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Wednesday, 11 October 2017 13:57

Staying in the game: New policies could define Waynesville economic development for decades

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After realizing small but consistent gains in local business development over the past few years, the town of Waynesville has recently undertaken several initiatives designed to strengthen the economic vitality of the town while also guiding that development in a direction acceptable to the community as a whole.

And as those investment dollars roll in — generating property taxes, sales taxes and other economic benefits — keeping those dollars as close to home as possible is just as important as attracting them in the first place.

But defining who gets what, and when, will be the hardest part; working within a narrow window of both statute and sustainability, Mayor Gavin Brown and the Waynesville Board of Aldermen must now craft detailed, nuanced policies that will carry with them economic repercussions far beyond their terms.

 

The carrot and the stick

Waynesville’s economic development activity can be thought in the context of old business, pressing business and new business.

The old businesses is that of capacity use fees; a recent ruling by the N.C. Supreme Court cast aspersion on the statutory authority of towns to collect fees from developers based on the future costs of system upgrades.

Waynesville hadn’t been charging the fees; maintaining infrastructure of the sort is costly, and expansion — critical to economic growth — is even more so.

A North Carolina General Assembly bill co-sponsored by Rep. Mike Clampitt, R-Bryson City, and passed in July bailed out towns like Waynesville, allowing them to charge fees so long as those fees were set by a commissioned study, which town aldermen on Sept. 26 voted unanimously to conduct.

The $8,500 McGill and Associates report, said Waynesville Town Manager Rob Hites, would probably pay for itself in a matter of months as new development follows and a previously unrealized revenue stream becomes available for infrastructure upgrades.

The town expects to be charging the fee — usually passed on from the developers to consumers — well in advance of a mid-2018 deadline.

With that old ambiguity out of the way, the pressing business is that of crafting a local preference purchasing policy.

Communities benefit substantially whenever expenditures — whether personal, professional or municipal — remain in that community. The beginning of the “buy local” movement came about as a result of this economic truth, which is even more important for isolated, rural mountain communities like Waynesville.

“It’s tremendously important,” said Haywood Economic Development Council Executive Director Mark Clasby. “I fully support the idea of doing business locally and growing local businesses.”

A few years ago, Clasby helped create the Buy Haywood program, which has been successful in helping local agricultural producers break into the retail grocery market as well as local restaurants; although what the town is trying to do with respect to local purchasing is slightly different, it all speaks to the same goal — keeping local dollars in the local economy.

During the town’s fall planning retreat, held at the Wells Events Center in Waynesville Oct. 6, Hites presented to assembled town aldermen, department heads and staff a small statutory sanctuary that allowed for what he called “a new concept in purchasing” utilized by a dozen-odd North Carolina towns over the past three or four years.

The governing statute over municipal purchasing, GS 143-129, is three-tiered; purchases from $30,000 to $90,000 require an informal bid process, while purchases above $90,000 require a formal bid process.

On purchases under $30,000, though, statute is silent — not permissive, per se, but silent, meaning there is no requirement that a town get the absolute lowest price on a purchase.

If a town gets too lenient in encouraging or allowing gross overpayment for goods and services, several concerns over the use of taxpayer monies could arise.

However, tightly crafted policy — in this case, favoring local vendors of goods and services under $30,000 — can be created without imposing undue burden on taxpayers while still stimulating the local economy at the same time.

As presented the proposal would require, only on purchases under $30,000, qualified firms to submit quotes; if a local firm comes in at 105 percent of a non-local firm’s quote, the town could either accept the 105 percent quote, or ask the local vendor to match the 100 percent price of the non-local competitor.

“Matching,” Hites said, “preserves the idea that the public is getting the lowest possible bid.”

If the local vendor refuses, the town could still choose from either vendor.

Alderman Jon Feichter pointed out that with the $30,000 limit, the most the city would ever overpay for local preference purchases is about $1,500.

Alderman LeRoy Roberson demanded that no sacrifices in the quality of the goods or services be made during such situations, which can only truly occur during apples-to-apples product comparisons.

While the theory and practice of such policy is relatively straightforward, the hardest thing the board must do is to define what, exactly, a local vendor is.

The town’s current definition includes all of Haywood County, but it could designate the whole state as local vendors if the board so chooses; likewise, all counties west of Haywood — or even some to the east — might gain such accreditation, or, only the corporate limits of the Town of Waynesville.

On an even more granular level, the town will have to decide if a bricks-and-mortar presence of a certain square footage is required, or a minimum number of employees is necessary.

After that issue is decided, what then will become of commissioned salespeople who live within the so-called “local” definition but work for companies headquartered outside of it, perhaps in Asheville or Charlotte?

“That’s part of the complexity of it,” Hites said, noting that the town had just made a purchase from one such vendor — Christmas ornaments that technically originated in Raleigh.

Feichter, an immediate advocate of the proposal, said he’d push for a “strict” definition of what it truly means to be local, asking the board to consider what percentage of the purchase stays in the county and what doesn’t. As an example, he cited Walmart, which employs many and contributes to the local economy greatly, but is based in Arkansas.

Once the details are worked out, the proposed policy should land on the board’s calendar some time in November, hopefully by which time the town’s business incentive policy is in place.

“Over the last two or three months, businesses have come asking for incentives to locate in Waynesville,” Hites said.

Clasby said the last major incentive package he worked on with the town was for Sunoco Plastics in 2012; the town didn’t — and still doesn’t — have a policy, so he looked to Haywood County’s policy as a model at the time.

Providing taxpayer money to specific local businesses is prohibited, but economic incentives have been allowed in North Carolina since the mid-1920s.

As with capacity use fees, having a formal economic development incentive policy ensures that investors, developers and town staff know exactly which cards are on the table.

That policy, however, will be twofold.

Of course, certain technical requirements will be delineated — number of employees, average salary, amount of investment and the like.

“The important thing about incentives is that they have to be performance-based,” Clasby said. “You don’t just write a blank check.”

Based on those criteria, the town may choose to rebate a percentage of property taxes already paid by the business back to that business for a pre-determined period of years, thus requiring no budget appropriation.

The board would then approve the incentive package in a closed session, and would further have to conduct a public hearing on the package, and then finally vote to approve it.

“This sets the framework,” Hites said, adding that such a policy doesn’t obligate the town to provide incentives; the process also allows for secrecy to be maintained, as some businesses require.

But who should be in line for such incentives? Henderson County’s policy says which kind of businesses it is willing to subsidize, and by omission which types it is not willing to subsidize.

Hites gave the example of a cheaply made cinder-block “junk mall,” as something most municipalities wouldn’t want, let alone incentivize to locate in town.

Prevailing economic development wisdom says that medical research is among the most coveted industries to attract, along with its accompanying high-paying jobs and significant infrastructure investments.

Aldermen also suggested that affordable housing or broadband infrastructure investment would be most welcome, and might be included in an incentive plan.

But Mayor Brown said that economic incentives wouldn’t transform the town overnight. When companies look to locate, first and foremost they look for a good workforce, a cheap and steady power supply and convenient transportation.

“I’d agree with that,” Clasby said, adding that competition for new businesses is withering, and that an incentive plan would make his job just a little easier.

“At that stage of development, you’re just trying to stay in the game,” he said.

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