ATTACHMENT 1

SUMMARY MINUTES OF A BREAKFAST MEETING

WITH  THE CHAPEL HILL TOWN COUNCIL

AND THE TOWN’S LEGISLATIVE DELEGATION

FRIDAY, FEBRUARY 20, 2004, AT 7:30 A.M.

Mayor Kevin Foy called the meeting to order at 7:30 a.m.

Council members present were Sally Greene, Ed Harrison, Cam Hill, Bill Strom, Dorothy Verkerk, Jim Ward, and Edith Wiggins.

Council Member Mark Kleinschmidt was absent, excused.

Members of the Legislative Delegation present were Senator Eleanor Kinnaird, and Representatives Joe Hackney and Verla Insko.

Staff members present were Town Manager Cal Horton, Deputy Town Manager Florentine Miller, Assistant Town Manager Bruce Heflin, Town Attorney Ralph Karpinos, Assistant to the Mayor Emily Dickens, Interim Finance Director Kay Johnson, Planning Director Roger Waldon, Transportation Planner David Bonk, and Town Clerk Joyce Smith.

Others present included UNC Local Relations Representative Linda Convissor and NC League of Municipalities General Counsel Andy Romanet.

Welcome and Introduction by the Mayor

Mayor Foy thanked the delegation for their attendance.  He noted this was an opportunity to meet with the delegation and talk about issues of mutual interest.  Mayor Foy said he hoped to have a frank and open discussion on issues of mutual interest.

Mr. Horton announced that Planning Director Roger Waldon has been selected as a Fellow of the American Institute of Certified Planners.  Mr. Waldon will be inducted into the College of Fellows in an April ceremony in Washington, D.C., Mr. Horton said.  He noted that there were only about 300 Fellows in the Country and just several in North Carolina, adding this was quite an honor for him and for the Town.

Mayor Foy briefly outlined the agenda for today’s meeting.  He introduced David Bonk as the Town’s Transportation Planner, and noted the first two items for discussion were transportation related and Mr. Bonk was available to answer questions or provide clarification.

Regional Transportation Issues

Mayor Foy briefly outlined the proposal that would merge several transportation systems in the region, and asked Mr. Bonk to provide more detailed information.

Mr. Bonk explained that the creation of the Metropolitan Planning Organization (MPO) process was a federal mandate, and ultimately any change would have to follow very strict guidelines.  The issue of merging the MPOs in the triangle grew out of funding issues, he said.  Mr. Bonk stated there was disagreement about the funding structure and how it would be distributed.  He said the two area MPOs have recognized that there is a need for greater cooperation, and that there are issues related to regional transportation that require better planning.  So, Mr. Bonk continued, joint meetings have taken place but there is a reluctance of the Chapel Hill-Carrboro MPO to merge.  He stated the feeling is that merging might compromise our ability to move forward in some areas.  We believe the Chapel Hill-Carrboro MPO would have more leverage separately than if it was merged with the Durham MPO, he said.

Mayor Foy said it is important for the delegation to understand is that there is a philosophical difference in transportation planning among the two MPOs.

Council Member Strom said that the Triangle Transit Authority (TTA) had a bias toward merging the MPOs, noting they believed more federal funds would be available through a merged MPO.  That has not been demonstrated, he said, though administration might be easier.

In response to a comment from Senator Kinnaird, Mayor Foy said that Northern Chatham was now in our MPO.  Mr. Bonk explained that our planning area extends just north of Pittsboro and into Hillsborough.  But, he noted, portions outside of that planning area are eligible for Regional Planning Organization (RPO) types of funding, adding that the State has funded these RPOs.

Representative Insko asked if Chapel Hill was planning to move ahead with the current proposals.  Mayor Foy answered that this demonstrates the difference, saying that regionally some elected and private interests have been working together to try to come up with a plan that the General Assembly would permit to raise transportation dollars.  He noted that Mecklenburg County had received such legislation.  Mayor Foy stated that Triangle area mayors and others have been working privately to identify ways to fund specific transportation projects.  Representative Insko asked if merger was a condition of this.  Mayor Foy responded no, adding that regionally we want to be united, but recognize the cross-boundary issues.  But, he clarified, we don’t want our whole pot of money to go only into roads, adding there are other needs.

Responding to a question by Senator Kinnaird, Mr. Horton noted the legislature had allowed a vehicle registration fee that assisted with transportation costs.

Council Member Strom said at the time that funding source was created we had hoped it would fund Phase I of our transportation plan, but funds have fallen short.  He said there is no money for planning or to get any projects underway.

