Idea of prepared-food tax in GSO revived during Tuesday city council meeting, emails show lobbyists working behind the scenes

by Gale Melcher

During Greensboro’s city council meeting on Tuesday, the possibility of a prepared-food tax was publicly discussed for the first time in weeks.

Some members of city council, including Mayor Nancy Vaughan, do not support increasing property tax rates outlined in the FY 23-24 budget, which was approved Tuesday night. The budget includes a city property tax rate of 67.25 cents per $100 property valuation, a four cent increase from the previous budget

As an alternative, Vaughan suggested additional funding streams — including a prepared-food tax.

“I feel that not exploring all funding opportunities is irresponsible and puts our city at a competitive disadvantage,” Vaughan said, noting there have been “exploratory discussions about potential revenue sources, such as a prepared food tax.”

Over the past couple of months, Triad City Beat has been chasing answers about a potential 1-percent prepared food tax that would affect all residents of Guilford County. In early May, TCB uncovered conversations that showed some of the city’s most powerful individuals’ — including Vaughan and councilmember Zack Matheny — attempt to pass a prepared-food tax without voter approval by analyzing emails compiled on Open Gate City

Currently, the total state and county sales tax rates for Guilford County is 6.75 percent. With a prepared-food tax, an extra 1 percent would be tacked onto meals served out of local restaurants for both dine-in and carry-out.

When TCB asked Vaughan and councilmember Matheny in May about the prepared food tax’s status, Vaughan replied that there was “no movement.” Matheny said that he “attended some meetings and was copied on emails” but that he “hadn’t heard of anything in a while.”

However, Vaughan seemed to have changed her mind as of Tuesday’s city council meeting.

“A prepared food tax would require support of our residents, our delegation and our legislature,” she said, adding that at the current time the city has not submitted a request.

“The city is doing its due diligence to determine the benefits to our residents, our business and what the budget implications will be. It’s a complicated issue and we are still gathering information,” Vaughan said, noting that there will be “ample opportunity for input and discussion.”

Through the adoption of local acts, state lawmakers have the authority to pass a prepared-food tax. When drafting a local act, the General Assembly can dictate the terms of how a meals tax may be imposed, and may require that constituents get a say in the matter. Voters may be asked via a referen- dum whether or not to enact the tax. However, emails analyzed by TCB back in May showed that officials in Greensboro were interested in enacting the tax without voter approval

Councilmember Sharon Hightower inquired about the process on Tuesday evening, to which Vaughan replied that the city is “not ready to move forward” and that “we wanna make sure we have a good plan that answers all questions.”

“Who is ‘we’?” Hightower asked.

“It is an exploratory group,” Vaughan responded, and stated further that there are “a number of us looking at what different funding mechanisms could be.”

“The food tax discussion is troubling,” Hightower continued, adding, “because certain ones are having it and everybody’s not having it….I can’t support a food tax without a referendum.”

Who is ‘we’?

In an interview with TCB after Tuesday’s meeting, Vaughan stood firmly behind the idea of a prepared-food tax.

“I think that we would be silly not to consider it,” she said, adding, “and we have the largest coliseum arena in the state.”

TCB’s article from May unveiled how political representatives like Vaughan were having conversations with business leaders like the Greensboro Coliseum’s managing director Matt Brown about passing the tax for revenue.

“All that takes money to maintain, and when you’ve got Charlotte and Raleigh that have a significant amount of legislative support and things like the prepared food tax, we’d be silly not to be speaking with our legislators,” Vaughan said on Tuesday.

Councilmembers Marikay Abuzuaiter and Nancy Hoffmann have also voiced their support for a prepared-food tax in the past.

Hoffmann relayed to Brown in an Oct. 2 email that she was excited about the prospect.

“You know I have favored this for some years,” Hoffmann said, and thanked Brown for “bringing together all the players.”

“Count on me to help in any way I can,” she added.

More recently, Abuzuaiter brought the topic up in a May 9 city council work session. Abuzuaiter mentioned that she is a council liaison to the Greensboro Sports Foundation, saying, “We have been discussing quite extensively — other cities are way ahead of us…Greensboro has the opportunity to become a youth sports town, which we basically are but all of the other cities are so far ahead of us building all these new facilities.”

When asked on Tuesday evening if a voter referendum would be used to pass the tax, Vaughan didn’t give a clear answer.

“I would say everything’s on the table, but again it’s gotta be right for the city, for the county,” she said. “There are just a lot of moving parts, and we’re just not there yet.”

When TCB’s article came out in May, members of city council, including Mayor Nancy Vaughan, as well as other political players denied that there were ongoing conversations about the food tax as of this year.

However, in recent weeks, former Yes! Weekly Editor Jeff Sykes — who now writes a Substack delving into city government and politics called Washington & Greene — has used TCB’s city council email tool to uncover more emails. He then shared emails obtained through public records requests with TCB that appear to explain Vaughan’s change of heart.

