn for the worse, if it had been completed as planned and bought a tremendous amount of revenue and activity to that end of town, we’d look at it through different eyes,” Matheson said. “I don’t think we’d even be having this conversation.”

Hensley said he hopes something changes — positively — in connection with the vacant hotel, located across from Wal-Mart.

Town Manager Adrienne Isenhower said it has proven difficult to get straight answers about the hotel’s future — or determine if it even has one. She spent some time early on trying to track down decision makers.

“When I first got here, there was an investment company that said someone was interested. But I haven’t heard anything since. Something needs to happen, it’s a major eyesore,” Isenhower said.

She said if there isn’t an actual use for the building, perhaps the time has come to consider tearing it down.

The problem is, the town isn’t legally in a position to make that decision. And it would seem that until the court case is resolved, no one — anywhere — can make any meaningful decisions regarding Sylva’s empty Clarion Inn.

Will WCU ever see Kimmel pledge fulfilled?

Six years ago, amid great fanfare, Joe Kimmel pledged $6.9-million dollars to Western Carolina University.

Based on that pledge, with payments expected to come in over an eight-year period, WCU went forward with a new school: the Joe W. Kimmel School of Construction Management, Engineering, and Technology.

Kimmel’s ability to pay WCU, however, abruptly ended in December 2009, when his company, Asheville-based Kimmel & Associates, went into bankruptcy. He stopped at $1.43 million — more than $5 million short of the original pledge to WCU.

The date of the last payment isn’t known. WCU would not release the payment schedule.

Chapter 11 bankruptcy afforded Kimmel and his wife, Cynthia, legal protection to try to reorganize their finances, both personally and for Kimmel & Associates. The company recently came out of bankruptcy proceedings. But it remains unclear whether Kimmel will, or even would be allowed under terms of his bankruptcy emergence, to fulfill the remainder of his promise to WCU.

The Kimmels said they had $7.2 million in personal assets and $15.8 million in liabilities. Kimmel & Associates listed $2.1 million in assets and $7.2 million in debts, according to federal bankruptcy filings.

Kimmel did not return a phone message seeking comment, with an employee at his company declining on his behalf.

 

Construction industry crashes

Kimmel & Associates is an executive head hunting search firm founded in 1981 that is focused on the construction industry. Kimmel & Associates could at one time — and did — boast of a national client base of more than 100 companies.

Pairing a construction-management school at a university seeking national prominence in the field with a construction head-hunting firm must have seemed a match made in heaven — particularly given Kimmel’s nearly $7 million dowry.

With an additional $3.5 million in matching state money secured as a result of Kimmel’s generous gesture, WCU promised to create a first-class educational program.

“We expect this pledge, combined with additional public and private support, will result in a school that will place Western on par with the nation’s finest institutions of higher education in preparing students for careers in construction management and related fields that are critical to the emerging economy of the state and the nation,” Chancellor John Bardo said in a press conference at the time.

Kimmel generosity didn’t stop with WCU. He and his company made contributions to numerous organizations in WNC, including the University of North Carolina at Asheville, Asheville Art Museum, Buncombe County Medical Society’s Project Access, Humane Society, Center for Diversity Education, Asheville Buncombe Community Christian Ministries, Meals on Wheels and the Fine Arts League of Asheville. Kimmel also established in 2004 a fund that provided $1,000 scholarships for students in construction fields.

“Giving and serving is the nucleus of the world, when the world is right,” Kimmel noted in a company newsletter as he reflected on his donation to WCU.

That was then; this is now. The world, at least the world according to Kimmel & Associates, soon wasn’t right.

Not even close: The housing boom, which seemed to promise ever-increasing profit margins to a construction industry left almost giddy by that prospect, instead crashed. Kimmel and his firm saw business dry up, virtually overnight, as builders were forced to put their measuring tapes up and hammers down.

In 2007, Kimmel & Associates was pulling in gross revenue of more than $19 million, bankruptcy documents show. That number dropped to $16.4 million in 2008, and by the following year, the company had dropped to $8.6 million.

Kimmel & Associate’s gross monthly income in 2009 still amounted to $625,000. But, with total monthly expenses coming to $626,047, Kimmel’s company was $1,047 a month in the red.

“Collapse of the construction industry” is the single reason given as a contributing factor in Kimmel & Associates fall into bankruptcy, according to documents.

