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Downtown BID tax district looks to have Council votes to roll forward -- after a 50% shave

Bull-bid Monday night's City Council meeting revealed a dais that was by no means ready to sign off on the full-gospel 7 cents per $100 of taxable value figure requested by Downtown Durham Inc. and others backing a special business improvement district for downtown Durham.

We noted here on Tuesday that Mayor Bell seemed poised to single-handedly want to find a compromise position, something hizzoner is wont to do when there seems to be division on the seven-member body.

And in the mayor's wisdom, he's seen fit to divide the BID rate in two. BCR has learned from a reliable City Hall source that Bell is looking to sell a 3.5 cent rate in place of the 7 cent'er proposed by DDI -- and with a start date delayed until July 2012.

The final tally would be revenue neutral to the so-called Bull BID, which had looked to augment DDI's annual funding in order to add additional streetscape maintenance, cleaning and ambassador services in the urban core, along with additional marketing for events and the like. That's because city manager Tom Bonfield would be called on by the council to find just under $200,000 per year to fill in the revenue hole left behind by the missing three and a half pennies.

Bell's decision to cut the Bull BID rate in two may be wise as a way of looking for community accord on a matter that brought out majority support but pointed minority opposition.

But we're not ready to call the move Solomonic yet. The real question still stands: will tax opponents like Hank Scherich, Terry Sanford Jr. and Bob "Blingram" Ingram (more on that later) come around even to a lower rate?

The idea is seemingly simple, of course. 

The BID drew support from property owners representing three-quarters of the downtown tax base, according to DDI as quoted by the Herald-Sun's Ray Gronberg earlier this week. But that didn't mean that the opponents didn't make some substantial noise.

Scherich, Sanford and others have made a range of arguments, from concerns over the economic cycle timing of the tax hike, to whether the services the additional tax would provide would disproportionately support visitor-oriented services while taxing all downtown property owners at an equal rate.

In theory, support from the City's coffers could open a range of options, including hiking downtown parking fees, for instance.  DDI and its boosters had argued that there was no provision for business improvement districts to siphon money from such services, under North Carolina law -- but there wouldn't seem to be anything to stop the City of Durham from raising money towards its voluntary contribution from any source possible.

Still, BCR's already hearing some worry that the mayor's compromise might reopen some wounds that the BID, ironically, was meant to avoid.

DDI's Bill Kalkhof and others made a point in selling the BID of noting that downtown had been the recipient of tens of millions of dollars in public funding support in the past decade or two -- money that's drawn increasing scrutiny from struggling commercial districts like the Fayetteville St. corridor and neighborhoods in North-East and Southwest Central Durham.

The BID, the reasoning went, would allow downtown to create a mechanism for sustainable self-funding for downtown's extra needs; the urban core essentially could start paying its own way for needs like trash pickup that exceeded those of the typical commercial or residential area.

Instead, the compromise will bring local taxes, yes, but also bring six-figures per year of municipal revenue to the table -- something likely to bring the Larry Hesters of the world front and center for the May 2 public hearing.

We're hearing the revised proposal has the support of the regular Bell bloc (the mayor, Mayor pro tem Cora Cole-McFadden, and Howard Clement), and is likely to draw more support, even if not fully supportive of the measure across the board.

~ ~ ~ ~ ~

Two interesting sidelights, some containing speculation:

The first is, what does the BID outcome do to the much-rumored but unconfirmed possibility that Kalkhof might seek a City Council seat in this fall's at-large election?

Diane Catotti's out of the race and Indy publisher Steve Schewel is in, but there's plenty of other candidates likely to throw their names in Mike Ashe's ring -- none as intriguing to speculate on, perhaps, as Kalkhof, who's got nearly twenty years of close linkage to the public sector, not to mention a very close relationship with county manager Mike Ruffin, and tons of insider cred.

A pure BID win would give Kalkhof a solid story to tell in an election, particularly from the vantage point of deflecting perceptions that he's once and always downtown's man; at the seven cent level, a presumed candidate Kalkhof could always note that he helped advocate for a better downtown -- and, then, for downtown to pull its economic weight.

A $0.035 rate is still a win, but might muddy that tagline, even if only slightly.

Secondly, and on surer footing: if you noticed, Mayor Bell seemed a bit interested in his public comments on the BID in the impact that the district might have on personal properties.

Like cars.

But not, we'd guess, just any cars.

Notable in his presence with an anti-BID button the other night? Bob Ingram, former GlaxoSmithKline exec and now head of his own startup.

Ingram's long been thought to be a possible tenant for new downtown development. But he also owns one of the more, er, unique collections of personal property downtown.

Longtime BCR readers will remember our 2008 story on Ingram's little downtown car collection; he uses his space on Duke St., in the green building visible from the Brightleaf Square parking lot, to store a collection of pretty Porsches.

Porsches that we reckon Ingram -- and, the mayor apparently -- feared would suddenly get hit with a seven cent surcharge.

We're hearing mixed messages on whether that's really the case, or whether the cars would obtain Ingram's home address rather than their Duke St. digs.

