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WILMINGTON, NC (WWAY / NEWS RELEASE) – Two Wilmington City Councilmen have announced they will sponsor a proposal to make downtown a municipal service district. Then, Wilmington Downtown Inc. would like to tax business owners in the MSD to pay for “downtown ambassadors” to patrol the streets.

Tom Harris, the owner of The Front Street Brewery, thinks the plan is “flawed.”

Here’s an email he sent out Wednesday to explain why:

NOTE FROM TOM HARRIS, OWNER OF FRONT STREET BREWERY: John Hinnant, “President/CEO” of WDI and David Spetrino, the Board Chair of WDI are meeting with downtown stakeholders on the proposed Municipal Services District (MSD) this Thursday at 5:30 at Press 102, 102 South Second Street. I would urge each of you to attend this meeting even if you attended the smaller meeting this past Monday. It is essential that stakeholders attend and share their concerns about the 4 major flaws in the current WDI MSD Plan and equally important, that stakeholders offer constructive SOLUTIONS on how to fix the problems with the WDI MSD proposal so we can all move forward together NOW to implement a MSD and work TOGETHER in a positive and collaborative manner to solve long-standing problems that have confronted downtown and adversely affected both the downtown economy and our individual businesses.

The 4 major flaws of the WDI Municipal Services District (MSD) plan are listed below (please note that all my comments below are made as an individual property owner and business owner and as someone who wants downtown to move forward and not as a member of any particular downtown group or organization):

1. The flawed WDI MSD plan was developed without talking to the vast majority of business stakeholder categories (including but not limited to retail and restaurant businesses) to get our input even though we will be paying, either directly as building owners or directly as tenants who have “triple net” leases (since the tenant pays the property taxes, not the landlord, in a triple net lease) or indirectly through increased rents, a very large share of the MSD taxes.

2. The flawed WDI MSD plan only guarantees one of the 15 board seats on the MSD Board to storefront (retail stores, restaurants, galleries, etc) businesses even though those types of businesses will be paying the MSD tax either directly as business owners or tenants with triple net leases or indirectly through increased rents. (At a meeting Monday Mr. Hinnant & Mr. Spetrino indicated they would consider adding 3 more seats for storefront business owners, but that is still insufficient for 2 reasons: (a). The WDI executive committe gets to “hand pick” who is given a seat, and (b). 3 additional seats is still a insufficiently small overall percentage of the total number of seats.

3. The flawed WDI MSD plan guarantees that the WDI Executive committee will have the “final say” in picking all MSD board members.

4. The flawed WDI MSD plan guarantees that the WDI Executive committee can ignore recommendations of the MSD Board since the MSD board has “advisory only” powers, with the ultimate power or “final say” resting solely with the WDI Executive Committee.

When pointing out things that are WRONG with a plan, it is also important to offer SOLUTIONS. Here are the SOLUTIONS I am putting on the table for consideration for each of the 4 things above that are flaws in the WDI MSD plan:

1. Collaboration: ALL interested stakeholders and WDI and DBA need to be able to come to a collaborative table and put all of our ideas of what programs and services a MSD should fund and provide on the table for later consideration by the MSD Board. Once the MSD Board is populated it should hold an open public forum to listen to organizations and stakeholders prior to making final decisions on what programs and services to include in the MSD. One option for setting this collaborative table would be for the City to set the table (Steve Harrell and Kim Adams are the facilitators I recommend since they did a good job of helping a diverse group of stakeholders representing many and sometimes competing points of view agree, along with City Staff, on the wording of the sidewalk dining ordinance.).

2 & 3. Fair and equitable MSD Board composition: A MSD board that is equitably and fairly populated is essential to represent all classes and types of stakeholders who would be paying the MSD tax directly as property owners or tenants of “triple net” leases or indirectly through increased rents.

In order to ensure equitable and fair board composition that does not allow the WDI Executive Committee to “hand pick” all board members, I propose that there be 12 MSD Board seats that would be labeled Full Board Members, and each Full Board Member would have a full and unconditional vote at every board meeting and that these 12 board seats for Full Board Members would be selected in the following manner:
(a). The board of WDI would get to appoint 6 Full Board Members of the MSD.
(b). The board of DBA would get to appoint 6 Full Board Members of the MSD.

In addition to these 12 MSD Board seats that would have an automatic full vote at every meeting I propose that there would be 4 additional board members that would be able to vote if and only if a “TIE BREAK” were needed due to a “deadlock” of the 12 Full Board Members. These 4 Alternate MSD Board Members would consist of:
(a). One alternate board member from one of the downtown museums jointly agreed upon and selected by the 12 MSD Full Board Members.
(b). One alternate board member from one of the downtown live theaters jointly agreed upon and selected by the 12 MSD Full Board Members.
(c). Two alternate board members from City Staff or City Council or a combination thereof jointly agreed upon and selected by the 12 MSD Board Members.

