Glimmers of a more positive chamber

Chapel Hill Herald, Saturday August 27, 2005

Last Wednesday, the Chamber of Commerce hosted an event to allow members to react to Chapel Hill's recent increase in the fees for privilege licenses for business. In the face of a crowd that was varyingly confused, frustrated or angry, chamber director Aaron Nelson rose to the occasion and showed some real leadership.

Typical of the comments in the early part of the discussion was the notion that "the town is not friendly to small business" or that "to suggest that this wasn't noticed [by Town Council members] is a bit naïve." But when one business owner asked, "Why were no business leaders part of this decision?" Nelson spoke up.

Nelson acknowledged that he was part of the budget committee that met 20 times over several months and worked with the town's budget consultant. He told attendees that he was an author of the committee's final report which he described as "very sensitive to the business community," adding that "he has never felt better about business interests being represented."

It turns out that the increase did pass under the radar. Nelson pointed out that neither he nor his committee ever took note of the privilege fee increase, one of many suggested by town staff in response to the consultant's recommendations. Nor did the consultant himself make any mention of it.

Nelson's mea culpa seemed to implicitly acknowledge the point made by Town Manager Cal Horton. "The privilege license item was missed by business representatives who regularly monitor budget proposals," Horton recently wrote. "Perhaps we relied too much on their normal vigilance."

Wednesday's meeting closed with Mark Kleinschmidt encouraging chamber members to join the council in a collaborative approach. He felt that all nine council members are committed to making a correction to the fee structure. He also expressed tentative support for a proposed compromise under discussion by the chamber.

The council will take up the issue at its Sept. 12 meeting.

I hope Nelson will encourage his associates to embrace Kleinschmidt's idea of collaboration. Unfortunately, some chamber members have adopted a more hostile and confrontational approach. In an e-mail, one businessman said the fee increase "showed an antagonistic attitude toward business." At least a vociferous minority of chamber members seem to believe the council is bent on driving business out of town.

Part of the problem faced by the chamber is a failure to accept the kind of town they are doing business in. Chapel Hill remains a university town although, at least since the 1980s, it has increasingly served as a bedroom community for RTP and Duke.

Thus, most Chapel Hillians relate to local business primarily as customers rather than as owners, colleagues or employees. What this means is that economic development must be moored to a sense of quality of life rather than to more conventional measures of sales, square footage or number of employees.

Unfortunately, the chamber has too often placed itself at odds with the desire of Chapel Hillians to maintain and enhance their quality of life. Its objections to environmental provisions in the Land Use Management Ordinance were typical of this.

The chamber has made some attempt to redress this, notably through creating a "sustainability council" and taking on a sustainability intern. Unfortunately, those efforts can be hamstrung by the conservatism of a minority of chamber members and by the big, nonlocal members (banks, utilities and such) who are in Chapel Hill for one reason only, to make a buck. Add to that the negativity of other chamber members and you have an organization that, at least as far as public policy is concerned, is mired in an oppositional stance.

Nelson's acknowledgment of the council's responsiveness on the privilege license could be the harbinger of a more productive approach. Beyond that could lie efforts to create true partnership with the community, adopting a more welcoming attitude and leaving behind the posture of the chamber as an unassailable bastion of business.

The chamber ought to recognize and embrace Chapel Hill's commitment to local business. From the 1998 council committee that helped with the revitalization of University Mall to last year's launching of the Downtown Economic Development Commission, that commitment is unmistakable.

Nelson made one odd comment last Wednesday to the effect that "communities want economic development because it brings in more than it costs." Actually, communities want economic development because it is essential to our well-being, providing a source for products and services that we all depend upon.

Chamber members should understand that the townspeople whom they consider their political foes are in reality their customers and their neighbors. Often, those most critical of the chamber's approach to growth and development are among those most loyal to local business. I certainly count myself in that category.



I'd like to see our local media acknowledge their own mea culpa in the ongoing misunderstandings between the Council and Chamber. Instead of taking the opportunity to educate the public on the fact that the Citizens Budget Advisory Group, with representation by the Chamber, encouraged Council to raise business fees, fires were fanned by reporting on business owners' anger over the 'business unfriendly' environment of Chapel Hill.

