Taxpayers plead with aldermen to reconsider.
During July's regularly scheduled meeting of the Franklin Board of Aldermen, taxpayers addressed the Town Board during a public hearing to voice their opposition of relocating the town's ABC store at an initial estimated cost of $1.25 million.
The public hearing was required by law due to the potential use of town property including the town hall, public safety and public works buildings as collateral to secure the loan to cover the expenses of the new facility. Residents spoke in opposition not only to spending $1.25 million to fund the store, but also the location of the proposed building.
Orville Coward, a Franklin attorney, was the first to address the board. He urged aldermen to consider using an available building in the downtown or West Franklin areas instead of the proposed site in the new Walmart shopping center plaza.
“There are empty buildings, and it seems to me that the ABC store is a magnet, a destination point for people to go to,” Coward said. “I don’t think there needs to be a magnet or destination point for Walmart. Walmart is its own destination point.”
According to Coward, regardless of where the ABC store is located, residents who shop at the store will continue to do so. “This board has a unique opportunity to put it [ABC store] somewhere that needs it so it will build the area around it back up for the people of Franklin. This board's responsibility is to serve the town, please consider that.”
Following Coward was Ron Winecoff, a Franklin resident and businessman who voiced his opposition to spending $1.25 million during hard economic times.
“Today, our economy in Franklin is back in the ’70s; Not enough business, not enough capital and not enough jobs,” said Winecoff. “Businesses have had to cut and cut and question every invoice and continually try to cut expenses. Well, it is getting better but very slowly. However, things are far from good enough to buy a $1.25 million ABC store and spend another $150 to $200 thousand to outfit it and move to new quarters. We cannot afford what you’re proposing.”
“It is not the Taj Mahal and we do not have to market it that way. It is another store, plain and simple,” continued Winecoff.
Winecoff also informed the board that he opposed the financing method the town was considering to pursue because according to the numbers, it doesn't seem beneficial. “Additionally, I oppose the method of financing because it is not fair to the citizens that opposed the liquor store to start with,” said Winecoff. “I cannot imagine what is driving this decision. As stated earlier, I believe it is safe to say that the $1.25 million will turn into $1.4 [million] when all expenses are included. $1.4 million at 2.9 percent for 20 years is $92,000 per year and that is $20,000 more than you pay now. Spread it over 30 years and that comes in just under $70,000, which we now pay. I can assure you figures do not lie, but they can be manipulated to look very pleasing to a governing board.”
Winecoff continued his reasoning for opposing, an opinion that was echoed by each Franklin resident that spoke after him, by noting that the current ABC store's profit and loss statements show that the store can not stand on its own, which puts Franklin at risk of making up the difference to pay the loan for the new building.
“According to the profit and loss statement which can be found on-line for the current ABC store, they show a profit of 2.87 percent for 2011 or $69,000. I doubt there is a bank in town that will loan $1.4 million with a profit margin of 2.87 percent and you should not underwrite and guarantee it either,” said Winecoff. “2011 sales were $2.3 million; operating expenses were $504,000; profit $69,000 or 2.87 percent. If I may, I will break that down a bit — $504,000 operating expense equal to 22.5 percent of sales. Even the dollar store cannot survive with those expenses.”
Winecoff suggested that if the Town of Franklin continues to look at spending $1.25 million on a new facility, the board should look at the cost effectiveness of the store and its functionality.
“The town board and city manager’s problem is that we are not getting the $250,000 return we deserve each year,” he said. “The ABC Board has several problems in my opinion; They need to return to town $250,000 each year for police and schools because that is the way it was sold to the voters originally 15-plus years ago. Number two, overhead is too high at $504,000 compared to Sylva at $345,000, and number three, operating cost at 22 percent of sales when it should be in the 10-12 percent range. That difference would deliver $300,000 plus to the town each year.”
Franklin taxpayers Tim Butterfield agreed with Winecoff in challenging the board's decision to invest in a business that is not showing the return to justify the expense. “It’s atrocious that you want to spend $1.25 million to move the store a quarter mile down the street and make a one percent profit,” he said.
In addition to the cost and location of the liquor store, residents questioned the town's decision to invest in an ABC when the threat of privatization is currently being disputed in the North Carolina General Assembly. “What would you do with the store if the state did privatize liquor sales,” asked Franklin resident Lamar Sprinkle. “You wouldn’t have a use for it. I guess you could sell it, but could you get your money back for it?”
Although the town board didn't discuss what was voiced during the public hearing after it concluded, in a 5-1 vote with Aldermen Bob Scott opposing, the board voted to approve a lease with the ABC board to continue the process of securing a lease with the Tennessee-based company, Meyers Franklin Associates, LP.
According to town attorney John Henning Jr., the town is now under contract to purchase the store property from Bright-Meyers Franklin Associates, LP. If the town decided not to buy the property at this point, unless clearly by reason of one of the conditions to the contract not being met (e.g. if the town's loan were to be turned down by the Local Government Commission), Bright- Meyers could argue that the $50,000 earnest money should be forfeited to them, and might also sue the town for additional damages.
The Town of Franklin began exploring options of relocating the ABC store, which is currently located on the Highlands Road, after the property owners of the current location informed the store that the rent would be increased.
Currently, the ABC store pays $6,200 in rent monthly to Centro Properties Group (the firm responsible for managing the plaza). Centro Properties later informed the town that they were willing to keep the rent the same and sign a threeyear lease at the current price, but after that, the store would likely experience a rate increase.
Previously, Town Manager Sam Greenwood stated that even at the current rent, which equals $74,400 annually, it would be more cost effective to own the building rather than rent, a theory that originally the entire town board agreed with. Greenwood explained that at $74,400 a year, with only renting the building, in about 17 years, the town would have spent nearly the $1.25 million in rent alone. By working toward owning the building, the town would lease the building for the 17 years instead of paying $74,400 in rent, they would pay the same each year on the loan, but will eventually own the building ultimately allowing the ABC revenues to increase. The cost of the rent or the potential cost to repay the loan of the proposed unit, is paid through ABC store revenues and is not, nor intended to become, the responsibility of the town.
The board is expected to take further action regarding the ABC store during their August meeting. The current ABC store's lease is set to expire in November.