Towns, fire chiefs oppose Asheville BID due to loss of sales tax revenue

The proposed downtown Asheville Business Improvement District isn’t just controversial within the city limits: four towns, along with the Buncombe County Fire Chiefs’ Association, oppose the measure because it will reduce the sales-tax revenue they receive from the county.

In May, Woodfin, Weaverville, Biltmore Forest and Black Mountain officials all passed resolutions opposing the Business Improvement District, and called on the city of Asheville to delay action until the sales-tax issue is addressed.

Buncombe County distributes a portion of its sales-tax revenue to every taxing entity in the county, including municipalities and fire districts. Another entity could mean a smaller piece of the pie for all the others.

“The issue here is that we feel none of [us] should have to support a special district in the city of Asheville (or any of the other municipalities for that matter),” Woodfin Mayor Jerry VeHaun wrote, summing up the towns’ position in a May email exchange with Vice Mayor Esther Manheimer obtained by Xpress. “I don’t have any issue as to whether or not you establish the district, but DO NOT use any of our tax money to do it.”

According to data from Buncombe County, cited by Manheimer in that exchange, the county’s municipalities would lose an estimated $125,948 in the first year of a BID. The biggest shares of that would come from the county ($82,763) and city of Asheville ($24,954). Black Mountain would lose $1,860, Weaverville $1,476, Biltmore Forest $1,311 and Woodfin $924.

Asheville officials have long asserted that the formula the county uses — distributing shares of sales taxes based on how much property taxes a municipality collects — favors small towns at the expense of the city, which generates a much larger portion of sales tax revenue than it receives.

Indeed, the return on sales tax appears much higher for towns than the city, according to county figures cited by Manheimer. Asheville generates $105.4 million in sales tax but only receives 12 percent — $12.3 million — back from the county. At the other extreme, Woodfin generates $31,178 in sales tax revenue and receives $458,351 back, a return of 1,470 percent. In between, returns for the other towns are more modest (Weaverville receives 23 percent of its sales tax revenue back). Advocates have asserted that creating a BID will result in increased sales-tax revenue for everyone, though critics have questioned the Western Carolina University economic study behind this claim.

“The proposed Business Improvement Districts would redistribute sales tax revenue from smaller governments to help subsidize improvements to a geographic area that encompasses property with some of the highest tax values in the region,” Woodfin’s resolution reads. This language is mirrored closely in the other resolutions. “The diversion of such funds during the present economic climate would necessarily cause tax payers in other parts of Buncombe County to pay higher taxes or fees or to forego services,” it continues.

Currently, the city and the interim BID board are considering changes to the proposal before it returns to Asheville City Council in September for further action.

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