Sunburst Trout Farms in Haywood County plans to add jobs and expand its operations thanks to a grant from the U.S. Department of Agriculture.

The farm received a nearly $300,000 Value Added Producers Grant from the USDA to help expand its market, namely finding new customers to buy more trout. The grant will help with everything from hiring a sales person to the upfront cost of trout fingerlings, which are then raised to full size at the farm.

Sunburst, founded by Richard Jennings, is a third generation family owned and operated company that processes fresh ready-to-cook and ready-to-eat trout products.

“The main goal is to stabilize things financially here,” said Sunburst’s Chef Charles Hudson. “We couldn’t have done it without that funding.”

The project, which will begin in April, will include purchasing more trout fingerlings, hiring new marketing and processing workers and installing new software to increase ordering efficiency. The plan is estimated to cost $500,000. The company was awarded $10,000 from the North Carolina Value-Added Cost Share Program in addition to the USDA grant.

Sunburst in particular hopes to increase business during winter months. The months of January, February and March are typically very slow for everyone in the mostly tourist-dependent region. The majority of Sunburst’s customers are within three hours of its Haywood County location.

But if the company is able to spread to new states, it could see more money rolling in throughout the year. One possible market is Florida, which gets a seasonal influx from people trying to escape the winter chill elsewhere.

“They (Florida) are busy when we are slow,” Hudson said.

Sunburst does not hatch its own trout from eggs but rather purchases them from trout hatcheries in Western North Carolina. The grant will allow them to increase the number of fish it purchases and therefore the number of trout it is able to sell.

Sunburst hopes to add about 100 new customers a year with the help of the grant funding.

To market the extra fish, Sunburst will also create a new marketing sales position. The job will include extensive travel and focus on expanding the company’s current market in the Southeastern U.S. Most of Sunbursts customers are restaurants, though their products are also available at some grocery stores.

Sunburst will add another two other positions to help carry the extra workload at its facility.

Last year, Sunburst sold about 250,000 pounds of trout. This year, it hopes to sell more than 300,000 pounds, Hudson said.

“It’s going to be a really good thing for not only us but for the county as a whole,” Hudson said.

Driving down Maggie Valley’s main drag, it’s hard not to notice the gauntlet of signs offering cheers of support for Ghost Town in the Sky’s new owner Alaska Presley.

Business owners on both sides of U.S. 19 have rearranged the lettering on their message boards to thank or bless Presley for vowing to reopen Ghost Town, an amusement park that symbolizes past prosperity in Maggie Valley.

“It makes me feel good,” Presley said of the encouraging notes.

Ghost Town has been closed for two years after going into bankruptcy but was purchased earlier this year by Presley who plans to reopen the park that once brought droves of visitors to Maggie Valley.

Weeds and other plant life have grown up around Ghost Town’s attractions, adding to its unkempt look. As she toured the park last week, Presley pointed out bushes and trees that would need to come down or be trimmed back and areas where brush must be cleared. Presley has already hired workers to tackle the greenery and is looking for contractors to make other necessary repairs.

With a listed population of 681, the mock Wild West Town sits at an altitude of 4,600 feet. While obviously a victim of harsh mountaintop weathering, vandals left the most apparent blemishes — broken windows, doors and doorframes, and residue from fire extinguishers — throughout the small fictional town.

“The buildings to me seemed in pretty good shape,” said Teresa Smith, executive director of the Maggie Valley Chamber of Commerce, adding that most of the work looked cosmetic.

Presley estimated that $2,500 worth of glass had been smashed but feels better now that she owns Ghost Town and can take action against any trespassers.

“Now, I can do something whereas before I didn’t have the authority,” Presley said.

Presley has dreamed of owning Ghost Town ever since its original owner put it up for sale 10 years ago. It was shuttered for three years, reopened under new owners for a couple of years, but then fell into bankruptcy and was once again closed. Presley rescued the park after striking a well-planned financial arrangement with BB&T. While BB&T was owed $9.5 million by the previous owners, Presley bought it last month for just $1.5 million.

But her work has only begun, as she embarks on a legacy project for the valley she loves: to restore the park to its former glory. The price tag is unknown, but she plans to tap her personal assets for the initial work.

Presley had previously remained quiet about some of her plans for Ghost Town’s revival but last week revealed her hopes to turn the highest of the park’s three levels into a religious-themed attraction.

The top level currently houses a concert hall, kiddy rides and Native American village. However, Presley plans to move the children’s rides to Ghost Town’s lowest level, where other rides currently reside, and get rid of the village.

In their place, Presley said she hopes to build large gold and white concert hall where people can hold religious events or performances. If her dream becomes a reality, the mountaintop would be crowned with statue of Jesus with a similar look to the one in Rio De Janeiro, Presley said.

