State budget timing critical to local governments

Local boards are finding themselves on the wrong end of the dog when it comes to putting together budgets for the upcoming fiscal year.

In Jackson and Macon counties, at work sessions held by commissioners in their respective counties last week, much of the discussion at these relatively informal get-togethers involved speculation on when — and what — might be expected from the state General Assembly.

The state, as it were, would be the front end of the dog.

North Carolina is facing a projected $3.7 billion shortfall. Thousands of state jobs are threatened, with massive cuts expected to come for health and human services, schools and other critical services offered on the state and local level.

So, what does that mean for counties?

“There are certain things we have to provide,” said Evelyn Southard, finance officer for Macon County.

And not knowing how much money will come down the pike from the state complicates matters, she said. When counties will know the full extent of the financial devastation is unknown, but that knowledge is critical to local boards starting preparations on budgets for the next fiscal year.

Macon County Manager Jack Horton warned his board that even though members of the General Assembly are making happy noises about having their budget passed by the end of June, August is more typical, and the state has actually lagged before into October.

“We have to have the (ability) to take care of the county business whether the state gets their house in order or not,” said Horton, a veteran administrator who has also worked over the years in Swain and Haywood counties.

 

Jackson faces immediate shortfall

In Jackson County, officials were concerned about staying within this year’s budget in addition to preparing next year’s.

Jackson County must either slow its spending, interim Manager Chuck Wooten said, or the county must dip into the fund balance — those are the two choices facing Jackson’s commissioners. An across-the-board cut for county departments seems the most palatable option of the two, Wooten said.

The problem is not enough people are paying their taxes in Jackson County. A gap between the budgeted tax-collection rate for the current fiscal year, and the actual collection rate occurring so far is 0.62 percent off what was originally projected. Sounds tiny, but that adds up to big bucks: there is a projected revenue shortfall for the current year of $336,004, including failures to pay vehicle taxes.

The recession has taken its toll on all counties when it comes to people paying their taxes. Jackson’s budget for this year assumes a property tax collection rate of 95.4 percent. Last year, the tax collection rate was only 94.8 percent, but county leaders apparently banked on it coming back up.

Wooten said as a result this year’s budget is “too optimistic,” though he stopped short of assigning blame. Wooten replaced longtime County Manager Kenneth Westmoreland in January.

In response, Jackson County commissioners indicated they would probably become more aggressive in tackling tax scofflaws.

“Why have we not gone after this?” Jackson Chairman Jack Debnam asked, presumably of the only two (Democrats) commissioners who remain from the previous board.

Debnam then answered his own question: “I know, we’re a small county — they could be friends and relatives.”

New Commissioner Doug Cody, a Republican, warned his fellow members that favoritism must play no role.

“If we go down this road, it is important to treat everyone equally,” he said.

Macon County leaders, by comparison, were merry about having a mere $34,283 projected discrepancy.

“And I think there’s some room in here for our expenditures and revenues to be even better than is shown here,” Southard said.

In other state-local government news, the N.C. Association of County Commissioners last week passed a list of legislative goals the group wants state leaders to adopt. Beale, who attended the meeting, summarized the top five priority goals of the group:

• Oppose shifting road maintenance from the state to the counties.

• Reinstate Average Daily Membership, a formula that uses school enrollment to determine funding levels, and lottery funds for school construction.

• Ensure adequate mental-health funding by seeking legislation for adequate capacity of state-funded acute psychiatric beds; oppose closing state-funded beds until there is adequate capacity statewide, and seek legislation to maintain the existing levels of state funding for community mental-health services.

• Preserve the existing local-revenue base (don’t take money streams away from already-hurting local governments).

• Authorize local revenue options by allowing counties to enact by resolutions, or at the option of boards of commissioners, by voter referendum any or all revenue options from among those that have been authorized for any other county.

Industries in arrears on rent and loans face county crackdown

With what they claim is hundreds of thousands in unpaid rent and loans on the line, Jackson County commissioners have ordered three delinquent tenants at county-owned industrial sites to pay up, or else.

Precisely what “or else” means hasn’t been spelled out. But, in a 5-0 vote, commissioners did make clear last week they want the money they believe is owed the county. That would be $92,700 from QC Apparel; $104,550 from Stanton and Stanton; and $83,166.72 from Clearwood Lumber.

The county has been prodding at least two of the industries to pay up since last summer. The former board of commissioners discussed the issue in closed session on more than one occasion.

