Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, June 1, 1990 TAG: 9006010332
SECTION: VIRGINIA PAGE: B2 EDITION: METRO
SOURCE: JOEL TURNER MUNICIPAL WRITER
DATELINE: LENGTH: Long
So it's not surprising there is a dispute over the amount Salem would have to pay for most of the Catawba Magisterial District if Roanoke and Roanoke County are consolidated.
County officials say Salem could acquire the territory for $16 million - half the $32 million it would have to pay if it acquired the land by annexation.
For county officials, it's a cut-rate price: 50 cents for each $1 of value.
"I don't think they'll be able to get that territory for that price at any time in the future," said Dick Robers, chairman of the Board of Supervisors.
For Salem officials, it's no bargain because they do not agree with the method for computing the price. And they do not think Salem should have to pay for facilities that Catawba residents already have helped finance as county taxpayers.
"Asking the Catawba District residents to participate in any funding for any government they want no part of is unconscionable. They have paid their fair share of taxes for services rendered," said Mayor James Taliaferro.
If the Catawba area became part of Salem, the residents would have to help foot the $16 million bill because Salem City Council would use tax revenues from Catawba - as well as the existing city - to pay the consolidated government.
With the concurrence of Roanoke's consolidation negotiators, county officials have agreed to the half-price offer.
They said Salem City Council must also agree to a 25-year moratorium on voluntary petitions for annexation by residents in the Catawba District to become part of Salem if consolidation is rejected.
But Salem argues that it's not an annexation case - and therein lies the dispute and controversy.
The proposed settlement involves big bucks, but the $32 million figure is not an arbitrary number that was snatched out of the air.
Annexation settlements are based on the premise that a city should compensate a county to help offset the loss of territory and tax base.
State law requires an annexing city to pay the county for the publicly owned facilities in the territory it acquires and the net loss of tax revenue for five years. It is also required to assume a proportionate share of the county's bonded debt on schools, parks, libraries, sewer and waterlines and other publicly owned property.
That's how the consolidation negotiators for Roanoke and Roanoke County arrived at the $32 million figure:
$13.5 million for the replacement cost, less depreciation, of public facilities in Catawba. This includes Glenvar High School, Glenvar Elementary, Mason's Cove Elementary, Fort Lewis Elementary, Green Hill Park, McVitty Park, Glenvar Library, three fire stations and several other county-owned facilities. But this does not include the cost of fire trucks, ambulances, books, desks, chairs and other "contents of facilities." The county's Public Service Center and the Regional Training Facility are in Catawba, but they would be retained by the consolidated government.
$12.4 million for the net loss of tax revenue for five years in the area that would become part of Salem. The county collects $7.5 million in taxes a year in Catawba, based on its fiscal 1990 budget. It spends about $5 million a year to provide services in the same area. Consolidation negotiators estimate the merged government would have a net loss of about $2.5 million a year in tax revenue from Catawba.
$6.2 million for Catawba's share of the county bonded debt. The county's bonded debt is $65.2 million. Real estate with nearly 15 percent of the assessed value in the county lies in Catawba. Thus, 15 percent of the bonded debt would be $9.8 million.
The debt on the county-owned facilities in Catawba is $3.6 million. This would be subtracted from the $9.8 million because Salem would pay the replacement costs for them. This leaves $6.2 million as Salem's share of the county debt.
"It would not be fair to make them pay the debt on these facilities since they would be paying the replacement costs for them," said County Attorney Paul Mahoney.
Three county supervisors agreed to cut the $32 million figure in half after it became apparent last week that Taliaferro and Salem would not consider paying that.
"It was a concession by the county to help move consolidation along," Robers said.
Part of the $16 million apparently would be used to help pay start-up and operating costs for the consolidated government.
Taliaferro doesn't think it is fair to require Salem and Catawba residents to help pay the start-up costs.
"If the proposed Roanoke Metropolitan Government cannot stand on its own two financial feet, [consolidation negotiators should] be honest with the citizens and say so," he said.
Taliaferro argues this is not an annexation case because Salem is not seeking to expand or acquire any territory - it just does not want to be surrounded by the consolidated government without the right to expand.
Last week, Taliaferro said Salem should be required to pay only a proportionate share of the county's bonded debt, based on the assessed value of real estate in the portion of Catawba that it would acquire.
He said then that Salem might be willing to pay $9.8 million, but he now says that a "fairer price" would be $3.6 million, the debt on the Catawba facilities, rather than a proportionate share of the county's overall bonded debt.
The county, Taliaferro says, actually has been making a profit on Catawba because the county's own financial documents show that it collects $7.5 million a year in revenue, but spends only $5 million a year on services there.
If merger is approved, a second vote would be held to allow residents in most of Catawba to decide whether they want to become part of Salem rather than the consolidated government. Without a financial settlement, a second vote to allow the residents to opt out of the consolidated government would be meaningless.
Salem City Council will hold two public meetings in Catawba and one in Salem before voting on the proposed financial settlement.
by CNB