Who gets paid: Asheville’s fight over incentives

When Asheville City Council voted 5-1 this week to give $90,000 to Moogfest (including $40,000 in cash), it marked the latest chapter in a long Asheville debate: Whether it’s business or festivals, who should get money from the city?

After a year’s hibernation, Moogfest has reemerged as an economic development and tech event as well as a musical one. The company’s representatives and the city’s economic development staff have touted the number of hotel rooms already reserved, predicted a $30 million economic impact, and claimed the amount of national press coverage and number of hotel rooms already reserved showed the event will be successful. However, according to Moog President Mike Adams, the company’s facing a sizable loss in the first year in an effort to make Asheville a destination for tech companies and the related economic growth they could bring.

“If it were just a music concert I would not be here, but what we’ve done is use the Moog brand, combined with an innovative daytime conference, to recreate Moogfest as an economic development event,” Adams said at the Feb. 11 Council meeting.

The new economic development component and its potential to bring in jobs from a sector Council has long desired, according to its advocates, merits a city contribution. If the festival delivers on creating some tech jobs and bringing more related business to Asheville, the contributions could even turn into a multi-year partnership.

Council largely agreed. Interestingly, it was Council member Cecil Bothwell, who’s been critical of a number of previous economic incentive deals, who offered the first, enthusiastic support. In this case, he said that the potential to make Moogfest a SXSW-style event could prove a major boon to Ashevile and was worth a city contribution.

“There’s nothing in the east that compares to [SXSW] and this very reasonably could, in coming years,” Bothwell said.

However, there was one dissenting vote: Council member Gwen Wisler said that she felt the incentives (specifically the $40,000) were too much for an event that isn’t free to the public, and unfair to organizations that had gone through the more traditional process.

“If Moogfest needs more up-front cash, it makes more sense to me for festival organizers to raise the money privately or by other means such as the Chamber of Commerce or the Tourism and Development Authority,” Wisler wrote in an email to constituents about the reasons for her opposition. After the Ashvegas blog published Wisler’s announcement of her opposition on Feb. 10, commenters debated the merits of donating to the festival or using the cash for another concern.

Tickets for Moogfest range from $199 to $499, though discounted tickets for locals were offered earlier, and free “scholarship” tickets were given to local educational institutions. As Council member Gordon Smith pointed out,  responding to Wisler, Moogfest’s job fair and some other parts of its economic development events will be free to attend.

The Buncombe County Commissioners will consider a similar incentive package at their Feb. 18 meeting. (See the meeting preview here.)

Economic incentives have been controversial before. Occasionally, as in the case of those for the New Belgium brewery, they pass Council unanimously. But debates over incentives for Canadian auto parts manufacturer Linamar, renaming the Civic Center after U.S. Cellular or giving tax breaks to GE Aviation’s “Project X” have seen critics assert that government should generally shy away from subsidizing for-profit corporations.

Generally, though not always, these incentives have taken the form of a waiver on property taxes for a set period of time, with the provision that the company meets certain goals (in terms of jobs hired, money put into local economy, etc.). Notably, Wisler also opposed the Moogfest incentives because they were donated upfront instead of as a rebate for money already spent.

Colliding with the debate about economic incentives is another about how the city should handle festivals. During the recesion, the city scaled back the number of events and festivals it was willing to waive costs for down to a few “anchor events” like the drum circle and Downtown After Five.

Beginning early last year, staff and Council have emphasized a “return on investment” approach, meaning that they should prioritize the economic benefit of a particular project to see if it’s worth the city’s dollars. Part of that meant more funds for infrastructure, affordable housing and other “aspirational” projects from the tax increase Council passed a few months later.

But it also meant a different approach to festivals and incentives (controversially, the city backed $2 million for renovations to the Asheville Art Museum as well). Shortly after staff and Council strategized about “return on investment” at the annual retreat last March Bele Chere, the longtime city-run street festival, got the axe. City government no longer felt it was getting enough bang for the buck, and noted a shift to “creative economies” as a target for support from government. Bele Chere itself had been a topic of major controversy for years, with critics asserting that the city had no business running a festival and that in many cases the event actually hurt local business.

On Feb. 11, Bothwell specifically emphasized the potential he sees in the new Moogfest versus the now-defunct Bele Chere. Jon Fillman, of the city’s economic development office, also noted that “Moogfest is in keeping with the current economic trend of selling a city on its people and its lifestyle.”

In the case of the Moogfest support, no members of the public spoke at Council’s Feb. 11 meeting, but some residents have since asserted that the incentives aren’t fair to other events and organizations.

Ashley Arrington, former outreach coordinator for Blue Ridge Pride, posted a letter to Council on Facebook opposing the Moogfest incentives. In the letter, she writes that while she likes Moogfest, the festival is still a relatively new event, that the ticket prices are out of range of many locals and that city has historically confined “anchor events” it supports to those run by nonprofits with a long history in the city.

“The overwhelming thing I keep reading is most of us understand the possible impact, but we’re hesitant to want taxpayer dollars in the form of cash invested until we see how it works out. I’d echo that sentiment,” Arrington wrote. “We’re raising fees on our kids after-school programs, our permitting process for new small businesses is incredibly difficult, we’ve squeezed our budget to death based on the fears of the lost revenue from the water system. Now does not seem like the time to be moving $40k from the unassigned General Fund balance to accommodate this request in this year’s budget.”

On Twitter discussion of Council’s vote, Arrington raised further criticism, asserting that Pride had managed a successful event without similar subsidy, kept it free and open to the public, stayed in the black and paid for police and other city services that Moogfest is getting for free.

At the heart of this latest argument is an old debate: Who should get taxpayer money? Why? Are corporate profits and events beneficial for Asheville? If so, which ones? Which uses of the public space should the city support with its tax dollars?

Long after the revamped Moogfest debuts on April 23, don’t expect that debate to go anywhere.

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2 thoughts on “Who gets paid: Asheville’s fight over incentives

  1. sharpleycladd

    Having a permits department that worked properly would be a good incentive for local businesses.

  2. Media Watcher

    Good commentary from David Forbes, clarifying the issues and the advocates on both sides.

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