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1993-01-19 Regular Meeting MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 278 ASSEMBLY The New Hanover County Board of Commissioners met in Regular Session on Tuesday, January 19, 1993, at 9:00 A.M. in the Assembly Room of the New Hanover County Courthouse, 24 North Third Street, Wilmington, North Carolina. . Members present were: Commissioners Sandra Barone; William A. Caster; William E. Sisson, Jr.; Vice-Chairman E. L. Mathews, Jr.; Chairman Robert G. Greer; County Manager, Allen O'Neal; County Attorney, Wanda M. Copley, and Clerk to the Board, Lucie F. Harrell. Chairman Greer welcomed all persons present and called the meeting to order. INVOCATION AND PLEDGE OF ALLEGIANCE Reverend Wayne Barkley, Pastor of the New Life Church, gave the invocation. commissioner Barone led the audience in the Pledge of Allegiance to the Flag. NON-AGENDA ITEMS Chairman Greer inquired as to whether anyone present would like to present an item not listed on the Regular Agenda or comment on an item listed on the Consent Agenda. No items or comments were received. . APPROVAL OF CONSENT AGENDA Chairman Greer reported that Commissioner Sisson has requested withdrawal of Consent Agenda Item #13 for further discussion due to circumstances regarding the financial reporting of the Volunteer Fire Departments. Chairman Greer commented on Consent Agenda Item #5 and expressed concern for a five-year agreement with Wachovia Bank and recommended approval of the agreement for two years. Finance Director, Andrew J. Atkinson, stated he has no problem with reducing the term from five to two years. Motion: After further discussion, Vice-Chairman Mathews MOVED, SECONDED by Commissioner Sisson to approve the Consent Agenda with removal of Item #13 and an amendment to Item #5 for approval of an agreement with Wachovia Bank for two years instead of five years as proposed. Upon vote, the MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA Approval of Minutes The Commissioners approved the minutes of the Regular Meeting of January 4, 1993, as presented by the Clerk to the Board. . Adoption of Resolutions Requesting the Addition of Roads to the State Highway System The Commissioners adopted resolutions requesting addition of the following roads to the State Highway System: -Vine and Blossom Streets -Hervey Lane -Roads in Oxford Place Subdivision -Roads in Fox Run Farm Subdivision Copies of the resolutions are hereby incorporated as a part of the minutes and are contained in Exhibit Book XX, Page 18. Reappointment of Ernst Swart to Serve on the Nursing Home Advisory Committee The Commissioners reappointed Ernst Swart to serve a three- ~ MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 219 year term on the Nursing Home Advisory Committee as nominated by the Administrators of the nursing homes. The term is to expire January 21, 1996. Approval of Change Order for LS3P Contract for Parks Master Plan The Commissioners approved a change order in the amount of $3,750 on the LS3P contract for the Parks Master Plan. Due to the acquisition of additional property and a second access road for the Ogden Park, additional planning services were necessary to revise the Master Plan. The County Manager was authorized to execute the document. () Award of Request for Proposal #93-0090 to Wachovia Bank of North Carolina, N. A. for Banking Services for New Hanover county and Approval of Contract #93-0090 with Wachovia Bank of North Carolina, N. A. The Commissioners adopted a resolution awarding a Request for Proposal to Wachovia Bank of North Carolina, N. A. to provide banking services for two years. Based on the evaluation of proposals received, staff recommends awarding the proposal to Wachovia Bank. A copy of the resolution is hereby incorporated as a part of the minutes and is contained in Exhibit Book XX, Page 18. Rejection of Bids Received for Myrtle Grove Branch Library Furnishings The Commissioners adopted a resolution rejecting all bids received for the Myrtle Grove Branch Library furnishings. After review of the proposals by staff, it was recommended that all bids be rejected due to a bidding procedure not being followed. A copy of the resolution is hereby incorporated as a part of the minutes and is contained in Exhibit Book XX, Page 18. () Approval of Tax Collection Reports Through December 31, 1992 The Commissioners approved the following Tax Collection Reports through December 31, 1992, as submitted by the Collector of Revenue: New Hanover County Tax Collections New Hanover County Fire District Tax Collections Copies of the reports are hereby incorporated as a part of the minutes and are contained in Exhibit Book XX, Page 18. Release of Value - Tax Department The Commissioners released late listing penalties for persons who certified they had listed on time; for persons listing in another county; for persons who listed incorrect vehicles during the listing period; and for persons who had never received penalties for a late listing. The release of penalties was recommended by the Tax Administrator. A copy of the list is hereby incorporated as a part of the minutes and is contained in Exhibit Book XX, Page 18. The Commissioners approved value adjustments on properties as recommended by the Tax Administrator for conditions that had not been brought to the attention of the Tax Department. A copy of the list is hereby incorporated as a part of the minutes and is contained in Exhibit Book XX, Page 18. () The Commissioners approved. delinquent applications for exemption from property tax for the following organizations: Love Chapel Church of God Wilmington Baptist Association 86 Chev 7-passenger Van R05414-020-001-000 l MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 280 Applications and letters explaining the late applications are on file in the Tax Department. Discovery Appeal for 1989 Cadillac Owned by the Greater Love(s) Chapel The Commissioners denied a tax exemption for the Greater Love (s) Chapel as recommended by the Tax Administrator. The vehicle was discovered by notice on September 30, 1992~ with no response from the Church. The vehicle is used by the Pastor at home and for commuting. Letters and information explaining the appeal are on file in the Tax Department. Approval for Reclassification of General Services Worker position to an Assistant Maintenance Mechanic in the Maintenance Section of the waste-to-Enerqy Facility The Commissioners approved a reclassification of a General Services Worker position to an Assistant Maintenance Mechanic in the Maintenance Section of the Waste-to-Energy Facility. The reclassification will increase the salary from $15,183 to $17,198. Funds are available in the FY 1992-93 Budget. Ratification for Appointment of Joe Russo to Serve on the