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Ideas unveiled to shift tax burden to tourists
Thursday, 06 December 2018 16:56
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Asheville Mayor Esther Manheimer unveiled a plan under consideration by the city to shift the tax burden more to tourists to ease the burden on locals during a Nov. 9 meeting of the Council of Independent Business Owners at UNC Asheville’s Sherrill Center.

About 65 people, including CIBO members, area government officials and others, attended the early-morning breakfast session. 

Manheimer began her CIBO address by noting, “First, I just want to say we have our interim city manager here — Cathy Ball. She’s done a fantastic job for us. Cathy is the one who has spearheaded our study on revenues.”

Turning to the topic of her talk, the mayor said, “I’ve been asked to come here and talk about hotels... It’s generated this larger discussion of how well we can manage the stresses on our infrastructure… in our discussion of hotels.

Ten hotels have opened in Asheville since 2015, with 1,183 rooms, she said, adding that seven more hotels are under construction in the city.

“Why have we seen so many hotels?” Manheimer asked, rhetorically. “Because we’re the best. We’re a top community to come visit and we’re seeing that. We’re also experiencing growth, but not at the rate of Raleigh or Charlotte.”

In what she termed “a revenue overview,” the mayor said that the Asheville area averages about 11 million visitors per year. To put that into context, she said, that exceeds the population of North Carolina, which is estimated at 10 million people.

The general fund budget, with revenue mainly from property taxes at $64 million and sales taxes at $25.7 million and other sources, is showing annual growth, Manheimer noted.

“So, in the best of times, Asheville expects an annual increase in its revenue of about $3.56 million. For a city of (its size in) North Carolina, that’s not too bad.

“But our expenditures also grow — just slightly more than revenue.

“So we don’t have room to increase annual expenditures. We’re just holding the line,” the mayor said.

At that point, she said, “Let’s look at our visitor population... We’re a regional economic hub, so we have a lot of people who come into the city every day...

Asheville has the highest daytime/nighttime change in population, for its size, of all other cities in North Carolina.”

After a pause, she then asked, rhetorically, “Who uses services?”

Responding to her own question, Manheimer said, “Whether you’re a visitor or resident of our city, you get essentially the same services.”

She prompted laughter from the meeting attendees when she quipped, “Now, you do get brush collection, if you live here” in the city limits.

As to “who pays for these things,” Manheimer said Asheville officials looked at how other comparable cities popular with tourists balance their revenues and expenditures.

“We looked at Portland, Maine (population 66,882) — it’s sort of similar to Asheville,” in that it draws many tourists. (Asheville’s population is estimated at 91,902.)

 City officials also looked at Miami Beach, Fla. (population 92,307), which the mayor described as “roughly same size as us”

In addition, Duluth, Minn. (population 86,066), which generates revenues from a city sales tax, a food and beverage tax and other sources, was examined by Asheville staffers.

Contrary to other comparable cities, Mainheimer said “the financial burden (in Asheville) is placed more on our residents, disproportionately, than on our visitors. Is there a way to even it up?

“You’re the first test audience, and probably the toughest test audience, for what would work and fit,” she told the CIBO meeting attendees.

As for a path forward, the mayor reviewed the following possibilities:

• 1/4 cent sales tax for transit, a move which would require a Buncombe County referendum in 2020. That tax could raise around $13 million, she said.

• Food and beverage tax, for which the state would allow Asheville to hold a referendum, again probably in 2020. That tax could raise around $8 million or $9 million, she said.

• Hotel tax, which would help the city “align impact to resources,” she said, adding that its implementation would require city officials to work with the Buncombe County Tourism Development Authority.

“Obviously, it’s not just about hotels. It’s about growth, in general.”

For instance, Manheimer said, “We have a higher 911 call volume, per capita, because we have so many more people here.

During a question-and-answer session that followed, a woman asked,  “So I understand dealing with your budgets…. I commend the city for adopting green energy goals and a federal climate solution… Are you considering in your plans how to deal with more people living here, via clean energy with building standards?”

“The city, to my knowledge, cannot enforce higher clean energy standards than that of the state,” Manheimer replied.

A man asked, “If the hospital sells, how much would it increase the city’s budget?”

“Around $6.8 million,” the mayor answered.

A man queried, “Beside trying to figure out more taxes, I’m sure you’d like to make the property more valuable in the city....”

“I would not say that that is the goal,” Manheimer interjected, adding, “This is how it usually goes.”

After the mayor’s interruption, the man asked, “What efforts are you thinking of to create incentives for developers to come in?”

