Council rejects incentive program
By Ethan Smith
Published in News on February 3, 2016 1:46 PM
After months of debate surrounding a proposal to distribute business incentive loans to businesses in the downtown area to help merchants recover losses suffered due to Streetscape, the Goldsboro City Council killed the idea on the cutting room floor at its work session Monday night.
The reason for striking down the idea before it could be implemented is because several members on the council thought it would set a dangerous precedent of helping any private businesses affected by construction projects on public infrastructure.
"Where do we stop? That's what I worry about," said District 2 council member Bill Broadaway.
Council members cited other infrastructure projects on Berkeley Boulevard and Wayne Memorial Drive, saying if downtown businesses received a bailout, the city could be obligated to help other businesses in different areas of the city any time a construction project happens.
"I share that same concern," said City Manager Scott Stevens. "You do a lot in your downtown within the municipal service district boundaries that you don't do outside that boundary. So you do have that boundary where you could say that's the only place it will happen. But if the reasoning is because of construction on public infrastructure, that argument can be made in a lot of other areas, too, that it does have an impact on small and large businesses in those other parts of our community."
When the council voted on the matter in its work session, it was a split vote. Four council members voted against giving out the loans, and three members voted in favor of moving forward with the loan program.
"I'm opposed to it. It sets a bad precedent," said District 5 council member David Ham. "How do you manage it?"
District 1 council member Antonio Williams initially said he could not ethically speak or vote on the matter, as he owns a business downtown -- The Ice Storm.
But, as the conversation progressed and the votes were taken, Williams eventually cast a vote in favor of the measure.
Council members Bevan Foster and Mark Stevens also voted in favor of developing the loan program, while Ham, Broadaway and Gene Aycock voted against developing the loan program.
This means the deciding vote came down to Mayor Chuck Allen, who voted against developing the loan program, providing a 4-3 vote against the measure.
"Back when we met in August, I think we should have done it and I was for it," Allen said. "But that was August. The project is finished. It's opened up. I've talked to several businesses downtown whose revenue has increased. The people I've ran into have had their revenues increase. Then you start looking at it from a staff level, you look at it from a fairness level of how are we going to figure out who gets it, it becomes a lot more difficult. When we had the meeting in here, I didn't hear anybody crying that they wanted the grants. I heard a couple people say something about it, but I did not hear a lot of it. There's just so much positive momentum downtown, and we're doing so much downtown, I'm going to vote against it and not do it."
The idea for a business incentive loan program was born out of a meeting in August 2015 where downtown merchants and city officials met to discuss how business in the downtown area had been hurt by Streetscape construction.
Business owners collectively felt like the downtown renovation project had caused them to hemorrhage sales and prevented customers from coming downtown.
Stevens said the council had far exceeded the time frame where curbing the adverse affects of Streetscape could had happened, as Streetscape has been complete for three months now.
But the time frame should not have been an issue, said District 4 council member Bevan Foster.
"If my house burned down today and I repair it, should my insurance company not pay for it?" Foster said. "It's not their fault that it took this long for us to come to a decision on it."
Another issue facing the program was that the city cannot legally hand out loans directly to businesses in order to recover lost sales, and would have been required to tie the loans to economic incentives, such as new business development.
"We can't do loans because somebody had a loss of sales. We don't have that authority," Stevens said. "So we can't be fair in doing a loan -- whether it be $1,000 or $2,000 or $5,000 or whatever the number is -- we can't be fair because we can't offer it to existing businesses that have been here at least in excess of five years, or maybe three to five years, depending on where you put that number. So if a business had loss of sales and had been here for 10 years, we can't do anything for them. If a business had been here for less than five years, and you developed this program on economic development criteria, then you can't do it for lost sales. That can't be part of the criteria."
This excluded an entire category of downtown business owners that have been downtown for many years, but were also harmed by Streetscape through a loss of sales.
Even though the loan program was voted down, Aycock said he believes businesses will see an uptick in sales now that Streetscape has finished and the downtown area is no longer being disrupted.
"Now that we've done the revitalization, hopefully everybody's sales and business will increase, and that can make up for lost business because we've done what we've done," Aycock said. "It's sort of like me having a home and spending money on it to remodel it. I expect the value of it to go up. I don't look at it as something that I spent money on and I'm getting nothing back from it. We spent the money, and hopefully they get returns on it."