Human Relations Commission as the Chamber of Commerce Representative The Commissioners ratified the appointment of Mr. Joe Russo to serve as the Chamber of Commerce Representative on the Human Relations Commission. The term is to expire January 1, 1996. DISCUSSION OF NEW HANOVER COUNTY FIRE SERVICE DISTRICT COMBINED FINANCIAL REPORT THROUGH JUNE 30, 1991 Commissioner Sisson commented on Consent Agenda Item #13 and expressed concern for the auditor, McGladrey & Pullen, reporting on Page 1 of the combined Financial Report that the Volunteer Fire Departments have not kept financial records of all monies received from the County and how these funds have been expended in a manner consistent with generally accepted accounting principles; therefore, he would request that a representative of McGladrey & Pullen or a County Official attest to the fact that the report as presented has satisfied the terms of the contracts with reference to generally accepted accounting principles. Emphasis was placed on the importance of maintaining adequate control over the monies allocated from the Fire Service District and how these funds have been expended in order to avoid problems as recently experienced with the North Wilmington Volunteer Fire Department. Finance Director, Andrew J. Atkinson, stated many times small units of government maintain their records on a day-to-day basis with the writing of checks and deposits. When auditors prepare the annual Financial Report, these daily records are converted to the modified accrual basis. Most of the records are kept by volunteers and in order to convert the records to a modified accrual basis the services of a professional accountant would be required, which can be costly. After discussion, it was agreed to authorize Commissioner Sisson to discuss with the Board of Fire Commissioners the need for the Volunteer Fire Departments to maintain acceptable accounting records that will accurately document how County funds are expended and the amount of equipment owned by each station. Motion: After further discussion, Commissioner sisson MOVED, SECONDED by Commissioner Barone to accept the Financial Report as presented by McGladrey & Pullen. Upon vote, the MOTION CARRIED UNANIMOUSLY. WITHDRAWAL OF ITEM #6 Commissioner Barone requested withdrawal of a resolution prepared at her request since it is the consensus of the Board that this problem should be approached in a different manner. ~ MINUTES OF REGULAR MEETING, JANUARY 19, 19.93 PAGE, 281 ADOPTION OF YARD WASTE ORDINANCE - FIRST READING Director of Environmental Management, Ray Church, presented a revised Yard Waste Ordinance with the following revisions. -Article IV - Jurisdiction - On and after the first day of June 1993, this ordinance shall govern yard waste collections, disposal, and recycling in New Hanover County, North Carolina. -Article V - Definitions: 2. "Inert Debris" means solid waste which consists solely of material that is virtually inert, such as brick, concrete, rock and clean soil. C), /' --" 3. "Land-clearing and Inert Debris Landfill" means a sanitary landfill that is limited to receiving vegetative materials such as stumps, limbs, leaves, grass, trimmings, untreated wood, and virtually inert materials such as brick, concrete, rock, and clean soil. 8. "Yard trash" means solid waste consisting solely of vegetative matter resulting from yard maintenance or landscaping maintenance (limbs, leaves, and grass trimmings, etc. ) . -Article VI - Yard Waste Handling B. Beginning June 1, 1993, loads of unseparated municipal solid waste exceeding 15% yard waste volume........ C. To be effective June 1, 1993, solid waste collectors shall not co-mingle yard waste and municipal solid waste prior to disposal. () D. To be effective June 1, 1993, yard waste shall be delivered separately to an approved yard waste processing facility or disposal site. G. section 2. The New Hanover County Land-Clearinq and Inert Debris Landfill, located at the New Hanover County Secure Landf i 11. section 4. A land-clearinq and inert debris landfill approved by New Hanover County and the North Carolina Department of Environment, Health and Natural Resources, and permitted to receive yard waste. section 6. The New Hanover County Waste-to-Enerqy Facilitv until June 1, 1993. Commissioner Barone commented on the policy allowing the Director of Environmental Management and/or his designee to determine when loads of unseparated municipal solid waste exceed the 15% yard waste volume which enacts the 100% surcharge above the normal tipping fee and asked the following questions: (1) Does this procedure provide an opportunity for kick-backs or pay-offs? Is this procedure being currently used? and (3) Is there a more objective method of determining the percentage of yard waste? o ---=:.t Director Church stated this policy is being used at the Landfill and has proven to be satisfactory. The weighmaster is responsible for rendering a judgement call; however, this person is well trained and willing to work with the customers. In most cases, the yard waste will not exceed 15%; therefore, the proposed procedure should not be a problem and in his opinion is the best method to use. Mr. Matt Bryant, Operations Manager of Waste Management of Wilmington, expressed concern for the proposed ordinance and urged the County to continue to utilize its present facilities instead of l MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 282 spending $355,000 for construction of a separate composting facility plus additional costs for operation of the facility and the separation of leaves and limbs. The citizens of New Hanover County now pay $60 per ton for disposal of trash, one of the highest tipping fees on the east coast, and it will be difficult for the haulers to inform customers that another price increase will be needed in order to dispose of yard waste. with the lack of revenues generated by the incinerator, it will be difficult to convince the taxpayers that transferring yard waste to another facility, which will decrease the amount of steam and electricity sold, will not end up with another increase in the tipping fee. If the County is concerned about controlling the costs for waste disposal, the County should very closely monitor the incinerator. This facility was constructed in 1983 through passage of a bond referendum with the promise to resolve the solid waste disposal problem and lower the tipping fee. At that time, the debt was $8,000,000 to be paid off in five years. The tipping fee was to be eliminated or reduced from $22 per ton once the incinerator began operation. Nine years later, the County has doubled the size of the incinerator, has a debt of $34,000,000 with an annual debt service of $3,500,000 which represents $36.25 per ton of disposal to generate