Their less-than-stellar track record with the county goes back years, however. Their failure to stay current on revolving loan payments portrayed the old Economic Development Commission as being lax in its oversight of the revolving loan fund. That in turn triggered a county takeover of the EDC, but the county hasn’t done much better since it has been at the helm.

In addition to the back rent, QC Apparel has an outstanding revolving loan of $410,094, and hasn’t made a payment since January 2008, interim County Manager Chuck Wooten told commissioners. Clearwood has an outstanding revolving loan of $76,716.87, and hasn’t made a payment since May, he said.

Neither QC Apparel nor Clearwood Lumber returned phone messages seeking comment. Wooten said he had not received a response as of earlier this week to the dunning letters sent to any of the three companies.

Charles Stanton, owner of Stanton and Stanton, told The Smoky Mountain News on Monday that commissioners are mistaken. He does not owe back rent, because his woodworking company put in “a lot of money fixing up the building” per a lease agreement. Stanton said he planned to meet with Wooten this week and attempt to clear up the matter.

Stanton said his company has six full-time employees and six to 12 installers working at any given time under contracts.

QC Apparel and Stanton and Stanton are located in the former Tuckaseigee Mills building on Scotts Creek Road. Clearwood Lumber is in Whittier.

Jackson County Development Corp., a nonprofit arm of the county’s Economic Development Commission, originally purchased Tuckaseigee Mills.

Jackson County commissioners shift into reverse on hiring policy

When Jackson County’s new commissioners announced they would oversee all hiring to determine whether positions should be filled or wiped off the books, the mandate had a fiscally prudent, vigilant-watchdogs-of-taxpayer-dollars sound.

“I have to admit, this is causing somewhat of a problem in being able to manage this,” interim County Manager Chuck Wooten told the board last week, just more than a month after commissioners so tightly grabbed the reins.

Though commissioners control the budget, statutorily speaking the sheriff and register of deeds — both elected positions — have full powers to do the hiring and firing in their own departments, Wooten pointed out.

Wooten also asked: did commissioners really want to clog-up the system (about 4 percent of the Jackson County workforce is currently open) by scrutinizing positions mainly paid for using state dollars, such as at the health department and in social services, which have their own overseeing boards? And, what about contracted and grant-paid positions? Take a transit driver, 85 percent grant funded, as an example of the latter category, Wooten said. Do you need to personally approve who is hired?

Well, no, now that the problems being created by practically their very first official decision as commissioners (during a Dec. 6 meeting) has become clear, it turned out the board didn’t really want oversight of those hiring decisions. In a 5-0 vote, they agreed in those cases to let others — the departments or boards directly involved, or Wooten — make the hires.

Unlike municipalities in North Carolina, county commissioners must vote for their manager to be given hiring oversight. State law gives town managers that right without elected leaders’ say-so. Most of the state’s 100 counties’ board of commissioners automatically extend that power to the county manager hired to, well, “manage” the county.

Jackson County commissioners did, however, retain the review-before-advertising-any-county-positions paid for purely with county money, via the general fund. Though, it should be noted, Wooten advised the five men they might want to reconsider that decision, too.

Wooten was hired as a temporary replacement for former County Manager Ken Westmoreland, who either elected to leave voluntarily before the new board convened in December, or who was shown the door. This depending on whom you believe, Westmoreland (who said he was forced out) or Chairman Jack Debnam (who said “it was his decision”).

Wooten retired Jan. 1 after 30 years of experience overseeing Western Carolina University’s finances. He has said he expects to help commissioners hire a replacement county manager within six months or so.

Jackson County has three new commissioners: Debnam (a conservative independent); Doug Cody (a Republican) and Charles Elders (a Republican). Democrats Mark Jones and Joe Cowan round out the board.

Supporters want to keep county funding for Green Energy Park

Supporters of Jackson County’s methane-powered Green Energy Park urged county leaders last week not to slash funding to the innovative project.

“What is the Green Energy Park?” Aaron Shufelt, a glass artisan and intern at the park, asked rhetorically during the public session of the county commission meeting, one of seven people who spoke about the issue.

“(It is) a place where creative and passionate people come together to experience the arts. The Green Energy Park is unique because they are dedicated to preserving the arts through education and the utilization of green energy. The result is economic growth for Western North Carolina.”

Jackson County’s new three-man-slate of conservative commissioners have sharply questioned the viability and future of the Green Energy Park. The project was launched about five years ago (under a board totally dominated by Democrats, now just two remain) as a means of capturing methane from a closed landfill in Dillsboro and turning that waste byproduct into energy. Today, methane helps power a blacksmith shop, glass-blowing facilities and a large greenhouse, with the artisans paying rent and fees to the county.

