MINUTES OF A JOINT MEETING OF THE TOWN COUNCIL AND ORANGE COUNTY BOARD OF COMMISSIONERS, WEDNESDAY, MARCH 6, 1991 AT 5:30 P.M.

Mayor Howes called the proceedings to order. Elected officials in attendance were Orange County Commissioners Alice Gordon, Verla Insko, Don Wilhoit, and Chairperson Moses Carey, and Chapel Hill Town Council Members Julie Andresen, Joyce Brown, Joe Herzenberg, and Nancy Preston. Also in attendance were Orange County Manager John Link, County Attorney Jeff Gledhill, County Economic Development Director Ted Abernathy, Deputy County Clerk Kathy Baker, Chapel Hill Assistant to the Mayor Lisa Price, Chapel Hill Town Manager Cal Horton, Assistant Town Manager Florentine Miller, Assistant to the Manager Greg Feller, Town Clerk Peter Richardson and Town Attorney Ralph Karpinos.

Mayor Howes welcomed the members of the Orange County Commissioners to the new Town Hall, noting that the Council Conference Room was designed for smaller meetings such as this evening's discussions.

Mayor Howes noted that the Council was in the process of developing possible legislative requests for consideration by the General Assembly. He noted that the prime utility of this evening's meeting was to discuss matters of joint interest such as the County-wide visitor development bureau and impact tax proposals.

Chairperson Carey noted that the Orange County Commissioners were also in the process of developing proposals for forwarding to the Legislature. He said that County officials would forward applicable materials from their March 20th meeting to the Council.

Mayor Howes stated that two of the lead agencies in the origination of a visitor development bureau were the Orange County Economic Development Commission and a task force of the Public-Private Partnership.

Mayor Howes requested a brief review of the visitor development bureau proposal. Town Manager Horton said that the staff had evaluated information provided by the PPP task force and was continuing to research the situation. Mr. Horton said the general conclusion was that a break-even analysis would be the most effective means of evaluating the proposal. He said that this preliminary recommendation was to allocate ten percent (approximately $30,000) of the hotel-motel tax to the proposed bureau. Mr. Horton said that performance contracts evaluated on an annual basis could be used to handle the bureau proposal.

Mayor Howes inquired whether it was necessary to work out all detail proposals prior to drafting a legislative proposal. Mr. Horton said no. Mayor Howes noted that the elected officials were attempting to seek consensus on whether to proceed with the generic concept of a visitor development bureau.

Orange County Manager John Link said that Mr. Horton had accurately outlined the visitor development bureau proposal. Chairperson Carey said the process was a two-phased one. He noted the importance of having full proposal support by affected Towns and the County. Council Member Preston inquired about the amount of detail necessary for proposed legislation. Chairperson Carey stated that it was not necessary to provide a great deal of detail in the initial proposal. He added that the initial proposal was to initially dedicate one percent for a visitor services bureau.

Council Member Brown inquired whether any consideration had been given to establishing a tax for purposes other than a visitor bureau. Mr. Horton stated that the County was proposing a separate tax levy, while the Town currently had no formal proposal on the table. Chairperson Carey noted that it would be possible to request a tax without outlining specificity and details of the program. He stressed the importance of outlining of how services would be implemented at the time of requesting legislative authority.

Council Member Andresen inquired about the proposed scope of the visitor bureau proposal. She asked whether the bureau would encourage conventions or would simply welcome people to the area. Council Member Andresen also stressed the importance of establishing performance agreements for accountability purposes.

Chairperson Carey said that tourism was a clean industry with high potential for maximum benefits. He stated that the proposal could be used to generate new tax revenues for the County and Town.

Council Member Andresen asked whether the visitor development bureau would be reviewed annually. Chairperson Carey said this was correct. He emphasized the importance of working out a two-phase implementation plan. Council Member Andresen emphasized the importance of identifying the scope of the bureau as soon as possible.

Commissioner Wilhoit said that a lot of visitors were currently coming to the Town. He noted that a key objective of the visitor bureau would be to encourage visitors to spend more time visiting the area. Mayor Howes concurred that it would not be the bureau's role to encourage conventions or large meetings. Commissioner Insko said that the possible impact of the bureau on the County had not yet been clearly defined. Commissioner Wilhoit said he was comfortable with the proposed scale and purpose of the County's proposal. Council Member Herzenberg, noting his involvement as a member of the proposal committee, said that the proposal was a modest one. He noted the importance of encouraging additional visitors during traditionally slower seasons and periods.