enough revenue to pay for the debt service. During this period, everyone has agreed that a total lack of maintenance has occurred and is still occurring at the incinerator. In the hauling business costs for a lack of proper maintenance cannot be passed to the customers because they can find another hauler at a more competitive price. The County should keep the incinerator under control in order to avoid passing additional costs to the taxpayers. The Commissioners were urged to continue to utilize the existing $34,000,000 facility as allowed under Senate Bill 111 instead of adopting an ordinance that will mandate one more waste disposal increase to the taxpayers which negatively impacts every residential, commercial, and industrial customer. < Mr. M. A. Haughton, a retired DuPont Manager and Chemical Engineer, requested the Board to obtain a variance from the State law prohibiting the burning of yard waste in the incinerator. The law was intended for counties using landfills for disposal of yard waste. Yard waste is an excellent source of fuel with its high BTU value; therefore, the incinerator should be utilized to its full capacity to produce steam and electricity for generation of revenue. From an engineering point of vi~w and experience with steam boilers, there is no problem with burning yard waste in the incinerator. Mr. Steve Woodard, a concerned citizen, recommended the feasibility of establishing a non-tipping composting facility with the operation and funding of the facility supported from the sale of compost. A lengthy discussion was held on maintenance of the incinerator and the need to inform the citizens that yard waste will be collected separately. Director Church stated a meeting was held with the haulers and they were notified that the County will continue to accept yard waste at the incinerator until June 1, 1993. Further communication will occur with the haulers in an effort to work out the logistics of the ordinance. Discussion was held on working with the State to obtain an exemption for New Hanover County. County Manager O'Neal stated the North Carolina Association of County Commissioners is reviewing the County's situation and will be working with the State. for an exemption; however, until a decision is rendered, an ordinance should be in place in order to comply to State law. Director Church reported on discussion with the N. C. Solid Waste Division with an opinion rendered that New Hanover County has not exhausted all other waste reduction avenues in order to qualify for the 10% waste reduction. ~ MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 283 Vice-Chairman Mathews commented on section G and inquired as to why burning was left out? Director Church stated the State does not view backyard burning as acceptable due to fire and emission problems incurred with this practice. Chairman Greer expressed concern for section G and recommended deleting this section from the proposed ordinance. () County Manager O'Neal recommended not eliminating section G, but rewording the introduction to read as follows: Solid waste generators, solid waste collectors, and other persons, may dispose of yard waste by one of the following methods: Chairman Greer recommended deleting Item #6 under section G., which bans yard waste from being burned in the incinerator, and to direct staff to continue working with the State for an exemption for New Hanover County. The ordinance should simply state the County will not accept yard waste in the Landfill after June 1, 1993. Motion: After further discussion, Vice-Chairman Mathews MOVED, SECONDED by Chairman Greer to adopt the ordinance with rewording of Item G as proposed by the County Manager and removal of Item #6 under section G. The floor was opened for discussion. commissioner Caster expressed concern for the seasonal influx of yard waste and inquired as to what will happen to the separate collection for yard waste when the yard waste exceeds 20% of the waste stream? Director Church stated this can be addressed in an ordinance. In other communities, the customer is required to put out a certain number of bags at a certain size as stipulated in the ordinance. () Mr. Angus Phillips, representing Waste Industries, stated at $60 per ton, haulers are already limited as to amount of pick-up without an additional charge. The Commissioners were urged to allow a place for disposal of yard waste without charging customers an increase in trash collection bills. Upon vote, the MOTION CARRIED UNANIMOUSLY. A copy of the ordinance is hereby incorporated as a part of the minutes and is contained in Exhibit Book XX, Page 18 and will be codified into the New Hanover County Code. commissioner Sisson expressed concern for the fact that it costs more to haul trash from the County than it does in the City and stated this does not make sensei therefore, he would recommend holding a Work Session to discuss and rationalize this issue in order to bring the County's cost in line with other major municipalities in our jurisdiction. In the past, the Commissioners have not addressed this issue, and in his opinion, it is the responsibili ty of the Board to thoroughly study this matter in order to give the citizens a break in hauling fees. n \ . -/ It was agreed that a Work Session should be scheduled. BREAK Chairman Greer called for a break from 10:00 A. M. until 10:15 A.M. PRESENTATION OF 1991-92 ANNUAL REPORT FOR THE HUMAN RELATIONS COMMISSION Ms. Shirley Hart Berry, Chairperson of the New Hanover County Human Relations Commission presented the Annual Report for 1991-92. ~ MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 284 The following reports were presented: . -Administrative Program Review -Community Affairs Committee -Committee for Persons with Disabilities -Hearing Committee -Youth Today Advisory Committee -Community Housing Resource Board -Friends of Human Relations, Inc. -Human Relations Month In summary, the Human Relations Commission had a most successful year. As the only local agency in North Carolina authorized to investigate both employment and housing discrimination complaints, staff and members of the commission have worked diligently to see that the letter and the spirit of the law have been followed. The Hearing Committee completed its work in updating the Employment and Housing Code in compliance with THE AMERICANS WITH DISABILITIES ACT and THE CIVIL RIGHTS ACT OF 1991. The Commission conducted Fair Employment and Fair Housing Workshops to inform local businesses and industries of the components of these new laws. Also, in 1992 a controversial issue that needed defining was sexual harassment in the work place. Staff conducted training and investigated charges of such discrimination. The Human Relations Commission is proud of the award-winning annual