JUNE 25, 2009 ISSUE
The DBDA’s Demise?
Town To Consider New Proposals for Municipal Service District Tax Dollars
The Town of Boone’s recent decision to restrict the expenses of the Downtown Boone Development Association (DBDA)—an action that could result in the end of the organization—will set the downtown area back 20 years, said John Cooper, owner of the Mast General Store and a Watauga County commissioner. Cooper helped found the DBDA in the 1990s.
“Without public notice and without the stakeholders, [the town] took away our money to run our program,” Cooper said. “It will set us back 20 years because we have a program that’s working.”
Cooper was a member of a merchants’ association that influenced the Boone Town Council to join the state’s Main Street Program, a project of the N.C. Department of Commerce that provides assistance to small towns to promote downtown revitalization. The town established a Municipal Service District (MSD) in the downtown area and collects taxes from MSD property owners. The DBDA was established as a nonprofit to contract with the town to put the MSD money to use in promoting the economic development of the MSD.
“We volunteered to tax ourselves in order to improve ourselves through having a Main Street Program,” Cooper said. “In my opinion, it has been very effective in making downtown Boone more vital and more economically viable.”
During a budget workshop held on June 9, the town council voted unanimously to restrict expenditures of the Downtown Municipal Service District (MSD) tax revenues to a ratio of 15 percent administrative expenses and 85 percent non-administrative expenses.
In the recently approved 2009-10 town budget, $108,589 is allocated for MSD expenditures. Under the new expenditure ratio, $16,288 of that allocation can be used for administrative purposes—including staff salaries and/or wages.
Earlier this year, the DBDA submitted a $142,009 budget proposal to the town for fiscal year 2009-10. The budget proposal estimated MSD taxes at $115,009 instead of the $108,589 approved figure, however. Of that, about $95,000 was to be spent on employee salaries ($32,500 for the executive director, $27,500 for the assistant director and $1,500 for a work study student), insurance, accountant fees, payroll taxes, office supplies, utilities, rent and storage. The budget also included $40,000 to be spent on downtown street improvements, $3,000 for community development grants and about $3,700 for promotional and marketing activities.
Tuesdae Rice, executive director of the DBDA, said she has not had a raise or cost-of-living salary increase in her five-year tenure.
Council member and Mayor Pro Tem Lynne Mason said the 15-85 ratio was a recommendation made by council member Janet Pepin. “I think it incorporated some norms in the nonprofit world,” Mason said. She said the council needs to carefully define what expenses are counted as administrative.
The strength of the DBDA is promotion and the events they have brought to downtown, Mason said, but “what we’re hearing is comments from downtown businesses that want to see more spent in other ways.” She said she has heard repeated requests for more money to be spent on downtown infrastructure, such as streetscape improvements. However, she noted, the council hasn’t heard enough input from MSD stakeholders.
“We need DBDA, we need input from the downtown businesses, and we need a Main Street Program,” she said.
Rice said she did not believe the organization was formed to address infrastructure needs. But, she said, the DBDA had planned to spend $20,000 of its 2009-10 budget and raise and an additional $20,000 from public and private sources for downtown site furnishings, including decorative street lights, flags, benches and trash cans. The DBDA spent 12 months working with the town Public Works Department and the Community Appearance Commission to develop a plan for the site furnishings.
If the focus of MSD spending is to shift from marketing and promotional activities to infrastructure improvements, “that decision needs to be made by the stakeholders,” she said.
Cooper said that promotional events are important to downtown.
“[The DBDA] puts all the programs in place,” he said. “It’s not just about having new street lights or garbage cans. It’s about getting people to work together to create good events that draw potentially new customers downtown.
“You could spend money on a lot of things that wouldn’t do what a good director will do in helping draw people downtown,” he added.
DBDA events include the monthly Downtown Boone Art Crawls, Fourth of July and Christmas parades and Easter and Halloween events, among others.
“No one came to me and expressed unhappiness about the way [the DBDA] was being done,” Cooper said. “I’m very disappointed and upset, and I don’t think that good governance makes a decision so quickly without giving notice that impacts so much of the economic vitality of a downtown. I’m amazed that they would do that.”
During a public hearing on the budget on June 16, council members indicated there were several “issues” with DBDA operations. Town attorney Sam Furgiuele said that a council member requested that he review the DBDA’s contract with the town and its bylaws.
“There is a bylaw issue and a contract issue,” Furgiuele said on Wednesday.
According to the DBDA bylaws, an annual membership meeting is required, and members are to be notified of the meeting personally or by mail at least 15 days before the meeting occurs, and an agenda is supposed to be provided. Ten percent of the active membership is required to be present to constitute a quorum, the bylaws state.
Rice said the DBDA holds monthly meetings on the first Thursday of every month that are open to the membership and to the public, and that MSD members are notified of the meetings by email. Furguiele said that he is on an email list for the DBDA and that notices about meetings are sent sometimes as late as the day before the meetings.
“That does not comply with their bylaws,” he said. “I do not believe that those are membership meetings.”
In addition, the officers and directors of the board are to be elected by the membership at the annual meeting.
“According to the information that I have been provided, that has never happened,” Furgiuele said. Furgiuele said he has spoken to a member of the DBDA board of directors about how DBDA business is conducted.
Furgiuele said the DBDA bylaws also prevent the organization from legislative advocacy. The DBDA passed a resolution of support for the 2008 mixed beverage referendum in Boone, and in his opinion, that constitutes legislative advocacy, he said.
“It is my belief that supporting a vote does not place an organization in political standing on one side or the other,” Rice said. “Our board passed a vote to support the mixed beverage referendum—that’s as far as it went.”
As to the town’s contract with the DBDA for use of MSD funds, “the contract itself is flawed in several respects,” Furgiuele said at the June 16 meeting.
Furgiuele said the contract was drafted at the time the DBDA was created in the 1990s, and he assumes that it hasn’t been reviewed since then. He said the contract needs to be very specific about the activities that can be funded using MSD taxes to be sure all activities are authorized by the state MSD law.
One line in the contract is particularly problematic, Furgiuele said. The second term of the contract reads, “The services the DBDA shall provide include, but are not limited to, the following activities within the Municipal Service District.” The phrase “but are not limited to” could be construed to include activities not authorized by the MSD law, he said.
“The contract needs to be re-worked,” he added.
The DBDA contract with the town expires on June 30, and several council members indicated Tuesday that they do not believe the contract should be renewed.
Also at the June 16 meeting, Jim Byrne, special assistant to the town manager, said the DBDA had not submitted statistical reports to the state’s Main Street Program for more than 10 years, suggesting that failure to submit the reports could jeopardize the town’s participation in the program. An email to Rice dated June 15 from Anne Morris of the Department of Commerce indicated that the statistical report has not been a requirement until this year, however.
On June 16, council member Pepin said she would like the town to solicit proposals for administering MSD funds, noting that the DBDA could submit its own proposal. The council agreed to accept proposals through August and also to send a survey to MSD members asking for input about how their taxes should be spent.
“As things stand now, several things need to occur,” Mason said. “The DBDA certainly can work on addressing some of the concerns that we had and submit a proposal.”
Rice said the monetary restrictions would be present a challenge for the DBDA to continue in the future. The decision would be up to the board of directors, but the DBDA could continue to function as a volunteer board with no staff, she said.
However, she noted, “it is more challenging to move forward with programming utilizing a volunteer organization.”
“I personally feel that our office has done a really good job. I’m proud of where our office has gone and what it’s become,” Rice said.
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