From Daily Planet Staff Reports

The local economy appears to have hit bottom and will rebound — gradually — in the near future, especially if there is a loosening of credit, according to most of the speakers at the first Asheville Area Economic Forum on June 19 at the Asheville Civic Center.

Mayor Terry Bellamy, who served as moderator, noted that the forum was organized to provide an opportunity for the public to hear from key advisors to city and Buncombe County staff, as well as from local officials, “to get a pulse of the local economy.” About 100 people attended.

In showing four slides depicting the severity of the recession locally, Tom Tveidt, research director for the Asheville Area Chamber of Commerce, said “they also show a bit of an uptick,” meaning brighter days may be ahead.

Under the onslaught of a two-punch combination, the city was hammered by an ailing housing market, followed by a pounding of local manufacturers from a national recession, he noted.

From September to October 2009, “we had a free-fall in jobs,” Tveidt said. In that period, 8,500 jobs were lost in the metro area including Buncombe, Haywood, Henderson, Madison and sometimes Transylvania counties.

As a result, “for the first time ever, Asheville had a higher unemployment rate than the United States” earlier this year. “It was probably the biggest drop (in employment) ever” in the metro area.

To put the numbers into perspective, Tveidt said, “We’ve lost two to three to four years of growth in employment.”

The only positive growth sectors in the metro area were health care and government — “and everything else lost.”

“As a native of Asheville, it’s good to have memories of what downtown Asheville looked like in the late 1970s and early ‘80s,” Bellamy said. “Then, many buildings were boarded up.” Now, downtown looks “totally different” — and much better.

The mayor added that “today, we’re guided by a downtown master plan, which is a collective vision for our community.”

Bellamy termed downtown as “one of the fastest-growing neighborhoods in Asheville.”

Further, she said, “We’re looking for solutions. We’re past the blame game.”

She then introduced the panelists, each of whom made relatively brief presentations.

Speaking first, Pam Lewis senior program director of AdvantageWest, reviewed the activities of the publicly and privately funded business promoter.

“There are a lot of folks right now out there who would love to buy, who have the cash to put down, who have the good job, but they don’t have what I consider to be a ridiculous credit score of 750 in order to qualify for a loan.”

Next, Bellamy introduced Tveidt as a sage who is well-known for saying, “Asheville doesn’t have high highs and low lows, which, he says, is a good thing.”

With a grimace, Tveidt said that, despite Bellamy’s reference to his mantra of the area’s ability to avoid high highs and low lows, “We didn’t do it this time. We’re in the low lows (now). It’d due to the mix of industries we have.”

U.S. metro areas that were not hit as hard “had a weighting in government and health care” that exceeded Asheville’s, Tveidt said.

Professional business services lost 3,000 jobs, especially in temporary work agencies including construction, Tveidt said. “Theoretically, the temps should be the first to come out, following by hospitality and leisure.”

He concluded, “To summarize, we’ve been in a very severe recession — nothing like we experienced in the last two decades. We’re going to have a long way to go to get back to 2007 levels.”

Prior to introducing the next speaker, Bellamy emphasized that ridership is way up at the Asheville Regional Airport in Fletcher, which, she said, is a good sign. In a reference to Tvedt’s comments about government job growth, she said, “It’s not the city and county just adding jobs.” The government jobs mostly were added at the Veterans Administration Hospital Call Center and the new Census Center.

At that point, she introduced Jon Creighton, assistant county manager and planning director for Buncombe County, who reviewed the county’s then-proposed 2009-10 county budget. “Our plan is to leave the (real estate) tax rate at 52.5 cents” per $100 valuation, Creighton said.

At $313 million, the new budget totals $6 million less than last year’s spending plan, he noted.

Creighton said 87 jobs will be eliminated by October for $2.4 million in savings.

On the bright side, he said Buncombe home prices are averaging 1 to 2 percent annual appreciation, in contrast with many other metro areas around the U.S. For instance, he noted that Wilmington has a negative appreciation rate for its homes.

Another speaker, Ben Durant, chief financial officer for the City of Asheville, noted that the city’s two revenue sources are sales taxes and property taxes.

Sales taxes are projected to decline 6.8 percent this year, while property taxes also have “slowed down.”

Compounding the city’s financial woes was an $870,0000 increase in health care coverage for employees, which Durant termed “a significant jump.”

In all, the city is facing $2.5 million in “uncontrollable cost increases, with a decline in our revenue.”

Since city leaders mandated that there would be no tax increase, one tack was to seek 100 percent cost recovery on all city services, which will raise many utility and recyling bills. Also, several fee increases were approved.

The city’s revenue moves should produce a projected $700,000 for the city.

Meanwhile, expenditures were slashed by $2.9 million, including salary freezes, reduced overtime and the elimination of 20 full-time jobs.

While the city budget is being balanced with no tax increase, a decline in tax revenue and no major service cuts, Durant said, “In closing, I think we’re seeing some signs we’re coming out of this recession. It’ll be slow and we’ll have to practive belt-tightening for a long time.”

The final panelist, Kimberly Evans, president of the Asheville Board of Realtors, noted that housing is appreciating at a 1.5 percent current annual rate in the city. In 2007, “at our high,” the average sales price of a house in Asheville was $277,842. Today’s average is $237,175.

At present, “the buzz is out there,” Evans said. “The calls are picking up. The amount of showings are increasing. We’re moving into our bus season any way.”

She praised the federal government’s first-time homebuyer $8,000 credit incentive program as “working well.” However, Evans said, “We’d like to see that increased to $15,000 for any homebuyer.”

Evans said interest rates “are on their way up, spurring real estate sales, but they’re still historically low.”

She added, “The credit market is where the business problem is. You must have (at least) a 750 score to quality for a loan. Many people have money for a down payment, and a good job, but don’t get a loan.”

“The commercial market is a little slower to come out than the residential market. The challenge is to get commercial lending....

“On the positive side, the Realtors are starting to feel positive.” However, she acknowledged that there were 1,750 members of the ABR last year, versus just 1,500 members this year.

“By 2010, we’re actually showing forecasts of positive numbers,” she said.

In a brief question-and-answer session that followed, someone asked if Asheville is actively recruiting industries to locate in the city.

Bellamy replied that, while city-county disputes garner much publicity, “when it comes to city-county development,” the two parties work together well.

Another questioner asserted that the hospitality industry often employs low-paid young adults, “but what about green industries?”

Tveidt said the chamber of commerce has a significant position in green job development, involving coordination with Asheville-Buncombe Technical Community College and area  high schools.

Bellamy added that Jan Davis, the vice mayor in attendance, was spearheading a green job project on the city’s behalf, but that no specifics could be revealed at this juncture.

Another citizen asked, “With commercial real estate seen as a lagging indicator, what do you see for the future for the commercial market?”

“The biggest issue is the credit market,” Evans replied. “Right now, it is virtually impossible to get commercial loans.”

She added, “We should see commercial begin to come out in 2010, as residential begins to come out in 2009.

On a different question, Evans said banks have directed appraisers “to appraise things at liquidation prices.

“Currently, with all the short sales and foreclosures, banks (often) bring in their own appraisers from out of the area. That’s a big problem — they don’t know the area.”

Cecil Bothwell, a City Council candidate, criticized the forum organizers for failing to include anyone from social services and enviromental groups.

Bellamy noted that the meeting was planned for an hour and that limits had to be placed on who was invited to speak, otherwise “we’d be here all day if we had to include everyone.”

In concluding the forum, Bellamy noted with pride, “This is a first!"