In most of North Carolina, successful small business people understand that having a vibrant local non-residential tax base is a critical component to a healthy local and regional economy.

However, Orange County isn’t like most of North Carolina, here small business people who question the wisdom of a commercial tax base (heavens you wouldn’t even consider industry) are rewarded by their political pals with low interest loans.

Recently Orange County Senator Ellie Kinnaird declared that she has given up trying to expand the southern Orange tax base by persuading a Costco to locate there. Having been told “no thanks” by the financial-understanding-challenged Carrboro governance board (“BOA), she accedes to their higher fiscal wisdom of shackling over ninety percent of the local property tax burden onto town residences.

After her announcement, one of the Carrboro small business geniuses challenged Ms. Kinnaird’s efforts. Mr. Brian Russell, owner of the Carrboro Creative Co-working empire uttered the following “geniousity”. “Senator Kinnaird, Can you provide research that shows residential taxes would be reduced or remain the same if the commercial tax base is increased? As a member of the local business community I’ve asked this question of several local elected officials. One commissioner pointed me to a study that says additional commercial taxes to the County would NOT significantly decrease residential taxes.

I share your concern that many people are priced out of our Towns. Plus I agree that a diverse group of businesses of all sizes helps our community. But until I see more data to back up the assertion that commercial taxes will lower our residential taxes I will remain skeptical.”

Can Mr. Russell be serious? Unfortunately, in his vernacular, “yesh”!

Mr. Russell apparently doesn’t comprehend that one of the dreaded big box stores (like Costco) is worth about $17,000,000 in assessed value. Such a property will pay the same amount of town property tax money (which goes solely into town coffers) as about 60 average Carrboro residences. Let’s not forget that, unlike 60 homes, the retailer doesn’t burden the county with school needs. Thus, the almost additional $300,000 that the retailer will pay the county in county taxes reduces the burden on existing Carrboro taxpayers. (Wait, doesn’t Mr. Russell live outside high-tax Carrboro?)

If Carrboro had but five big box retailers within its borders, then the town would receive about $500,000 in town taxes. That’s equivalent to 300 homes, or to about 3% of the town budget. Just five stores.

How does Carrboro reward Mr. Russell for his enlightened financial state? Why he is a special high-risk town debtor. He has received an only partially secured Carrboro low interest loan.

One of the pride and joys of the local living economy movement is the Carrboro revolving loan fund (CRLF). Created by a grant of non-local state funds, the CRLF lends money at less than market interest rates to businesses that supposedly can’t get loans from private capital lenders.

Recently one CRLF recipient (Original Ornaments) went belly up in the hotly competitive Carrboro glass bead business. The town of Carrboro invested $70,000 in a small retail beading business in the midst of the worse financial downturn since the Great Depression.

Mr. James Harris, Carrboro’s ED director, foresaw no problem in issuing the owner, Ms. Schlatter, a loan of $70,000 from town coffers. He even foresaw no problem with Ms. Schlatter only putting up $25,000 in assets. (Try getting that debt-to-collateral ratio in the real business world.) The term was six years. The interest rate was 3%.

Turns out, that the Schlatter loan wasn’t the only undercollateralized loan approved by Mr. Harris in his rush to empty the CRLF coffers. Around the same time, Mr. Harris sent another CRLF loan to the Boa for approval. The business plan was to rent cubicle space in a common office in Carrboro. So many great businesses have been launched from coworking space. The loan was for $90,000 at 2% interest (a rate one–third better than even Ms. Schlatter got) over six years. The payment plan was interest only for the first six months, then interest and principal payments.

So what was the collateral for the $90,000 loan? It was $40,000 in home equity. The collateral was a second mortgage position on the business owners’ home.

Why would the town of Carrboro accept less than 50% collateral on a business that, unlike Original Ornaments, didn’t even have an inventory to help secure the loan?

The answer is simple if you recognize the time-honored tradition of Carrboro politics, reward your pals. Turns out that the requesting business, Yesh Thirty Seven LLC dba Carrboro Coworking, is owned by a married couple. Mr. Brian Russell is one partner. Ms. Ruby Sinreich is the other. Yes, it’s the same Ms. Sinreich who is a longtime friend of Mayor Mark Chilton.

Pulpsters will remember that as a college-educated, private secondary school educated, single female she received a low–interest loan from Empowerment, Inc. courtesy of Mr. Chilton. Ms. Sinreich denied that the loan was in return for her supporting Mr. Chilton in his run for Carrboro office. Ms. Sinreich also operates the local censored political blog known as Orange Politics. Despite, Ms. Sinreich never having lived in Carrboro, she's avidly supports Mr. Chilton in all of his developer/mayor schemes.

Pulpsters should note that as of June 2008, the town of Carrboro was sitting on over $400,000 in CRLF cash. Within the next year, the town had exhausted the fund. Here’s a table showing the wise dispersals creating dozens of well paying jobs and oodles of boodle in sales taxes, at least if you're Mr. Harris.

Note the Carrboro Raw “juice bar in a van” is so dedicated to repaying your loan money that it closed for business over the Christmas break.

No word on when the Boa will require Mr. Harris to produce an actual accounting that shows how much money has been given over the past decade to create exactly how much in additional tax revenue for the town.

In yet another display of palocracy (see Phictionary) at work, the Carrboro Boa is about to spend town money on rent for another coffee bar cum playpen cum office hangout.

Freelance web designer and Chapel Hill resident, Brian Russell, is in the process of applying for a Carrboro town revolving loan. Mr. Russell is husband to media darling, former Chapel Hill Planning Board member, Orange Politics blog censor, “dances with bricks” anarchist, Mayor Chilton backer, wannabe affordable housing bourgeoisie rentier, trustafarian disciple, and now real estate advertiser political analyst, Ruby Sinriech. He wants Carrboro to pay for the rent and furnishings for a “shared workplace for freelancers and other creative types”.

Carrboro’s crack ED guru, James Harris, is dying to lend him the money, public money for creating a private franchise empire. Mr. Harris, busy ignoring the closing of the Track & Field business (see Hot Orange Anemic Carrboro ED Story) spends his time getting this important not-yet-even-an–applied–loan story into the local media.

Mr. Russell sees no reason why the town shouldn’t enrich Carrboro historic business district landlords further, anticipating the new digs being built at 300 Main and Roberson Square.

No word on why Mr. Russell doesn’t get a real office, like most for-profit businesses, assuming Mr. Russell doesn't file for tax-exempt status for his business.

No word on why Mr. Russell can’t meet other creative types in the existing coffee bars in Carrboro.

No word on why Mr. Harris hasn’t contacted a well-capitalized business that already operates a network of coffee bars with internet access, “Starbucks”.

See Carrboro Citizen Anemic Carrboro ED Story.