The problem was never that Council wanted to stick it to business, but that staff embraced the Committee's recommendation far in excess of expectations. Furthermore, the fee increase was directed at one particular fee rather than being spread out among many.

While I don't always want to read 'balanced' reporting, I think in this instance the media contributed by not taking the opportunity to dig in and help the community understand that this was nothing more than a misunderstanding, contributed to by all sides.

Actually, Terri, it was the committee that embraced the staff's recommendation. And, as I wrote above, this was one of many fees that were raised.

Before writing the column I did an archive search of all papers and, you're correct, there was no mention of the privilege fee. The first mention, I believe, was in a July 10 article on A Nelson's concerns (also a letter or two around that time).

When I first read about Nelson's position I was surprised that he was not acknowledging his role on the budget committee and instead seemed to be blaming the council. It seemed at first that he was trying to rile up business people over an issue on which he shared responsibility (and which might be readily rectified as turns out to be the case).

That is why it was so refreshing to attend the meeting last week and hear him clarify the situation to the Chamber members.

What makes you think the committee embraced the staff's recommendation? According to the Budget Advisory Report, the suggestion first came from Maximus and the committee endorsed it:

P. 3, #2. Fee Adjustment: The CBS generally agrees with the Maximus recommendations that fees should cover the cost of services with a few exceptions such as when the service serves a public purpose and a portion of the service expense should be paid for from general fund revenue....The CBS estimates at least $240,000 revenue can be achieved by adjusting and creating fees for municipal services.

The committee goes on to challenge the town management to involve staff in identifying ways to achieve these goals. And that's what happened--each department head recommended fees that could be increased after reviewing how current fees compared to other local governments. Feel free to go back through the tapes to verify this, Dan.

The issue is that the town budget is now based on the amount expected to be generated through raising the privilege fee. If the Council does go back and reduce the fee, they either have to find another option for recovering the loss revenue or they have to reduce spending/cut services in another area. Why hasn't that discussion made it into print?

Terri, you are reading my comment on the wrong level.

The privilege fee increase is a specific increase and the question is: what is it's origin? Neither Maximus nor the committee proposed increasing that fee. Maximus proposed looking at fees overall. The committee, as its report indicates, concurred. The staff then made the specific suggestions, including the privilege fee increase, which were then passed on to Maximus, the committee, and the council.

So, yes, the proposal for the privilege fee increase indeed came from the staff. That's why I said so. Feel free to go back through the tapes to verify this, Terri.

Dan, If you need to be right on this, that's irrelevant to me. The point is that the media (including you) have failed to help the community understand the details and the impact of this issue. Furthermore by not taking the opportunity to clarify the situation, the media (including you) have contributed to the negative relationship between the Council and the Chamber/business community.

Frankly, Terri, that's a crock. I troubled myself to go to the Chamber meeting and see what was going on. And wrote favorably of it.

The fact is that you have as much opportunity to look into and comment on these matters as I do. So, in your terms, by not doing so you are contributing to the "negative relationship" between the Council and the Chamber.

But, what is this negative relationship? If you ask Aaron Nelson, is that how he would characterize it? I don't think so although some of his members probably would. It's not anti-business to point out that there are business-people who won't be happy until we have the style of government typified by Dick Cheney's secret energy taskforce. Hopefully, we won't ever have that around here.

If you really believe what you say, why don't you offer some facts to contradict my point about the council's commitment to local business. You can knit-pick if you like around some issues but I'll tell you: I know all nine of the council-members and they all understand the importance of the economy and of local business to it.

To take an obvious example, some of the proponents of the redevelopment of lots 2&5 are lumped in on one side of that "negative relationship." But the redevelopment is the town's biggest economic development project ever. The council has worked openly and collaboratively on it with lots of public input and all nine have been in agreement on moving forward on it.

By the way, the criticisms of that project (e.g. build more parking instead) are not that it is not a pro-business project but are disagreements over how the town can best support business. That it is attempting to provide that support, particularly downtown, is undeniable.

Dan is trying to clear the air and he is encouraging improved community/business relationships. I'll go with that!

