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After Commish Vote on Sales Tax, Boone Releases Four-Page Statement: Private Mediation With County Is Legal, Also Lays Out Its View On Other Relevant Matters

By Jesse Wood

April 16, 2013. Following the Watauga County Board of Commissioner’s vote to approve redistributing the sales tax, the Town of Boone released a letter on Tuesday night stating, again, its disappointment with the commissioners rejecting a closed-session mediation and again extends the offer to meet.

Although County Attorney Four Eggers stated in a letter to Watauga Chair Nathan Miller that a private meeting between the two governmental bodies would not be legal, the Town says that such a meeting would be acting within state law, citing a 2006 N.C. Court of Appeals ruling involving the City of Asheville and Buncombe County meeting under similar circumstances (a private mediation, different issue) that was deemed legal.

“That method was for the public bodies to meet in closed session to discuss their mediation positions and to receive legal advice, and then for the respective attorneys, with a single representative from each body, to then meet with the mediator and each other, as appropriate,” reads the four-page letter, which is in its entirety below.

In the letter, the Town also notes that Boone generates, according to 2008-09 figures, two-thirds of the sales tax in the county, although it only receives 25 percent of those revenues under the per capita basis. With the change to ad valorem basis, the Town of Boone would receive only 12 percent of those revenues which are garnered in town limits.

The Town also states that Boone is at disadvantage for ad valorem revenues “because government entities and non-profits are exempt from paying real estate taxes which includes ASU, local and county government, the old high school property, the hospital, churches and non-profits – at a value of over 608 million dollars.”

Yet, the letter added, each entity depends on town services.

Also released is a letter from Deal, Moseley and Smith, LLP, the law firm representing Tempelton Properties in the potential acquisition of the old Watauga High School property, which has become the impetus for the potential change to the sales-tax redistribution by the commissioners, whereby the Town of Boone would lose $2-million dollars in sales tax revenue.

See  the Deal, Moseley and Smith letter, which also suggests exemptions and changes to ordinances in place before his offer, and other maps and charts released by the Town of Boone concerning the old Watauga High School property and sales tax distribution here – Letter and chart.

See Tuesday night’s Town of Boone letter further below.

Here are two previous articles that give some background: https://www.hcpress.com/news/time-is-of-the-essence-for-negotiations-between-watauga-and-boone-regarding-sales-tax-ball-and-miller-both-cry-foul.html


Check the archives of HCPress.com for numerous back-and-forth letters between Watauga County and the Town of Boone.

Town of Boone Letter 4-16-2013

We are very disappointed that the Watauga County Commissioners rejected our invitation to participate in a mediation to try to resolve the County’s threat to sue the Town of Boone to challenge the recently enacted ordinance which was designed to increase housing opportunities for moderate income people in Boone. We hope that the County will reconsider and that the County Commissioners will also reconsider their threat of legal action and the change in the sales tax distribution. Therefore, the Town is extending another invitation to the County to participate in mediation.

The basis for mediation in closed session is based on the County’s threat to sue the Town. There was an explicit threat of a lawsuit by County Commissioner Miller which was printed in the Watauga Democrat and the High Country Press, reported on WATA on April 15, 2013 and repeated to two town council members, as well as the Town Attorney.

The North Carolina Open Meetings Law, General Statutes Section 143-318.11(a)(3) expressly allows a public body to go into closed session to consider and give instructions to an attorney concerning the handling or settlement of a claim or mediation.

The following North Carolina Court of Appeals opinion from 2000 authorizes a closed session for a threatened lawsuit, not just when one has already been filed:

MULTIMEDIA PUBLISHING OF NORTH CAROLINA, INC., d/b/a Asheville Citizen Times Publishing Company, a North Carolina Corporation, Plaintiff, v. HENDERSON COUNTY and Henderson County Board of Commissioners, Defendants.

Found at Volume 136, North Carolina Appellate Report, page 567.

In 2006, the North Carolina Court of Appeals actually examined the use of closed session for a mediation between County Commissioners and a City Council in the case of Gannett Pacific Corporation versus the City of Asheville and County of Buncombe, found at Volume 178, NC Appellate Report, page 711, over the termination of a regional water agreement, and the Court found that the method, the same which the Town intended to employ, was entirely legal and appropriate. That method was for the public bodies to meet in closed session to discuss their mediation positions and to receive legal advice, and then for the respective attorneys, with a single representative from each body, to then meet with the mediator and each other, as appropriate.

The Town favored a mediation over an open meeting between the two bodies because so far, two of the County Commissioners have made public statements that seemed more designed to attack the Town, mischaracterize the motives and effects of the ordinance, and inflame public sentiment against the Town, rather than to pursue a reasoned discourse aimed at meeting both the County’s stated goal of selling the high school property and the Town’s legitimate goal of fostering development which meets the needs of the many people who work or live in Boone. The Town Council wanted to avoid a political circus and instead wished to try to reach a resolution that served the legitimate goals of each body. The Town had arranged with a Republican Superior Court Judge emeritus to conduct the mediation, and he had said that he would do so. At this time, on behalf of the Boone Town Council, I would like to share the following statement in order to provide additional background information and to clarify misinformation that has been shared publicly regarding the threatened law suit by the County:

1. The Boone Town Council has and will continue to act and respond as a body and not as individual members in the actions threatened by the County.