A very long to-do list

For now, Presley is focused on getting Ghost Town’s core attractions up and running — fixing up the Old West town and getting the parks’ rides in working order — in hopes of a summer opening.

All the amusement rides, including the park’s signature roller coaster and its all-important chairlift that takes tourists up the mountain, must pass inspection with the N.C. Department of Labor. That had proved a hurdle for past owners, partly because of a strained relationship.

To get the ball rolling, Presley invited Cherie Berry, the state labor commissioner, to tour the amusement park last week along with Maggie Valley leaders and media.

During the tour of Ghost Town, Presley and Berry were “laughing, cutting up and holding hands,” Smith said. “That will be a really good working relationship.”

Representatives from the Department of Labor said they were not surprised by the appearance of the park. The equipment looked much like they thought it would, considering the weathering it has undergone during the past two years, said Tom Chambers, chief of the Elevator and Amusement Device Bureau at the Department of Labor.

State officials have not been asked to conduct comprehensive tests on Ghost Town attractions as of yet and therefore could not provide opinions on how much or what type of work the rides need. It is still up-in-the-air as to which rides still work.

“I don’t know what’s good and what’s not good,” Presley said.

No matter what, however, it is clear that Ghost Town still has its fans who will show up to visit the park when it opens. The Maggie Valley Chamber still receives messages everyday asking if Ghost Town is open.

Once Presley is able to fix transportation up the mountain, “I think people will be excited just to hear that the chairlift and incline are running,” Smith said.

As well as repairing the transit, however, Presley will need attractions that will draw all ages. One such addition would be a zipline, which Presley hopes to incorporate before opening.

A zipline would be “awesome,” Smith said. “The thrill lovers would love it.”

Waynesville leaders are looking for a way to keep guns out of town parks and recreation centers despite changes in the state’s conceal carry law that allow guns in more places than before.

A new state law stipulating where concealed weapons can and can’t be carried seem to leave a gray area when it comes to town parks. The town of Waynesville has always banned concealed weapons at town parks and would like to keep doing so but likewise doesn’t want to go against the new state law.

The law passed last year prevents concealed guns from being carried in recreational and athletic facilities and schools. And, under the law, weapons are legally allowed in some formerly prohibited places such as bars and state parks. While the state tried to be specific where guns are banned, however, the verbiage is ambiguous in some respects.

“There are a lot of questions in our mind, ‘what is an athletic facility? Is a dog park an athletic facility?’” said Town Manager Lee Galloway during a meeting with town leaders earlier this month.

The town’s recreation center on Vance Street and the nearby baseball and soccer fields could be classified as athletic facilities and still ban weapons. The dog park, which is completely surrounded by athletic facilities, would also remain gun free.

Prior to the state law change, Waynesville already had an ordinance in place that prevented people from carrying concealed weapons in town parks.

Several North Carolina communities, including Blowing Rock and Hickory, have begun to question the legislature’s decision, he said. Some town boards have decided not to loosen their ordinances to fall in line with the state.

“It has pretty well been concluded that this will end up in court at some point,” Galloway said.

Mayor Gavin Brown asked the town attorney to draft an ordinance even though a likely court battle over the legislation would leave a final outcome up in the air. And, if the town passes the new ordinance before the matter is resolved, the board can simply adjust it as needed.

“We can change the ordinance” if necessary, Brown said.

Despite any arguments over gun rights, the fact remains that neither Waynesville nor any town in North Carolina has had a problem with permitted gun-toting individuals. Those with permits generally obey the law with respects to their weapons and only use it for protection.

Police Chief Bill Hollingsed said he could not find incidents involving a permitted carrier using a gun at a sporting event or in a park.

“I can’t say that we have a big problem with this; we can’t find any city in the state that has a problem with this,” Hollingsed said.

The people that the town and police need to be concerned about are those who do not have permits but carry a weapon anyway, the town board agreed. The law will not prevent that individual from committing a crime.

“You worry about the people who are going to carry a concealed weapon no matter what the law is,” Hollingsed said.

Keeping a roof over the head of Haywood County’s nearly 8,000 students is getting harder every year as the school system grapples with funding cuts at both the state and county level.

With 16 schools, it’s wise to stay on a steady rotation of replacing a roof every one to two years. Go four years without replacing one, and it is catch up time.

“Then where is the money going to come from? Instead of $1 million project you are looking at a $3 to $4 million project,” said Chuck Francis, chairman of the Haywood County school board. “Now we are at the point where somebody is going to have to step up our schools are going to start going down.”

That’s exactly the message school leaders will be taking to county commissioners this year as they lobby for their maintenance budget to be restored. The county’s annual $600,000 maintenance and repair budget for school buildings was cut to $200,000 four years ago.

“We have to buy light bulbs and fix broken pipes. It’s fixing door knobs and changing locks and keys, and replacing windows that get hit with a rock,” Assistant Superintendent Bill Nolte said. “It is just on and on and on.”