Republican Commissioner Doug Cody, a successful businessman in private life, has been crystal clear about his beliefs that the park needs to pay its own way. This isn’t out-of-the-blue posturing on Cody’s part — the previous board of commissioners, too, said they intended for the park to become economically self-sustaining. The sticking point is when, exactly, this should take place.

Green Energy Park Director Timm Muth notes previous commissioners never set a timetable. This year alone, the Green Energy Park is set to receive $218,422 in taxpayer dollars. Total, the park has received $1.2 million from the county’s general fund since 2006.

John Burtner, a blacksmith who has used the park as an incubator to grow his business, credited the venture with keeping him gainfully employed. Burtner said he believes he would currently be out of work without use of park’s shop and tools. The blacksmith has used his two-and-a-half-years there to start equipping his own shop elsewhere, he said.

“This whole time, I’ve been busy, profitable,” Burtner told county leaders.

Commissioners, while deciding the fate of the Green Energy Park, might want to factor in the following. According to the January 2006 minutes of the Jackson County Board of Commissioners, then County Manager Kenneth Westmoreland noted: “The county had anticipated spending approximately $1 million to satisfy requirements imposed by the EPA and DEHNR concerning the unfavorable release of methane (from the landfill) into the atmosphere. The dollar amount will be expended (in building the park), but for a beneficial use and is a ‘win-win’ situation … because it is so unique, the project will more than likely receive national attention and visits to the area.”

GEP does produce private-sector jobs

To the Editor:

I thoroughly agree that it is past time to wake up, get Jackson County moving.” For too long we have relied upon the national and state governments to provide leadership and direction for us in Jackson County and Western North Carolina. It is past time that we came together and charted our own economic future. One of the leaders in this economic renaissance is Timm Muth, the director of Jackson County’s Green Energy Park (JCGEP).

Commissioners, I appreciate your taking a look at various county departments for efficiency, effectiveness, and fiscal responsibility. It is important for our county representatives to promote open, honest, accountable, and fiscally responsible government at all levels. Otherwise, we might as well hold out a tin cup to Washington, D.C., and Raleigh and be grateful for the pennies that we do get back from the dollars that we send them.

Muth appeared before you on Jan. 3 of this year asking for a replacement to his departing assistant. You asked him some pointed questions and made the excellent suggestion that he produce a cost-benefit analysis study so as to better show you how the JCGEP benefits all of Jackson County.

I went to the JCGEP a few days before your Jan. 18 meeting and had Muth show me what he has done, what he is doing, and what he wants to do with his operation. Frankly gentlemen, the benefits of the JCGEP for the county are impressive. Capturing methane gas from the old Dillsboro landfill and using it to create viable, tax-paying, private-sector jobs is no small feat.

According to a study just recently released by the North Carolina Department of Environment and Natural Resources (www.p2pays.org/ref/-53.52107.pdf), there are currently over 15,000 private sector jobs that have been created to recycle valuable materials here in North Carolina. These private sector jobs, which have been promoted by operations such as the JCGEP, have increased by 4.8% since 2008. The total annual payroll for these recycling jobs in North Carolina is $395 million. There are numerous other benefits created from these public-private partnerships.

What Muth has done at the JCGEP not only is currently paying economic dividends for the investment that our county is contributing, it also has the strong probability of promoting many more private-sector jobs, tourism dollars, and tax monies to return to the citizens of Jackson County.

In the coming weeks and months we’ll be talking more about the JCGEP and the unique, positive benefits that it creates for Jackson County. In the meantime I would urge all of you commissioners to call Timm Muth, invest a little of your time going to the JCGEP, and find out the many positive benefits generated there. Remember, gentlemen, that these benefits that you will see are not in the future, but they are occurring right here and now in Jackson County.

Carl Iobst

Cullowhee

Future of Green Energy Park might lie in the numbers

Jackson County has pumped hundreds of thousands of dollars into the Green Energy Park since launching the innovative project about five years ago.

Rent and usage fees offset a portion of the costs. Taxpayers, however, largely underwrite the venture, an examination of county finance records show. The county has kicked in a total of $1.2 million since 2006 (see infobox).

The park is built next to a closed county landfill near Dillsboro. Methane, a byproduct of the decomposing trash, is captured and used to heat a greenhouse and help power a blacksmith shop, glass-blowing studios and a metal-art foundry. Plans call for building pottery studios. Some of that structure is already up.

