MINUTES OF A FORUM HELD BY A COMMITTEE OF THE CHAPEL HILL

TOWN COUNCIL, FRIDAY, APRIL 30, 1993 AT 3:00 P.M.

Mayor Broun called the forum to order. Committee and Council Members in attendance were Julie Andresen, Joyce Brown, Joe Capowski and Mark Chilton. Council Member Joe Herzenberg, not a committee member, was also in attendance. Also in attendance were Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller and Town Attorney Ralph Karpinos.

Mayor Broun noted that Council Member Andresen had suggested today's forum as a means to convey the concept of a prepared meals and beverage tax and its possible benefits and concerns. Mayor Broun noted that the General Assembly was considering the request for authorization of a prepared meals and beverage tax of up to one percent. He requested committee members thoughts and comments.

Council Member Andresen said the need for a dedicated funding source for infrastructure improvements in the downtown area and other infrastructure projects in the community had been identified. She stated that the proposed prepared meals and beverage tax was a good mechanism for this purpose. Council Member Andresen also suggested that the tax might be temporary in nature.

Council Member Capowski noted that the proposed tax could also provide improvements in areas outside the downtown.

Council Member Chilton said he looked forward to hearing from concerned persons today. He added that a number of people previously expressed their concerns and opposition to the proposal.

Council Member Brown said she hoped that today's forum would be the beginning of communications on how to meet some of the community's needs and concerns.

Mayor Broun suggested that staff provide an overview of the proposed downtown streetscape project. Mr. Horton noted that the streetscape proposal was only one of the possible uses of funds from the proposed tax.

Urban Forestry Officer Curtis Brooks said the proposed streetscape plan had been initially presented to the Council last July. He said the plan had also been presented to a number of local organizations and Town advisory boards and commissions. Mr. Brooks showed a number of slides outlining various elements of the plan including sidewalks, underground and street lighting, travel lanes, street trees and landscaping. He stated that the biggest single proposed improvement was a two-tiered lighting system, with the second tier directed at the sidewalk. Mr. Brooks said that most streetscape improvements could be accommodated within existing rights-of-way. He also noted that relocation of some service lines would be a very major project and should logically be implemented first.

Mayor Broun inquired about other possible types of improvements. Mr. Horton said a number of types of amenities such as artwork or provision of enhanced police services were possible. Mayor Broun noted that the Council had recently created the Committee on the prepared meals and beverage tax proposal. He emphasized the importance of community input on the proposal.

Chapel Hill-Carrboro Chamber of Commerce Executive Director Joel Harper said the Chamber had a number of concerns about the proposal, as outlined in an earlier letter to the Council. He stated that increased business taxes could possibly be detrimental to the community. Mr. Harper said the proposed legislation was too unclear in its intent. He also noted that the Chapel Hill News and Chapel Hill Herald had recently printed editorials opposing the proposed prepared meals and beverage tax proposal.

Bob Woodruff, a Chamber of Commerce board member, said many members of the business community perceived the hotel-motel tax as having a declining percentage devoted to visitor and cultural services. Mr. Woodruff said its most recent contributions were toward cultural rather than visitor services. He expressed the Chamber's desire to know where hotel-motel tax proceeds were being expended and how prepared meals tax funds would be used.

Council Member Andresen noted that at least ten percent of hotel-motel tax funds were used to support visitor and cultural services each year. She added that the proposed prepared meals tax legislation was quite specific. Council Member Andresen said the Orange County Visitor Services Bureau received about one percent of hotel-motel tax funds to assist in attracting Orange County visitors to the community. Council Member Brown said the prepared meals tax bill before the General Assembly was quite specific concerning the use of funds for public infrastructure improvements and supplemental law enforcement services.

Noting the Chamber's concern about the vagueness of the proposed tax, Council Member Capowski inquired whether the Chamber would support the bill and lobby for its passage if greater specificity were available. Chamber of Commerce board member Mark Collins said the Town had dutifully allocated only ten percent of hotel-motel tax proceeds to visitor and cultural service programs. Mr. Collins said that current funding for visitor services did not provide for many programs or services. He suggested that more funds be allocated to the visitor's bureau for attracting visitors to the area. Council Member Capowski inquired whether a new piece of legislation relative to the hotel-motel tax was being suggested. Mr. Collins said the concept of an amendment to the current process and legislation was being suggested. He added that the proposals would need to be considered by the entire Chamber of Commerce board. Council Member Capowski noted that the April 1st deadline for proposed new legislation was long passed.

Margaret Skinner said she appreciated Mr. Harper's and the Chamber of Commerce's efforts. She said that local lodging establishments would contribute about $70,000 in the event that the one percent prepared meals and beverage tax were enacted. Ms. Skinner expressed concern that additional hotel-motel tax funding for visitor services had not been provided in the past. Council Member Andresen inquired what Ms. Skinner meant by her reference to visitor services. Ms. Skinner said primarily visitor's bureau activities. Council Member Andresen noted that these activities were primarily targeted at local hotels. Ms. Skinner said these activities tended to be much broader.

Bob Farr said the proposal was an inordinately unfair tax to put on the backs of local restaurant operators. Mr. Farr said that restaurant's operating margins were quite low. He expressed concern that some diners might choose to eat in Durham or elsewhere rather than pay the additional one percent tax.