Council Member Harrison stated that a big part of his concern is the development projects coming into the area that interplay with that corridor.  He said we would like to be able to show some progress in the planning process.

Mayor Foy stated that when South Square Mall was demolished and Durham approved another use of the property, we were concerned about how that development would affect the corridor.

Representative Hackney asked if the corridor was officially identified.  Council Member Harrison answered that corridor had undergone some significant changes, and was vague in some ways.  Representative Hackney asked if it was specific enough that the land use could be controlled.  Council Member Harrison said with a struggle it could be.  Council Member Strom noted it would be difficult.

Council Member Strom said, regarding Phase I of the NC 54 project, that corridor could be coordinated with NCDOT’s High Occupancy Vehicle (HOV) project, and if that happens we will want to piggyback onto that process.  Any time HOV is discussed, he said, we have a significant interest in that.

Mayor Foy said when we talk about transportation we are talking as well about corridors, so that people can travel to UNC and points in between such as RDU Airport without sitting in traffic.

In response to a question from Senator Kinnaird, Mayor Foy said Phase I went from downtown Durham to Downtown Raleigh, and we are obligated to pay for that.  So, he continued, we want Phase II to go forward so we can benefit.  We had agreed to pay for Phase I with the condition that Phase II would be built as well, he stated.  Mayor Foy noted we want to make sure that happens.  Council Member Strom noted that Phase II would be a train, and tracks are already present.

Representative Insko asked if language had been written to identify a funding source.  Mayor Foy said the issue was when the timing might be right to go to the General Assembly.  But, he said, we hope you will see something soon from our group, with Mecklenburg being the model.  Mr. Horton added there have been bills drafted recently to establish menu options, so language could be taken from those.

Senator Kinnaird asked would we need the CAMPO to get funding for Phase II.  Mayor Foy answered that CAMPO would cooperate, as we already jointly fund some infrastructure.  Decision-making and policy-making of the Transportation Advisory Committee (TAC) is what we are not convinced would benefit this area, Mayor Foy stated.  Senator Kinnaird responded that if a larger area were asking for the funds, it would be easier to sell to the General Assembly.

Mayor Foy said there are two issues here: we wanted the delegation to be aware of the issue regarding the two MPOs, and that we are probably going to support as a Council that the General Assembly allow us some new funding sources to fund transportation.

Representative Insko said when Mecklenburg’s funding was approved, it was controversial and not contentious.  Mayor Foy said that Wake County has some legislators that are not as supportive as we would like.

Senator Kinnaird said that the gasoline tax was a State-wide tax, so that type of funding source would not be possible.  Mayor Foy said no matter what source is identified, someone will not like it.

Senator Kinnaird asked about the vehicle registration fees.  Mayor Foy said the problem was that those fees did not raise support funds.

Representative Hackney asked where were we on the idea of being able to get to RDU Airport without a transfer station.  Council Member Strom responded that the existing program is to take a bus to a TTA facility, then a shuttle to RDU Airport.  He said it was getting less than 2000 riders per week, which is considered low ridership.  Council Member Strom said that RDU Airport had very little interest in public transportation, adding that TTA is looking at some type of express bus service to the Airport.  Council Member Harrison remarked that is what HOV lanes would be used for.

Mr. Horton thanked the delegation for support of funding for the Town’s transit facility, and hoped for $7 million in MovingAhead money.  He stated that Congressman David Price was able to get $1 million in appropriations, which moves us a step further.  Mr. Horton noted that Transportation Director Mary Lou Kuschatka had received a call from a State Transportation representative announcing that the Governor would be meeting with President Bush.  Ms. Kuschatka asked that the $7 million funding request be discussed during that meeting, and she was assured that it would be.

Fire Protection Services to UNC Properties

Mr. Horton distributed a document that he said was a quick illustration of the funding need.  He stated that the Fire Department’s operating budget was $5.3 million.  Mr. Horton said the percentage of Fire Department service calls to UNC and UNC Hospitals had been dropping, from 21% in 2000-01 to an average of 26%, but it is still running at about 25% of calls.

Mr. Horton noted the value of UNC and Hospital buildings, stating that they are almost equally divided.  So when you compare that, he concluded, the fair share of service costs should be about half.  Based on the illustration, the “fair share” of the service costs of fire protection to UNC and UNC Hospitals would be about $2.6 million.  Mr. Horton said at this time, the Town receives $850,000 each year for fire protection services to those two properties.  He said it was understood that we must be careful how we raise this issue because of the danger of losing all funding, but feel it is important that this issue be looked at.

