Asheville City Council maps recovery around fiscal constraints

Recovery was front and center during Asheville City Council’s annual two-day retreat.

The event Feb.13-14 at the Buncombe County Administration Building was facilitated by Fountainworks, a Raleigh-based consulting firm that helps public leaders address significant challenges.

As Council members plotted a course, staff laid out a bleak fiscal landscape the city will have to navigate, tallying revenue losses from Tropical Storm Helene at $17.6 million atop response and cleanup expenses.

Xpress rounded up key takeaways from the retreat.

Helene’s fiscal impact 

The city is on the hook for approximately $41.5 million in response and recovery costs.

So far, the city has received $9.86 million in Federal Emergency Management Agency (FEMA) assistance and staff expects full reimbursement for storm-related emergency costs, according to a presentation given by three members of the city’s finance staff.

Even before the storm, the city faced budget challenges due to slowing revenue growth and rising costs, particularly in employee health care and retirement benefits, said Lindsay Spangler, the city’s budget and performance manager, during the presentation.

The fiscal year 2024-25 began July 1 and ends June 30. When Council approved the budget on a 4-3 vote at the June 11 meeting, it included a 0.63 cent property tax increase and a $7.8 million draw from the city’s fund balance.

City Manager Debra Campbell prefaced the upcoming budget discussion with a disclaimer that the process won’t be typical.

“This is going to be an evolving process. We have a number of other meetings and additional work sessions because this is, again, an unusual budget process. We don’t have all the information we need to make the key decisions,” Campbell said.

In the aftermath of the storm, the city’s revenue dropped by $17.6 million. This was due to disruptions in tourism, property tax collections and other service fees such as water, parking and transit. FEMA will not reimburse lost revenue, according to the presentation.

But the biggest decision falls on whether city leaders will increase property taxes to stabilize the budget. Potential scenarios include:

• 3.88-cent increase to replenish the fund balance ($136 per year for an owner of property assessed at  $350,000).
• 2.7-cent increase to offset storm-related revenue losses ($95 per year).
• 0.5-cent increase per 1% employee salary raise ($18 per year).

If all increases were implemented, an owner of a property assessed at $350,000 could see an annual $249 tax hike.

Potential cuts

To stabilize the budgets for FY 2025 and FY 2026, the city identified $5 million in cost savings:

• $1.5 million by delaying nonessential purchases.
• $1.3 million by reducing payments to a retirement trust fund for retired staff’s health benefits.
• $1.1 million by reducing contracted services.
• $500,000 by limiting training and travel.
• $400,000 by reducing Strategic Partnership and neighborhood grants.
• $200,000 in operational savings from storm-damaged facilities, such as pools and the Western North Carolina Nature Center, that remain closed.
• $100,000 in maintenance service reductions.

On the positive column, the city secured $225 million in Community Development Block Grant Disaster Recovery (CDBG-DR) funds for storm recovery, with a spending plan due by Monday, April 21. City officials are also seeking additional state and federal funding to support rebuilding efforts.

Credit rating concerns

Meanwhile, Standard & Poor’s, an organization that rates municipalities’ creditworthiness, slapped Asheville with a“negative outlook” label, raising concerns about the expense of borrowing money just as the city is about to issue $80 million in voter-approved bonds.

“That’s pretty concerning information to hear that S&P is putting us on a negative outlook. Those are two very powerful words. Am I overinflating that? That’s a pretty big yellow flag they just raised at us,” said Council member Maggie Ullman.

Tony McDowell, the city’s finance director, said staff tried to get the label removed.

“I felt like we were in some ways fighting a losing battle with Standard & Poor’s from the first phone call because they had formed an opinion about the level of destruction here, based on what they had seen in the media, that we found very hard to overcome as we went through the conversations,” McDowell said. “We tried to explain, ‘Yes, there has been a lot of impact here, a lot of damage, but we’re recovering.”

McDowell said that when he invited S&P representatives to visit this spring, they declined, saying they would wait until the city is further along in the recovery process.

Charting the course

With financial information in hand, Council members worked to set short- and medium-term recovery priorities shaped by nearly 6,900 Helene Recovery Priorities Survey responses representing 8% of the residents, along with door-to-door community outreach and insights from a workshop with Asheville board and commission chairs, said facilitator Beau Mills.

Survey respondents pegged their top three recovery priorities as strengthening infrastructure, expanding housing solutions and economic recovery. Ullman also noted that 82% of respondents highly valued thoughtful land use planning in storm-damaged areas.

“Even in the midst of vulnerability you would think people would want to build back quickly, but I think they’re taking into consideration that climate disasters will be ongoing and they will probably increase. So, even in the midst of their distress, they are considering resilience,” said Council member Sheneika Smith.

Council member Kim Roney highlighted that 71% of respondents supported rent and mortgage assistance to prevent displacement.

“I think the pressure to get from funding allocation to funding on the ground and preventing evictions — that bridge has not yet been fully crossed, and I think the demand is high since we had the survey fairly recently,” Roney said. “It shows me even four months in, we have work to do.”

Council member Sage Turner identified housing coordination as the biggest gap.

“We’ve had several disasters — whether it was COVID, then two years later the South Asheville water crisis that affected everyone, and now, I mean, it’s like every two years we’re having a disaster to manage. Each time it had an impact on housing and emergency housing needs, and we haven’t quite fleshed that out or tied it together,” Turner said.

Council member Bo Hess pointed to the newly formed Flood Assistance Support Team (FAST) as an example of innovation taking place.

“Innovation is not imagining new things but how we can make the things that are already here work better,” Hess said.

Looking ahead 

At the retreat’s conclusion, Council outlined its one-year vision for success across key areas of recovery. Work is underway on many of the goals cited.

They included:

• Infrastructure & Environment: Align neighborhood emergency plans with the city, update flood maps and assess the tree canopy.
• Housing: Improve data regarding needs and use, enhance housing capacity, amend zoning for housing diversity and density, and increase home repair funding.
• Economy: Develop a process for distributing community block grant funds, achieve an above-average business survival rate, lower unemployment and retain storm-impacted businesses.
• Community & Well-Being: Prevent displacement, establish a Helene memorial, foster a sense of community, increase tourism and business revenue, and engage the community in planning and implementation.

This story was supported by the Fund for Investigative Reporting and Editing.