Board brings early end to MSD exodus

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Board brings early end to MSD exodus

Sharon and James Earley had sought unsuccessfully for almost two years to have their property removed from Waynesville’s downtown taxing district, until a recently passed law gave them new hope that their wish would finally be granted.

Although the outcome didn’t change, the first vigorous vetting of the cost and benefit to property owners of the taxing district — formally known as the Municipal Service District — did leave some important philosophical questions unanswered.

Opening the lid

The Waynesville Board of Aldermen held the required public hearing on the Earleys’ request for removal from the MSD at its Aug. 9 meeting.

Property owners within the MSD pay an extra 20 cents per $100 property valuation on top of Waynesville’s 48.57-cent rate. That revenue is managed by the Downtown Waynesville Association and is used, largely, for downtown revitalization and marketing.

The Earleys have argued that their property at 180 Legion Drive, which does not have frontage on Main Street and is home to Ferguson Plumbing Supply, does not benefit from the “services, facilities or functions” of the MSD.

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The public hearing saw a number of speakers — all of whom were interested parties and none of whom were in support of the Earleys’ request.

But that didn’t stop the board from hearing out both sides of the issue and carefully weighing the arguments. John Keith, a Realtor, downtown property owner and President of the DWA, was first to speak.

“The success of our district, of course, is reliant on the cumulative tax fund balance to market and advertise the district to benefit all of us,” he told them.

Buffy Phillips, executive director of the DWA, reminded the board that property owners had decided to tax themselves “to help bring their home town back, and to not let it die … and it worked.”

Local artist, longtime downtown property owner and DWA Executive Board Member Teresa Pennington echoed both Keith and Phillips, and in doing so established their “Pandora’s box” argument — namely, that once one property owner was allowed to leave the district, it would be hard to deny others the same right.

By omission, the Pandora’s box argument laid out by the three seemed to acknowledge that there were property owners who do not benefit from the MSD — including the Earleys.

However, the argument asserts that allowing the Earleys to leave would encourage others to leave (Phillips), which would reduce DWA revenue to the point of it being unable to succeed at its mission (Keith), which would result in the decline of downtown Waynesville (Phillips).

On the town board, Alderman Julia Boyd Freeman said that although she sympathized with the Earleys, she did recognize Penningtion’s “Pandora’s box.”

Alderman Jon Feichter — himself a DWA board member and Main Street property owner — also seemed to acknowledge this when he said that he agreed with the Earleys.

“They do not directly benefit from the services, facilities, or function of the MSD. As I thought about this over the past few days, I realized that I’m in the same boat as the Earleys,” he told fellow board members. “My business does not benefit from many, many of the activities the Downtown Waynesville Association provides.”

Feichter then pivoted with what he called “a pretty big but.”

“I benefit in a multitude of ways indirectly,” he said, citing statistics claiming that in 2014 each of the 35,087 Haywood County households would have had to pay $549 more in state and local taxes to replace the taxes generated by the $161.5 million in direct tourism spending and $33 million in worker’s paychecks attributable to the activities of the MSD and the DWA.

“So in my mind, although I agree with the Earleys that they don’t benefit directly, they ultimately do benefit indirectly, and we all benefit indirectly by virtue of the spending that is generated directly as a result of the activities that the Downtown Waynesville Association provides us,” he said. “So, I stand opposed.”

Alderman Dr. LeRoy Roberson, himself a downtown property owner, agreed.

“If we start with this, any business could say, ‘Well, we don’t get any direct benefit from this. So have us removed,’” he said. “Wells Funeral Services — they don’t have any tourists coming in saying ‘I want to buy one of your caskets’ or ‘I need your services right now.’”

Thus the opposition to the Earleys request was twofold — Pandora’s box and direct versus indirect benefit.

Direct benefits

Sharon Earley remained steadfast in her argument that in return for the extra taxes she and her husband had been paying on the property for years, they expected direct benefit — which, by acclimation, they have not and may never receive.

