MINUTES OF A PUBLIC HEARING HELD BY THE MAYOR AND COUNCIL OF THE TOWN OF CHAPEL HILL, MONDAY, FEBRUARY 4, 1991 AT 7:30 P.M.

Mayor Howes called the meeting to order.

Council Members in attendance were Julie Andresen, Joyce Brown, Joe Herzenberg, Nancy Preston, Alan Rimer, Arthur Werner and Roosevelt Wilkerson, Jr. Council Member James C. Wallace was absent.

Also in attendance were Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Finance Director James Baker and Town Attorney Ralph Karpinos.

Mayor Howes noted that the primary purpose of this evening's hearing was to hear public opinion on the proposed allocation of Town funds. Mayor Howes said that the Council had received a realistic overview of the Town's and State's financial outlook at its retreat in early January. Mayor Howes noted that this year's budget review would involve a more involved process than previous years. Council Member Andresen suggested that the Council consider deferring its work session on the budget if citizen comments continued beyond 10:00 p.m.

Town Manager Horton reviewed the proposed budget review process, noting that he recommended that the Council hold six work sessions on the budget during February and April. Council Member Andresen stated that the proposed schedule was a conglomeration of the Council's calendars. She noted that noontime meetings were especially difficult for her personal schedule. Council Member Preston noted that she would be unable to attend the April 1st session at noon. Mayor Howes, noting that the Council members were busy people, said it had been very difficult to find six commonly available dates for work sessions.

COUNCIL MEMBER HERZENBERG MOVED, SECONDED BY COUNCIL MEMBER WILKERSON, TO ADOPT THE RESOLUTION DETAILING A SCHEDULE FOR BUDGET WORK SESSIONS. THE MOTION WAS ADOPTED UNANIMOUSLY (8-0).

Mayor Howes noted that the Council would hold a joint meeting with the Orange Water and Sewer Authority at 6:30 p.m. on Wednesday, February 6th, in the OWASA Community Room. He also noted that the dedication ceremony for the Town Hall would be held on Sunday, March 17th at 2:00 p.m. Council Member Rimer inquired why the ceremony had been changed from February 24th. Mayor Howes stated that the Chapel Hill High School Choir and Band had a prior commitment and were unable to perform on this date.

Public Hearing on Proposed 1991-1992 Operating Budget

Finance Director James Baker briefly outlined the Town's anticipated near term financial outlook.

Council Member Andresen inquired about the level of acceptable fund balance for the Town. Finance Director James Baker responded that a balance of $1.8 to $2 million was considered acceptable. Town Manager Horton noted that the Town was currently within the range of acceptability.

R.D. Smith stated that Mr. Baker had painted a fairly gloomy

financial outlook for the near future. Mr. Smith said he intended to review the proposed budget with a red pen, identifying areas of potential cost savings. He requested that no new personnel, other than public safety officers, be added to the Town's staff in the new budget. Mr. Smith also suggested that the Town's performance based pay plan use a base other than percentage of salary. He suggested that all Town departments be required to submit reduced budgets for the new year.

John Graham, representing Tax Watch, said that the Town's recent budgets had tended to be over optimistic, blue sky budgets. Dr. Graham noted that State and Federal budgets were being reduced to austerity budgets, in recognition of a deepening recession. He urged the Council to adopt a budget based on essentials only. Dr. Graham volunteered the services of retired professionals to assist the Town staff in the budget preparation process.

Donna Dyer, Executive Director, Orange County Community Housing Corporation, said her agency worked to find affordable housing for families making less than eighty percent of median income. Ms. Dyer requested the Council's continued commitment of approximately $150,000 per year to affordable housing programs. Ms. Dyer also requested that the Council consider adopting a strategic plan for housing.

Adrian Cubberley expressed his concurrence with Mr. Smith's and Dr. Graham's earlier remarks. Mr. Cuberlee said that his property tax rate increased by approximately $0.15 per $100 in 1990. He noted that a $130 million bond referendum by Durham County in March could possibly add another $0.09 to $0.10 per $100. to the rate. Mr. Cuberlee expressed concern about large percentage increases in operating costs in several Town departments.

