Downtowns get surprise funding from state budget

A last-minute addition to the state budget will send $1.25 million to 13 towns for “downtown revitalization” – even though some of them never asked for money and their legislators say they don’t know how the towns were selected.

In the final weeks of budget negotiations, House leaders added the allocation and named 13 recipients, most of which are represented by powerful legislators or close allies of Speaker Tim Moore. The funding sidesteps the N.C. Main Street program, which has for years provided state money for downtown development through a competitive grant process.

Each of the 13 towns will receive about $100,000. A separate Senate allocation, added by Republican Sen. Trudy Wade of Guilford County, will direct $1 million to High Point to turn a library parking lot into a downtown “central gathering space.”

Meanwhile, the Main Street Solutions Fund will get $900,000 for its grant program. Those grants, ranging from $25,000 to $200,000, help renovate downtown properties in poorer communities.

The House’s top budget writer, Rep. Nelson Dollar, a Republican from Cary, said Moore pushed for the $1.25 million in downtown funding.

“In the budget process, very late, the speaker found that we had a little bit of money left,” Dollar said. “I think the speaker thought that it would be best used to assist some of these rural downtowns that these communities had.”

The downtown fund is among a variety of projects in this year’s budget that powerful legislators added to benefit their districts. Moore also garnered funding for a water system project in Kings Mountain and a baseball stadium in Shelby. Senate budget writer Harry Brown directed millions to his district.

The earmarks made it into the final spending compromise, despite major cuts to education and other programs as the overall spending level was lowered by $415 million from the House proposal.

Moore declined to comment for this story, but his spokeswoman provided a news release sent only to media outlets in his Cleveland County district. The announcement highlights downtown grants to Shelby and Kings Mountain and says the money will “help continue growth and job creation. Similar grants have proven extremely effective for other cities across North Carolina.”

Cleveland County is the only county in the state where two towns will receive the downtown money.

Other recipients include Dunn, the hometown of House Rules Chairman David Lewis, and Rutherfordton, the hometown of House Majority Leader Mike Hager. Most of the 13 towns are represented by legislators appointed to leadership positions by Moore or legislators who rarely vote against the House majority. Only one of the towns, Pembroke, is represented by a Democrat.

The unexpected windfall has the towns’ leaders unsure how they’ll spend the money.

“It was a complete surprise, and I think that was the case for all the communities,” said Sarah Edwards, director of the Downtown Smithfield Development Corp. “I don’t know that anybody really knew about it.”

Edwards said Smithfield leaders are waiting to see any requirements for the funding before they decide what projects to pursue. The downtown group has an annual budget of about $230,000 to promote the town center and host street festivals and other events.

“A shot in the arm of $100,000 would be incredibly helpful,” Edwards said, noting that the town has been looking to upgrade a boat ramp to draw Neuse River boaters to the area. “It would be a substantial increase that I think would allow us to do some things that haven’t been possible in the past.”

Smithfield is the hometown of Rep. Leo Daughtry, a longtime Republican legislator who Moore appointed this session to lead committees on matters of justice and public safety. But Daughtry said he wasn’t involved in budget talks involving the downtown funding and isn’t sure why Smithfield was chosen.

He said he’d sent House leaders a request from the downtown development agency but doesn’t recall specifics. Edwards said she hadn’t requested funding but had contacted Daughtry’s office about issues facing downtowns statewide, such as historic preservation tax credits.

Daughtry said he’d been assured by budget writers early in the process that “in the event we funded any (downtowns), Smithfield would be part of it.”

Other House Republicans said they also weren’t sure how towns in their districts were chosen.

“I’m not familiar with where that originated,” said House Finance Chairman Jason Saine of Lincolnton, which is on the list. “I’m glad we got it.”

Bryan Holloway’s district included one of the towns, Reidsville, but he said he was never asked about which town in his two-county district should get money. Holloway resigned his seat Friday to become an education lobbyist.

“I ended up being the beneficiary of that, but I think that came from a little higher up,” said Holloway, a Republican who chaired committees on education. He noted that Moore’s chief of staff, Clayton Somers, is from Reidsville but “I don’t know who selected the towns.”

Fast money

Dollar said House leaders decided not to allocate the downtown money through a competitive grant process.

“The advantage is that the money will get to those communities much faster,” he said. “Sometimes the grant process takes a considerable amount of time.”

High Point’s Library Plaza project also won’t have to compete with other towns and cities. Of the $2 million allocated for the Main Street Solutions fund, the budget bill requires $1 million to go to a city with a population between 105,000 and 110,000 located in a county that changed its state poverty ranking last year.

High Point is the only city that fits the bill. Wade – a close ally of Senate leader Phil Berger – said she pushed for the provision because the state doesn’t have “any programs for the mid-size city” pursuing downtown revitalization.

“Usually it’s the rural areas and the larger areas that seem to be getting the most money,” she said. “We thought we’d start a pilot program with someone who was prepared. We foresaw possibly down the road (funding) other mid-sized cities.”

High Point will be required to match the $1 million grant with $1.43 million of its own funds, which the City Council has already directed to the plaza project. The plaza will host community events, library programs and farmers market stalls. It’s designed to stimulate business and development along Main Street.

While the High Point funding appeared in the original Senate budget proposal, the other downtown fund was not in the House budget and first appeared publicly in the final budget.

‘Highly politicized’

The conservative Civitas Institute says state funding shouldn’t be used for downtown development projects.

“Whenever you have state tax dollars being utilized, it becomes highly politicized,” said Brian Balfour, the group’s director of policy.

He said local governments should handle the costs of downtown improvements. “It’s far easier for the people there locally to hold their local elected officials accountable for how those tax dollars are being spent,” he said.

The Department of Commerce closely tracks grants made through the Main Street Solutions Fund, which requires a detailed application. It estimates that every dollar spent on grants generates $6.35 in new investments in the community.

One of the latest recipients is Clinton, a town of about 8,000 people about an hour south of Raleigh. It got $200,000 to help a restaurant owner renovate a building to house his business and a banquet hall.

Mary Rose, the town’s planning director and Main Street manager, said the grant application went through a “very detailed, thorough process.” She said she’s not familiar with the state budget’s new funding for specific downtowns.

“If there are funding opportunities out there, we would not pass them by,” she said.

This story was originally published October 25, 2015 at 7:34 PM with the headline "Downtowns get surprise funding from state budget."