Human Relations Month acti vi ties held in February. The Commissioners were complimented for appointing a student to serve as a member of the Human Relations Commission. . Chairman Greer, on behalf of the Board, expressed appreciation to the members of the Human Relations Commission, the Human Relations Director and Staff for an excellent job performed during the past year. Consensus: It was the consensus of the Board to accept the Human Relations Commission 1991-92 Annual Report. DISCUSSION OF RESOLUTION RELATING TO RACIALLY EQUITABLE SCHOOLS Ms. Shirley Hart Berry, Chairperson of the Human Relations Commission, presented and read a resolution adopted by the Human Relations Commission urging the Board of Education to retain a priority on the practice of providing racially non-segregated schools as def ined and accepted by the Supreme Court. The Commissioners were requested to adopt a similar resolution. Vice-Chairman Mathews commented on it being very appropriate for the Human Relations Commission to adopt the resolution and stated, in his opinion, with the Supreme Court Law mandating non- segregated schools, it is not necessary for the Commissioners to adopt a similar resolution. Ms. Berry emphasized the importance of preserving the quality of life in New Hanover County through the protection of non- segregated schools and stated a similar resolution was adopted by the Board of County Commissioners in 1988. . Commissioner Sisson emphasized the importance of all local governments supporting the laws of the state and nation and recommended adoption of a similar resolution supporting these principles. Emphasis was placed on the fact that human relations is an on-going issue that must be addressed at all times. Commissioner Caster expressed concern for adopting a resolution that will infringe on the responsibilities of the Board of Education and stated he heartily supports racially non- segregated schools but hesitates to tell other elected officials how to perform. their duties. ~ MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 285 Ms. Berry respectfully disagreed. She stated the school system often redraws the district lines; however, with any plan or redistricting, the Board of Education must understand that the County Commissioners believe that schools should not be segregated. Chairman Greer recommended developing a resolution that supports racially non-segregated schools but is not directed at the Board of Education. Emphasis was placed on the fact that the Commissioners and hopefully every member of the community strongly desire racially non-segregated schools. Ms. Berry stated this resolution has been presented to the Board of Education and is on their agenda for consideration at the January meeting; therefore, she does not feel the Board would consider the Commissioners infringing on their positions as elected officials by adoption of the resolution. Motion: After further discussion, accept the resolution as presented. LACK OF A SECOND. commissioner Sisson MOVED to The MOTION FAILED DUE TO A commissioner Sisson recommended amending the last paragraph of the resolution to state: "The New Hanover County Board of Commissioners retains as a priority the practice of providing racially non-segregated schools as enacted by the Supreme Court." This revision would not refer to the Board of Education but would affirm the support of the Commissioners. Chairman Greer recommended preparing a resolution stating the County will do everything possible to maintain racial harmony in the community, whether in the schools or in the work place. Emphasis was placed on the importance of upholding the laws of the land, but not becoming involved with the responsibilities of the members of the Board of Education. Consensus: After further discussion, it was the consensus of the Board to request the Human Relations Commission to prepare a resolution that will not be directed to the Board of Education but will endorse racial balance in the schools as well as in the work place. The resolution is to be considered by the Commissioners on February 1, 1993. Ms. Berry stated the Human Relations Commission will be glad to prepare a resolution as requested. STATUS OF GROUNDWATER STUDIES IN NEW HANOVER COUNTY Assistant County Manager, Dave Weaver, presented background information on groundwater reports and recommendations for developing a drinking water plan for New Han?ver County. The following recommendations were presented: -continue to develop regulatory means that will balance groundwater protection with industrial/commercial development. -continue to develop information needs and to pursue grant and cooperative opportunities with Federal and State agencies and local industries. -Develop a plan for committing to a County Drinking Water System. The State Government has data available for development of models to be used by the County. This data has been combined and the County is aware of the sensitive areas and the best location for a major well field if a County Drinking Water System is to be developed. If an aquifer overlay district is to be developed, a higher level of information must obtained detailing the primary and secondary aquifer areas. After meeting with the State, there is potential for developing a cooperative study with the State of ~ () () n. " /' MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 286 North Carolina. They are presently under contract with the U. S. Corps of Engineers for the deepening of the navigation channel in the Cape Fear River. The study could be expanded to include the northeastern portion of the County in order to obtain the information needed to develop a plan for a County Drinking Water System. . In summary, the County's groundwater resource is a precious asset and should be protected. The County should continue to work with the State in collating information needed for development of a groundwater model utilizing a consultant to prepare a feasibility study for the cost of a. County Drinking Water System. Discussion was held on the cost of a groundwater study. Chairman Greer commented on the need, but expressed concern for spending thousands of dollars at this time. He recommended encouraging local industries to participate in the financing of a groundwater study. commissioner Sisson reported on this being an opportune time to work with the State, the City of Wilmington, and local industries for expanding the study with the Corps of Engineers. Assistant County Manager Weaver stated to obtain groundwater data in this area of the County with funding participation by industry would be valuable; however, a majority of industries are not located in this area. Funding for the study can come from the Water & Sewer District Budget, and the County could enter into a County