Todd Paris, Associate Editor and Salisbury Attorney
♦ In many cities, governmental activities like downtown development and county development are performed by government departments. If this were done in Salisbury, we would have a City Department for Downtown Development and a city and county Office of Economic Development. In Salisbury no such offices exist because their functions were “handed- off” to private entities like RowanWorks (EDC) and Downtown Salisbury, Inc. There are more such organizations than these two.
DSI is a non-profit corporation under N.C. law and you will find its articles of incorporation below. I can’t find articles of incorporation for the EDC on the Secretary of State’s website. It may not be incorporated.
There was a name change certificate in 1990. An image is not available on-line. According to the original Articles of Incorporation, it was set up in 1983 to be a 501 (c)(3) corp. which under IRS Code allows it to not only to be tax exempt, but also have donations made to it tax deductable. Such a organization is required to file annual IRS 990 Forms that certify the amount of pay to officers and directors. The link to a public site that has DSI’s last Form 990, (2013) was provided by Paula Bohland at DSI. It may be found here:
http://990s.foundationcenter.org/990_pdf_archive/561/561432420/561432420_201406_990.pdf
IRS 990 Forms provide very limited information and appear to be focused on director and employee compensation. This is a good thing in that it would provide useful information to the public so as to determine which 501(c)(3) organizations were merely “fronts” for profit making ventures. In DSI’s case it’s clear this is not a problem as the directors are not compensated and employee expenses appear to be “over-all” reasonable. It tells nothing about their budget otherwise, like how much money they are losing on “The Empire Hotel” or was “Slide the City” profitable.
An oft cited argument for letting non-profits perform these quasi-governmental functions is that they may do certain things that the governmental units can not do. For instance, they may take prospective clients out for expensive meals and book expensive travels that the public may not “understand” and otherwise keep things secret. They may also pay their leadership more than the public might understand. I was told that the head of RowanWorks EDC has a higher salary than the county manager, however that is impossible to confirm because there are three employees on their website the last Form 990 only shows @250K in total salaries. There is no breakdown as to individual slaries. County Manager Aaron Church, as a governmental employee, makes 125K per year as revealed on the County’s website. A pdf is attached below. I have no idea what DSI’s Director Paula Bohland earns.
https://app.box.com/s/824p3tbo7ck872yp0jwsce0y1ycaq65v
The obvious downside to letting these quasi-governmental groups perform governmental tasks is that as private organizations are not subject to Freedom of Information requests from the public under state law and need not reveal their financial reports or budgets and are not publically audited to make sure they follow applicable law.
Under N.C. corporations law, they need not reveal their bylaws and disclose who and how people get elected to their Board of Directors. Are there rules that require so many directors nominated by City Council or Commission? We may never know.
Now all this may be “just fine” except that they receive public tax money as the lion’s share of their budgets. DSI, for instance is almost entirely funded by a special municipal service district property tax of 17.66 cents per thousand that goes straight to DSI. My MSD tax bill each year is $433.00. I was told my combined tax rate is the highest in the county.
This situation causes concerns. Recently, on “Politics This Week” a radio show on the Ford Broadcasting Network, hosted by Jeff Morris; County Commissioner and DSI Director Judy Klusman revealed, (reading from a prepared statement from Paula Bohland, head of DSI) that two requests for proposals (RFPs) for sale of the “Empire Hotel” (which is owned by DSI) were sent to developers and that exciting news was on its way.
This reporter contacted DSI through Paula Bohland and requested a copy of their budget and asked for an opportunity to interview someone at DSI. The response was:
“Thank you for contacting DSI. Since we are a not for profit organization, our for 990 is public record. You can review a copy of it at http://nccsweb.urban.org/PubApps/search.php?1.
There is currently no one available to provide an interview for your organization.”
Screenshots of the actual emails are attached for your information and edification below.
Subsequent questions would have included: Can you tell us who the Requests for Proposals were sent to? Can we have a copy of the requests for proposals? Why aren’t the requests for proposals on DSI’s site? If this building is for sale, why is it not listed on commercial real estate web sites? Why is this sale the best kept secret in Salisbury ? Who holds the certificates of deposit? Of course, they need not reply under the law.
Frankly, for my $433.00 annual contribution I expect more. Judy Klusman has suggested that if I want to learn more I should attend DSI meetings, and in all fairness, DSI past Director and former City Council Candidate Mark Lewis has suggested he will let me “see” last year’s budget over lunch. He wouldn’t give me a copy.
Perhaps we need a state law that says if a quasi-governmental non-profit receives more than 50% of it’s annual revenue from public taxes that it must: release it’s budget and bylaws and be subject to public freedom of information requests just like it would be if it were a department of the city or county, which of course it replaces or “stands in” for. After all, it’s our tax money, right?
In order to further cast “sunshine” upon these two organizations, and prepare for future articles, I have filed a FOIA with the City of Salisbury asking for:
1. Any copies of budgets, budget audits and (or) IRS 990 forms and (or) other financial information since 2006 from “RowanWorks” (Salisbury-Rowan County Economic Development Commission EDC) or Downtown Salisbury, Inc. or similarly named entity, that receives funds from the City of Salisbury directly or indirectly or from the MSD taxes. I realize they are separate organizations, but surely if we are giving them tax dollars we must have demanded a copy of their budgets in the exercise of due diligence.
2. Any financial statements or other documents presented by either of these entities as to their costs and expenses, income and (or) finances in the City’s possession for the same time period.
3. All emails between Downtown Salisbury, Inc., its employees and (or) directors and employees and (or) Council members of the City of Salisbury for the same time period.
4. All emails between “RowanWorks” (Salisbury-Rowan County Economic Development Commission EDC) and (or) its directors and employees and employees and (or) Council members of the City of Salisbury for the same time period.
Please provide these electronically and if possible as “Word Documents” so as to reduce the cost to the citizens of Salisbury .
I realize they are separate organizations, but surely if we are giving them tax dollars the City must have demanded a copy of their budgets in the exercise of due diligence. Right?
I realize they are separate organizations, but surely if we are giving them tax dollars the City must have demanded a copy of their budgets in the exercise of due diligence. Right? The final “rub?” In exchange for my $433.00 annual contribution to DSI through my MSD tax, I thought I would at least get an interview.