Improve? What improvements will come from statements like, "Unfortunately, those efforts can be hamstrung by the conservatism of a minority of chamber members and by the big, nonlocal members (banks, utilities and such) who are in Chapel Hill for one reason only, to make a buck."

Are we upset that people make decisions based on cost-value basis? Why do these "big, nonlocal members" survive and in some cases, thrive?

I do not accept that they are only in Chapel Hill to make a buck. Sure, they make bucks but that's only part of the story. Let's give them credit for the things that they do for the community.

I fully support any efforts Dan or anyone else makes toward encouraging improved community/business relationships Mary. My point was that the media needs to be held partially accountable for any negativite relationships that came from raising the privilege fee. While I appreciate Dan's efforts in the current editorial to publicize and praise Aaron Nelson's mea culpa over a shared bad decision, I hold to my belief that had the press done more research when the problem first arose, some of the negativity might have been avoided.

For the record, while OP was on break, I spoke with two Council members about the problem and then went through the record (linked above) to understand the etiology of the problem. Did the Chamber err? Yes. Did town staff make an unreasonable recommendation? Yes. Should Council have caught the problem? Maybe. I would hope that in such a well educated and well informed community, the press (reporting staff--not editorial staff Dan) would contribute to citizen understanding of the issue through a more thorough investigation than just reporting the outrage of the business community.

"Let's give them credit for the things that they do for the community."
OK, Fred, you know Dan was doing his best. Perhaps now is a good time for you to remind us of some of the nonlocal business community largesse that people often forget about.

Thanks for your kind vote of confidence, Mary, but actually that wasn't my best. Here's another shot at it:

Let's consider those big non-local corporations. How about Duke Power, one of whose executives was formerly a prominent Chamber leader? Consider the following:

December 20, 2003
From media and wire reports:

Duke Energy has settled accusations with federal regulators that it helped cause and exacerbate the blackouts that swept California during 2000 and 2001, an agreement that will cost the company up to $4.6 million, the Charlotte Observer reported on Dec. 20, 2003.

"The settlement agreement addresses allegations regarding potentially manipulative bidding practices in the California markets, known as economic withholding, as well as physical withholding of generation supplies," a Federal Energy Regulatory Commission (FERC) statement said.

The Observer article said the settlement closes three tumultuous years of accusations and uncertainty for Duke, but the Commission's statement said, "The agreements do not resolve any liabilities Duke may incur in the overall California refund case, which is an ongoing proceeding before the Commission."

In separate proceedings, California is still seeking $9 billion it believes it is owed by Duke from overcharges during the energy crisis....

So, I guess we're supposed to think that while Duke is "alleged to be" ripping folks off in California they're planting daisies in Chapel Hill-Carrboro. I don't think so.

This is hopeless...

The problem Dan is that your brush is usually broad and paints so wide a swatch that you end up making imprecise and non-useful generalizations.

If you see all of these corporate entities as evil, then so be it; nothing I say will change your mind. I just hope that they don't stop their positive actions and financial support.

And no Mary, reminding folks of some examples is just an un-useful exercise. I hope that most can come up with some of their own examples.

I was on the Citizens Budget Committee, as was Aaron
Nelson. I don't remember the committee ever discussing the privilege license fee increase. When the fee increase was
passed, we committee members all exchanged emails
about it. None of us could remember a discussion about
that specific fee increase.

During the meetings,Aaron
did an excellent job representing the business community,
and a number of our recommendations stem from his

But Joe, the committee did endorse the Maximus recommendation to review ALL fees and raise them up to competitive levels with surrounding local governments. The committee then challenged each department to identify where they could raise revenues or save costs. The staff followed those recommendations and targeted the privilege fee (among others) as one means of raising revenue by raising a fee that was lower than those of neighbors.

The problem came from the % increase in the fee not in the recommendation itself.

The question now is what happens when Council votes to reduce the % increase. Will they simply cut back on portions of the budget or raise other fees to make up for the loss? They are in tough position, but I guess that's why they get the big bucks. :)

I was at the Chamber meeting. (Dan it was nice to meet you and thanks for attending.)