Joan Danaher expressed concern that it had recently taken approximately forty-five minutes for the Town to respond to two public safety calls, one for a break-in and the other a minor car accident. Ms. Danaher also stated that the Town's current refuse pickup arrangement was an amenity which makes the Town a special place. Ms. Danaher suggested that the Town park empty buses in favor of a commuter based bus system. She also suggested that the Town sell any non-operable equipment tied to insufficent staff resources. Ms. Danaher requested that the Town curtail additional property acquisition and scrutinize subsidies for low-income housing. Ms. Danaher said resources would be better spent on subsidizing mortgages for existing housing stock.

Kathy Harris noted that $50,000 historically reserved for greenways acquisition was not included in the current proposed budget. Ms. Harris requested that the Council provide $50,000 for continued operation of the program. Ms. Harris said a portion of these funds would be used for a part-time assistant position to support greenways programs. She expressed concern that the Town's greenways program would lag behind those of other communities, without continued program funding.

Tommy Gardner said that the Council and Manager had a very difficult task in preparing the proposed budget document. Mr. Gardner urged the Council to consider adoption of an austerity budget. He also recommended that the Council strongly support new revenue sources such as an entertainment tax.

Henry Whitfield expressed his concurrence with Ms. Danaher's proposals for cost savings. Mr. Whitfield also emphasized the need to vigrously review current operating costs. He said that current affordable housing programs were not achieving their objective of getting people out of low-income housing. Mr. Whitfield also suggested that the Town sell the Old Town Hall building at Columbia and Rosemary Streets, rather than continue its operation as a homeless shelter. Mr. Whitfield requested that the Council not increase for the new year. He urged the Council to possibly eliminate some existing positions such as the forestry officer and wellness coordinator. Mr. Whitfield also said that savings could be achieved by using low maintenance plantings, which would require less upkeep by Town employees.

Frances Hargraves expressed her support for continued provision of safe streets and sidewalks. She requested that the Council use any additional revenues to improve the Town's sidewalk system. Ms. Hargraves requested that the Council consider the safety of walkers and joggers in its budget process.

Linda Mews expressed her support for holding the Town's property tax rate at its current level, since the community's tax base was in a period of decline. She expressed support for generating income from outside sources such as an entertainment tax. Ms. Mews also expressed her support for an increased hotel/motel room tax. She also noted the importance of encouraging Town residents to buy goods and services locally. Ms. Mews also expressed concern that students at the University would likely not have to bear the proposed increased cost of the local vehicle license fee.

P.H. Craig expressed his concurrence with Mr. Smith's and Mr. Gardner's earlier remarks. Mr. Craig said he supported a zero property tax increase budget. He stated that greenways tend to take potentially valuable property off the tax rolls. Mr. Craig said that no money was available to acquire, maintain, or police additional greenways and parks. He noted that the University and Duke Forest both offered significant parkland resources. Mr. Craig said he supported the visitor bureau concept and hoped that the Council would similarly support such a program.

Marcy Lowe, a resident of Ransom Street, requested that the Council make the provision of safe streets and sidewalks a priority in the proposed budget. She expressed concern about pedestrian safety at the corner of Cameron Avenue and Ransom Street. Ms. Lowe also suggested that the Council continue to stress alternatives to automobiles such buses and sidewalks. Henry Whitfield suggested that the Council could require people to stay back off the curb, within the right of way.

COUNCIL MEMBER WERNER MOVED, SECONDED BY COUNCIL MEMBER HERZENBERG, TO REFER THE MATTER TO THE MANAGER. THE MOTION WAS ADOPTED UNANIMOUSLY (8-0).

1991-1996 Capital Improvements Program

Town Manager Horton gave a brief overview of the proposed 1991-1996 capital improvements program, noting that the first year of this type of program was funded on an annual basis. Mr. Horton noted that this evening's meeting was the first forum on the proposed 1991-1996 CIP.

