Property tax exemption could be fatal blow for controversial recycling venture
A recycling sorting plant proposed in Haywood County has encountered a hitch following an 11th-hour revelation that it would be exempt from paying county property taxes.
County officials had hailed anticipated property tax revenue of $50,000 to $100,000 a year as one of the major upsides to the project. Property taxes were considered a consolation prize of sorts, making up for shortcomings.
County officials had hailed anticipated property tax revenue of $50,000 to $100,000 a year as one of the major upsides to the project. Property taxes were considered a consolation prize of sorts, making up for shortcomings.
But that is now not the case after all.
The county learned of its faux pas from opponents who have been sleuthing under every rock to build a case against the facility. Speakers at a public hearing two weeks ago dropped a bombshell when they pointed out a state statute that exempts recycling facilities from paying property taxes.
This week, County Manager Ira Dove admitted the county’s mistake.
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“It was a mistake and I apologize for that,” Dove said. The county hadn’t realized there was a state statute exempting recycling facilities from paying local property taxes.
The promise of recurring property taxes had been a significant factor for commissioners when weighing whether to sell off 55 acres in the county industrial park — helping to offset misgivings about the limited number of jobs the venture would allegedly create and making it easier to overlook the unproven track record of the start-up company.
Dove emphasized that county leaders aren’t sold on the recycling venture being a good use of industrial park property.
“None of this is a done deal,” Dove said. “The commissioners are weighing their options.”
The question now remains whether the company’s president, Ken Allison, was aware of the tax exemptions but didn’t let on. Critics are accusing Allison of selective amnesia.
“Hogwash, balderdash and malarkey,” said Peter Watkinson. “What is the hidden agenda?”
Opponents now have added ammunition to question the veracity of Allison’s other claims and projections.
“It is clear that Ken Allison has not been acting in good faith,” said Brad Stanback, a speaker at the public hearing this week. “This causes me to have much less confidence in any of the other assertions he has made.”
Will he create the number of jobs at the salaries he says he will? Will noise and smell be a non-issue like he claims? Does he really have somewhere lined up to haul the left-over garbage after culling out recyclables?
“What else are we getting misinformation on?” asked Jeremy Davis, another speaker at the hearing. “For every cockroach we see there’s 50 we don’t.”
Allison claims he will limit the volume of dirty household garbage coming in and plans to focus on “cleaner” commercial and industrial waste streams with a higher content of recyclables. But speakers asked what guarantee they had other than Allison’s word.
“How do we know anything he says is true?” asked Dustin Cornelison, an organic farmer in Beaverdam.
Allison pitched a similar recycling sorting facility in Buncombe earlier this year. He’s tweaked some of the projections for the operation proposed in Haywood —promising to create more jobs yet generate less truck traffic.
“Your business model and numbers have changed from county to county. There are too many ‘what ifs’. There are no proven and firm answers. Get your facts straight,” said speaker Jeffery Powell.
County officials have talked up the possibility that other industries that use recycled commodities in their production process could move to Haywood County to be close to the source of the raw materials coming out of Allison’s recycling sorting plant.
But the possibility of spin-off industry isn’t a guarantee. Dove said any business venture has inherent risk.
Back to the drawing board
Haywood County commissioners were clearly caught off-guard by the property tax exemption. County officials had been in negotiations with Regional Recycling Solutions for more than two months to arrive at a sale price for 55-acre industrial tract.
They had predicated the deal in part on the property tax revenue they expected to get. Commissioner Kirk Kirkpatrick said the revelation that the recycling facility would not have to pay property taxes is a strike against it in his mind.
It’s not necessarily a deal killer, Kirkpatrick added, but it is a fairly big con on his pro and con list as he weighs where he stands.
Commissioner Mark Swanger said the county has not reached a decision “formally or informally.” The revelation over the property tax exemption will be a major factor to consider, he said.
“It is a very important component of the decision-making process,” Swanger said. “It is disappointing.”
The county initially offered to sell the industrial site property to the recycling sorting venture for $450,000 — less than the market value of $780,000.
Once county officials became aware of the property tax loophole, however, they went back to the negotiation table. They rescinded the offer to sell the 55-acre industrial tract at a discount and instead wanted the full asking price of $780,000.
Regional Recycling Solutions agreed.
County officials have another conundrum that’s yet to be worked out with new negotiations, however.
Once the county has sold the industrial site, how can it be assured Allison will build the plant and create the jobs he says?
“The question is if we do this how do we make sure the jobs come? Those are the negotiation points,” Dove said.
“How could we ensure the jobs?”
Under the original deal, the county had a carrot-and-stick approach to hold Allison to performance benchmarks.
If the company failed to reach full build-out of 70 jobs within seven years, it would have to pay back the $330,000 discount it got on the sale price of the land, according to “claw back” terms in the original agreement.
Now that there’s no discount on the land, the county needs something new to threaten Allison with if he doesn’t create jobs — especially since the consolation prize of property taxes is no longer part of the equation either.
Following a public hearing Monday, commissioners met privately for nearly an hour and a half to discuss the issue. While public bodies generally can’t meet behind closed doors, the North Carolina Open Meetings Law allows an exemption for economic development incentives and negotiations.
Did Allison know?
Allison has proposed three other waste and recycling ventures in three other counties over the past three years. One in Transylvania involved a waste-to-energy incinerator. The other two — in Henderson and Buncombe — were similar to the recycling sorting facility proposed in Haywood.
None came to fruition.
“Mr. Allison I appreciate your perseverance. I was always told growing up if at first you don’t succeed try, try again. You are certainly doing that. I think car salesman might be a better fit for you,” speaker Travis Wesley said at the public hearing this week, addressing Allison.
Critics find it hard to believe Allison could have spent three years developing various business schemes around recycling yet have somehow been unaware of the property tax exemption recycling facilities enjoy.
A couple of speakers postulated that the tax breaks were Allison’s motivation all along. New York investors behind the project are merely after the tax write-offs and tax breaks associated with recycling facilities, speakers asserted.
“Why should Haywood County be used as an enabler for a bunch of East Coast investors to use on their tax returns?” Beaverdam resident Barbara Wilkins said at the hearing. “Recognize this for what it is and send Mr. Allison on his way.”