Still, it's the best explanation that BCR's source has for Ingram's anti-BID bid -- or for Mayor Bell's obvious concern over the impact on personal property like cars.

It's not every Durham mover and shaker who has their own Porsche collection downtown. Actually, it's not any of them, save for Mr. Ingram.

Or, as the official BCR nickname now goes, "Blingram" Ingram.

Comments

Natalie

Does the Bull Bid logo look like a penis to anyone else or is my mind hanging out in the gutter alone?

Rob

Now that you've said that, all I see is penis.

bb

i noticed that the last time this topic came up, and after stewing on it for a month now, i believe that it must be a reference to the downtown brass bull's bull-hood, it's too intentional. subliminal marketing at it's best, and it's not even that subliminal.

Natalie

Perhaps it's why some downtown property owners feel they are being...uhm...shafted.

jonn

I've started noticing a lot of anti-BID signs around town..mostly businesses who feel they would not benefit as much from the increased foot traffic. (non-retail or food)

Stacey

how about finally reverting the loop (along with the one way N/S roads) to two way travel -- instead of just talking about as a one day in the future rainbow)?

That seems a far better, and more stimulative, use of BID funds and energy than anything else being bantied about, and something a diverse range of people would get behind -- and more likely to make a tangible positive benefit to residents, visitors, retail businesses, and non retail businesses.

Kevin Davis

@Stacey -- Personally, I agree that the loop should go two way. To put it in perspective, though, the cost I hear bandied about is in the $15 million to $20 million range. The BID even at 7 cents would generate less than $500k per year.

That would be enough to support bond service on, what, $5 million or so in bonds, maybe? Back of the envelope, so take that with a grain of salt. But nowhere near enough to do the road.


I also think downtown propertyholders would have a good argument to make that road improvements benefit the entire community and should be paid for by the entire community, or the state.

Matt Drew

"Instead, the compromise will bring local taxes, yes, but also bring six-figures per year of municipal revenue to the table -- something likely to bring the Larry Hesters of the world front and center for the May 2 public hearing."

Also note that it brings this money without any strings attached. There are no projections, no performance goals, and only vague information on how this money is going to be spent (except for the street cleaning). How are citizens or the Council supposed to measure the success or failure of the BID? The proposal hands nearly a million tax dollars over to a quasi-private institution with only a single, spare thread of accountability - shutting it down after 3 years.

Geoff

Bill Bell on personal property downtown:

I spoke with some persons. One said, "I didn't have a problem with the real property. Then they started talking about taxing personal property, that get's to be a little biit differnet. I've got three cars-pretty high-end cars-and they're all associated with my business downtown, which is personal property."

Transcribed from the audio of yesterday's work session

Will

Proponents want the tax and opponents are suggesting things like parking fees. My downtown business will pay either way as we cover parking for our employees. I say go with the 7% and get it done sooner rather than later.

Will

p.s. I'm not seeing what others are seeing in the logo. And trust me, I'd definitely notice if it was there. :)

Carl

Hi,

I've been able to find some general information about the BID. Unfortunately, much of it is fluff. I am hearing more and more about taxes being leveled on things like computers, and other equipment (aside from land, buildings and autos). Is this true?

I haven't read the entirety of every related thread on this, and if the answers are already available, please point me in a direction. Otherwise, will someone with more knowledge of the minutia of this whole thing please explain how we are to be taxed on our personal property; including that which is in our homes.

If there are to be taxes on internal, private items, will there be police inspections of the interior of homes and businesses? If not, how will this new tax be enforced?

More information on the minute details would be great.
Thanks!

Kevin Davis

@Carl -- Here is how I understand it. Any Durham County resident is already subject to the personal property tax, in downtown or not. That includes things like cars, boats, RVs, jet skis, aircraft, mobile homes, and -- I am not making this up -- hot air balloons.

The issue here is not that the 3.5c or 7c BID tax would be a de novo tax on those items. It would be in addition to what you already pay.  

Carl

Thank you for the excellent response, BCR. That is great information! So, what about what I'm hearing about property *inside* people's businesses, condos, apartments, etc? I've heard that there will be taxes on certain kinds of equipment, computers, and such. Do you know if this is true, or is this still part of the convoluted ("let's keep it quiet") part?

Again, thanks for your response! I don't want to seem ungrateful by asking a follow up, but I, and many others, are terribly concerned about this.

Kevin Davis

@Carl -- Ah, sorry.  That issue gets further from my comfort zone -- here is how I think this works. 


For residents, that kind of equipment -- personal computers, etc. -- are not taxed anywhere in the county.


Corporations and businesses, however, are subject to tax on some of their equipment. That is, I think, a statewide thing in NC. There was a lawsuit that consumed much of the past decade between Durham Co. and IBM over the value of leased computers. However, I do not think this in any way affects residents -- and again, would only affect businesses to the extent that the rate they pay on their business equipment would go up within the BID.