Eleanor Scandlin, Chair of the Parks and Recreation Commission, requested that the Council appropriate 1989 bond funds for the development of facilities at Southern Community Park. She noted that no significant new parks and recreation facilities had been constructed since 1979. Ms. Scandlin stressed the importance of releasing the bonds to address growing community recreational needs. She also noted that a portion of funding for the Southern Community Park was a matching grant, which had eligibility lapsing in 1991.

Tim Stephens requested that the Council provide funding for sidewalk improvements in the Northside neighborhood, particularly North Columbia Street and Longview Drive.

Jim McHenry suggested that active park users form a group to specifying identify their overall recreation needs.

Jerry O'Donnell, representing the North Carolina Youth and Amateur Soccer Association, noted that his organization used the practice fields at Lincoln Center, since the Town does not have any fields dedicated to soccer activities. He added that tennis courts were sometimes used for practices, since there were no other appropriately lighted facilities available. Mr. O'Donnell expressed concern about the poor conditions of soccer facilities at Lincoln Center and the lack of Town soccer fields.

COUNCIL MEMBER WERNER MOVED, SECONDED BY COUNCIL MEMBER PRESTON, TO REFER THE MATTER TO THE MANAGER. THE MOTION WAS ADOPTED UNANIMOUSLY (8-0).

Public Hearing on Community Development Grant

Housing and Community Development Director Tina Vaughn noted that a second public hearing would be held on March 19th. Ms. Vaughn said that approximately $317,000 of Federal grants would be used locally to benefit low income families in 1991-1992. She stated that this evening's hearing was an opportunity for the public to comment on the proposed use of grant funding.

R.D. Smith stressed the need to properly maintain the Town's present stock of affordable housing. Mr. Smith recommended that seventy-five percent of the grant funding be used for repair and upkeep of public housing units, with the remaining twenty-five percent being used for amenities at the new Airport Road housing development.

Council Member Andresen noted that a large percentage of the grant funding was proposed for maintaining and repairing existing units. She inquired about the proposed use of $50,000 in general funding. Ms. Vaughn responded that these funds would be used for homeownership opportunities and meeting the needs of those needing low cost rental housing. Council Member Andresen inquired whether the $50,000 was static. Ms. Vaughn responded that the figure was a projection which might be increased in the future for off-site improvements. Council Member Andresen stressed the importance of these programs, given the relative absence of new affordable housing initiatives. Council Member Preston inquired about the source of additional housing program income. Ms. Vaughn responded that this funding was derived from mortgage payments from the owners of two homes rehabilitated with Housing Loan Trust funds.

Council Member Rimer requested that the staff provide a priority listing of funding needs in its follow-up report to the Council. He emphasized the need to maintain low cost housing units in a reasonable state of repair.

COUNCIL MEMBER RIMER MOVED, SECONDED BY COUNCIL MEMBER PRESTON, TO REFER THE MATTER TO THE MANAGER. THE MOTION WAS ADOPTED UNANIMOUSLY (8-0).

Local Bills and Legislative Requests

Town Manager Horton said he was recommending that the Council consider increasing the local vehicle licensing fee from $5 at present to $20. Mr. Horton also suggested that the Council support local legislation for implementation of an admissions or entertainment tax and other alternative revenue sources supported by the North Carolina League of Municipalities.

R.D. Smith said that the vehicle licensing fee was $1 per vehicle when he first moved to Town. He expressed concern about the proposed increase from $5 to $20 per vehicle. Mr. Smith said his objection would be tempered somewhat if all Town residents, including students, had to paid the licensing fee.

Roland Giduz expressed his wholehearted support for the implementation of a local general admissions tax. He urged the Council to give their unqualified support to the alternative revenue sources recommended by the North Carolina League of Municipalities. Mr. Giduz said that the proposed alternative local revenue currently had a fairly remote chance of passage in the legislature. He urged the Council to contact the local delegation to express their support for the bill. Mr. Giduz noted that eight of the nine Council Members had expressed support for the merits of an admissions tax. He stated that the only major institution opposing the general admissions tax was the University of North Carolina. Mr. Giduz requested that the Council support local legislation for an admissions tax and increased hotel/motel tax for the establishment of a visitor development authority.