Johnny Mariakakis said Friday nights were a busy time for restaurateurs and caterers and thus many concerned parties were unable to attend this afternoon's forum. Mr. Mariakakis said he anticipated that the Council would receive a number of calls and letters concerning the proposal from persons unable to attend the meeting. He stated that local property taxes were a more appropriate funding mechanism for the proposed streetscape plan. Mr. Mariakakis said some funds ordinarily spent in the downtown area were being spent in Durham due to the construction of the Town's parking facility on Rosemary Street. He also expressed concern about register reprogramming costs necessitated by the new tax. Mr. Mariakakis said he did not think the Council was anti-business. He also stated that the proposed tax could be a disincentive to local business expansion. Mr. Mariakakis requested that the Council do away with the proposed new tax.

Council Member Andresen said the committee would be happy to hold another meeting to hear concerns of persons unable to attend today's forum. She requested that Mr. Mariakakis contact her with suggested meeting times. Mr. Mariakakis said he would do so.

Larry Eldridge said Council Member Andresen's proposal for a temporary tax was intriguing but not practical. Mr. Eldridge expressed concern that administration of the proposed tax would be extremely difficult for local restaurants. He said it was unfair to single out restaurants to collect the proposed tax. Mr. Eldridge said he wanted to see the proposal defeated.

Steve Nelson said he did not understand the proposal for a temporary prepared meals tax. He also expressed concern that installation of underground utilities would involve extensive construction and disruption of local business activities.

Mickey Ewell, Chairman of Tax Watch and local restaurant owner, said Tax Watch was adamantly opposed to the proposal. He said the North Carolina Restaurant Association was opposed to the proposal unless the tax applied to all local businesses or if all proceeds were dedicated to visitor services. Mr. Ewell expressed concern that most proceeds from the proposed tax would be collected from Town residents. Noting that he thought the tax was unfair, Mr. Ewell said local restaurants would work against the proposal.

Council Member Andresen asked Mr. Ewell what mechanism he would recommend to fund improvements in the downtown area. Mr. Ewell said he could work on developing some proposals. Council Member Capowski inquired what specific improvements were desired in the downtown area. Mr. Ewell said he could provide examples as proposals. He expressed concern about the impact of the proposed new tax on local restaurants and their service staffs.

Council Member Chilton expressed appreciation to Mr. Ewell for his comments. He noted that the tax to support improved infrastructure might be beneficial to downtown and area restaurants in attracting more tourism and visitors. Mr. Ewell said he did not think that restaurants in the eastern part of the Town would view improvements downtown as putting more money in their pockets. He noted that construction of the parking deck on Rosemary Street had directly impacted many businesses in the 100 block of East Franklin Street.

Paul Tripodi, a local restaurant operator and caterer said his wife, children and he opposed the proposal as an easy way out of a difficult situation. Mr. Tripodi expressed concern that his business was down thirty percent from the comparable period last year. Mr. Tripodi said it would cost restaurants a significant amount of money to reprogram registers. He stated that some people catering parties and patronizing his restaurant might choose to dine or cater in Durham rather than pay the additional tax. Mr. Tripodi said the proposed tax was not a temporary one which would be terminated in the future.

Council Member Andresen inquired whether the tax could be for more than one percent. Mr. Horton said no. Mr. Tripodi said the tax could possibly be increased in the future. Mayor Broun said it was quite unlikely that the State legislature would increase the tax beyond one percent.

Keith Norris, representing Slug's restaurant, said $500,000 collected by Mecklenburg County had been used to fund a convention center in Charlotte. Mr. Norris expressed concern that the proposal was too vague logistically. He also stated that restaurants would have to pay to reprogram registers and make certain that cashiers properly taxed customer purchases. Mr. Norris said he was definitely opposed to the proposal.

Robert Humphreys said the Downtown Commission had no position on the proposal. He urged the Council to get behind projects such as streetscape and find reliable mechanisms to fund them. Mr. Humphreys expressed concern to tie the streetscape plan to funding from the proposed prepared meals tax, given the level of opposition by local restaurant owners. Mayor Broun said there was a lot of commitment to the streetscape plan regardless of what happened to the prepared meals tax proposal.

Council Member Andresen said she believed that the prepared meals tax was a good mechanism to pay for the streetscape plan. Mr. Humphreys urged the Council to turn a "can't do" Town into a

"can do" one.

Roy Piscitello, owner of Breadmen's restaurant, said he preferred the Council increasing personal property taxes rather than his business customers.

Council Member Capowski inquired how many restaurants were members of the Chamber of Commerce. Mr. Harper said twenty-four restaurants were members. He added that the Chamber also had some caterer and hotelier members. Council Member Capowski inquired whether there was a local restaurants association. Mr. Mariakakis said there was not, although restaurant owners were welcome to meet at his establishment. He stated that the Council Chamber could be filled if the forum had been held at a time more conducive to restaurant owner's schedules.

Jim Crisp, owner of Ye Old Waffle Shoppe said a more equitable tax was preferable to the prepared meals tax proposal. Council Member Andresen inquired whether Mr. Crisp would support a bond for streetscape improvements. Mr. Crisp said he felt most citizens would favor a bond to improve the downtown area. He expressed concern that construction of the Rosemary Street parking deck had hurt business on the 100 block of East Franklin Street. Mr. Crisp said he hoped all parties could continue to work together. Mayor Broun said the committee hoped for additional input on the proposal in the future.

The forum concluded at 4:29 p.m.