As we have noted here in the past, this seemed to be acknowledged at a BID meeting as a factor, in the opinion of Bill Kalkhof at least, behind the logic of the opposition from Hank Scherich -- not only is Measurement Inc. not leasing out its facilities to renters (thus having to absorb the cost), but the company has business operations and thus business equipment that are already I presume subject to such NC taxes, which I believe would go up in a BID.


From UNCs School of Govt: 


http://sogweb.sog.unc.edu/blogs/localgovt/?p=1650

Local tax officials should add to their reading lists the latest chapter in what may be the state’s longest-running property tax saga.  Last month the N.C. Court of Appeals ruled in favor of IBM Credit Corporation in its dispute with Durham County over the 2001 tax value of 40,000+ computers and related items that IBM leased to its customers in Durham County.   Nearly ten years after the property was listed for taxation, the parties are still about $50 million apart in their respective valuations.  The ruling could cost Durham County close to $5 million in tax revenue and change the appraisal process for business personal property across the state. 


The court first confronted this particular dispute back in 2007, when it concluded that the Property Tax Commission applied an inappropriate burden of proof framework while rejecting IBM’s tax valuation appeal.   The court sent the case back for a re-hearing at the PTC.  After the PTC found in favor of Durham County for a second time, IBM again appealed to the Court of Appeals.  This produced last month’s decision, in which the court concluded that Durham County had failed to make appropriate valuation adjustments for the computer equipment’s functional and economic obsolescence.

Carl

Thanks for the fantastically detailed answer!

Will Wilson

Durham County farmers also get subjected to a "farm equipment" tax...tractors, greenhouses, shovels, etc. If they put a fence around a field, then that's considered "farm equipment", and gets taxed. So I'm told. If any business needs no such tax, it's our farms.

clif

as an editorial question, i'm interested if how long Kalkhof's potential run for city gov't was known.

and why does the city need a middle man to hire an outside contractor to walkie talkie themselves around bubble gum and litter pickup?

i pick up litter everyday along west chapel hill street. shouldn't i get paid by DDI's logic?

Rob Gillespie

@Clif-
Kalkhof's not announced his candidacy for any office, but it's been pretty well known that he wants to throw his name into the hat after he's done with DDI. The only question has been when he would pass DDI on to someone new. I think having the BID secured seems like a good time-- the BID involves a lot of political wrangling that a newbie wouldn't be able to tackle for a few years.

Rob Gillespie

And in related news--

I think Mayor Bell's compromise stinks. Under his proposal, the BID will raise around $200,000 a year, with the city contributing a total of $600,000 a year toward the services district (under the original proposal, $400,000 a year was still coming from the city). That's not a BID, that's a giant city subsidy that, so far, looks like it will come on the backs of neighborhoods.

We don't have money for speed bumps in front of neighborhood parks, or for more streetlights, but we do have an extra $200,000 now to throw at downtown because some guy that owns $65 million in property is kvetching about his taxes being raised?

Look, opponents like Harry Sherich can't use the "we don't benefit because we're commercial" shtick. Remember, Measurement owns Morris Ridge, and wants to develop it into condos and (with a giant city subsidy, of course) a Minor League Baseball Museum. They also have an option on the old hotel at CCB Plaza--more downtown condos, of course. Measurement has an eye on residential development, so they're not "just commercial". Even beyond that point, though, everyone will benefit from the BID, even office buildings.

Do you want to attract great workers? You better be located in a place where people want to work. The BID, beyond a doubt, will make downtown a better place to live, visit, and work in. This is good for everyone, Measurement included.

Will

@Rob, B-I-N-G-O. You took the comment out of my mouth.

Rob Gillespie

I just realized I had an error, Measurement currently owns about $35 million of assessed value downtown.

kelly

@rob: You hit the nail on the head. And now that gas is heading again to $4.00+ a gallon, we'll see the pendulum shift back toward downtown--for both residents and businesses--and away from those clearcut on the edges of development with 30 mile commutes to work subdivisions & suburbs. Any small BID taxes will pale in comparison to what suburbanites will be paying for gas to commute to work (don't even get me started on public transportation).

Carl

Rob, you have made an outstanding case against the BID (I hope Frank reads it). These are details I did not know: a local businesses has $35 million invested in downtown. There are plans to build new condos, plazas, museums and more! All this potential without this new tax. As the TV infomercial guys say, *It's* amazing!

As you allude to, I think we can just slow down a little, and allow things develop naturally. Odds are we'll be happy with the organic growth of downtown, and then we don't have to take money out of the natural economy, shuffle it around, and re-inject it superficially.

Rob Gillespie

@Carl-
You didn't read my post. Thanks for trying to distort my argument.

I'll give myself a simple copy-and-paste:

The BID, beyond a doubt, will make downtown a better place to live, visit, and work in. This is good for everyone, Measurement included.

Carl

Hi Rob,
I did read your post. I guess I misinterpreted it. Sorry. I guess we disagree after all. Anyhow, it seems, I found your argument for the BID to be a decent argument against it, too. Peace out.

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