Fate of Downtown Boone

Development Association

is in question
By Melanie Marshall

A vote by the Boone Town Council during the town’s recent budget workshops placed restrictions on the use of the municipal service district (MSD) tax funds.

Historically the funds have been managed by the Downtown Boone Development Association (DBDA). The change leaves the fate of the organization unknown.

During the workshop, council members reviewed the proposed budget for the DBDA’s upcoming fiscal year.

The total income for the organization, which is a separate nonprofit entity that contracts with the town of Boone for services, was set at $142,009. The MSD tax represents 80 percent of that total.

The MSD tax revenue taken in by the town in the fiscal year for 2009-10 is estimated to be $115,009. DBDA had set a fundraising goal of $20,000. The remaining funds were identified as savings from the previous year of $5,000, interest earned $1,000 and membership dues of $1,000.

The council discussed the organization’s budget at length, breaking the totals down into administrative and other expenses.

Mayor Pro-Tem Lynne Mason estimated $95,000, or 67 percent of the budget, to be for administrative costs.
The bylaws of the organization also came in question. A council member, unnamed during the budget workshop, had asked the town attorney Sam Furgiuele review the bylaws of the organization.

Furgiuele reported to the council that he did not find the DBDA to be in compliance with its bylaws. He found that the organization did not hold annual meetings and also did not keep a membership list.

The DBDA is under contract with the town for the use of the MSD funds. MSD tax funds spending is restricted by state statute.

Furgiuele advised the council that the contract between the two is flawed and does not restrict the DBDA to the uses specified by the law. The contract was created by the town several years ago and has been renewed as is.

“In essence, the town has a lack of control of funds,” Furgiuele said. “They may in compliance with contract and not in compliance with state law."

Council member Janet Pepin made a motion to restrict MSD funds to be used for town improvements, based on the large percentage of administrative costs for the DBDA.

“At least 85 percent of the municipal taxes should be used for downtown improvements,” she said. “The DBDA is a nonprofit that should operate on the standard nonprofit formula of 80 percent to the mission and 20 percent of funds for standard overhead.”

The motion was seconded by Mason.

“As an elected official, I have a fiscal responsibility to monitor the spending of tax funds. We can hold funds until the specific mechanism is worked out,” Mason said.

Council members voted unanimously in support of the fund restriction. The council will be entertaining proposals for the management of funds. The DBDA can submit a new budget and proposal for the management of the funds.

The current contract between the town and DBDA expires on June 30.

Assistant town manager Jim Byrne advised the council that an annual report was due for the purposes of obtaining funding for the Main Street Program, through the N.C. Department of Commerce. The town of Boone has been a member of the Main Street Program for several years. Byrne said the DBDA had never filed the report.

The issue was re-visited during the public hearing held the following Tuesday. Council member Stephen Phillips presented the council with a listing of issues he found with the vote.

The information presented by Phillips asked questions as to who would organize the downtown parades, the popular Art Crawl event held the first Friday of each month, and who or what body would now serve as the voice for downtown merchants.

“I believe that if problems exist in a town department or contracted agency, the director should be informed of these problems and given time to correct the problems,” Phillips said. “If the problems are not corrected by the given deadline, then disciplinary action would be in order. Any other format is detrimental to the normal functioning of the town and to the morale of the staff.”

Pepin advised Phillips that the council action was to restrict the use of MSD tax funds, not a specific action against the DBDA.

No action was taken was the public hearing.

DBDA executive director Tuesdae Rice sat down with the Watauga Democrat to discuss the town’s actions.

“We have met our contractual requirements,” she said. “The DBDA was originally formed as a promotional organization for downtown.”

Rice said she was unaware of the town’s investigation into the contract and bylaws, but will work openly with the council.

“At this year’s annual meeting of our board of directors, we adjusted our budget to fund some site furnishings,” she said. Site furnishings consist of downtown lighting and other ammenities. “Although, historically, we have been a promotional organization,” she said.

The organization has worked closely with the N.C. Department of Commerce for the Main Street Program, according to Rice.

The annual report requested, Rice said, is a statistical analysis of downtown growth.

The report was requested in previous years, but this is the first year the report is required for funding purposes, according to an e-mail from Anne Morris, program associate for the N.C. Main Street Program.

The DBDA sent letters seeking development, improvement and growth information from downtown merchants on June 3, prior to the town’s actions. The statistical report is due to the N.C. Department of Commerce on July 31.

Rice said the operation of the DBDA will cease following the June 30 end of the contract.
“We are a nonprofit organization, but the lack of funds with a short time to raise funds will end our operation,” she said. “We will hand over all of our paperwork on DBDA-run programs and work with council members to make this an amiable transition.”