A TWSA Policy Committee meeting held Tuesday, Aug. 27, represented the first in a new round of discussions about what those policies should look like and who they should apply to.
“The goal in the end is that the property owner, the renter, is made whole,” TWSA Executive Director Dan Harbaugh told the committee. “Our goal is to make sure that DOT (N.C. Department of Transportation) makes them whole to the best of their ability. If for some reason there are impacts that are not accounted for by DOT, then that’s part of the reason we’re talking about what can be done from a policy standpoint, because it’s important for TWSA to recognize that we want to retain customers.”
The road project is expected to require 55 businesses and organizations to relocate, with an additional 131 properties expected to experience some loss of property below the threshold that would trigger relocation. Of the 55 businesses, 12 are owner-occupied and 43 are renter-occupied.
A key consideration for TWSA is how to handle fees for customers relocating within its service area. TWSA charges what’s called a system development fee, an often-hefty charge designed to offset the cost of future capacity expansion projects required as existing capacity is used up. The fees follow the property, not the business or property owner — if a restaurant pays a $20,000 system development fee for its original location but then decides to open up in a new spot across town, the business could find itself paying that fee again.
If a business being forced to move by the road project is required to cough up that kind of money to relocate in Sylva, it might end up leaving the community altogether. Businesses can use DOT relocation funds anywhere within a 50-mile radius.
“The real trick in the discussion is going to be developing policy changes so they don’t allow an impacted property to derive benefits from more than one source,” said Harbaugh. “That’s the real trick.”
It’s DOT’s job to reimburse affected parties for project impacts, said Harbaugh. For now, TWSA should be working to inform DOT about allocation issues and the associated fees so that it can more fairly compensate business owners. But the organization doesn’t want to foot the bill for expenses that are ultimately DOT’s responsibility.
Board member David Nestler didn’t agree with that approach. TWSA had earlier discussed the topic of N.C. 107-related policies in October 2018, at Nestler’s request. The board decided to delay decision-making until the road planning got further along and more details emerged, but Nestler had maintained that TWSA should be more proactive. During the Aug. 27 meeting, Nestler pushed for a complete waiver of system development fees for relocating businesses.
“I think that people need to be reassured that if they are impacted by this project they’re not going to suffer a hardship at the hands of local government entities,” Nestler said. “And we want to guarantee that they feel completely OK to relocate in TWSA’s service area and that they’re not going to have to pay any fees to do so. I think that the only way to do that is to develop a hardship policy for situations like this that waives the system development fees for anyone relocating.”
Nestler questioned whether DOT would actually reimburse business owners for the cost of system development fees and pointed out that DOT rules require relocating businesses to find an equivalent space if their expenses are to be covered. With a dearth of suitable business locations available in Sylva, period, how many business owners will be forced to move into non-equivalent locations and so find themselves short on relocation funds?
“The only way to ensure that businesses relocate in this area and are disrupted by this as little as possible is that we not charge them fees for relocating within our area, and I don’t see any reason we should be collecting money from people that are forced to relocate,” said Nestler. “I think that’s going a little too far.”
In addition, he said, it is on the business owner to request reimbursement for specific items, like system development fees. Many of the businesses in question were established before these types of fees were even instituted, he said, so the odds look good that some won’t even think to request reimbursement for that particular expense.
“I think that’s why education is very important,” said Nancy Hoyle, finance officer for TWSA. “We need to help them. We need to assist them so that they know what to bring up and what to ask for. It’s a level of awareness and education.”
“No matter how much education we provide and resources we provide, if we charge people that get relocated from this project an SDF there will be people that are left out,” Nestler replied.
Nestler was unwavering in his viewpoint, but he was in the minority.
Jeff Goss, a TWSA board member and local attorney, sat in on the meeting to give his perspective that TWSA would do better to create a broad granting program to cover deficits in DOT reimbursement — when a business owner applies to request such funds — than to do a complete waiver of all fees for everyone affected by the project.
“The problem is it is so incredibly fact-specific on that property, the status of that ownership, what service is available at that site at that time,” said Goss.
Because allocation follows the property, two equivalent businesses moving into two equivalent buildings could face vastly different system development fees. Someone moving into a building that already has sufficient allocation attached to it wouldn’t have to pay any additional system development fees, while someone moving into a structure with no existing allocation could face a hefty charge. If a move does require a system development fee, there’s then the question of how much allocation was available at the previous location and who owned it — the business, or a landlord unaffiliated with the new location? DOT may have its own ideas as to how much it should reasonably be expected to cover in any given situation.
“There is potentially a fight between that business owner and DOT as to whether that is a viable space for DOT, but we can’t make that determination,” said Goss.
“That’s one of the big concerns that the right-of-way meeting brought up for me is that you are expected to find an equivalent space, and when you don’t there are expenses DOT won’t cover,” Nestler replied.
“I would say that’s why you craft a very broad policy that presents an opportunity for the board to look at some of these fact-specific things for a grant,” said Goss. “It may be that only one or two people are impacted this way.”
The remaining Policy Committee members, TWSA Chair Tracy Rodes and Member Buddy Parton, favored Goss’s position.
“I think the statement should be that we are willing to support our ratepayers through this process in any way we can, and we have a willingness to do that,” said Rodes. “I genuinely think that’s what our intent is. Now as far as what might happen and who might get left out, we don’t know who those people are. We don’t know what that hypothetical is. How can we write a policy about a hypothetical?”
In 2015, TWSA developed a policy creating a grant fund to offset impact fees — the fees are now called system development fees — for economic development and community outreach projects. Rodes suggested that the board consider changes to that policy that would make grant funds more available to N.C. 107 relocatees.
The full board will discuss the issue at its upcoming work session, 5:30 p.m. Tuesday, Sept. 10, at the TWSA boardroom.