The rationale for including Alternate Board Members (who would only vote if a tie-break were needed are threefold: (1). To broaden the discussion at board meetings to include input from the Live Theater and Museum stakeholders who, while they do not pay taxes, contribute immensely to both the economy and the fabric of downtown as a whole (2). To insure that the City is kept apprised “real time” of every aspect of the MSD (3). To provide “tie break” votes from individuals with a “big picture” perspective that take into consideration what is best for downtown as a whole (as opposed to what is best for one particular downtown organization) in the event there were a “deadlock” between the 6 Full Board Members appointed by WDI and the 6 Full Board Members appointed by DBA.

I am purposely proposing an “even number” of Alternate Board Members, the board members who would cast the “tie break” votes: In the event the alternates “split evenly” and a “tie break” persisted then even after the “tie break” vote was taken, the deadlocked board, including the Alternate Board Members, would have to discuss the various possible compromise and keep re-voting on a compromise until the deadlock was resolved.

4. The MSD Board would have FULL powers (not just the “advisory” role proposed by WDI) to make final determination on all matters concerning the MSD, including but not limited to which particular MSD programs and services to provide, what organization(s) or companies it chooses to contract or subcontract with to implement MSD programs and services, and recommendations to the City on any proposed changes in the MSD tax structure.

Those are my ideas on how to create an MSD that would have a board populated in a fair and equitable manner to create a board that would be more likely to be representative of the interests of all the various types and classes of stakeholders who would directly or indirectly be paying the MSD tax as well as more likely to see the “big picture” and work to benefit downtown as a whole instead of a board that is controlled by just one organization that neither represented all the taxpayers who funded the MSD nor had a history of either collaboration or in recent history having as its main focus, efforts or accomplishments, helping downtown as a whole.

It is time we put organizational turf and/or individual goals and egos aside and stop thinking about what is best for any one particular organization and start thinking about what is best for downtown as a whole and all work together to solve the longstanding problems that confront downtown, and a MSD is an essential tool in solving the two most critical problems that confront downtown, the nighttime crime problem and the seasonal economy downtown that lacks a sufficient number of locals doing commerce on a daily basis downtown in the “off season”.

Working together to solve these two problems would not only benefit downtown as a whole but would also greatly enhance the financial investments of the business owners and property owners who would paying the MSD tax, as well as increase tax revenues for the City through both increased property values and an increase in sales tax revenues.

That these two problems are interrelated is evidenced in the City survey in which nearly 80% of the local citizens polled did not feel safe in coming downtown after dark, and nearly 1 in 5 local citizens did not even feel safe coming downtown during the day. For downtown businesses that operate after dark to only appeal directly to 1 out of 5 local citizens, and for downtown businessses that operate during the day to lose nearly 1 out of 5 potential local daytime customers because they do not feel safe coming downtown even in broad daylight is astounding, and should be a “wake up” call to all of us that we cannot afford to waste precious time having acrimonious debates about how a MSD board should be structured and populated or what services and programs the MSD should offer.

Instead we need to all come together and work together for the good of downtown to quickly, fairly and equitably implement a MSD to immediately begin working to help solve the longstanding nighttime crime problem and solve the longstanding problem of having a downtown economy that only does well when the tourists are in town and the rest of the year barely treads water because too large of a percentage of local people do not feel safe and comfortable in coming downtown to conduct commerce.

Having ambassadors out on the streets from 3 to 11pm will not only help solve the nighttime crime problem, it will also help solve the problem of way too many locals feeling unsafe in doing commerce downtown, including during the day, since it is the stigma of the nighttime crime that has given so many locals their unfavorable opionions about downtown and coming downtown to do commerce.

These unfavorable opinions of downtown caused primarily by the nighttime crime stigma can also be addressed by a rebranding and marketing campaign to rebrand downtown as being “family friendly” and the center of Live Theater, Museums, galleries, unique shops and one of a kind restaurants. This kind of rebranding and marketing campaign can not only attract locals to start coming back downtown to shop, dine and be entertained but can also help fill hotel rooms, help sell condos and help bring more people downtown to bank and seek other professional services, thereby enhancing the values of the investments ALL types of businesses and property owners have made.

We don’t all need to agree right now on all the programs and services of the MSD to move forward in supporting the MSD and getting it approved by Council. What we DO need to agree on NOW is an equitable and fair manner to populate and structure the MSD Board, and then leave it up to this Board to listen to different proposals from different groups on what MSD services and programs they think the MSD should fund and then leave it up to the MSD board to have final “say” over what programs and services are funded and how they are implemented and managed.