“I think that is a good question,” Manheimer said. “One that I worry about. To me, we need to make those pathways as easy as possible. Obviously, if a project has to come to council for approval, it’s much harder and totally stressful.

“We struggle in our community in (considering the issue of) how we grow versus projects that we really want... I can tell you council receives hundreds of emails that says say ‘no’ to any more development. So there is that voice.

“We’re trying to navigate those two tensions... We are growing. That is inevitable. The option of not allowing one more thing to happen is not an option.”

A man told Manheimer, “All this discussion of prohibition and moratoriums…. It’s a disaster... The hotels and visitors that are coming — and are not going to stop coming.... This is what Asheville has wanted for the last 30 or 40 years. Now you’ve got it.”

Continuing, the man told the mayor, “So discussing prohibition… You’re discussing sprawl — because everyone’s locating on the outskirts” of Asheville, since city leaders are opposing downtown hotels.

In response, the mayor said, “I agree with you that there’s a schizophrenia about creating urban density — and that we don’t want more hotels downtown. I totally agree that you can’t marry those two opinions.”

Prior to the mayor’s address, Todd Okolichany, the city’s director of Planning and Urban Design Department, reviewed the “urban center zoning goals,” as recently defined by the Living Asheville committee.

Okolichany added that the city is looking at several urbanized areas for possible rezoning from “highway business” to “urban place,” including the following:

• Around the Kmart property on Patton Avenue in West Asheville.

• Around the Stein Mart department store on Merrimon Avenue in North Asheville.

• Around the Innsbrook Mall area on Tunnel Road in East Aseveville.

• Around the Walmart discount store on Leaftree Boulevard off Hendersonville Road in South Asheville.

“Current zoning is mostly highway business and some, regional business, and some is zoned river,” Okolichany said,.

The first phase of the city’s zoning changes is something called “urban place,” he said. “With urban place, the city would require mainly two-story buildings vs. one-story buildings... We’d also allow higher residential density.”

While the current highway business zoning allows 35 units per acres, under the urban place designation, 64 units per acre would be permitted. “So more housing would be allowed,” he noted.

However, under urban place zoning, some things would be prohibited, such as drive-throughs. Okolichany said that “some things would be allowed to be ‘grandfathered....’”


He added, “We’re looking at about 52 properties on about 145 acres.”

The city agreed on Nov. 7 to delay action on the proposed rezoning of parcels to urban place until Jan. 24 , when the city’s Planning and Zoning Commission will conduct a formal review, Okolichany said.

After that, tentatively in February, Asheville City Council will hold a public hearing and review, prior to making a final decision.

In questioning that followed, a man asked about the stormwater problems that persist on Patton Avenue

“You’re right, there are stormwater issues on Patton Avenue,” Okolichany replied. “On the southside of Patton Avenue, there are more issues with flood plains. Again, with the rezoning, it’s changing the zoning” and not resolving other issues.

Craig Justice, a local attorney, asked a number of questions about the Kmart property on Patton Avenue, pertaining to “if a developer wanted to put affordable housing there.”

“You can go up to 75 percent of a project to make an improvement for a nonconforming building,” Okolichany said. “We would look at the entire site in its totality. Most likely due to the size of the redevelopment of some of these properties, it would go through the conditional zoning process. That conditional zoning allows an applicant to create different conditions that might deviate from the zoning” rules. 

The city official also was asked by Justice, “While we’re talking about 15 feet (building are required to be placed close to adjoining roads), could we talk about logic?

For instance, he noted that Walgreens Pharamcy on Merrimon Avnue had to construct a small building that remains vacant along the street just to conform to the city’s regulations. (The pharmacy itself is set back far from Merrimon.)

“What is the logic in this 15 feet?” Justice asked. “Multiple businesses have gone out of business because of what you (city officials) are forcing people to do.”

In response, Okolichany said, “Sunrise Boulevard in Fort Lauderdale (Fla.), where I came from, used to look just like Patton Avenue here,” but “it looks better” now because the buildings are required to be built closely to the main road.

“Once you start looking at streetscape improvements and private development with housing, it changes” visually for the better, Okolichany said.

Disagreeing, meeting attendee Jeff Slosman queried, “What’s the logic of putting buildings 15 feet from the street?”

“What we’re trying to create is a more urban environment,” Okolichany replied. “If we can bring buildings closer to the street, a lot more can be done behind them. We’re trying to create these pedestrian-friendly environments. Along these corridors ... we’re making it more pedestrian-friendly.”



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