“What can the Downtown Waynesville Association do for Legion Drive?” she asked. “The same thing it has done for the past 18 years — nothing.”

Alderman Gary Caldwell was first to voice support for the “direct benefit” argument put forth by the Earleys when he said to Feichter and Roberson, “You guys get the sidewalks, the decorations, the nice street lights — these guys they don’t get that.”

Feichter shot back with Pandora’s box.

“I agree with Gary,” he said. “The Earleys don’t receive that. They are on Legion Drive, off the beaten path. But I do stand by my statement that they indirectly benefit, and that leads us to the question of if we say ‘yes’ to the Earleys how can we say ‘no’ to anybody else?”

Mayor Gavin Brown took the opportunity to analyze the 1986 ordinance that created the MSD, and said he didn’t believe the Earleys benefited from the services, facilities, or functions of the MSD, but that the town could re-annex into the MSD any piece of property it wanted — meaning if the plumbing supply store was sold and became something that could benefit from the MSD, it could be re-included.

James Earley, who had been silent except for the letter sent to town officials requesting removal from the district weeks ago, was recognized by Brown and took the podium.

“Tell Teresa (Pennington) and Buffy (Phillips) to go down there and weed eat that place,” he said, again buttressing his “direct benefit” argument.

“I’m sorry, Mr. Earley,” Brown said. “I’m not sure what you’re referring to.”

“I spend over $1,500 a year maintaining that building, just for the surroundings,” Earley clarified. “How many times has Teresa and Buffy picked up a weed eater on Main Street? Buffy can run up town and drink coffee on Main Street with her ‘loyal’ downtown people — Teresa and the whole gang …”

At that point, Brown cautioned Earley to not get personal.

“It’s getting personal,” he said. “Where’s that money they spend on Legion Drive? You can buy a whole lot of coffee with that $700 a year we pay. That’s the first thing she wanted to do with my wife — ‘Oh, we need to go have a cup of coffee.’”

Earley did go on to apologize while indicating his frustration, but when Brown finally called for a vote, the result left Earley even more so.

“I’ll see you in court,” he said to Phillips on his way out of the meeting after Brown and Caldwell voted to allow them leave the MSD, saving them $692.20 per year in taxes. Freeman, Feichter and Roberson voted no.

“I’m disappointed to see that the board members are still allowing the Downtown Waynesville Association to control this town,” Sharon Earley said after the meeting. “We have legislation on the books that would fit a situation like my husband and I are in. We are not on Main Street, but yet there are still some members on the board who are controlled by the Downtown Waynesville Association.”

Questions remain

Although the issue with the Earleys has been settled for now, the way in which both sides argued their respective positions leaves more than a few loose ends.

Section 4 of N.C. General Statute 160A-538.1 reads, “A property owner may submit a written request to the city council to remove the owner’s tract or parcel of land from a service district. The owner shall specify the tract or parcel, state with particularity the reasons why the tract or parcel is not in need of the services, facilities, or functions of the proposed district to a demonstrably greater extent than the remainder of the city, and provide any other additional information the owner deems relevant.”

The Earleys did so, but still weren’t allowed to have their property removed from the MSD, which raises the questions about what burden of proof property owners will labor under in future requests — or, if there will even be any future requests, based on the results of the board’s actions in the Earley instance.

Furthermore, James Earley’s comments directed at Phillips and Pennington also allude to the fact that there may be a schism developing between MSD owners in Waynesville’s downtown Main Street core and those on the periphery — a “haves” versus “have nots” situation.

The statute says nothing about the detrimental effects MSDs may encounter when allowing certain property owners to leave, nor does it address the benefit — direct or indirect — the property owners do or do not receive from the “services, facilities or functions” of the MSD.

But if any credence is to be given the arguments of Feichter, Pennington and Roberson, if everyone in the county benefits from the activities of the DWA and the MSD, how can anyone ever be allowed to leave it?

Conversely, if everyone benefits, then why, in the words of Sharon Easley July 26, “aren’t all paying that extra 20 cents?”

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