Mayor Foy said he believes that through his discussion with the Chancellor, UNC would support us in our efforts to receive more funding for fire protection services on the UNC and Hospital campuses.  He reminded the delegation that the new Fire Station 5 serves the campuses as well as areas in the southern part of Town.  Mayor Foy said it was expensive to staff a fire station 24/7, and the Fire Department has for the last several years stated their need for more personnel.  This year, he said, the Fire Department is asking for 18 additional positions, with six for this year so that they can respond adequately to fire and service calls.  Mayor Foy said that $850,000 pays for a lot, but there is justification for an additional contribution.  We wanted to bring this forward, he continued, because there are forty new buildings going up on campus and we are getting further and further behind.

Representative Insko asked when this contribution was last increased.  Mr. Horton said about 5 to 6 years ago, from $327,000 then to $850,000 currently.

Senator Kinnaird asked about the blue fire truck that belongs to the University.  Mr. Horton stated that the University does not down the blue fire trucks, adding that are gradually changing the color of all trucks to blue.  He noted that the University and UNC Hospitals has jointly funding the purchase of two trucks over the last few years for the Town, for which we are grateful.

Representative Insko said this would have to be approached as quietly as possible, because it is controversial.

Mayor pro tem Wiggins asked had other college towns asked for this same type of funding.  Representative Hackney said that the City of Raleigh tended to not care so much about these issues, and if they did care if would help Chapel Hill’s request.  But, he said, NC State University does not occupy nearly the percentage of services as the University and the Hospitals in Chapel Hill do.

Mr. Horton said we may be able to call on the NC League of Municipalities to help in this area.  Representative Insko said if we could bring in other college towns, such as Greenville and Boone, we would stand a better chance of increasing funding.  A coalition of college towns would provide a united front, she stated.

Mayor Foy noted he would have to leave (8:40 a.m.), and turned the meeting over to Mayor pro tem Wiggins.

Proposed New Revenue Sources for Regional Transportation Services

Senator Kinnaird said that every year there is more and more call for new funding sources from many local governments.  She stated that many are struggling, but not many are granted new revenue sources.

Representative Hackney said there was similar discussion in the House, but “no new taxes” is still on many agendas, including the Speaker of the House.

Senator Kinnaird said another aspect of this was the lobbying effects of the Homebuilders Association, which is strong.  Mr. Romanet said it was clear to him that cities and towns want some autonomy to raise taxes, but it was a hard sell to the General Assembly.  He said that it was difficult to discuss the real estate transfer tax because the homebuilders and realtors where such a formidable force.  Mr. Romanet stated it would take an absolute effort of everyone coming together like we did for the half cent sales tax to do this, adding it would take a unified front to push something like this through.

Mr. Horton asked Mr. Romanet if there was a form of tax that we could focus on, if we wanted to create an alliance to push for one.  Mr. Romanet responded that he had watched how Mecklenburg had pushed theirs through, and they did have a united front.  He said he believed that the real estate transfer tax might be possible if we could get support, and you could use the threat of impact fees as leverage to convince the homebuilders and realtors that they would rather have the real estate transfer tax than an impact tax.

Mr. Karpinos asked about the possibility of increasing a tax we already have.  Mr. Romanet said the occupancy tax may be a possibility, although there is a specific process you must go through to do that.  He said that the reality is this is not a good time to raise the issue of increasing taxes.

Representative Insko asked if there had been a stand alone State tax that had passed outside of the budget process, and said she did not believe any tax would stand a good chance of passing.

Mr. Karpinos said the vehicle registration tax was based on those that live inside Chapel Hill, but asked what about vehicles that are actually in Chapel Hill that are owned by students or others but the vehicles are registered in other counties or states.  Representative Hackney said that would be asking that other counties be taxed to support Chapel Hill.  Representative Insko said that there are taxes that other cities have that are aimed at commuters.

Council Member Hill said this idea was targeted at students who have vehicles registered elsewhere, and suggested that it could become a part of the student fees charged by the University and paid to the Town.  Representative Hackney said he believed that was a good idea.  Council Member Hill said it would require cooperation of the University, would not have to go through the General Assembly, would be collected by the University through student fees, and then transferred to the Town.  This would accomplish the same purpose, he concluded.

Representative Insko asked about the fee schedule for the University.  Mr. Horton said the fee schedule was submitted to the General Assembly each year by the Board of Trustees for approval.  He added that the University had worked with students to raise fees to support the transit system, which in great part allowed the Town to provide fare free bus service.  Mr. Horton said without the support of the University and Carrboro, it would not have been possible.