SEE ALSO: Where do schools rank?

Commissioners don’t doubt the schools need the money.

Falling behind on upkeep will eventually catch up with the county, agreed County Commissioner Mike Sorrells, a former school board member.

“The longer you prolong this the more behind they are going to get,” Sorrells said. “If you don’t do your preventive maintenance you are going to end up with a huge backlog. So it is like the saying goes ‘pay me now or pay me later.’”

But in this case, the county may have to take the “pay me later” approach, depending on how the coming year’s budget shapes up. (see related article.)

Another routine expense the school system once kept on a regular schedule is replacing activity buses used for field trips, band trips, sports teams and the like. Those activity buses have to come from local dollars — and the money to replace them hasn’t been there.

“We had a schedule plan to increase that, and that has been frozen for three years,” Francis said.

Assault on all fronts

The school system has also lost a pot of state money for building maintenance, repairs and small capital projects. The state once earmarked a share of corporate income tax for school systems, divvied up based on school population around the state.

When the recession hit, the state started keeping that money for itself — resulting in a loss of $270,000 a year.

That puts the school system out a total of $670,000 in building needs.

Meanwhile, however, the Haywood school system has gotten a boost from lottery money. The school got more than $1.4 million last year in lottery money to use for maintenance and capital projects.

When the state started a lottery six years ago, lawmakers promised the money would be a boon for education. Lottery money would not supplant current funding but would be stacked on top of the funding schools already got, lawmakers promised.

Ultimately, it appears lottery money has supplanted other sources of school funding after all, even though it wasn’t supposed to.

Operational money

In addition to school building construction and maintenance money, the county also gives the schools money for operations, nearly $14 million a year. It hires extra teachers that the state won’t pay for, school secretaries, janitors, supplies, and myriad other operational costs not covered by base state funding.

While the county hasn’t cut the schools’ operational budget, it hasn’t grown any either.

About eight years ago the county brokered a deal with the school system designed to curb what had become an annual fight over how much money the county would pony up. Under the deal, the county would use a formula based on student population to determine school funding each year. The formula also built in a 1 percent increase year to year. But it has been frozen for the past 4 years.

Commissioner Mark Swanger, who at the time had just gone from school board chairman to county commissioner, came up with the idea of a formula.

“The formula worked great,” Sorrells said. “Every year, the school system was able to say we are expecting this amount of money.”

Sorrells saw real progress during those years of better funding.

“So it has been disheartening to have to cut back and cut back,” Sorrells said.

Schools got only a brief and passing mention by Haywood County commissioners during a brainstorming session last week on priorities for the coming year.

Education came up near the end of a free-wheeling 90-minute discussion, with only two to three minutes spent on the topic.

County commissioners later said that education is top priority, however, and its short and late mention in their discussion is no indication of the importance they ascribe to it.

“With this board, schools have been at the top,” said Commissioner Bill Upton, former superintendent of the school system who was a career educator.

Commissioners said their commitment to the schools goes without saying — literally — thus they really didn’t need to say very much about it.

“That’s a matter that we know every year is at the top of our to-do list. It is just always a priority,” said Commissioner Mark Swanger. “It is just a given.”

Of the five commissioners, three have been leaders in the school system. Upton as superintendent, principal and teacher; Swanger as school board chairman; and Sorrells as a former school board member.

Sorrells agreed that schools are “a given.”

SEE ALSO: Lottery money hardly a win for schools

“Boom — that is part of the budget,” said Sorrells. “Historically, Haywood County has always, always supported education, and I feel like our board is still very much in tune to that.”

Sorrells was the one who brought up education in the 11th hour of the priority-setting budget discussion. He realized education hadn’t been mentioned yet and didn’t want the meeting to slip by without at least some acknowledgement that schools would be attended to.

“Albeit it come up at the end, but it come up,” Sorrells said.

The school system has been saddled with funding cuts at both the state and county level. Haywood County Schools has lost 129 positions and $8 million compared to its pre-recession days.

Meanwhile, commissioners have pledged not to raise taxes, so the prospect of more school funding could be slim, even though commissioners said philosophically they wish they could restore cuts to the school’s budget.

“But how in this economy when people are struggling do you come up with that extra money?” Sorrells asked. “I am torn between that. It is a Catch 22 for me.”

Chuck Francis, chairman of the Haywood County school board, said he empathizes with commissioners who are still handcuffed by the economic realities of the time. However, Francis hopes lost funding can be restored, as cuts are starting to take their toll.

“We’ve got a great school system here, and we need to protect it,” said Francis. “It is a selling point for the county. If we lose a good school system, people don’t want to move here. They won’t want to work here.”

Top of the list?

With Haywood commissioners pledging not to raise property taxes, it leaves little wiggle room in next year’s budget. No new money coming in means no new money to go around.