These emails reveal months of correspondence regarding a prepared-food tax between Greensboro Sports Foundation President and CEO Richard Beard and representatives of KTS Strategies, a consulting firm and subsidiary company of Kilpatrick Townsend & Stockton that assists clients with advocacy and business strategy across all levels of government — in both state and federal arenas.

According to the newly analyzed emails, Beard and members of KTS Strategies have been discussing how to pass the tax in Greensboro since last fall.

Emails reveal GSO org working with lobbyists

In a Sept. 27, 2022 email, sports tourism industry leader Hill Carrow connected Beard with KTS Strategies Senior Managing Director Charles “Ches” McDowell — a lobbyist representing clients in all levels of government with a focus on the NC General Assembly — and managing director Nelson Freeman.

Carrow wrote: “Richard and I have worked on sports tourism projects in the Triad for many years, and he is now working to take it to the next level [in] Guilford County…. Richard is running point on an initiative in Greater Greensboro to get legislative approval for instituting a prepared food tax…. I told Richard that you guys were the best, and had done an outstanding job on our World University Games legislative request.”

On that same day on Sept. 27, Beard and McDowell connected via email, with Beard writing to McDowell: “We are working on a project that will require GA support. It would be a local bill and we can discuss more later. We have a community meeting to kick off the project sometime in the next 2 weeks. I would like to get that meeting in before we talk.”

Beard added in a separate email, “I think it would be better for me to get past a meeting scheduled on October 11 before we have a discussion.”

In previously discovered emails, Greensboro Coliseum Managing Director Matt Brown scheduled an initial meeting for Oct. 11 as well as a follow-up meeting for Dec. 2 to discuss their “next steps toward the implementation of a Guilford County wide Prepared Food Tax.” Brown invited a number of city officials and major power players to attend, including Vaughan, Zack

Matheny, Nancy Hoffmann, Beard, Guilford County Board of Commissioners

Chair Skip Alston, former Greensboro Mayor Jim Melvin and President and CEO of Greensboro Chamber of Commerce Brent Christensen.

On Oct. 27, Beard wrote to McDowell to arrange a call the following week.

On Dec. 3, Beard wrote to McDowell, saying that he was “ready to proceed with conversation and engagement of [their] team” and that he wanted to schedule a meeting with key stakeholders like Mayor Vaughan, Jim Melvin and Brent Christensen. Beard added that they “[were] working with HPU on an economic impact study on Sports Tourism in Guilford County.”

Beard then discussed “highlights” from initial conversation, including a “retainer of $10,000 per month for the duration of the assignment” and how the KTS Strategies team would guide them with “any and all conversations with GA members.” They would also assist in developing a strategy with Greensboro City Council members, Guilford County commissioners and local General Assembly members.

“Could we possibly schedule a meeting, in person, the week of 12/12 or 12/19, prior to everyone getting away for the holidays?” Beard asked in the Dec. 3 email. “My goal is to get this engaged so we are ready to move forward Jan 1.”

McDowell confirmed the details and Beard was later sent an engagement letter on Dec. 5 by Amanda Honaker, the company’s government relations advisor. A document discovered through the city’s public records request database shows an agreement for consulting services between Greensboro Sports Foundation and KTS Strategies.

“The term of our representation will start on January 1, 2023,” the agreement dictates.

Beard’s last discovered correspondence is dated Dec. 9 and was sent to Greensboro Chamber of Commerce President Brent Christensen. Vaughan was CC’d on the emails.

Lobbyists, business leaders skirt questions

Despite the preponderance of emails discovered through public records requests, when TCB asked Beard if KTS Strategies had made any movement on the prepared food tax with the General Assembly, Beard replied, “I have no comment.” He replied similarly when asked if the Greensboro Sports Foundation was still working with KTS Strategies.

When asked if anyone else would be willing to speak on the matter, Beard claimed, “There’s no story there,” adding, “I don’t have any comment based on what you’ve already reported.”

Despite Beard’s refusal to answer questions, the state’s lobbying directory, which is updated every 20 days while the General Assembly is in session, provides some insight. The most recent lobbying directory contains all registrations of lobbyists and principals as of June 2.

In Section 2 - Page 58 of the document, Richard Beard for the Greensboro Sports Foundation is listed as a principal — the person or governmental unit who hires the lobbyist and pays for the lobbying. KTS Strategies’ employees Charles F. McDowell, Nelson Freeman, Hampton M. Billips and John C. Easterling are listed as the lobbyists. All four have had Greensboro Sports Foundation listed as one of the principals they represent since January

Emails to KTS Strategies’ employees have gone unreturned for this story.

Vaughan also denied that the city itself was working with KTS Strategies on the prepared-food tax issue.

“We don’t have the contract with KTS,” she said. “Whatever we do has to go through the legislature…I believe that’s what they’re contracted to do at this point, to figure out what the procedure is…there’s really not an endgame at this point.”