Council Member Hill said in some states there are rules regarding vehicle registration.  He said if UNC or the Town charged a fee, you could require, for instance, that a sticker be obtained and displayed on your vehicle noting that your vehicle was either registered in Chapel Hill or you had paid a fee.  Council Member Hill said if would be easy for students to come to Town and be told by UNC that they could not operate a vehicle without a sticker and paying the fee.

Mayor pro tem Wiggins said the students play a large roll in producing revenue.  Council Member Hill responded that that they play a large roll in traffic congestion as well.

Other Issues

Mayor pro tem Wiggins asked if any other issues needed to be discussed by the Council.

Council Member Strom said that we have such a demand on services and we don’t have options for alternative funding sources, that we are forced to raise property taxes.  It’s a burden on those who have lived here for long periods or those that are retired, he said, and it is becoming more difficult for persons to stay in their homes.  Council Member Strom said the Homestead Exemption is low, and asked if the delegation would consider revisiting this issue and raising the exemption.  He argued that this was an equity issue that was very important to those who live in Chapel Hill and throughout the State.  Council Member Strom said this exemption was “incredibly low for 2004.”  Representative Hackney said this would take money away from the State, and would not be popular.  Mr. Romanet said there are those who want to change this exemption, but it would reduce revenues all over the State.  He added the League had supported increasing this in the past.

Senator Kinnaird said this does affect lower income people who are faced with rising costs of keeping their homes.  Council Member Strom said that property tax burdens State-wide are low when compared to other states, but in this delegation’s district property taxes are much higher.  When we look at the needs in CH, he said, we are looking at a potential tax increase just to maintain services.

Representative Insko said there was some talk about looking at exemptions for the elderly, adding that those who had lived here for generations are particularly hard hit.  Council Member Strom said people are being forced to consider moving elsewhere.

Mr. Horton said one way to address the tax rate would be to have revaluations more often.  He said many communities do revaluations every year, and that this might be a more realistic approach.  Senator Kinnaird said a big problem in this area is that the tax base is more residential, placing a heavier burden on homeowners.  She said she would be willing to support this.

Senator Kinnaird thanked the Council for staying in touch and keeping contacts open, adding that she tries to be responsible and will do whatever she can to assist Chapel Hill.  Senator Kinnaird noted she is working on electronics recycling issues, and is interested in the Homestead Exemption issue.  There is a large health contingent working on the tobacco tax, she stated, although it was not a tax issue but a health issue.

Mayor pro tem Wiggins asked if the General Assembly would be addressing the issue of same sex marriages.  Senator Kinnaird said they were watching California to see what would happen there.

Representative Insko said it was helpful to hear about local issues, and she would make an extra effort to stay in touch.  She noted that State revenue was always an issue, and they were facing additional cuts while achieving some equitable balance.  Representative Insko stated her believe that there should be a significant increase in the tobacco tax, maybe as much as 75 cents, so that it would impact young smokers.  We do have some very interesting study commissions that are working now, she stated, such as domestic violence which is bi-partisan, child abuse which has a lot of support, as well as medical malpractice.

Representative Hackney said there was tension between town interests and UNC interests, for instance Carolina North and Area Health Education Center (AHEC).  He said one main interest was how to keep AHEC from being damaged in this process.  Representative Hackney thanked the Town for their support and interest.

Council Member Strom asked if the AHEC committee was appointed and beginning its work?  Representative Hackney responded yes, that Senator Kinnaird, Representative Insko and he were all on that committee.  It had not met yet, he said, but we are close.

Representative Insko said they were charged with having a proposal ready before the end of the General Assembly’s session, so some proposal would be forthcoming.  She promised to keep the Town and University informed.

Mayor pro tem Wiggins said the Town’s most recent position was to advocate for relocation of AHEC.  Representative Insko said that the most recent survey of doctors showed that if the AHEC was moved to RDU, 40% of those doctors would drop out of the program.  She noted that AHEC was popular in the General Assembly.

Mr. Horton promised to keep the delegation informed about issues facing the Town and of interest to its citizens.

Mayor pro tem Wiggins asked when the AHEC committee met, would they accept comments from the public or from the Town?  Representative Insko said that once the committee meets, she would broach that idea to the members.

Council Member Ward said that most recently when the Chancellor made the move to close the airport, information was that RDU was the most logical place for it to be moved, so he did not understand the survey mentioned.  Representative Insko said she would keep the Town informed.

The meeting adjourned at 9:17 a.m.

The minutes of this meeting were adopted on March 22, 2004.

                                                                        __________________________________________

Joyce A. Smith, CMC

Town Clerk