A $204,730 Rural Center Grant is being counted on to help complete the pottery studios, but word on whether the county will actually get that money hasn’t yet come.

At question is whether the county’s new conservative majority of commissioners will continue subsidizing the project, with or without grant assistance — particularly since the Green Energy Park epitomizes the environmentally friendly, look-toward-the-future thinking of the three Democrats ousted in November.

 

By the numbers

An examination of the current year’s budget for the Green Energy Park shows rent is projected to bring in $25,000, and “donations” an additional $10,000. The overall budget for the Green Energy Park is $458,152, but that number is misleading because it includes the Rural Center grant for $204,730, intended to offset the exact same amount in expenditures for building the pottery studio.

No grant, no building, Muth explained in a recent interview.

Utilities get a $17,000 budget line item this fiscal year. Salaries and wages, $99,756 — Muth is paid $64,626.12. His helper, Carrie Blaskowski, who left the county post to join a family business, was budgeted to receive $35,129.38.

Muth, in a commission meeting , asked permission to advertise Blaskowski’s open position. Instead, commissioners ordered — or rather, Chairman Jack Debnam, a conservative Independent, and Commissioner Doug Cody, a Republican, ordered — a top-to-bottom cost analysis of the Green Energy Park. (New Commissioner Charles Elders, also a Republican who ran on a platform of change with Debnam and Cody, hasn’t proven much of a talker during the meetings, leaving onlookers little choice but to assume he is in agreement with his two conservative cohorts.)

Two Democrats, Joe Cowan and Mark Jones, remain on the board of commissioners, but to date have appeared reluctant to publicly defy the board’s newcomers. Perhaps because they want to work together the best they can for the good of the county. Or perhaps because they anticipate running for reelection themselves in two years, and learned from their fallen fellow Democrats that a financially strapped voting electorate doesn’t have much patience.

Cowan, in fact, joined conservative commissioners earlier this month when they peppered Muth with questions about the park. For his part, Jones didn’t exactly defend the project. But Jones did point out that carbon credits from the Green Energy Park could be sold in the future, helping offset some of the project’s cost.

 

What’s it all about?

“This is about trying to create jobs,” Muth said.

If completed as originally envisioned, the Green Energy Park will create 15 to 20 new jobs for Jackson County. The project was intended to be economically self-sustaining — though Muth said no timetable was ever mandated.

“They never gave me a date,” the park’s director said.

Although the Green Energy Park is clearly Exhibit A for a majority of commissioners anxious to publicly flex their conservative muscles, Muth might have picked up a somewhat unlikely ally: Interim County Manager Chuck Wooten, the darling of the conservative trio of commissioners.

Wooten was picked to temporarily replace County Manager Ken Westmoreland after the three newcomers showed him the door. (Or, that’s what Westmoreland said happened. Debnam claimed the veteran government administrator volunteered to leave on his own.)

Wooten, in addition to having a majority of the board’s blessing, brings 30 years of experience in managing Western Carolina University’s budget and the nimbleness required to survive in that position. In other words, Wooten has virtually unassailable financial credentials, vast political know-how, and an ability to leave the job of county manager at any point if his relations with the board prove untenable.

“Tim and I have met a couple of times, and I have had the opportunity to visit the Green Energy Park and take a tour, so I have a better understanding of what’s going on,” Wooten emailed The Smoky Mountain News in response to questions about the park.

“We’re going to hold on the request for filling the position until we can complete the cost analysis,” he wrote. “I’m going to propose to the commissioners that they have a work session on possibly the afternoon of Jan. 28, and the Green Energy Park would be one of the items for discussion. I think we can complete our fact-finding by then and provide some better information to the commissioners for their consideration. …It’s obvious to me that the Green Energy Park can probably not be self-sustaining in the short term but when we consider some of the indirect benefits of the park then the numbers become more manageable.”

Wooten this week said he does not feel Jackson County is the point of actually abandoning the project, but rather re-examining and rescaling the venture. The interim county manager said he needs, with Muth’s help, to understand commitments made on previous grants — particularly, would the county have to repay money in the event of changes to the Green Energy Park?

 

County contributions to Green Energy Park

• 2006-2007 – $100,000.

• 2007-2008 – $210,000.

• 2008-2009 – $447,383.

• 2009-2010 – $264,530.

• 2010-2011 – $218,422.

Public hearing set for landfill problem

Jackson County’s old solid waste landfill is leaking contaminants in higher concentrations than allowed into the groundwater, and satisfying state demands to safely contain the situation will cost taxpayer dollars.