There may be a little extra money — little being the operative word — if an uptick in spending stays on track to bring in more sales tax this year compared to last. A modest number of new houses and businesses being added to county tax rolls will also bring in a little more property tax.

The debate will likely come down to who — or what — will get first dibs on that little bit of extra money.

“I don’t know yet. I think we are still a little bit early,” Swanger said.

The majority of commissioners have indicated cost-of-living raises for county employees may top the list if there is any money to go around.

“One thing we will look at is county employees — the 501 county employees who haven’t gotten a raise,” Upton said.

County employees have not gotten an across-the-board cost of living increase in five years.

“Our employees have sacrificed a lot, being asked to do more with less and getting paid less as gas and other things are going up. I would like to see us help our employees some if at all possible,” Swanger said during budget discussions last week.

The county has awarded merit raises to particularly deserving employees, those who have taken on additional responsibilities or proven particularly exceptional.

“They realize we do have some real high performers and people are doing more,” County Manager Marty Stamey said.

Teachers would probably like to see pay raises too, but haven’t seen one in four years.

“Of course, the teachers’ pay scale from the state has been frozen,” Francis said.

In Haywood County, school teachers get a local bonus —  4.5 percent of the base salary from the state. These supplements are supposed to attract better teachers. While higher than many counties its size, Haywood’s teacher salary supplement is still lower than most of the state’s more urban counties — and lower than Buncombe and Asheville.

Haywood County commissioners and the school board pledged to work together to increase the local bonus a little each year until Haywood County caught up. That plan was sidelined with the recession, however.

Morally, it would be difficult to lay off even more people to afford raises for everyone else, Assistant Superintendent Bill Nolte said.

“As far as I am concerned, how in the world can we increase the supplement when we have lost 129 employees,” said Nolte, citing the toll on the workforce in Haywood’s school system since 2008.

The county likewise has laid-off staff — more than 50 positions have been cut in four years.

Commissioner Kirk Kirkpatrick said giving employees raises is an admirable goal, but he pointed out that in this economy, jobs are hard to come by, and there are always plenty of applicants for any open position the county has had.

Still, with the majority of commissioners reflecting a desire to give employees raises with the little bit of extra money in its coffers, the best-case scenario for the schools may simply be no more cuts.

“We all want to keep it at least where it is,” Upton said. “I am thinking our mindset is we just want to maintain. Maintain — that is the big thing from our budget session.”

Sorrells agreed the schools, like everyone in county government, will likely be hearing the “do more with less” refrain again this year.

“That has been our theme in the county, and we are going to be in that mode for a little while,” Sorrells said.

In the meantime, commissioners are pinning their hopes on consumer spending to increase sales tax revenues. The more it goes up, the more additional money they have to spread around.

A cut of the state sales tax flows back to counties. In the last quarter of 2011, Haywood County saw a slight uptick compared to the same quarter of 2010 — an extra $65,000. It’s hardly enough to pay for raises for all 501 county employees and still have some left over for the schools.

But, Stamey hopes the trend will continue through the next six months.

“The key is sales tax,” Stamey said. “That is the key one we are monitoring closely.”

Common ground

Schools get most of their budget from the state, which pays the lion’s share of teacher salaries. Counties foot the bill to construct and maintain school buildings. That’s the simple version anyway.

Counties also contribute to varying degrees for additional positions, from teachers to extra teacher’s assistants to school secretaries to janitors. Counties also pay for incidentals like activity buses used for field trips.

Haywood County chips in a larger contribution per pupil than many counties its size, and that commitment hasn’t changed, Commissioner Mark Swanger said, despite the belated shout out schools got in the budget priority discussion.

“All you can say is you want to fund education,” Swanger said. “We didn’t get into dollars on anything because we just aren’t there yet.”

Plus, the county isn’t entirely sure what the schools will be asking for yet. County and school officials are meeting next Monday to talk money. The annual budget pow-wow is essentially a chance for the school system to make its pitch.

“We’ll make sure going into this budget process they are aware of what our needs are,” Francis said. “They just need to be brought up to speed where we are.”

The school has to be strategic in its request. Ask for the moon, and the county will have a hard time discerning what is indeed a dire need. Ask for too little, the county will see the schools as being in relatively good shape.

Both the school and county officials went out of their way to stress what a great relationship they have.

“I don’t know if it is anybody’s fault, the state or the commissioners or anybody else’s,” said Assistant Superintendent Bill Nolte. “I think the commissioners empathize with us here.”

Likewise, the school board empathizes with commissioners.

“We understand the funding situation they are under,” Francis said.

A $500 grant was awarded to Haywood Waterways Association by the Haywood County Community Foundation to expand Haywood Waterways’ sediment monitoring program and establish five new monitoring sites in the Raccoon Creek watershed.