Drinking Water System by purchasing existing commercial drinking water systems and sinking County wells in selected areas. . Vice-Chairman Mathews commented on the availability of groundwater and stated a plan should be developed for protection of this valuable resource. Discussion was held on the Cape Fear River Drainage Basin carrying the second highest pollution load of any river basin in the state. Commissioner Sisson reported on the impact of continued large scale development upstream on the Cape Fear Ri ver and recommended pursuing a joint venture study with the State to ensure clean drinking water. commissioner Barone recommended performing a study in the following three phases: I. Collect and combine the data available which should require six months. II. Analyze the combined data, which will require six to twelve months. III. Placement and monitoring of wells can be done at a later time. . commissioner Barone commented on the U. S. Geological study including many items that were beyond the scope of service for the County and recommended contracting with groundwater experts to assist with the performance of Phases I and II, which should not be too costly. Emphasis was placed on the need to begin the planning stage for development of a drinking water plan. Commissioner Barone also commented on the fact that she had requested the Assistant County Manager to place this item on the agenda with copies of groundwater reports relating to the status of groundwater in New Hanover County. When reviewing backup data, information was included on recommendations from the proposed Land Use Plan Update. Concern was expressed for presenting this information when public hearings have not been held on the Land Use Plan Update, nor has the final plan been adopted by the City and County. Commissioner Barone cautioned the Planning Department ~ ~ ( I MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 287 about providing additional information in a draft form concerning down zoning from industrial to residential, which, in her opinion, is a knee-j erk reaction and a no growth policy. Also, she expressed concern for a paragraph in a report presented by the Assistant County Manager referencing the OxyChem incident in 1985 and stated this statement should be corrected. The contamination was in a start-up mode, it was an accidental one-time occurrence and was not discharged, nor did the contamination ever leave the plant site. OxyChem performed an outstanding job in working with the state Environmental Office to properly clean up the site. Commissioner sisson disagreed and expressed appreciation to the Planning staff for including this information. The general public and commissioners are aware that OxyChem has performed an excellent job in rectifying the contamination problem; however, simply stating the fact that a problem did occur is not a knee-jerk reaction when there was potential for a real contamination problem. Motion: After further discussion, Commissioner Sisson MOVED, SECONDED by Commissioner Barone to direct staff to invite the City and local industry to join the County in requesting the state to expand its present study to include analyzing and combining existing data and to gather future data for development of a county drinking water plan. All groups will be requested to participate in financing of the state's expanded study. Upon vote, the MOTION CARRIED UNANIMOUSLY. Mr. Jim Vithalani, an engineering consultant, urged the Board to pursue development of a groundwater study for drinking water in New Hanover County. The State, City, County, and local water companies have voluminous information on the County's groundwater but have not combined this data for analysis. Emphasis was placed on the need to begin a preliminary study as soon as possible. TAX APPEAL BY WILMINGTON COCA COLA Tax Administrator, Roland Register, presented background information on the appeal and reported that Wilmington Coca Cola (Coke) was audited by New Hanover County staff members, Bruce Shell and Walter Ward, since Coke did not allow Tax Management Associates (TMA) to perform an audit. It is the contention of Coke and their accountant, willis Hardesty, that the accounting ledgers had been incorrectly maintained since old equipment had not been written off of the records for the past 20 years. The N. C. Department of Revenue requires counties to review the official accounting records during an audit. The County cannot accept what a taxpayer intended to do, but must accept the facts of the official records. It is not proper to allow a business to retroactively change their annual reports for property-tax purposes. In this case, the County has given unusual consideration by allowing Coke to write off $1.2 million in 1992 and $1.7 million in 1991 feeling that the company was trying to correct their records; therefore, it is the recommendation of the Tax Department to uphold the findings of the audit and penalties. Also, the Tax Department just learned last week that coolers are considered as vending machines; therefore, the coolers will have a 5-year life instead of a 10-year life which will reduce the tax by $18,778. Attorney Rex Willis, representing Wilmington Coca Cola, reported on the tax appeal and stated it is important to understand that the general ledger was not correct when the audit was performed. This was an omission on the part of the bookkeeper; however, the Tax Administrator would like to tax Coke for property listed on the general ledger not for property owned and used by Coke as stated in the tax law. The old vending machines, coolers, and pre-mix equipment carried on the books have not been removed from the books for the past 20 years. wilmington Coca Cola met with the Tax Administrator in October, 1992 to request additional time to prepare documentation that would verify the property now being used and owned by Coke. Emphasis was placed on the fact that Coke has not attempted to conceal or be dishonest with the general ~ o () () MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 288 ledger. In November 1992, an audit was conducted by the accountant, willis S. Hardesty and Ms. Connie B. Tyndall of Wilmington Coca Cola with subtractions and deletions in order to determine the actual amount of property owned and used by Wilmington Coca Cola. The results of the audit reflect that Coke has paid taxes on $3,000,000 worth of vending machines, coolers, and pre-mix equipment that were not actually used and owned by Wilmington Coca Cola. The Commissioners were requested to adjust and settle the tax liability of Wilmington Coca Cola at taxes already paid. Tax Administrator Register reported the County cannot accept a physical audit as of November, 1992 to refute the official records of the company for the prior four to