Altamont Inc. representative Joel Lenk told commissioners this week that drinking water in the area has not been contaminated and is safe to use. The old landfill is less than a mile from Dillsboro. Several families living near the it rely on individually drilled wells for water, according to a report based on the company’s findings.

Altamont, headquartered in Asheville, collects water-monitoring samples at the old landfill for Jackson County.

Commissioners this week set a public hearing — as mandated by the regulating agency, the N.C. Department of Environment and Natural Resources — on possible remedies. The hearing will be held Feb. 7 at 1:30 p.m. After that, the next step will be to develop a state-approved corrective action plan, Lenk said.

The most expensive remedy, which involves treating the groundwater at the site, could cost more than $1 million. Responding to questions by Chairman Jack Debnam, Lenk said, however, the county will probably be able to pay his company an additional $10,000 per year for sampling and to satisfy the state.

Debnam, newly elected in November, initially proposed setting the hearing time for 1:45 p.m., with a regularly scheduled meeting starting at 2 p.m. Mark Jones, a veteran commissioner on the board, suggested moving the time back because, he said to Debnam, “you might draw a bigger crowd” than realized given the possible environmental implications.

Jones’ concerns that holding a public hearing during working hours might not give people an adequate opportunity to attend, however, were brushed aside. Debnam pointed out the board would be providing people the state-required 30 days notice.

 

Landfill timeline

• Groundwater sampling starts in 1998, Altamont company hired.

• Jackson County starts testing residential water-supply wells on annual basis in the late 1990s from residents who consented to sampling.

• At the same time, Jackson County installed and began monitoring landfill gas probes along the perimeter of the property.

• The last shipment of waste was taken at the landfill in June 2001.

• A monitoring well was installed into bedrock in 2004 to determine whether impacted groundwater was migrating northward toward a residential water well.

• In 2005, a full-scale operation of extracting landfill gas started. It was thought that the removal of the gas could provide benefits to groundwater quality.

• In July 2010, an additional bedrock monitoring well was installed to evaluate groundwater quality in fractured bedrock southwest of the landfill.

Commissioners demand ‘green’ wonder prove black-and-white dollar value

How fickle fortune can be, Timm Muth, the director of the oft-touted Green Energy Park, found upon tendering a simple request this week to the Jackson County Board of Commissioners.

Muth’s desire to advertise an open staff position gave way instead to a drilling down into the project’s overall worth — or, rather, its continued cost. The park, envisioned at the outset some five years ago as economically self-sustaining, has to date not been.

But it will be, Muth said. Just wait until the original vision is completed: the addition of a new pottery studio and studio spaces. Then, Muth said, the rent received from artists and craftspeople will prove the tipping point.

“I don’t see how you can make that statement,” newly elected Republican Commissioner and local businessman Doug Cody flatly responded after eliciting from Muth that there’s an absence of hard numbers to back that claim. Prove it, Cody told him. Perform a cost analysis, top to bottom.

The Green Energy Park opened late in 2006 to overwhelming public acclaim. This was a time, not so long ago, when Democrats ruled Jackson County and North Carolina.

The park was deemed a “technological first,” an environmental wonder, “the first place anywhere” to take landfill gas and use it to make biodiesel fuel, as Muth said then. By his side were officials eager to share in the glory of such a thing. Those officials included Larry Shirley, then the director of the North Carolina State Energy Office, who proclaimed: “This is an example of what will take place across the nation and the world.”

Maybe not. These days, the wind is blowing right, not left. And the Green Energy Park might not survive conservative commissioners’ efforts to back election promises they made to scrutinize the county for fiscal waste and potential savings.

The Green Energy Park was built next to a closed county landfill outside Dillsboro. The $1.2 million project was a means of recovering methane — a byproduct of the landfill’s decomposing trash — to heat greenhouses and help fuel a blacksmith forge. A crafts village (hence the pottery studio Muth mentioned) was part of the plan.

Last summer, the Green Energy Park served as a backdrop for a visit by Gov. Beverly Perdue and the Appalachian Regional Commission. The officials came for a tour, along the way dubbing the project a symbol of the new green economy.

Less than three months later, Republicans grabbed control of the state’s General Assembly and of the Jackson County Board of Commissioners. In addition to Cody, Republican Charles Elders was elected, as was Chairman Jack Debnam, who ran as an Independent but relied on the GOP’s local political structure and advertising dollars to help secure victory.