John Graham expressed his support for the establishment of a general admissions tax locally. Dr. Graham said he did not understand the University's position in the matter, since few local football and basketball would be dissuaded from attending events for the sake of one additional dollar.

Council Member Andresen requested a follow-up report by the staff concerning a general admissions tax. She also inquired about the status of impact taxes. Council Member Werner responded that the matter could possibly be reintroduced, since the main party objecting to the proposal no longer held elective office. Council Member Andresen suggested that the Council revisit the possibility of an impact tax. She also inquired about the possibility of uniformly levying a vehicle license fee on all citizens of the Town, including non-permanent residents. Mr. Horton said that approaches to this situation could be presented to the Council in a follow-up report.

COUNCIL MEMBER WERNER MOVED, SECONDED BY COUNCIL MEMBER WILKERSON, TO REFER THE MATTER TO THE MANAGER. THE MOTION WAS ADOPTED UNANIMOUSLY (8-0).

Public Forum on Hotel/Motel Tax and Visitor Development Authority

Assistant to the Manager Greg Feller briefly summarized the proposal. He noted that the City of Raleigh has a $1.1 million budget for visitor development services. Mr. Feller added that the City of Boulder, Colorado has a budget of $300,000 per year for similar services. He said that investing in visitor services and tourism would yield benefits for the overall community.

Vic Knight, President of the Chapel Hill Board of Realtors, said that the visitor development authority would have a positive economic ripple effect in the community. Mr. Knight noted that the City of Durham's visitor bureau was intending to distribute its information pamphlet in Orange County. Mr. Knight said that the bureau would offer a single source of information to community visitors. He requested Council support of the proposal.

Ken Jackson emphasized the important role of tourists in turning funds back into the community. He estimated that approximately thirty-five percent of the business at his store was from tourists. Mr. Jackson noted the vital role of a visitor development authority in attracting, serving and servicing tourists. He added that a great deal of time and energy was already being spent on efforts to attract tourists to the Town. Mr. Jackson cited events such as the recently concluded State High School Football Championships and the upcoming Junior Olympics as two such efforts. He urged the Council to reinvest a portion of tourist dollars into the tourism industry. Mr. Jackson also urged the Council to continue its support of the tourism industry.

Rick Strunk, representing the North Carolina High School Athletic Association, said that his organization represented over three hundred high schools from around the state. Mr. Strunk said that his private, non-profit entity attracted approximately seventy thousand tourists per year to the Chapel Hill area. He said that tourism dollars have a multiplier effect. Mr. Strunk expressed his vigorous support for assisting visitor services, noting that they were a good investment with excellent potential for fiscal return.

Anne Robinson, President of the Downtown Chapel Hill Association, stressed the need to develop the tourism industry in Chapel Hill. Ms. Robinson expressed her support for the formation of visitor service authority. She stated that tourism is a clean, existing industry which requires some fine tuning for marketing.

Jim McHenry said that many visitors to the Town were here on a very short term basis, perhaps less than a day. He inquired why taxpayers were being asked to subsidize the local hotel and restaurant industries. He suggested that the task force's proposal was premature. Mr. McHenry also urged the Council not to have Orange County control the program, if established.

Betty Maultsby said she questioned the potential benefits of a visitor development authority. She noted that many visitors to the Town currently stayed in private homes, rather than local hotels and motels. Ms. Maultsby stated that an influx of visitors meant more litter and less parking, among other problems. She noted that a three percent tax by the County would yield $345,000 in addition to $50,000 from the Town, resulting in a total of $395,000. Ms. Maultsby stated that the City of Boulder, Colorado, a much larger community, had a visitor development authority budget of $338,000. She said that the funding requested was out of line with actual needs. Ms. Maultsby expressed her support of the Manager's recommendation of a maximum of ten percent.