Noting the large initial outlay for a visitor bureau, Council Member Brown inquired why existing organizations could not be used for a visitor development program. She noted that the proposal might unnecessarily create a new institution. Mr. Abernathy responded that the main purpose of a bureau would be to entice visitors to spend more money within Orange County and to attract additional small to medium-scale educational conferences. Mr. Abernathy said that the bureau would be able to target specific types of conferences and other events.

Council Member Andresen inquired about services that a new bureau could offer that were not available from existing agencies. Mr. Abernathy said that existing agencies did not have experts on visitor services. Mayor Howes noted that any new visitor bureau or authority would be very small in terms of paid staff. Council Member Andresen asked whether funding for the bureau would pay for staff expertise rather than a physical facility. Mayor Howes said this was correct, adding that there were no plans to construct a visitor center or other new facility. Commissioner Gordon said that the bureau might play an important role in attracting new educational conferences. Commissioner Insko said that the bureau could develop and print brochures to attract smaller groups to the area. Council Member Herzenberg said that the City of Boulder, Colorado's visitor bureau model was inspirational. He noted the importance of attracting visitors during the summer and during other breaks at the University.

Council Member Brown noted that a number of communities were entertaining proposals to develop visitor development bureaus.

Commissioner Gordon noted that the County offered a number of unique arts and crafts, historical, and educational attractions.

Chairperson Carey said that Council Member Brown's comment concerning other community's similar efforts was well-taken. He emphasized the importance of drafting a well-organized proposal to provide greater opportunity for program approval and implementation.

Council Member Brown inquired about possible revenues from a one cent additional hotel-motel tax. Council Member Andresen said that such a tax would yield an estimated $115,000 per year. She emphasized the importance of drafting a consensus proposal concerning the visitor bureau proposal. Mayor Howes said that this evening's discussions had provided important and useful background for drafting of a proposal for consideration by the Council.

Commissioner Wilhoit emphasized the providing flexibility in the visitor bureau funding proposal, with an initial levy of one percent, possibly increasing to three percent in the future.

Council Member Andresen said she was uncomfortable with a broad scope proposal for the bureau. Council Member Herzenberg said he presumed that a tax of one percent would be levied initially. Chairperson Carey said this was correct. Council Member Brown noted that this percentage could possibly be increased to six percent for Town hotels in the future. Mayor Howes noted that such a percentage was not out of line with room taxes in other communities. He added that hoteliers had indicated that a maximum rate of four percent, rather than six percent, would be acceptable.

Commissioner Gordon noted that the hotels currently supported a one percent additional room tax. Mr. Horton noted that room taxes of nine to eleven percent were not unusual or out of character in other communities. He added that funds derived from the tax could be used to offset property taxes.

Commissioner Wilhoit stated that the County and Town had independent perogatives in terms of hotel taxing authority. Council Member Brown said that the present economy generally included fewer dollars for travel and conference purposes. Commissioner Insko said that the present might be good time to spend money on attracting conferences and visitors to the area. Commissioner Gordon suggested a trial period for the proposal, with a one percent hotel tax levy. Chairperson Carey expressed his concurrence with this approach. Council Member Andresen emphasized the need for the Town to benefit proportionally in terms of funds received. Chairperson Carey said that the primary expense payers would be the prime beneficiaries of the proposal.

Commissioner Insko inquired whether marketing activities of the proposed bureau should extend to other visitor-related businesses such as restaurants. Council Member Andresen said yes. Mr. Link stated that a large proportion of the County's capital improvement funds (approximately eighty percent) were earmarked for schools. He noted that most of these schools are located in Chapel Hill or Carrboro.

Council Member Brown emphasized the need for periodic evaluations and accountability of the visitor development bureau proposal, if implemented. Mayor Howes said that a relatively small number of governments would be involved in evaluating program accountability. Council Member Brown noted that it was relatively difficult to dismantle programs following their implementation. Council Member Herzenberg said that the hotel-motel tax could be used as an alternative revenue source to make taxation more equitable. Mayor Howes suggested the possible establishment of a joint working group to further discuss the concept of a visitor development bureau.