Debnam started Muth’s difficulties in front of the board, reeling off a series of questions in Socratic fashion about the project’s cost to taxpayers: some grant money that had been built into the Green Energy Project’s budget hasn’t come through; the irony that thousands of dollars are required from the county to support the park’s utility bill; about rent and such not offsetting other costs.

Muth, who surely had some sense of what was coming because there were references to a prior tour of the facility by the board’s new members, seemed unprepared to answer such pointed questions.

About that pottery studio, Cody said: “All that sounds good on paper, but it costs money.” Cody made additional requests for hard numbers. And he asked the director, “What’s the end game on this thing?”

Democrat Commissioner Joe Cowan joined in with questions. He told Muth the board hadn’t had been given adequate time to review the information that was provided. More time also was needed, Cowan said, to review the director’s request that he be allowed to advertise for a new employee to replace Assistant Director Carrie Blaskowski.

Muth left to Cody’s words, “I’d just like to reiterate that I’d like to see a cost analysis done on the whole thing.”

More Blue Ridge Parkway viewshed protected

The Southern Appalachian Highlands Conservancy (SAHC) recently protected Blackrock Ridge in northern Jackson County, a striking and important component of the Plott Balsam Mountains. The Plott Balsams, which reach 6,000 feet in elevation, tower above Waynesville, Sylva and Cherokee. Blackrock Ridge is a 60-acre parcel just a little south and west of Waterrock Knob, which is located at milepost 451.2 on the Blue Ridge Parkway. Blackrock Ridge lies within the Yellow Face/Blackrock Mountain State Natural Heritage Area and Audubon North Carolina’s Plott Balsams Important Bird Area. The tract ascends Blackrock Mountain where it adjoins The Nature Conservancy’s 1,595-acre Plott Balsam Preserve.

According to Jay Leutze, SAHC trustee, the organization had been negotiating with the landowner when it learned the property was going to be auctioned.

“We had five days to raise donor funds,” Leutze said. “We’re fortunate — we don’t have a lot of bureaucracy — and we can be pretty nimble,” he said. SAHC was nimble enough to be high bidder and purchased the tract for around $110,000.

The tract is located near the newly created Pinnacle Park (Sylva’s old watershed), and trails maintained by natural resources students from Western Carolina University link the Blackrock Tract and Pinnacle Park.

Leutze said SAHC was extremely happy to be able to preserve the Blackrock tract. “It’s in a larger assemblage of private tracts and would have surely been developed,” he said.

 

Attributes

The proximity to thousands of acres of already protected wilderness makes the tract important as a wildlife corridor. Blackrock Ridge attains an elevation of 5,600 feet, making it an ideal habitat for high-elevation species like the endangered Carolina northern flying squirrel. According to Leutze, Carolina northern flying squirrels have been documented on The Nature Conservancy’s Plott Balsam Preserve and the protection of this tract will add further protection and preserve more suitable habitat for the endangered flying squirrel.

Protection of the tract also helps preserve the cultural heritage of the Eastern Band of Cherokee Indians, who have strong ties to the craggy peaks of the Plott Balsams.

 

A nice fit

Leutze said that SAHC breaks the regional landscape up into “focus areas.”

“This allows us to focus on who would be likely partners and where to find likely donors for particular projects,” he said Blackrock Ridge falls within SAHC’s “Smoky Mountains Focus Area.”

“The Smoky Mountains Focus Area, of course, includes efforts to try and help buffer the Park [Great Smoky Mountains National Park] but it also provides the opportunity to try and protect outstanding high-elevation sites like this one that don’t have a lot of protection,” he said.

And parcels that help protect the integrity of the Blue Ridge Parkway viewshed help protect the goose that lays the golden egg.

“A 2007-2008 study noted that 90 percent of the visitors that come to the Blue Ridge Parkway come for the view,” said Carolyn Ward, the new head of the Blue Ridge Parkway Foundation (BRPF).

That translates into about $2.3 billion for communities adjacent to the Parkway.

“Those of us who live in the area know the value of protecting our natural resources and anytime we can add land, whether by purchase or by an easement, it helps protect that resource,” said Ward.

Ward said that the one of the BRPF’s projects for 2011 would be to help design guidelines for protecting viewsheds along the scenic byway that celebrated its 75th birthday in 2010.

Ward said the foundation would not only focus on the technical aspects and/or options for protecting tracts of land that would be useful to landowners and organizations and agencies but also work on outreach and education for residents to help them see the incredible value of the resource.

“Protecting our viewsheds is critical,” she said.

 

 

About SAHC

The Southern Appalachian Highlands Conservancy — headquartered in Asheville — is one of the oldest land trusts in the country.