 

School nuts & bolts

Today, the Kimmel School offers six degree programs in two departments: construction management and engineering and technology. There are state-of-the-art laboratory facilities; and about 300 students enrolled to take advantage of them.

The Kimmel contributions have gone toward endowments for distinguished professorships, student scholarships and program support for the construction management program, including allowing students and faculty to expand their participation in academic competitions, national conferences and industry meetings, said Bill Studenc, a WCU spokesman.

WCU landed a big-name, politically connected dean in March of 2008 when Robert K. “Bob” McMahan Jr. came on board. An astrophysicist, McMahan came to the university from his previous position as then North Carolina Gov. Mike Easley’s senior adviser for science and technology.

It wasn’t just WCU that Kimmel & Associates left in the lurch. UNC Asheville, where six of Joe and Cynthia Kimmel’s seven children attended school, built the Kimmel Arena — the health and wellness center was the result of a $2-million pledge from the couple. Last year, a UNCA official told the Asheville Citizen-Times that half that amount had been received.

 

WCU optimistic

A full assessment of the Kimmel School financial outlook is difficult to ascertain. When asked directly whether the school would be given a different name to more accurately reflect the true giving-picture, Clifton Metcalf, WCU vice president for advancement and external affairs, responded in a written statement:

“The university has taken a long-range view in our relationship with Kimmel & Associates,” he said. “We have been confident that Kimmel, one of the nation’s premier firms in recruiting executives for the construction industry, would rebound as economic conditions improved generally and as construction activity, specifically, accelerated. That appears to be happening now, and there is no intention to rename the school.”

Metcalf’s assessment of Kimmel & Associates’ ability to fulfill its pledge might be more hopeful than realistic.

The bankruptcy plan called for Kimmel and his wife to sell their $1.2 million in gold jewelry and 100 acres in Madison County, plus turn over to debtors the leases on two properties — the business itself on Page Avenue in Asheville, and a beach house in Folly Beach, S.C., used by customers and employees. Even leases on the company’s fleet of cars were up for grabs.

Haywood may look to property tax hike to offset still sagging sales tax revenue

Haywood County, like everyone else, is bracing for the impact of state budget cuts. But the good news is that they may leave the budget fray with fewer scrapes than they thought.

In Raleigh, budget committees have been busily trying to bang out cuts in the billions, and while nothing is yet final, a proposed House budget released last week gave a view of the carnage that may be to come.

So Haywood commissioners met with county staff to hash out what this might mean for the county’s budget and the services that rely on it.

Though there will certainly be state cuts that will fall to counties to pay for, but County Manger Marty Stamey told commissioners at a budget workshop last week he’s not as concerned as he could be.

“Best case scenario, we’ll be $250,000 out, which is good,” said Stamey, meaning that a mere $250,000 shortfall would be their best landing in the budget fallout. “A lot of counties would be proud to be where we are. People say what they want to say, but budget-wise, we’ve done the right things over the last few years.”

The county’s budget is still in flux, waiting on both state cuts and the reaction of other groups, such as community colleges and the school system, which may come to the county for helping plug holes from state cuts of their own.

Currently, community colleges are looking at a 10 percent reduction in state funding, while K-12 education was slightly shielded, only facing an 8.8 percent cut.

One area where the county might feel some crunch is in its health and human services budget. The state is seeking to reduce spending there by $527 million, including $527 million in Medicaid, $67 million for mental health services and half of the funding for senior centers. Also on the chopping block are Community Care block grants and Smart Start spending.

“Human services are really busting at the seams for demand in this county,” said Stamey, noting that a decline in services would affect many citizens harshly.

Another proposal that staff said seemed likely to come through is the closure of four state prisons. Though there’s no word yet on which prisons would close, it would shift the burden of housing prisoners serving time for misdemeanors to county jails.

Stamey reported that, while Sheriff Bobby Suttles said he was confident he could house the criminals currently in the system, predicting whether they’ll have room in the future is impossible.

“That’s one reason that we think we might need to have higher contingency this year, for things like this, because that’s an unknown,” said Stamey.

On the revenue side, Finance Director Julie Davis told commissioners that the picture is no clearer there.

Surprisingly, said Davis, the property revaluation that happened this year isn’t what’s throwing projections into turmoil.

Usually, property values would go up with a revaluation, requiring counties to tinker with the tax rate to offset would would otherwise be an unpallatable rise in property taxes.

But due to the stagnant real estate market, the total value of property remained nearly flat in the recent revaluation — requiring little adjustment to the property tax rate to bring in the same amount of revenue as last year.