five years. The County has allowed write-offs for fiscal years 1991 and 1992. Chairman Greer inquired as to why write-offs were given for only two years, 1991 and 1992? Tax Administrator Register stated no accounting records were available to support write-offs for prior years other than 1991 and 1992. Internal Auditor, Bruce Shell, reported on reviewing the general ledgers as of 1987-1992 with the determination that a higher amount of equipment was owned than listed. This issue was discussed with Mr. Hardesty who informed the County that he had a difficult time writing off assets due to poor records. The County has made a considerable adjustment by allowing write-offs of $1.2 million being applied back to January 1, 1992, and $1.7 million being applied back to January 1991. He also commented on the trend schedule used by the N. C. Department of Revenue, which is the cost of assets adjusted for their age, and stated if equipment is very old and fully depreciated for financial purposes it is of no value; however, for tax purposes the Department. of Revenue does not allow property to depreciate below 25%. There are assets on Coke's books that were not written off that are being taxed by the County at the 25% residual. Mr. Willis stated no write-offs have occurred for 20 years; therefore, Coke feels the physical inventory as of November 1992 is the best evidence of the property owned. Coke has performed this inventory with no attempt to change accounting records. Coke has paid property tax on more equipment than owned. Attorney Dan Brawley, representing Wilmington Coca Cola, commented on requesting an extension of time in order to properly prepare figures and stated this request was not granted by the Tax Administrator. The point to consider is that taxes are paid on property owned. Coke is requesting the County to allow the company to pay taxes on property owned, not on what is provided by the general ledger which everyone knows is in error. Actually, Coke has overpaid. Tax Administrator Register commented on the additional information presented by Mr. Hardesty and stated if the County cannot depend on the general ledger certified by a public accountant, what can the Tax Department accept as a record. Mr. willis Hardesty, a Certified Public Accountant for Coca Cola, reported on the 1986 merger of Coke when he became their accountant. Coke was keeping books and records on assets acquired in the general ledger as a group listing. There was no individual listing for each piece of equipment or depreciation schedule for each piece of equipment. When bringing this matter to the attention of management, he was informed a computer system was in the process of being installed with a number of years required to accurately reflect. a fixed asset or depreciation schedule on each piece of equipment. The only machines deducted were machines that could be verified. An appointment was scheduled with Tax ~ MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 289 Administrator Register and Mr. Shell; however, when calling to verify the appointment, he was informed they would be out of the office for two weeks and that he should provide actual documentation of Coke's listings in other counties. Other counties were contacted and this information was obtained. When meeting with the Tax Administrator, no discussion was held, but he was informed there would be no negotiation. After working as a Certified Public Accountant for 30 years, he has never met a Tax Administrator who was not willing to talk or discuss a problem. After taking a physical inventory, using small cards showing the names of each vending machine, cooler, or pre-mix machine, the schedule prepared is a certified and verified record of equipment owned. () Commissioner Caster inquired as to the amount of the penalty? Internal Auditor Shell stated with the deduction for the life of the coolers, the tax is now $42,000 including a $10,000 penalty. He also reported that Coke was requested to obtain figures from other counties in order to give them the benefit of showing what was correctly written off. When receiving large write-offs, consideration was given. Chairman Greer expressed concern for applying a penalty when the tax has been paid and stated Coke is a good employer of the community and certainly tries to abide by the law. Concern was also expressed for the possibility of driving this business out of New Hanover County. commissioner Sisson, the owner of a small business, stated he is required to keep meticulous records. If proper records are not maintained, the accountant will not prepare his taxes. Emphasis was placed on applying tax standards fairly to everyone in the County and the fact that New Hanover County cannot be held responsible for Coke not maintaining accurate records. () Motion: Commissioner Sisson MOVED, SECONDED by Commissioner Caster to uphold the findings of the audit and penalties. The floor was opened for discussion. Chairman Greer expressed concern for charging the penalty. Tax Administrator Register expressed concern for setting a precedent and stated penalties in the past have not been released to other firms. The Board was urged to uphold the uniformity of the law. Upon vote, the MOTION CARRIED AS FOLLOWS: Voting Aye: Commissioner Caster commissioner Sisson Vice-Chairman Mathews Voting Nay: Commissioner Barone Chairman Greer BREAK Chairman Greer recessed the meeting from 10: 58 A.M. until 11:14 P.M. o TAX APPEAL BY MID-ATLANTIC YACHTMASTERS, INC. Tax Administrator, Roland Register, reported that Mid-Atlantic Yachtmasters, Inc. was chartered in April 2, 1990. The President of the company, L. H. Kirksey, owns and operates several funeral homes in Morganton, North Carolina. He does not report any business property or real estate ownership in New Hanover County. and in Morganton, he is a mortician, not a boat dealer.. Mr. Kirksey previously owned a 40' plus Hatteras yacht, then purchased a replacement which was a 46' yacht. Upon purchase of the discovered "inventory" boat, he sold the 46' yacht without ~ MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 290 . replacement. After review, it is the opinion of the Tax Department that Mr. Renn and Mr. Kirksey are not boat dealers in the regular course of business. This partnership may grow into a business, but as of this date, the primary business for Mr. Kirksey is a mortician and the primary occupation for Mr. Renn is a fleet captain for the Bald Head Island Ferry; therefore, the boat should not be considered exempt inventory held for sale in the regular course of business. The discovery should be upheld and penalties applied. Mr. James Renn, a partner & General Manager of Mid-Atlantic Yachtmasters, Inc., presented a copy of the Articles of Incorporation, the Bill of Sale to Mid-Atlantic