The new sites will help identify areas where sediment, the top water quality problem in Haywood County, is running off. Once identified, Haywood Waterways and its partners can seek grants to assist willing landowners correct these problems.

The sediment monitoring program in the Raccoon Creek Watershed is a smaller part of a county-wide effort that was started more than nine years ago.

In 2006, the state designated as “impaired” sections of Richland and Raccoon creeks, meaning there weren’t as many fish and bug species as a clean stream should have. Haywood Waterways and its partners, including Haywood Soil & Water Conservation District, are working to reduce sedimentation throughout the Richland Creek Watershed, which includes Raccoon Creek.

Sediment enters streams and lakes though erosion and runoff. Once in the water sediment fills the spaces between rocks and smothers the spaces where macroinvertebrate insects live and fish lay eggs. Sediment also clogs intake pipes for industry and agriculture, as well as favorite swimming holes.

Delinquent payers of the tourism room tax in Haywood County will soon have the tax collector knocking on their door.

County commissioners approved a resolution that will allow the tax collector to recover money from hotel and motel owners not paying the county’s 4-percent occupancy tax.

“It’s not fair when you’ve got some people who are paying on time every month and some people quit paying,” said Lynn Collins, executive director of the Haywood County Tourism Development Authority. “Over the years, it has become an increasing problem.”

The tax is supposed to be tacked on to a tourist’s bill when they stay in a hotel, bed and breakfast or vacation home rental. Lodging owners then remit the tax they collect to the county on a monthly basis. The Tourism Development Authority uses revenue from the tax to fund advertising campaigns, area events and other tourism-related expenditures.

“How do you know if they’ve not paid?” asked Commissioner Kevin Ensley.

Collins said that she can read newspapers, look on websites or simply drive by lodging establishments that she knows are not paying and see them still accepting customers.

Room tax money is paid to the county finance office, which keeps a small percentage of the tax to pay its employees. However, the TDA was responsible for contacting businesses who were behind in their tax payment or those who did not pay. The TDA, however, does not have anything close to the authority that the county tax collector has. Tax collectors can garnish wages or take money directly from a business’ bank account if it is not paying.

For years, the tourism authority board has struggled with ways to bring accommodation owners into compliance. Each meeting, the board is presented with a list of people who owe overdue taxes.

“This is an ongoing issue,” said Commissioner Mike Sorrells, who also sits on the tourism board. “Every meeting, this is discussed.”

In some cases — continued delinquency or flat out refusal to pay — the TDA will still need to resort to legal action to collect its dues.

Waynesville leaders have committed to foot the bill for the long-held dream of a skateboard park — and it will receive help from an unexpected place.

After years of pinning their hopes on grants and private fundraising that only partially materialized, town leaders have now decided they must move forward with the construction of a public skate park or kill the idea all together. The town board discussed what to do about the skate park at a daylong annual planning session last week. And, fortunately for local skateboarders, the town has said it will fund the project no matter what.

“I sort of like the idea of being able to hang our hat on (the skate park investment),” said Alderman Wells Greeley. “We are going to have parents who will bring their kids over to Waynesville for the day. This falls in the category of what I call good growth.”

Alderman Gary Caldwell has been advocating for a skateboard park for 15 years and was the most vocal board member when discussing the skate park last week.

“I know I am asking a lot,” Caldwell said. But, Caldwell said he wouldn’t stop lobbying for it.

“It’s not a dying issue,” he said.

Plans for the park continually stalled during the past decade as the town struggled to find financing for the project.

“I think it’s something that has been wavering too long,” said Alderwoman Julia Freeman.

Freeman said the town should support projects that benefit kids and get them active.

That’s exactly what the town did in 2010, when it put up $30,000 to hire a consultant to design a skate park in collaboration with ideas from local skateboarders.

The price tag to build a skate park was pegged at $325,000. The town has amassed almost $137,000 toward the cost: a $60,000 grant from the N.C. Parks and Rec Trust Fund, a $20,000 grant from the Waynesville Kiwanis Club and another $40,000 committed by the town itself.

With blueprints for a skate park in hand, the town hoped it would kick-start fundraising, but only $5,000 in private donations has been raised in the past year.

That leaves the town $190,000 short to fund the project.

If the town continues to postpone the project, the cost will inevitably increase with inflation.

“The longer the delay, the higher the price — for the same thing,” said Alderman LeRoy Robinson.

A facilitator from the Southwestern Commission who was running the town’s planning meeting tossed out the idea of scaling back the project and thereby reducing the cost. But, town board members did not seem receptive to that idea.

“If you scale it back, you are going to reduce the challenge, and that is part of the draw of something like this,” Robinson said. “If they don’t feel it is a challenge, they will be back on the street.”

Skateboarding on town sidewalks and most streets is illegal, and violators could be fined $50 or, even worse, have their board taken away. But, that doesn’t mean kids aren’t doing so when no one is watching.