I thought the meeting was quite good. Not all the people who attended were Chamber members (all businesses who pay the privilege tax were invited, and not all of them are members), but they all do business in Chapel Hill. I think the most valuable thing that happened was having businesses, town staff, and some of our elected officials coming together to talk directly to each other (without third party interpretations or summaries) about an issue of mutual concern and to realize that we have many other potential areas where we can come together.

If there was a "takeaway" lesson it was this:

Town Council---the best way to nurture small thriving sustainable local businesses is to ask them directly about what is and is not working right now, what it would take to make things even better, determine if it is possible to do so, and do it if you can. Make it a priority to get front-line feedback whenever you can, and actively seek it if it doesn't come on its own to you. My sense is that the Council wants to support the local business community, but may not know practically how its decisions play out at the day to day level for many businesses and how those decisions may have unintended consequences.

Businesses--the best way to effect change is to be constructive, concise, and consistent. Recognize that the Council has to balance a lot of competing interests and the business community is responsible for educating the Council about how its decisions affect the health of the business climate here. TC members are not psychic, they depend on business owners to give them feedback about how decisions they make affect one's ability to own and operate a profitable business in this community. If you want something ask for it. If you have a problem, propose a solution.

My thanks to Kay Johnson, Mark K, and Ed H. who attended from the Town. I thought they were extremely responsive and listened very well.

****I am speaking only for myself as a citizen and small business manager.

A few quick comment/questions for Anita.

The Chamber doesn't represent several businesses in Town that employ citizens but aren't service or retail oriented. I've asked the DEDC to survey these type businesses (at least for Downtown) and include them in our Town's inventory. What about feedback from these organizations?

Ah, the power of incumbency ;-). While Mark K. and Ed H. will be joining what Mark stated as a complete consensus of current Council members in revisiting and revising the privilege tax numbers, a few other potential members appeared. Was their participation as important to the business community?

Finally, what do you expect the current Council to do about the privilege tax? Remove it? Flatten it? Accept the Chamber's 2005 numbers? Accept the Chamber's apparently acceptable 2001 numbers?

Will, I will try to answer your questions. Understand I do not speak for the Chamber as a whole.

I was delighted to see several candidates, including you, there. I think other business owners were too. I only mentioned the incumbents because they are the ones who will be voting on the changes, so naturally we hoped they would be listening. I personally am very excited to see you and the other candidates wanting to hear what business people need in our community in order to be successful.

I'm not sure I understand your question about the non-member/non-service/non-retail businesses. The Chamber has about 950 members right now, we heard from Kay that 2100 businesses pay the privilege tax, and that there are many local businesses (who knows how many??? I suspect hundreds) that are not required to pay the tax in order to do business in our town. I am not sure the Chamber is the right organization to answer your question?

I work with a number of locally based businesses (in my day job :}) whose don't earn a single dollar providing anything (service, product, whatever) to anyone in Chapel Hill, NC or even the USA. I dont think their opinions differ widely from what you heard at the meeting. If you can clarify your question I will try to answer you.

As far as what I would like to see, well my "wish list" and my "OK to live with" list are different.

I think philosophically there is a strong argument against privilege fees altogether. It's rather inequitable that so many businesses are exempt completely by state statute, (banks, lawyers, and architects being some examples) and that many of the businesses that aren't exampt are the ones we in our community claim to support--the indy's, the local proprietors, the ones that didn't have enough money to lobby the General Assembly when the law was written in the 1950's. It's also hard sometimes to determine even who owes a license fee.

And what is the purpose of a privilege license anyway? It does not cover any services, there is nothing that a town provides in exchange for the license fee of which I am aware. It helps the town maintain some kind of business database maybe, but even that isn't very valuable because so many businesses don't have to pay for one.

The bottom line is that a town charges the fee because it can. It does not have to. Philosophically I think it's tough to justify with any logic based argument.

That said, the reality is that there will be a privilege license fee in Chapel Hill. The Chamber's proposal considers the fee in surrounding areas, the current financial reality that the Town's budget needs at least some of this revenue, and is, I think is a viable compromise, given the reality.

It would be an interesting discussion though.

What's your position?

My apologies for the typos. I'm doing too much multitasking. Hope you understand the comments anyway!


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