Sales tax is a different story, however.

“Sales taxes have been up and down. Looking at the comparison to last year, four months they’re up compared to the current year and three months they’re down,” Davis said. “Were chasing a moving target on revenues.”

The fluctuation makes it hard to predict how much money the county can bank on from sales tax next year, but year-to-date on average, sales tax collections are down 10 percent over last year.

In light of that, and state-level slashing, a property tax rate increase might not be out of the question.

Overall, though state cuts do look grim, Stamey said he’s confident in the county’s ability to stay afloat without undue carnage. But, he said, there just aren’t any solid numbers yet to be had, so it’s impossible to know for certain.

“We’re at the mercy of a lot of people’s budget’s right now to sort of figure out our budgets,” said Stamey. “I feel like I’d be doing us an injustice right now [to give numbers].”

The picture painted by county staff was in broad strokes, an overview of what could be coming in stead of the nuts and bolts of what to do about it. But that was purposeful, according to Davis.

“We specifically did not mention numbers or the revenue neutral rate because there is so much up in the air right now,” said Davis.

Commissioners will be meeting throughout the spring for more budget talks, though they noted that much of it is out of their hands.

As Commissioner Kevin Ensley said, “so if the state leave’s us alone, we’ll be alright.”

A state budget is expected by early June.

 

Haywood schools talk budget

Haywood County Schools could be facing a budget shortfall of $4 million if the state House of Representatives proposed budget gets adopted. The school board held a public hearing on Tuesday to hear community feedback and discuss what cuts might mean for local schools.

The reductions would mean 46 positions would be slashed within the system. Teacher assistants would be scaled back by 49 percent, textbooks by 68 percent and dropout prevention programs, school technology and staff development initiatives, among other things, would be eliminated.

See www.smokymountainnews.com Thursday for an update on the public hearing and the impact of threats to school funding.

Gearing up: Mill outage to bring hundreds of outside laborers to Canton

For the last month, Greg Petty has been on a leaflet campaign around Canton. He’s been to parking lots. He’s been to offices. He’s been to bulletin boards. He’s been inside Evergreen Packaging, the paper mill that looms large in the town’s small center, and trolled its perimeter, plastering spots that might catch the eye of workers with his restaurant’s offerings.

“We’ve got menus up at every tunnel and every gate and every parking lot,” said Petty, the owner of the Canton Lunch Box.

The Main Street lunch and dinner spot is hardly in need of new business. On any given weekday around noon, there is nary a seat to be found. The wooden tables and chairs are filled with mill workers and other locals, and the staff seem acquainted with virtually all of them.

But what Petty, with his paper push, is gearing up for is an onslaught of new customers, thanks to more than 1,400 contract workers who will descend on the town next week for a massive mill maintenance, the largest since 2003.

 

A collective undertaking

The workers are coming for what, in the paper business, is called a cold mill outage. The paper mill will halt operations for three days and undergo major maintenance for several weeks to overhaul the place. They’re cleaning, they’re replacing pipes, they’re rebuilding boilers, they’re aligning massive pieces of equipment like steam turbines.

It’s going to take regular mill employees working at full pelt — some clocking overtime — and a hoard of outside contractors to get it all done.

But for an often-sleepy hamlet like Canton, such an influx of people isn’t just a massive undertaking for the mill: it’s a massive undertaking for the entire town. With the incoming contractors, the town’s population will swell by a third. And out in the streets, if they’re not busily gearing up, they’re anticipating the busyness to come.

“I’m not going out to eat for the next week,” said Nancy Rathbone at Sign World WNC on Main Street.

Sign World itself, meanwhile, has been cranking out custom signage for the mill as fast as it can: signs to mark parking lots, signs to mark exits, stickers for parking, ID badges, new plaques for machinery and a plethora of other printed pieces to orient and direct the out-of-town workers. Charles Rathbone, the company’s owner, said Evergreen officials have been in nearly every day in the weeks running up to the outage.

“We’re getting a lot done for the mill to gear up and probably expect a whole lot more during the period of time that they’re here,” said Rathbone, who said he’s excited about the outage and believes it will be good for Canton.

The mill estimates that it’ll be pretty good for it’s hometown, as well. The outage should boost the local economy by $500,000, according to Mike Cohen, a company spokesman.

According to Cohen, they arrived at that $500,000 figure by using an economic impact formula that factors in things such as hotel nights, meals and gas.