“That has been a major issue,” Caldwell said. “It’s a nuisance.”

The park will give those kids a free place within walking distance of downtown to skateboard legally.

The design for the skate park, developed by Spohn Ranch Skateparks from California, includes bleachers for spectators, at least four ramps and a raised platform with rails, among other features.

“To be honest with you, I’ve been trying to do this forever and ever, but I never envisioned it to look like this. This is amazing,” Caldwell said.

Although the town is building the skate park, it will not staff it, limiting its liability in the event of an accident. Once the park is complete, the town could host competitions there, which would draw visitors and their checkbooks.

As luck would have it, money materializes

As the Waynesville town board grappled with where it would find $190,000 to fund the remaining balance of a skateboard park, it realized somewhat accidentally it was staring a new source of revenue in the face.

At the same meeting where the skate park was discussed last week, the town also took up the issue of whether to start charging fees for controversial sweepstakes machines as several other towns in the region do.

The board agreed in an epiphany moment that recreation would be an appropriate use the new income.

It would likely not be enough to fund all that is needed, however. Maggie Valley and Canton currently tax the sweepstakes machines in their respective towns. Maggie collects $8,250 a year, while Canton rakes in nearly $32,000 each year.

Hopes of turning the abandoned Haywood County social services building into low-income senior apartments have been dashed, leaving the county in a quandary over who else might want the building and what other uses it could have.

The county recently moved out of the massive, aging, five-story brick office building in Waynesville. The Department of Social Services had not only outgrown the building, but it was also deemed too dated and run-down to bother renovating.

A new life seemed to be in the cards for the building as a low-income senior apartment complex — but the $8.5-million project was contingent on lucrative tax credits to offset the expense of renovating the old office building. The county learned last week that the hoped-for tax credits have fallen through, and the project is off the table as a result.

Patsy Dowling, the director of the nonprofit Mountain Projects that was behind the plan, said the low-income housing is much needed in Haywood County. She said she is disappointed that the project was knocked out of the running for the tax credits.

“Our aging population is growing, and I thought it was a great thing to be proactive to meet the needs of the senior population in our community,” Dowling said.

County Commissioner Chairman Mark Swanger said the county is likewise disappointed — not only to fill a desperate need for low-income housing but because the county is left with a big, old building on its hands.

The tax credits for low-income housing projects are highly competitive. Only five to eight low-income housing projects in the mountain region will land the tax credits this year — out of more than 20 applications.

Mountain Projects withdrew its application for the old DSS building after realizing its score wasn’t high enough to make the cut. The other 26 applications it was up against all had perfect scores.

The downfall of the Haywood County project? It was too far from a grocery store or pharmacy — 0.7 miles instead of the required 0.5 miles.

“They are very strict about how close it is in proximity to major services,” said Dowling.

The old DSS office building was just short of the criteria, costing the project critical points on its application.

“It is not an equitable system,” Swanger said of the tax credit criteria. “It seems very arbitrary when you are looking at rural areas.”

Blueprints called for renovating the old DSS building into 54 apartments, with a mix of one- and two-bedrooms. The total project cost was $8.5 million, including cost of the property and construction.

The tax credits would have amounted to $6.7 million — dramatically lowering the total cost to just $2 million. Indeed, that’s what made the project feasible. The developer partnering with Mountain Projects to do the project would have a very small mortgage in the end, allowing them to charge lower rents.

“The project doesn’t work without the low-income credits,” said Hollis Fitch, president of Fitch Development, a low-income housing developer based in Charlotte.

Fitch works across the state and regularly taps the low-income housing tax credit pool.

“It is a competitive process,” Fitch said.

Fitch’s group had put more than $60,000 into the design and planning for the Haywood project, including blueprints.

After Fitch and Dowling realized they were up against 26 projects with perfect scores — leaving no hope of snagging one of the five to eight slots — Dowling withdrew the application to save on the $5,000 non-refundable application fee.

While Mountain Projects could theoretically apply again another year, Dowling doesn’t anticipate the competition will getting any easier.

With the building not getting any closer to a grocery store, it is hard to see how it would ever land the tax credits needed to pull off the project.

“The building is where it is. We can’t move it any closer,” Swanger said. “Unless there is a dramatic change in the way in the North Carolina Housing Authority ranks its points, the chances would be remote.”

Indeed, getting that criteria changed is the only hope of jump--starting the project at this point. Swanger said he plans to take the issue up with state legislators.

Going once, going twice?

For now, the 70,000-square-foot building is officially for sale, with a price tag in the neighborhood of $1.25 million.

That’s what the developer working with Mountain Projects was going to pay the county, Swanger said.

The central offices for Haywood County Schools are still located in the building but would move out if and when it sells.