SAHC was founded in 1974 and works to conserve the unique plant and animal habitat, clean water, local farmland and scenic beauty of the mountains of North Carolina and east Tennessee for the benefit of present and future generations. SAHC achieves this by forging and maintaining conservation relationships with landowners and public agencies, owning and managing land, and working with communities to accomplish their conservation objectives.

SAHC’s flagship project is protecting the Highlands of Roan in Mitchell and Avery counties North Carolina and in Carter County in Tennessee. But its focus areas include the Smoky Mountains, Newfound and Walnut Mountains, Pisgah Ridge and Balsam Mountains, Black Mountains and the Mountains of East Tennessee.

To learn more about the SAHC visit www.appalachian.org.

Property values affected election and are a looming problem

By Mark Jamison • Guest Columnist

During the recent election for county commissioner in Jackson County, both sides made reference to property taxes. The challengers — who ended up sweeping out the incumbents — claimed, to some derision, that Jackson had seen a tax increase even though the marginal rate had fallen. Supporters for the incumbents made frequent reference to the fact that the county had the third lowest marginal tax rate in the state. Both sides were correct in their assertions and both were also somewhat misleading.

The issues surrounding revaluation and marginal tax rates are somewhat confusing and easy to distort for political purposes. The fact that this area of public policy is prone to confusion and misunderstanding is unfortunate because it is an essential issue that has a direct impact on not only every property owner but virtually every resident of the county.

 

Setting values

North Carolina mandates that counties determine the value of property within their jurisdiction at least once every eight years. Beyond that, the frequency of the process, known as revaluation is up to the board of commissioners. Statute mandates that values reflect the market value of a property, i.e., the amount a property would sell for in an arm’s-length transaction.

The state allows counties to select among several methods for determining market value. The tax assessor may visit every property. This yields perhaps the most accurate valuation since it presumes that a specific visit will fully account for particular defects or attributes of the property which may affect market value.

This is also time consuming, expensive and may be subject to the art of personal judgment.

The other methods available rely on various statistical modeling techniques and may result in as few as 10 percent of the properties in a jurisdiction actually being visited. In all the methods there are choices in schedules of values that can be applied which might yield differing results. The governing body has some discretion in these choices and makes them based on technical factors which are analyzed and presented by the tax assessor.

The process is more difficult in a developing areas like Jackson and other mountain counties. It is further complicated when the area has market pressures resulting from second home or resort development. Mountain land may be even further difficult to value because the costs of development vary greatly. The presence and complexity of local land use ordinances may impact the value of land, especially steep land that costs more to develop in an environmentally responsible manner.

The process of evaluation is also complicated when large tracts of undeveloped land are part of the market, or when many lots are in the inventory of undeveloped land. One of the most compelling reasons for a subdivision ordinance is the fact that it standardizes the process for platting of lots and therefore provides some order and basis of comparison to the market.

 

Revenue neutral declaration

After a revaluation, North Carolina mandates (through GS 159 - 11(e)) that a taxing jurisdiction state a “revenue neutral” tax rate in its budget. The Local Government Commission gives a specified method for making this calculation. Essentially, one takes the total value of property within the county after the revaluation and determines what tax rate, when applied to that value, would yield the same amount of revenue as prior to the revaluation.

For example, after the 2008 revaluation it was determined that in order to raise the same amount of revenue as prior to the revaluation, Jackson County would need to charge a rate of 26 cents. The previous tax rate was 36 cents but the total value of property in the county was now valued higher, meaning that a lower rate would bring in the same revenue.

Twenty-six cents is not, however, the “revenue neutral” rate. The LGC calculations recognize that each year properties are added or improved thereby increasing the tax base. The “revenue neutral” rate therefore allows for the application of a growth-rate factor.

In the case of the 2008 revaluation that calculation yielded a “revenue neutral” rate of 27.05 cents. In other words, for every $1,000 of assessed valuation the property owner would pay 27.05 cents or $270.50 on a $100,000 property. Under the concept of revenue neutral, that means that if the value of the property had increased exactly at the same average rate as all of the property in the county that the owner would pay the same taxes as before the revaluation.

Of course, a county is made up of thousands of pieces of property. Not all can be expected to increase in value at exactly the same rate so the actual tax an owner may be assessed after revaluation depends on both the average increase in values for the entire county but also on how that particular property compares.

My friend saw her property in Frady Cove increase in value from about $300,000 to more than $900,000. Her property was valued significantly higher than the average increase, consequently she paid significantly more in taxes. My house in Webster saw an increase in value of about 30 percent, much less than the average. My taxes went down.