Bruce Holsten, Executive Director of the Downtown Commission, said that the establishment of a professionally managed visitor program was an important step for the community. He noted that one of the programs in the Downtown Commission's 1990-1991 work plan was the establishment of a downtown welcome center. Mr. Holsten said that the Downtown Commission strongly supported the creation of a new visitor development authority as an educational catalyst for better understanding of the community by visitors. Mr. Holsten suggested that a one percent tax be initially levied and administered by Orange County. He strongly urged the Council to support creation of the authority.

Tim Stephens said he questioned the potential for an economic trickle down effect. Mr. Stephens emphasized the need for a community-wide debate on the proposal.

P.H. Craig said it was quite extraordinary that hotel and motel owners were lobbying in favor of the proposal, since they could possibly be hurt by taxing their own industry. Mr. Craig said that the proposal offered a viable alternative for raising monies in the future.

Guido deMaere, Chairperson of the Orange County Economic Development Commission, expressed his support for the creation of a visitor development authority. He stressed the need for the County and Town to join forces in creating a visitor development authority. Mr. deMaere stated that people tend to spend the most money in places where they feel welcome.

Ed Rehkopf requested that the Council dedicate twenty percent of the hotel-motel tax to visitor services. He asked that hoteliers in attendance supporting the authority stand up to be recognized.

Sharon Finch said that tourism was one of the primary themes of the 1990's. Ms. Finch stated that the time was right for the introduction of a local visitor development authority. She encouraged the Council to make an investment in the future of the community.

Charlie Nottingham, representing University Inn, said that he stood behind his anti-tax stand, since existing tax levels were too high. Mr. Nottingham expressed his support for a hotel-motel tax dedicated to funding a visitor development authority. He stated that taxes from visitors could help in developing the community's economic strength.

E.G. Martin said he believed that the visitor development authority proposal would be of benefit to Town residents. He noted that the community should take the opportunity to share its unique treasures with visitors. Mr. Martin urged the Council to support the proposal.

Mike Fales, President of the Orange County Hotel/Motel Association, emphasized the need for local hotels to compete with other area hotels. Mr. Fales stated that a properly managed visitor bureau would play an important role in bringing additional dollars to the Town. Mr. Fales said that visitors would be willing to pay additional taxes if they receive tangible benefits in return.

Jean Holcomb stated that tourists generate a total of six dollars for each dollar expended. She urged the Council to support an entertainment tax and a hotel-motel tax for a visitor development authority. Ms. Holcomb requested that the Council allocate twenty-five percent of hotel-motel taxes for the proposed visitor development authority.

David Taylor, President of the Chapel Hill-Carrboro Chamber of Commerce, said he favored the establishment of a visitor development authority and services program. Mr. Taylor stated that the Chamber's Board of Directors had adopted a resolution on December 13, 1990, supporting establishment of the authority. He added that many businesses and individuals in the community also favored the proposal. Mr. Taylor said that the request for twenty percent of the tax collected was very modest. He added that support of visitor services was an important investment in the future of the community. Mr. Taylor said that the Manager's recommendation was a responsive compromise. He urged the Council to support the proposal.

Council Member Andresen said it was reasonable to ask why visitor services could not be exclusively provided by the private sector. She also stated that there was a good argument for a trickle-down effect from a visitor development authority. Council Member Andresen said she was reluctant to recommend the creation of a new institution. She noted that if funds were allocated for a visitor development authority, it was reasonable to make allocations for greenway needs and other types of programs.

Council Member Werner said that there was no clear demarcation of County and Town roles relative to the proposed authority. He requested additional financial information, as a possible basis for calculating anticipated return on investment. Council Member Rimer requested that the staff detail the original purpose of the hotel-motel tax in its follow-up report to the Council.

COUNCIL MEMBER WERNER MOVED, SECONDED BY COUNCIL MEMBER HERZENBERG, TO REFER THE MATTER TO THE TOWN MANAGER. THE MOTION WAS ADOPTED UNANIMOUSLY (8-0).

The hearing adjourned at 10:38 p.m.