Typically, the county would sell property to the highest bidder. But, it doesn’t necessarily have to. The county could opt to sell it for a lower price to a nonprofit entity if it would in some way serve the public interest, as was the case with the sale to Mountain Projects.

Likewise, the county does not want to sell it to someone who will simply park on it as an investment.

“There would be a due diligence on our part to make sure that it is to a responsible party who will not allow it to just deteriorate and become an eyesore or safety hazard,” Swanger said. “You also don’t want someone to buy it at a very low price just to flip it.”

Obviously, the price tag to buy the property would only be part of the necessary investment from a buyer. Almost any use would require renovations.

Of the $8.5 million projected estimated cost to pull off the low-income apartments, $5.3 million was for construction, Fitch said.

The building was originally constructed as a hospital. The layout — long hallways lined with dozens of tiny rooms — isn’t conducive to many uses without major renovations. Age isn’t exactly on its side either. Part dates to 1927 and the rest to the 1950s — a whopping 72,000 square feet in all.

And, the building isn’t in the best shape either. Its sheer antiquity aside, the county scraped by on its maintenance during the years, spending the bare minimum to keep the building from falling into disrepair — but no more.

Now that it is mostly empty, a county maintenance worker is making twice-daily rounds through the building to make sure there are no water leaks, broken windows, varmints or vandals. The county has kept the utilities on. It can’t shut off the water since the school system is still occupying the front portion of the building. The heat is also being kept on, albeit at a cool 48 degrees, to avoid building shock from wild temperature fluctuations.

“To let it deteriorate further is something we would like to avoid,” Swanger said.

In hindsight, the county hasn’t exactly been the best cheerleader for the building. County commissioners repeatedly talked up the building’s short-comings when debating whether to move out.

The county relocated DSS to a repurposed office complex inside the former Walmart.

Haywood County in the real estate business

The old DSS building isn’t the only former office complex Haywood County government is trying to unload. County Manager Marty Stamey joked that it seems like he has a part-time job as real estate agent these days.

After moving several county departments once spread out in three separate office buildings under one roof at the repurposed former Walmart strip mall, the county is now looking to sell the three office complexes.:

• Annex II (board of elections/planning department): $1 million

• Annex III (health department)/annex III: $1.5 million

• Board of elections/planning department/ annex II: $1 million

• Former DSS (old hospital): $1.25 million

The buildings known as annex II and III on the Old Asheville Highway were originally medical offices, but when the old hospital moved out of its former building, doctors likewise moved their practices closer to the new hospital.

A $10 million line of County credit intended to bridge short-term cash flow problems at MedWest-Haywood hospital has hit a snag.

A loan taken out by the hospital offers up the hospital building as collateral but legally it needs approval from county commissioners to do so.

The MedWest board failed to seek necessary approval from the county before taking out the loan, however. The hospital had already signed on the dotted line and promptly begun spending some of the loan money before the oversight was realized, prompting the hospital to seek the county’s retroactive blessing.

But, county commissioners apparently have not been willing to rubber stamp the loan. The hospital came to the commissioners six weeks ago for their approval on using the hospital building as collateral.

Since then, county commissioners have held three private meetings, which were closed to the public, citing attorney-client privilege, to discuss the loan conundrum.

Formerly known as Haywood Regional Medical Center, the hospital has a clause in its deed that prevents any transfer of the property without county approval. In the unlikely case the hospital defaults on the loan, the lender could not in fact take the building, making the current loan documents partially invalid unless the commissioners give their blessing.

Commissioner Chairman Mark Swanger said commissioners are working with the hospital to come to a suitable arrangement that helps the hospital move forward but still safeguards the building in the event of a default.

“We generally have two goals,” Swanger said. “One is that there be a viable thriving hospital in Haywood County and the second is to protect the county’s interest in the property.”

Meanwhile, the Jackson County medical community has expressed dissatisfaction that their hospital in Sylva, which is part of the MedWest system, ended up on the list of collateral for the loan.

A shorter list, in fact, might be what didn’t get listed as collateral. In all, the loan documents list enough collateral to pay the $10 million many times over. Accounts receivables are at the top of the collateral list — essentially every payment coming into the hospital could be garnished to cover the loan, which in itself would be more than enough to cover the debt. Collateral also includes all the medical equipment in the hospital, as well as the MedWest Health and Fitness Center.

The actual hospital itself, along with the MedWest-Harris and MedWest-Swain hospitals, are far down the list.

So why even list them as collateral? It’s the nature of financing these days, with skittish lenders requiring everything but the kitchen sink, and in some cases even that, to secure a loan, according to Mike Poore, CEO of MedWest-Haywood.

MedWest-Haywood has spent $4 million of its $10 million loan so far. The hospital has no other debt. And that’s why Poore is confident the debate over whether the building is included as collateral is a largely a moot point.