I believe that the board composition I have proposed above would create a board that IS fair and equitable, unlike the board composition currently proposed by WDI, which is a board designed and structured to put one organizaton, WDI, in control of the MSD. We need to do what is best for all the stakeholders involved and what is best for downtown as a whole and have a MSD Board that is not only equitably and fairly populated but also has the final “say” in all matters pertaining to the MSD, not a board that is under the control of any one existing downtown organization.

If you care to share any of your thoughts and ideas directly with City Council on whether WDI should be able to dominate and control the MSD by being able to “hand pick” the MSD board and by being able to create a MSD board with “advisory only” powers that it can ignore you can do so by emailing the Mayor and all Council members at council@wilmingtonnc.gov . A single email sent to this address goes to the Mayor and each of the Council Members.

I am personally very uncomfortable with WDI having dominant control of the MSD board since WDI is an organization that has failed in recent years to collaborate and work well with the downtown storefront businesses, museums and live theaters to any meaninguful or substantive degree, and also has failed in all of 2010 and so far in 2011 to do anything meaningful or substantive to try to help us reduce the late night crime problem even though there have been opportunities for them to do so that they declined to particpate in.

WDI also failed to help us in our effort to rebrand and promote downtown as being “family friendly” and rich in Arts, Museums, Galleries, Shops, Tours and Restaurants. That raises the question, if they had opportunities to help us in a meaningful way fight the downtown crime problem or help us rebrand downtown as being family friendly and declined to help, WHY did they decline to help and why now do they want to be able to control and dominate the MSD? The only answer I can come up with is “money”. There was “nothing in it for them” with regards to money if they had reconvened the Night Life Task Force when a group of stakeholders asked them to do so last August when some urban leaders and the owner of ROX had agreed to come to the table and work with the Task Force to try to reduce the late night violence if WDI would reconvene the Task Force, and there was “nothing in it for them” with regards to money when we asked them to participate in the Do It Downtown campaign to rebrand downtown as being family friendly and the home of “5 Live Theaters, 5 Cool Museums, 20 Galleries, Tours, 100 Shops and 50 Restaurants” and they declined to either participate in our effort to rebrand downtown as being “family friendly” or to implement their own rebranding campaign. Fast forward to 2011 with nearly $400,000 in MSD funds on the horizon and all of a sudden they want to be the “champion of helping reduce crime and promote downtown” and they want to control the entitiy that would receive and spend those funds.

I say “not so fast”. As storefront owners who own buildings, lease buildings with triple net leases where we pay the property taxes or pay rents that would increase to cover the increase in property taxes, we deserve an “equal say” through DBA in how the MSD board is selected and structured and how the MSD funds are spent and what programs and services the MSD offers. I don’t think that WDI should be excluded from that process since they do have a history of working with the larger corporations downtown like Hilton, PPD, the banks etc, but I think they should only participate in the MSD as an equal partner with DBA, the organization that along with its sister initiative “Do It Downtown” has been out in the “trenches” actually DOING things to try to improve downtown as a whole and not just sitting on the sidelines like WDI has on the two most important problems/issues facing downtown, the late night crime problem and rebranding downtown as being family friendly.

Both organizations represent valid and important business interests downtown. Both should share equally in the formation of the MSD and in populating its board. No unfair advantage should be given to either organization. It’s about time that both organizations start working TOGETHER for the good of downtown as a WHOLE, and the MSD is the perfect vehicle to accomplish that.

In closing, I want to comment on the very modest ten cents per hundred dollars in property valuation that would fund these essential MSD programs. That translates to a very small monthly charge for our storefront businesses. If you were to combine that small increase to fund the MSD programs and services to the base city tax rate Wilmington would still be BELOW just the base tax rate of other NC cities of comparable size and age such as Durham. Having an unusually and artificially low base city tax rate such as the base tax rate we have in Wilmington is a “two edged sword”: It means we save a few bucks when we pay our annual property taxes but then it means that we pay dearly the rest of the year with things like insufficient police officers downtown because our base tax rate is too low to fund hiring additional officers, so we have to do the best we can with the officers already on WPD staff.

We can’t have our cake and eat it too when it comes to paying an artificially low property tax rate when compared to other cities in NC our size and age (age is a factor since newer cities such as Cary NC have very few social problems that contribute to public safety needs). Once again, even WITH this very modest ten cents per hondred dollars of property valuation our combined (base tax rate plus the additional 10 cents per hundred) tax rate is still LOWER than Durham’s base tax rate alone.

I urge you to support the formation of the MSD, but ONLY if the board structure and compostion is changed and the “advisory” status of board is changed to a fully empowered board so that WDI cannot control the MSD that to a very large degree OUR tax dollars are funding.


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