Mark Clasby, Haywood County’s economic development director, said that’s only one facet of the positive impact the outage will bring.

“It’s good news because of the capital investment that they’re making in the plant to continue operations, but there are multiplier effects — it means buying supplies, there’s hotel nights, meals, things like that, expenses. All those factors go into that,” said Clasby.

 

A boon for business

Businesses around Canton are already feeling the rising tide they hope will continue to lift all boats.

At Days Inn on Champion Drive, they’re completely booked. They’re pretty close at the Comfort Inn just down the road, the town’s other hotel.

“We just have a few rooms, but they are very few,” said Gagan Nanda, who works the desk there. He said they’ve been taking advance bookings for three months now in preparation for the work.

The contractors themselves have been preparing, too. Anchor Steam Power, based in Asheville, said that, although they keep a crew at the plant nearly year-round to repair and maintain boilers, they’ll be sending in nearly 200 extra workers to revamp most of the plant’s many boilers.

Evergreen will be paying dearly for the maintenance — they expect it to cost in the range of $20 million.

They’ve budgeted for the outage and upped production in the weeks leading up to it so they can keep their customers’ orders filled, said Cohen, though, he notes, it isn’t a move they’re keen to make regularly.

“It’s one of those things that you do them when you need to, but not anymore often than you have to,” he said.

Of the $20 million that the company thinks they’ll spend on the outage, 60 percent of it — around $12 million — will be spent on paying workers to do the maintenance. The other $8 million will go to pay for the maintenance itself, purchasing supplies and equipment, along with preparations for the incursion of extra help.

Some of those workers, like those from Anchor Steam, are from the region. Most, though, are industry specialists who travel around the country, bouncing from site to site doing similar work.

“Most of the contractors have specialized skills for what we need,” said Cohen. “A paper mill is not like anything except other paper mills, and even those can be very different.”

With so many out-of-region workers, that means they’ll be relying on the town for pretty much everything, and in addition to shops and motels, some of Canton’s restaurants are ready to entice the temporary customers in for a meal or two.

Back at the Lunch Box, they’ve bolstered their operations in addition to their marketing.

“During the outage and the upgrade, we’re going to be opening at 10 in the morning and we’re going to double our staff,” said restaurant-owner Petty. They’ll also be delivering to the mill, and just in case anyone didn’t hear about their offerings, they’ve saturated the campus with paper.

Petty is also the man behind the renovation of the town’s Imperial Hotel, which will include a restaurant slated to open later this year. Though he was shooting for both restaurants to be open, Petty’s excited about the infusion of people and believes it will be a boon to the town’s businesses and morale.

“I think a lot of the people in town are excited about having 1,500 people in town that aren’t from Canton,” said Petty.

Rene Cutshaw, the service manager at Sagebrush steakhouse, one of the town’s other lunch spots, said they’re bulking up their normal staff schedules, too.

“We are putting some extra staff on next week and getting ready for the people staying in the hotels that are right behind us,” said Cutshaw.

And as one of only two restaurants that serve alcohol, and the only bar, they’re expecting an upshot in their sales there, too.

“We’re the only option, but we’re a good one,” said Cutshaw. “The next closest [bar] is O’Malley’s in Waynesville, so we’re making sure we’ve got a bunch of bottled beer ready and making sure we’re ready to meet their needs.”

The town itself has been helping out with operations, too. Though Town Manager Al Matthews said Evergreen has been handling most of the logistics, his staff has been helping them locate parking lots to house the workers’ vehicles while they’re here, which is no mean feat in Canton’s small downtown.

“We’ve been coordinating with their people to accommodate the extra vehicles that will be in the town, and our law enforcement is trying to accommodate that, to have enhanced patrols to protect all those vehicles,” said Matthews.

With so many unmanned cars sitting in vacant lots all day, police realize that the temptation might be too much for potential thieves.

Matthews, too, is optimistic about the benefits that the maintenance will bring.

“I think it will be very positive,” said Matthews, echoing the sentiments and hopes expressed by many in Canton ahead of the outage.

So as the little town readies for the big mill ball, they seem to have their hopes high that the temporary boom will be as loud and prosperous as estimates promise.

Business owners rally to make Maggie blossom

Maggie Valley is gearing up for its next round of beauty treatments in an ongoing effort to spruce up the town and bring some color to its streets.