Yachtmasters, Inc. and a copy of the N. C. Registration card and inquired as to whether these documents had been copied to the Commissioners? Tax Administrator Register stated Mr. Renn's letter was furnished to the Commissioners; however, the other documents were not copied since the Tax Department did not feel it was necessary to provide this information. . Mr. Renn reported on leaving employment with Wilmington Water- Crafts as a salesman to serve as the General Manager and Secretary for Mid-Atlantic Yachtmasters, Inc. In October, 1990, Mid-Atlantic Yachtmasters, Inc. participated in the Fort Lauderdale Boat Show as a Hyatt Dealer. An order was placed for the first dealer yacht. The 1991 45' Hyatt arrived in February 1991 at the Port in Miami, Florida. The boat was outfitted in Ft. Lauderdale by Mid-Atlantic staff and then entered in the February 1991 International Boat Show in Miami. At this show, Mid-Atlantic Yachtmasters, Inc. sold a 40' Hyatt. For the last three years, sales have been so poor, that he had to become a fleet captain for Bald Head Island. Since August 1991, the company has been trying to sell the boat. Mr. Renn stated when demonstrating the boat for persons interested in purchasing the boat, Mr. Kirksey has not been on most trips; however, Mr. Kirksey is retiring and intends to promote the business. Emphasis was placed on the fact that the company is in business and that the boat is not used for personal use. commissioner Barone inquired as to the number of hours on the boat since it has been docked in Wilmington. Mr. Renn stated the boat has less than 10 hours which can be documented. Motion: After further discussion, commissioner Barone MOVED, SECONDED by Chairman Greer not to concur with the recommendations submitted by the Tax Administrator and to release the discovery and penalties. Upon vote, the MOTION CARRIED UNANIMOUSLY. . PUBLIC HEARING TO RECEIVE COMMENTS ON PROPOSED REFUNDING BONDS OF THE COUNTY OF NEW HANOVER Finance Director, Andrew J. Atkinson, reported on the opportunity for the County to hold an advance refunding bond issue in the amount of $5,500,000. Advance refunding is a technique whereby new bonds are issued at a lower interest rate and held in escrow to pay the old bonds at their call date. The County can potentially save approximately $433,800 in interest by the refunding process. commissioner Barone expressed appreciation to the Finance Director for proceeding with the refunding bond issue. Motion: Chairman Greer MOVED, SECONDED by Vice-Chairman Mathews to open the Public Hearing. Upon vote, the MOTION CARRIED UNANIMOUSLY. Chairman Greer opened the Public Hearing and inquired as to whether anyone from the general public would like to comment. ~ / I I ~INUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 291 No comments were received. Motion: Chairman Greer MOVED, SECONDED by Vice-Chairman Mathews to close the Public Hearing. Upon vote, the MOTION CARRIED UNANIMOUSLY. Chairman Greer closed the Public Hearing. MEETING RECESSED TO HOLD A MEETING OF THE NEW HANOVER COUNTY WATER & SEWER DISTRICT Motion: Commissioner Sisson MOVED, SECONDED by Commissioner Caster to convene from Regular Session to hold a meeting of the New Hanover County Water & Sewer District. Upon vote, the MOTION CARRIED UNANIMOUSLY. Chairman Greer convened from Regular Session at 12:01 P.M. Motion: commissioner Barone MOVED, SECONDED by Commissioner Caster to reconvene to Regular Session. Chairman Greer reconvened to Regular Session at 12:31 P.M. APPOINTMENT OF VICE-CHAIRMAN E. L. MATHEWS, JR., TO SERVE AS AN EX- OFFICIO MEMBER ON THE BELLAMY MANSION, INC. BOARD OF DIRECTORS Consensus: It was the consensus of the Board to appoint Vice- Chairman E. L. Mathews, Jr. to serve an ex-officio member on the Bellamy Mansion, Inc. Board of Directors. APPOINTMENTS TO THE STRATEGIC PLANNING COUNCIL Chairman Greer reported that two vacancies exist on the Strategic Planning Council in the category of a religious leader and member of the community at-large. To maintain the concept of receiving input from various segments of the community, new appointees should represent the categories named. Consensus: After discussion, it was the consensus of the Board to delay these appointments since this request has been presented as an additional item with no listing of the applicants. DISCUSSION OF COUNTY SEAL Vice-Chairman Mathews inquired as to whether the Commissioners have officially decided not to change the seal? County Manager O'Neal stated staff is under the impression that the seal is to remain unchanged and is in the process of preparing a banner for the 200th Anniversary Celebration of the University of North Carolina at Chapel Hill. Vice-Chairman Mathews also inquired as to whether the Board would like to proceed with erecting signs displaying the County's seal when entering New Hanover County. After discussion, staff was authorized to pursue this issue. Discussion of Swales in the wrightsville Green Subdivision Vice-Chairman Mathews commented on the drainage problem being experienced in the Wrightsville Green Subdivision and inquired as to whether any progress has occurred? Assistant County Manager, Dave Weaver, reported on the County Engineer being contacted by a homeowner who has requested the County to 'determine if swales were properly placed in the subdivision by the developer. This procedure will be a difficult task; however, the County Engineering office is going to investigate the matter. The answer to this question will determine who will pay for drainage improvements. If the swales were not placed as proposed in the subdivision, the developer will be responsible for payment of drainage improvements; however, if the swales were there and filled in, the homeowners will be responsible ~ o () o ~ MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 292 for drainage improvements. . commissioner sisson inquired as to the amount of time that will be required to complete this process and stated the homeowners have requested documentation that will allow them to hold the developer responsible if swales were not properly placed as required by the drainage plan. Assistant County Manager Weaver stated staff will work on this project during the coming week. Chairman Greer expressed concern for being able to determine if swales were in place five years ago and stated the question to be answered is whether the County signed off on the plan when all drainage improvements had not been satisfactorily performed. Concern was expressed for possible liability to the County, not only in this case but in all cases, if plans are not in compliance before receiving final approval. Commissioner sisson stated the residents are not asking the County to pay for replacing the swales, but they need official documentation