 

So who was right?

So, were the challengers right in claiming there had been a tax increase? Well, technically they were since the new rate set by the commissioners was 28 cents, which was higher than the revenue neutral rate of 27.05 cents. Those who argued that there was actually a decrease because the rate went from 36 cents to 28 cents were wrong — they didn’t understand the concept of revaluation and revenue neutral.

But those who argued there was a tax increase in terms that made it seem immense were perhaps stretching a point. The increase was about $9.50 per $100,000 of assessed value, or $95 on a million dollar property — not nothing, but not a political point scored either.

And what of the incumbents, who pointed with great pride to the “third lowest marginal tax rate in the state.” Well, if you’ve followed the discussion so far you may have noticed that marginal rates might not mean much in an area with a very hot real estate market. Since 2000 there have been three revaluations in Jackson County resulting in property values increasing by about 200 percent on average.

 

Mega increases avoidable

Of all the things the commissioners who lost in the last election could be criticized for, the most serious error is the one no one talks about. The 2008 revaluation came at the height of a sizzling real estate market. It was apparent that because of some of the gated developments and very high lot and land prices that the revaluation was going to reflect some astronomical increases.

Contributing to that problem was the use of a statistical method in the process that had the potential for allowing some of the prices in places like Balsam Mountain Preserve to leak out and impact other areas — something that generally should not happen if the process is to be equitable and truly reflect market value.

One didn’t have to be especially prescient or have a crystal ball to see that we were on the cusp of a real estate bubble. I wrote about that potential in 2006. By 2008, when we were on the cusp of the bubble bursting, it was evident that there were serious problems in the market.

Jackson County had done a revaluation in 2004. The increases in that cycle were alarming. Jackson County had been on an eight-year cycle prior to 2000 and had justifiably shifted to a shorter cycle to minimize the impacts of the hot market. The idea was to reduce sticker shock and made good sense. The downside was that short cycles can lock in huge increases in market values right on the edge of a slowdown. The ordinance process the county engaged in may have exacerbated this, although certainly not in the way the alarmists in the Cashiers market claimed.

It was reasonably predictable that the ordinance process would at least pause the market while developers adjusted to the new regulations. That was a good thing, but it was also something that needed to be accounted for in the revaluation process — both in the methods chosen and in the schedule of values.

By mid-2008 when the revaluation was completed it was clear that the market was seriously challenged. By accepting the 2008 revaluation, higher land values were locked in and the distribution of the increases was clearly troubling. Valuing steep land in larger tracts at $16,000 an acre or more was not sustainable.

The problems were foreseeable and predictable. Going ahead with the 2008 revaluation was a serious mistake, and we’re about to see the consequences. We are scheduled for a revaluation in 2012. The complete collapse of the real estate market will have some serious consequences for that revaluation. It will be difficult to find “comps” — comparable values — needed to establish a shape to the market. How do you determine market value when there is no market?

Currently, much of the land that was slated for development in 2008, land in the former Legasus developments for example, is now virtually worthless. Lots that may have been worth $400,000 may now be in foreclosure. Land that was slated for gated development and relied on developers for community wide infrastructure may now only be saleable as lots or tracts having substantially less value and potential.

 

Who’s going to pay?

The county may have a current dilemma collecting revenues from some of these lots. That could have an immediate impact on budgets and require tax increases, but even worse consequences occur if a revaluation shows the true current value of some of the land previously targeted for development. It is possible that a huge slice of tax base has virtually disappeared, meaning that the next revenue neutral calculation would result in the marginal rate going up significantly to 35 or 50 cents.

I want to make perfectly clear that this discussion in no way endorses development. It isn’t about how we develop or preserve land or what we may want our communities to look like. It is solely about state mandates and current processes that have tremendous impacts and consequences.

The immediate solution may be deferring the 2012 revaluation. That does nothing to remediate the values locked in from 2008, but it may allow the market to recover and mitigate some of the foreseeable problems. Over the long run though we must rationalize the property tax system in a way that accounts for these systemic problems. The state must recognize that a system that works for stable developed areas like the Triangle has hugely negative consequences on rural areas.

Some will say that given the current state budget crisis that now is not the time to address these issues. I would argue that now is the best time to address these issues. I would like to see the rural counties of the state through both boards of commissioners and the representatives in Raleigh convene a planning group and design some specific changes in state law and policy that give local jurisdictions the tools they need to raise revenues in an effective and fair manner.

(Mark Jamison lives in Webster and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..)

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