2. The Town has worked cooperatively with the County on the sale of the old Watauga High School Property.

  •  Rezoned the entire property to unrestricted B-3 at the request of the County
  •  Reserved 150,000 gallons per day water allocation for this property in recognition of its value to the citizens of the Town and the taxpayers of Watauga County, which at the time represented about 1/4 of the total remaining water the Town could allocate before a new water intake was built.

3. Since the County entered into an agreement on November 13, 2012 with Mr. Phil Templeton for the purchase of the former high school property the Town has only had 3 inquiries related to the development of this property:

  • A. Mr. Phil Templeton discussed development of this property with Mr. Bill Bailey the Director of Planning and Inspections during the bid process.
  • B. Mr. Jim West, on behalf of Mr. Phil Templeton spoke with Development Coordinator David Graham and Urban Design Specialist Brian Johnson on one occasion.
  • C. Mr. Phil Templeton’s attorney met with the Planning Staff along with county staff in early January to present a proposed plan to rezone 38.64 acres to R-3. Refer to letter sent to County Commissioners and to the Boone Town Council dated April 12, 2013.

4. The recently adopted ordinance that encourages family housing provides an exemption to B-3 properties which includes the old high school property. Only if the developer asks for permission to build in phases and wants to first build more than 1/3 of the apartment portion of the development, is any financial security required. The Town Council realized that if there was not some financial guarantee provided, a developer might obtain approval for a mixed commercial/residential project, build the apartment portion of the development as the first phase, and then never follow through with the commercial part. Therefore, when a developer wants to build the entire apartment portion first and rent out the apartments before starting the commercial part, the developer can only do so as long as the developer provides financial assurance that the commercial portion is built.

The financial assurances which are required have been misrepresented in the media as a letter of a credit for 125% of the value of the commercial part of the development. Although the ordinance mentions this as one type of financial guarantee that will always be acceptable, it allows the developer to propose whatever guarantee the developer thinks is adequate, and it allows the Town Council to negotiate that with the developer.

5. Before the ordinance that is at the heart of this dispute was even adopted, the Town Council conducted a public hearing at which both Commissioner Nathan Miller and the attorney for the proposed purchaser of the high school property spoke. Their suggestions caused the Town Council to adopt the exemption of B-3 property, such as the old high school property, from the new requirements so long as it was clear the whole project would be built and not just the apartment portion. Before that new language was even adopted, it was shared with Commissioner Miller nearly a week before the Council considered it. Commissioner Miller said he did not have a specific problem with the language. A copy of the adopted ordinance was sent to all County Commissioners and the financial assurance requirement has been explained to Mr. Templeton’s attorney that the section that reads by way of example only….that the letter of credit is an example and not a requirement.

6. Two of the five County Commissioners report that they were not included in the decision to approach the other municipalities about changing the sales tax distribution from per capita (population based) to ad valorem (property value based). Since Commissioner Miller has repeatedly said that he already has the votes to sue the Town and change the sales tax distribution method, it appears that Commissioner Miller has been conducting meetings with two of the other commissioners behind closed doors.

7. Boone is at a disadvantage with the ad valorem distribution method since 32.11% of the property in town is off the tax rolls because government entities and non-profits are exempt from paying real estate taxes which includes ASU, local and county government, the old high school property, the hospital, churches and non-profits at a value of over 608 million dollars and yet all these entities depend on town services such as fire protection, police, roads and sidewalks and snow removal, all of which the sales tax helps finance. The loss in property tax revenue of all the tax-exempt properties cost the Town is over 2.2 million dollars. Refer to % Share of Distribution for Fiscal Year 2012-2013 from the Department of Revenue for a breakdown of the distribution methods for the County and each town in Watauga County.

8. In Fiscal Year 2008/2009*:

 Two-thirds of the sales tax generated in Watauga County came from within the corporate limits of the town of Boone. 

 Even under the more beneficial current per capita method of distribution of the sales tax, Boone only received about 25% of what was distributed in Watauga County.

 If the distribution had been changed to the ad valorem method, Boone would have received approximately 12% of what was distributed in Watauga County. Applied this year, it is estimated to be a loss of approximately two million dollars.

*The last fiscal year the state reported the amount received by municipality.

9. County Commission Chair Nathan Miller has approached all Watauga County municipalities about changing the sales tax distribution with the exception of Boone. Although Boone understands that these other communities would naturally want more money of which the majority is collected in Boone, it is disheartening that they have failed to consider the many things Boone does for them as the economic center of the county. For example, Boone has spent significant funds trying to develop a second water intake, in part to enable the Town to provide Blowing Rock with a half million gallons of water per day. The Town has also provided long-term leases at nominal costs for County recreation programs that provide youth activities for all children of the county. If the method of sales tax distribution is changed, the Town will be forced to reconsider these arrangements.

10. The loss of 2 million dollars in the sales tax distribution will be devastating to the citizens and businesses in the Town of Boone as there will need to be a drastic cut in services and programs. It will affect the Town’s ability to provide services to its residents and to those who work here and vacation here.

If the County Commission majority actually wanted to reach a compromise that met the legitimate goals of both entities, it could easily have done so without resorting to threats and actions explicitly stated by Commissioner Miller as intended to “penalize” the Town. The Town is still open to reaching such a solution. Citizens of the Town are also citizens of Watauga County and they are Watauga County taxpayers. Actions taken by the County Commission to hurt Town residents therefore also hurt their own constituents.

We, therefore, extend an invitation to the Watauga County Commissioners to participate in mediation