Commissioner Gordon noted that the visitor development bureau proposal offered a wonderful opportunity for joint cooperation between Town and County officials. Commissioner Insko concurred that representatives of divergent groups could work cooperatively on the proposal.

Mayor Howes expressed hope that the Council would endorse necessary enabling legislation for funding of the bureau. He similarly expressed support for the establishment of a working group to further explore the proposal. Counncil Member Brown inqujired who would be responsible for drafting proposed legislative language. Chairperson Carey said that County Attorney Jeff Gledhill would draft the language in consultation with County Manager Link, Town Manager Horton and Town Attorney Karpinos. Mayor Howes noted that it was not necessary to establish a large committee to draft the legislation.

Impact Tax Proposal

Mayor Howes noted that the Town currently had the authority to assess impact fees, but the authority had not been enacted.

Chairperson Carey stated that the Commissioners were proposing to expand the authority for impact fees to a county-wide basis.

Chairperson Carey requested a broad summary of the impact tax proposal. County Attorney Gledhill said that an impact tax was more manageable than an impact fee, due to the establishment of a nexus between the occurrence of development and required infrastructure. Commissioner Insko inquired whether impact taxes were tied completely to the impact of development. Mr. Gledhill said this was correct. Council Member Preston asked whether the tax would apply to new development, rather than being applied retroactively. Mr. Gledhill said this was correct.

Council Member Preston said a major problem with the concept of an impact tax was that a great deal was currently required of developers. Commissioner Wilhoit noted that the impact tax could also require developers to provide improvements for schools.

Council Member Preston asked whether the proposal applied to both residential and commercial development. Mr. Gledhill said this was correct. Commissioner Wilhoit noted that the proposed impact tax rates had not yet been determined. Chairperson Carey emphasized that the impact tax would not address all the County's existing capital needs. Council Member Preston expressed concern that the cost of homes would increase if the impact tax were implemented.

Commissioner Wilhoit emphasized the need to quitably distribute incremental costs.

Commissioner Gordon noted that the County would be performing fiscal impact analyses of new developments. Council Member Preston expressed interest in examining these analyses when they became available. Commissioner Wilhoit noted the importance of a public participation process concerning the impact tax proposal.

Chairperson Carey expressed hope that the Town would support the proposal within it's planning jurisdiction. Council Member Andresen inquired about the proposed structure for revenue distribution. Mr. Gledhill responded that tax rates would be set by the County in consultation with the Town. He noted that there would be a separate tax for County school facilities. Mr. Gledhill added that implementation of an impact tax would not adversely impact the County's impact fee authority.

Council Member Andresen said she favored the concept in principle. She also requested that the Council consider the possible ramifications of the proposal in the near term. Mayor Howes emphasized the important role of a careful staff analysis of the proposal. Mr. Horton said that the Town staff would provide the Council with a fresh analysis of the proposal.

Council Member Preston inquired whether the County had performed any preliminary analysis to date. Commissioner Gordon responded that this information was not yet available. Council Member Preston inquired whether the County currently employed development exactions. Chairperson Carey said that some exactions were in place for paving of roads, collection of fees in lieu of recreation facilities, and a number of other exactions. Commissioner Wilhoit noted that authority for County exactions was of a much narrower scope than authority for municipalities. Chairperson Carey noted that if impact fee authorization were received, the County would require a few less development exactions.

Mayor Howes requested the County Commissioners support of funding for operation of the Triangle Transportation Authority. He also requested the Commissioners' support of legislation pertaining to returnable beverage containers. Council Member Andresen emphasized the importance of contacting members of the State Legislature concerning the Governor's budget proposal. Commissioner Wilhoit noted the instrumental budget role of the local legislative delegation during the previous session of the General Assembly.

Town Manager Horton noted that the State Legislature would most likely focus its energies on the coming budget year, rather than the present one. Mayor Howes expressed his concurrence. Mayor Howes noted that he had written letters to Governor Martin and members of the local legislative delegation outlining the Council's budgetary concerns.

The meeting adjourned at 6:54 p.m.