“There are several dominoes,” Poore said, listing all the collateral that would be tapped first in the event of a default before the hospital itself would ever become an issue.

Even then, the loan would merely take the form of a lien against the hospital, as the hospital is worth far more than the $10 million loan.

Indeed, the debate over whether the hospital should have been used as collateral on the loan seems to be playing out more on a matter of principle.

“If we thought there was much chance of default we wouldn’t be doing this. We felt we would be in and out of this moment,” said John Young, vice president for Carolinas HealthCare’s western region.

In an unusual financing arrangement, Carolinas HealthCare System has agreed to act as a bank and put up the money from its own reserves for the loan to MedWest-Haywood. MedWest-Haywood is under a 15-year management contract with Carolinas HealthCare, a network of 32 hospitals under the flagship hospital of Carolinas Medical in Charlotte.

Despite the large number of hospitals under the wing of Carolina’s management, it has never stepped in to provide financial help for an affiliate hospital.

“It has never been done before,” said Young. “I don’t know we will ever do it again, but at the time, it was the right thing to do.”

Young said Carolinas made an exception given the circumstances. For starters, the Haywood hospital desperately needed the money to bridge a short-term cash flow crisis brought on by a perfect storm of financial hits.

MedWest-Haywood had to spend $1 million to replace a broken generator, $1.6 million on a wrongful firing lawsuit by group of emergency doctors and $8 million on a new computer system to handle electronic medical records.

The hospital will actually be paid back for part of the cost of electronic medical records system by the federal government in coming years, Poore said.

“These are what you would consider one-time expenses. We knew we would have to get some kind of financing to help us through,” Poore said.

The hospital also spent an undisclosed sum buying up private doctors’ practices during the past year. It didn’t have the budget to do so, but the practices were being courted by Mission Hospital in Asheville. MedWest-Haywood feared long-term repercussions of a patient drain if it didn’t make a competing offer.

While the hospital was in the black last year, its margin was so slim — around 1 percent — it didn’t have the cash flow to cover the unexpected one-time costs.

“It is not a symptom of the engine being dysfunctional in any way,” Young said. “We realized this liquidity issue would go away, so we decided to lend them the money to get through this moment.”

Smoothing out the wrinkles

Meanwhile, the newly formed MedWest allegiance — a merger of sorts of the hospitals in Haywood, Jackson and Swain under an umbrella organization — need help finding its footing.

“Coming together under MedWest was trying to happen in a very difficult time under a very difficult set of circumstances,” Young said, offering further explanation of why Carolinas stepped up to the plate financially.

The recession was taking its toll on hospitals everywhere, particularly smaller, rural hospitals. And here, the hospitals in Haywood and Jackson were facing tougher competition than ever from Mission Hospital in Asheville.

Meanwhile, the relationship with the Jackson County medical community toward MedWest was strained. A large number of doctors in Jackson County had come forward to express concerns about how their hospital was faring under the new MedWest entity.

Carolinas has been asked for help many times by cash-strapped hospitals operating on razor-thin margins. It’s a frequently asked question by smaller hospitals when weighing whether to join Carolinas’ umbrella.

“One of the things that usually comes up is would you be willing to put capital in. Our answer is always ‘no,’” Young said. “That is not our model. Our business model is to help local hospitals find economies of scale and have the expertise to be successful in a very difficult marketplace. It is hard to do it alone.”

Poore said the financial problem faced by MedWest-Haywood is partly inherited. The hospital couldn’t get a traditional loan from a lender.

The once deep-reserves of MedWest-Haywood were spent up during a faltering time four years ago when the hospital failed federal inspection, largely on technicalities, but the resulting decertification by Medicare, Medicaid and several major insurance carriers forced the hospital to essentially shut its doors for five months. Its reserves were depleted as a result.

“I wish it could have happened a different way,” Poore said of the need for the loan from Carolinas. “I wish we had all the credit in the world and everyone was knocking down our doors to give us credit.”

Poore sees the loan more like a line of credit, a very common financial tool used by corporations both large and small.

“The line of credit is helping us pay for a lot of one time expenditures we’ve incurred this year,” Poore said.

Poore said it wasn’t altogether clear initially whether they actually needed county commissioners to sign on the dotted line.

“At one point, we had 11 attorneys on the phone trying to put this deal together,” Young said. “It is unusual for one hospital to loan another hospital money.”

Poore pointed to the proactive steps MedWest-Haywood has taken during the past two years that will start paying off. It has employed doctors practices, has an outpatient surgery center under construction on its campus, has a new urgent care slated to open in Canton in the spring, and has recruited several new doctors, including a new urologist, cardiologist and neurologist just recently.

These days, it is all about fighting for market share against Mission, and that’s what Poore has been positioning Haywood to do.

“There is a demand, and if we can meet that demand, we can keep those patients here,” Poore said.