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Admission tax attacks nonprofits

This year, the North Carolina legislature cut income tax lavishly at the top end. Those who make more than $60,000 will see their top marginal rate of 7.75 percent cut to the same 5.75 percent everyone will be paying by 2015.

This cut in the income tax blows a massive hole in the budget, which will be filled by an aggressive expansion of the sales tax, which places the greatest burden on people of lower means.

Starting in 2014, the sales tax will be extended to ticketed entertainment. In Wake County, this will mean a 6.75 percent levy on movie tickets, live theater, live music, college and pro sports and more. (Chatham County's sales tax is 6.75, as well, while in Durham and Orange County, it'll be 7.5 percent.)

But nonprofits operating at lower price points are going to be the hardest hit. We canvassed a few, and the news isn't good. The Carolina Theatre, for example, will raise its evening adult movie ticket price to $10 on Jan. 1, and $8 for matinees and seniors/students/military, according to CEO Bob Nocek. "There's a threshold at which the cost dissuades people from buying tickets, and we'll remain sensitive to that," Nocek said in an email. "The changes have the potential to be especially damaging to arts nonprofits, who already operate on slim margins."

Joesph Haj, artistic director of PlayMakers Rep, says the Legislature disregards the value of arts nonprofits. "This admissions tax is a genie that will never be put back in the bottle," he says. "And by applying it, the legislature sends the clear message that the non-for-profit performing arts are just another business." Art Menius of Carrboro's The ArtsCenter goes further: "This is not just an anti-business tax; it is an anti-business tax aimed at nonprofit presenters."

"It's unfortunate that those in power in North Carolina have chosen to burden its residents and its businesses with widespread tax increases," Nocek says, "and it's particularly deceitful to have done so under the banner of reducing taxes." —David Fellerath

Last days of college sport?

In a time of austerity, college sports are richer than ever.

In the histories of civilizations in decline, one often sees an irrational increase in useless spending, on bread and circuses, monuments to rulers about to be toppled and lavish offerings to the deities. So it is, apparently, with college campuses. Earlier this fall, the John W. Pope Center for Higher Education Policy issued a report that recommended cutting about 80 percent of the 4,000 or so courses now available on the Chapel Hill campus. This came after a summer in which the state Legislature cut a further $115 million in permanent funding to the UNC system, while increasing out-of-state tuition, which comes on the back of more than $235 million in economic-crisis-blamed cuts to the system since 2008.

One might think that, in this time of belt tightening and austerity, trims to the college sports programs might be in order. However, earlier this month, the Knight Commission on Intercollegiate Athletics, in cooperation with USA Today, unveiled a very useful online database that charts the dramatically escalating spending on athletes and non-athletes at America's public universities. In 2011, for example, UNC's athletic department spent $185,037 per scholarship football player, a 46 percent increase from 2005. This is more than six times the amount that the school spends on full-time, enrolled non-athletes.

Although some may argue that the athletic department is entitled to spend its money as it sees fit, most athletic programs require direct and indirect subsidies. If transfers from the general fund can't cover gaps, as has been the case in Chapel Hill and elsewhere, there's another source: increasing student fees, which is how UNC-Charlotte (UNCC) is able to fund its new $45 million football stadium. UNCC's addition of a mediocre football team added $6 million in annual operating expenses. Student fees will hit $200 next year; the school's 20,000 undergraduates thus will provide an annual subsidy of about $4 million.

click to enlarge UNC football struggles to get fit after the Butch Davis-era scandals. - FILE PHOTO BY JEREMY M. LANGE
  • File photo by Jeremy M. Lange
  • UNC football struggles to get fit after the Butch Davis-era scandals.

Although Duke, as a private institution, does not have to report financial information, it's clear that the football arms race has infected west Durham as well. A year ago, Duke announced a $3.25 billion capital campaign. In the athletics goody bag: a $100 million overhaul of Wallace Wade Stadium, a facility that this year saw an average crowd of 26,062 watch a 10–3 Chick-fil-A Bowl-bound team.

Meanwhile, in Chapel Hill, disgruntled, increasingly straitened faculty members issue plaintive appeals from the Athletic Reform Group, which advocates for "institutional openness, educational responsibility, and consistency in the University's mission."

Between cuts in funding from the Art Pope-backed Legislature, and recommended cuts in curriculum by the Art Pope-backed John W. Pope Center for Higher Education Policy, one might think that the Popists have it in for Chapel Hill. Not at all! The largest feature of Kenan Stadium's luxury suites known as the Blue Zone (aka the House That Butch Davis Built), is a 29,000-square-foot "Student-Athlete [sic] Academic Support Center," made possible by a $3 million gift from the John William Pope Foundation.

How will we react next year to systemic pressures that are "unsustainable," to use a word employed by Knight Commission co-chairman William "Brit" Kirwan. In 2014, it will be interesting to see if faculty reformers gain any traction, or if former UCLA basketball star Ed O'Bannon's pending lawsuit against the NCAA blows up the business model. In the meantime, the bread and circuses should be exciting. When in Rome, do as the Vandals do ... —David Fellerath

Durham gets cooperative again

First came Downtown. Then arrived Old North Durham. Now we predict the Bull City's Next Hip Neighborhood is ... The West End.

Not only is the area emblematic of Durham's diversity—the Taiba Middle Eastern Market, Ar-Razzaq Islamic Center, Tabernacle of Joy and Immaculate Conception Catholic Church sit within the same two blocks—but also its DIY spirit, via The Cookery.

Expect that entrepreneurial spirit to accelerate with Durham Central Market. The new, locally owned cooperative grocery is slated to open at Kent and West Chapel Hill streets in late 2014 or early 2015, according to project manager Don Moffitt, who is also a Durham City councilman.

Self-Help Ventures, the nonprofit development arm of Self-Help Credit Union, will own the 10,000-square-foot building and Durham Central Market will lease it. Financing challenges had delayed the $2.5 million project, which was originally slated to be built on North Mangum Street. The 2008 recession upended the credit markets, making it difficult for small businesses to get loans.

"The difference between this [West Chapel Hill Street] location and any other in downtown is Self-Help's interest in development," Moffitt says. "No other property owner offered us anything in terms of support."

Durham Central Market's cooperative model is similar to that of Weaver Street Market, which has members and investors. Anyone can shop at the market, but members, who pay a one-time fee of $100, have a stake in the business through voting rights, plus they receive product discounts. Investors can buy shares in the market, with rates of return up to 5 percent.

click to enlarge Future home of Durham Central Market - PHOTO BY LISA SORG
  • Photo by Lisa Sorg
  • Future home of Durham Central Market

Durham Central Market will also have ties to Weaver Street's commissary, which provides meat, seafood, poultry, baked goods and some prepared foods. "We'll tap their baking expertise," Moffitt says. "That's considerable."

The West End neighborhood is also economically diverse, ranging from restored historic homes on Burch Avenue to working-class apartments and small houses on west and south of the market.

It's important not only to Moffitt but to Self-Help that the neighborhood economically benefit from the market.

However, the market's prices will be higher than those at Food Lion, a supermarket chain with a store less than a mile away. "We want to provide affordable foods," Moffitt says. "It's difficult given the reality of food distribution. There are only a handful of food distributors, and they are designed to serve a large multi-store operations that buy their complete inventory from them. These distributors aren't set up to buy 10 of this and two of those. Even in the natural foods world, there are only a couple of food distributors now.

"We can provide jobs and a gathering place," Moffitt says. "And we're working on food access and food for all." —Lisa Sorg

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