The beautification program, led by master horticulturalist and Maggie Valley resident Clayton Davis, is a sweeping plan that intends to bring color to the valley year-round through mass plantings.

The first phase, which entailed planting tulip and daffodil bulbs in the town’s signature red and yellow, got under way last autumn. The bulbs need to be dropped into cold ground, so the town along with residents and businesses collectively planted several thousand bulbs last November.

The next phase of the plantings will include knockout roses, a famously hardy and simple species that blooms throughout the warmer months. Davis said that other plants intended to add color in the winter months, like nandina, will also be on offer.

The town is able to get wholesale discounts on the plants because they’re buying them in bulk, so citizens and businesses who take them up on the offer get their plants at cut-rate prices, as well as the expertise of Davis and the town’s grounds staff.

After discussion at a recent meeting of the beautification committee, participants will also get fertilizer and Nature’s Helper, a special growth aid, to help their plants along.

For its part, the town is funding the planting of its own properties — such as the landscaped area in front of town hall — with $6,000 it’s set aside for the project. Half of that sum was donated as matching funds by Home Trust Bank.

The idea behind the beautification belongs to Davis, who was inspired long ago by a trip to Summerville, S.C., where azaleas bloomed across the city. Davis and city officials hope this initiative will give Maggie Valley a face lift and bring increased tourist visitation.

Order forms for the plants are available at the Maggie Valley Town Hall and all orders are due by April 18. On sale are Gulf Stream nandinas for $11, nandinas for $18 and knock-out roses for $11. The next meeting of the beautification program will start at 10 a.m. on April 18, in the Maggie Valley Town Hall.

Maggie loses another attraction with closure of Eaglenest Entertainment

After eight years of entertainment, Maggie Valley’s largest venue is closing its doors, falling prey to the poor economy.

800-seat Eaglenest Entertainment was one of the largest in Haywood County and has drawn big-name acts such as Percy Sledge and Pam Tillis, but in the end, they just couldn’t keep pace with a still-sluggish economic environment and consumers’ increasingly discerning tastes in entertainment.

“There’s a lot of competition for the entertainment dollar today,” said owner Grier Lackey. “We have not been able to attract the clientele that we needed to make the place profitable.”

Lackey is putting Eaglenest up for sale with hopes that whoever buys keeps it as an entertainment venue.

“We are going to make every effort we can to try and get someone back in there that will be an asset for Maggie Valley,” said Lackey. “That’s not going to be easy, but we’ll wait for the right opportunity that will be an asset to Maggie Valley.”

For now though, Maggie Valley is missing one of the few major attractions the struggling tourist town had left. Carolina Nights dinner theater is not reopening this season either.

It will “leave a big gap in entertainment options,” said Teresa Smith, president of the Maggie Valley Chamber of Commerce.

The massive center is state-of-the-art and unique in Maggie Valley. In addition to the large two-level auditorium, there’s also an outdoor amphitheater that can hold up to 1,000.

The site opened in 2003, replacing the notorious dance club Thunder Ridge with a family-friendly, alcohol-free venue. The idea, said Lackey, was to bring in entertainment that was geared towards families and tourists, bolstering the entertainment economy in the valley.

And to a certain extent, it worked. The place did draw a number of big names and crowds of music fans clamoring to see them. However, with the tanking economy, the shows Eaglenest has been able to book have steadily dwindled, along with each production’s attendance.

Lackey chalks this up not only to the economy, but to new entertainment venues that have come online in the region, like Smoky Mountain Center for the Performing Arts in Franklin and a new concert venue at Harrah’s Cherokee Casino.

“I think that has had a drastic effect on it,” Lackey said. Plus, the region is known for its plethora of free festivals and music events put on to attract tourists.

Really though, said Lackey, it wasn’t just the new competition that was the death knell for the place. It was also a changing tide in what people actually want and are willing to pay for. Expendable income, he said, is shrinking fast, and the money that was once put to seeing acts of all kinds is now spent more carefully.

People only want to see artists they’re really committed to, which makes filling an 800-seat auditorium in a semi-rural community a very difficult proposition indeed.

And to just break even, never mind turning a profit, Lackey said they need to be pulling in at least 60 to 70 percent of their capacity for each show.  That, of course, just hasn’t been happening.

Lackey says he’s not in a huge hurry to sell. The venue was always more of a hobby than a central business investment anyway. He is the president of Taylor Togs, once the nation’s manufacturer of Levi Strauss.

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