to determine who is responsible for drainage improvements. Assistant County Manager Weaver stated the homeowners have been informed that the County will not be responsible for drainage improvements. . Discussion was held on being able to determine if the swales were originally placed in the subdivision. Assistant County Manager Weaver stated the County Engineer who inspected the subdivision five years ago cannot actually remember that all swales were in place; however, when checking the subdivision next week, some areas will show that swales were installed. There will be a few areas that probably do not have swales, but it will have to be determined if swales were necessary at that time. Vice-Chairman Mathews inquired as to whether the original drainage plan showed where swales should have been placed? Assistant County Manager Weaver stated the original plan specified roadside swales along all the roads. Chairman Greer, again, expressed concern for signing off of the plan without knowing that all requirements have been completed. Assistant County Manager Weaver stated a check list has been developed to specify the types of improvements on the final plat as to whether or not all work has been performed. In the past, the subdivision was inspected by an Inspedtion Engineer who simply stated the final plat was in order with no check list. Commissioner sisson commented on the County Engineer signing off on the final plat with all items checked and the developer later selling lots to another developer who may fill in the swales, and inquired as to how the County can prevent this type of situation from occurring? . Assistant County Manager Weaver stated once improvements are inspected for final plat approval, the County is no longer responsible for the future development of the subdivision; however, Wrightsville Green was unique since it was developed as a high density project which requires a site plan through the Zoning Ordinance. In high density development, the site plan becomes a part of the Zoning Ordinance which requires on-going enforcement. by County staff so that building permits can be issued or denied based upon compliance to the Zoning Ordinance. commissioner sisson inquired as to whether the County is enforcing the Zoning Ordinance in this sit~ation? j MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 293 Assistant County Manager Weaver stated the County is enforcing the Zoning Ordinance by requiring the developer to deposit $8,000 and no further issuance of building permits or certificates of occupancy until the drainage is corrected. A drainage plan has been submitted by the developer and has been reviewed by County staff and by an engineer for the homeowners. The status of the plan is still under negotiation between the homeowners and developer. Mr. Dan Dawson, a local engineer assisting some individual homeowners in the Wrightsville Green Subdivision, reported on a final plat being recorded in order for lots to be sold. The plat was recorded after County staff reported that improvements had been made. During the past five years, there have been questions as to whether all .improvements are in place. An item not addressed by the Subdivision Ordinance is when the Homeowners Association actually takes over the common property, the roads, drainage swales, etc.; therefore, the developer continues to build and at some point he does not have a majority of control over the common area. In this case, Wrightsville Green Subdivision is at the breaking point where the private lot owners will begin to pay the bill. The developer is claiming that all County requirements were satisfied with signing off of the plat; therefore, he has no further responsibility. The homeowners are requesting evidence to show that swales were as required in the original drainage plan. When the developer attempted to close some lots, the County informed the developer of its dissatisfaction with the level of completion of drainage improvements and required the developer to post an $8,000 bond and submit a plan to correct the drainage problems. A plan has been submitted with an estimated cost of $16,000. () In summary, this is a complicated issue and it is important to encourage all parties involved to work together. Progress has been made with the parties, and the residents are pleased with the most recent communication and dialogue being held with the County. This is a nice development and the residents are concerned about the Homeowners Association having to pay the developer's expenses. () Chairman Greer inquired as to whether the County should require the developer to post a bond when establishing a subdivision to ensure that all improvements are completed? Mr. Dawson stated in this case private roads are involved; whereas, if state maintained roads were involved, all improvements would have been completed and the roads would become state dedicated and accepted by the State Highway Maintenance System based upon certain criteria. He again stressed the importance of the Subdivision Ordinance not clearly defining when the Homeowners Association takes over the maintenance of common property. Assistant County Manager Weaver agreed with Mr. Dawson and stated it is felt that a compromise is being worked out among the parties involved. Also, additional amendments to the Subdivision Ordinance will be forthcoming. One approach to consider is requiring the engineer of record for the subdivision to certify that the improvements were built according to the plan. This would remove the responsibility from the County and avoid having to hire additional staff. () Vice-Chairman Mathews inquired as to the amount of funds needed to install a proper drainage plan? Mr. Dawson stated the drainage improvements of $16,000 consists of only a few swales, pipes, and ditches, but design of a drainage plan could cost as much as $50,000. Vice-Chairman Mathews inquired as to the number of homeowners in the association? . . . ". ~ MINUTES OF REGULAR MEETING, JANUARY 19, 1993 PAGE 294 Mr. Dawson stated there are approximately 30 homeowners. Some homeowners are in excellent shape; however, another group of homeowners are in desperate need of drainage improvements before the Homeowners Association takes over the common area. It was generally agreed that the County Engineering office should proceed with determining if the swales have been placed according to the original plat. Also, the Planning Staff should review the Subdivision Ordinance to implement regulations that will avoid situations of this type in the future. ADJOURNMENT Motion: Vice-Chairman Mathews MOVED, SECONDED by Commissioner Sisson to adjourn. Upon vote, the MOTION CARRIED UNANIMOUSLY. Chairman Greer adjourned the meeting at 12:59 P.M. ~::;ked. Lucie F. Harrell Clerk to the Board j