Source: Rhino Times Greensboro

State and County in Cahoots Over DMV

by Scott D. Yost

January 05, 2012

Not only is it good to be the king, it’s also good to be Guilford County.

Recently, Guilford County staff decided to get Guilford County government into the business of running a license plate office – a service in North Carolina that’s almost always provided by private companies. So Guilford County Manager Brenda Jones Fox jotted three sentences down on an application and sent it to the Department of Motor Vehicles (DMV) in Raleigh.

That sparse application was sent on Friday, Oct. 14 and received by the state on Monday, Oct. 17, and, even though the deadline for the applications closed on Oct. 14, Guilford County’s application was accepted and the county promptly beat out 39 private providers that had applied to open the license plate office in Guilford County.

On the county’s application, which was signed by Fox, two of the three sentences explained to DMV officials why the county wasn’t going to answer a question on the form about where the county intended to open the license plate office.

That part of the application asks applicants to, “Give proposed office location with a description of the facility and available parking.”

Guilford County’s response – or rather its non-response – was no doubt much more vague than that of the 39 private vendors who were hoping to win the right to open a license plate agency in the county. The county’s response simply said Guilford County officials would get back to the state’s DMV on that.

“Pending application approval,” Guilford County’s response stated, “the County will find a suitable location. The County has several properties which may be considered in the location process.”

Another question on the application to run the license plate office asked whether Guilford County planned to “operate the agency in conjunction with another business.” The county’s one-sentence response reads: “If successful, the County may consider including property tax collection at the same location as the LPA [License Plate Agency.]”

Those three sentences constituted the entirety of Guilford County’s answers on the application. When it came to the part of the form that asked for the county to list its liabilities and assets, Fox’s response states, “See attached,” and she sent along a copy of the county’s 138-page Comprehensive Annual Financial Report for fiscal year 2009-2010.

It’s hard to say if big counties like Guilford County get an automatic pass when it comes to getting state approval for new license plate offices – it’s hard to say because there aren’t any other large counties in the state that run a license plate agency.

However, if the DMV is looking for applicants that have shown a history of prudence in financial affairs and have a sterling reputation created by a lack of scandals, it’s certainly unclear how in the world state officials came to the conclusion Guilford County fits that bill.

In Forsyth County, the county manager made a similar move for that county to open a license plate office, but the Forsyth County Board of Commissioners nipped the idea in the bud because they didn’t want Forsyth County competing with private businesses.

Forsyth Commissioner Gloria Whisenhunt said the commissioners in that county were so disenchanted with the idea that it never made it as far as an official vote. She said that, when the manager proposed the idea, it seemed wrongheaded to the majority of the commissioners for the county to get into a business that private providers could handle.

According to Whisenhunt, a move by Forsyth County staff to open a license plate agency was viewed by the Forsyth Board of Commissioners as the exact opposite of what county government should be doing – encouraging private enterprise and promoting business in the county, not, she said, displacing it by expanding government.

“You always hear privatize, privatize, privatize,” Whisenhunt said. “Well, this seemed to be going in the other direction.”

Guilford County Commissioner Billy Yow said he’s aware there are other counties in the state that operate a license plate office, but he said other counties get into the license plate business out of necessity rather than desire. “Those are small counties where the population isn’t big enough to make it profitable for private businesses,” Yow said.

Yow has been highly critical of the prospects of Guilford County opening a license plate office. Yow said the business model Guilford County has in mind would pay workers more than private offices pay, and, he added, he doesn’t believe county officials have thought through the cost and implications.

He has also said Guilford County had an unfair advantage compared to the other applicants, and the county running an office where there are two private offices already in place is likely to result in unfair competitive practices by Guilford County.

Yow said Guilford County should be promoting private enterprise rather than swooping in to a business it hasn’t been in before and running an office that’s almost always handled by private providers in other parts of the state.

The two existing license plate agencies in Guilford County are on West Friendly Avenue in Greensboro and on Westchester Drive in High Point. Based on Guilford County’s population, state DMV officials have concluded that the county needs three license plate agencies, and state officials said that therefore they’re eager to open a new office after a long-standing office at Golden Gate Shopping Center in Greensboro was shut down on Friday, Sept. 9 due to fraudulent practices.

Marge Howell, the communications director for the NC DMV, said there are 120 license plate offices across the state, and, she added, the state contracts with private providers to run 101 of those. She said that, in addition to the 101 run by private owners, there are 19 license plate offices run by governments or quasi-governmental entities: nine counties, five cities and three chambers of commerce, and there are also two offices run by the state. The state provides license plate agency services at the DMV’s main office in Raleigh and at its office in Charlotte.

Howell said some of the counties that do run an office are Ashe County, Hoke County, Swain County and Watauga County.

Those counties have populations of 27,000, 47,000, 14,000 and 51,000 residents respectively. By contrast, Guilford County has a population of about 488,000.

The cities and towns in North Carolina that run plate offices are also all small. They include Angier, Marshall and Robbins.

Howell said that, while counties like Guilford County might have a large number of applicants – such as the 39 who applied to open the new office in Guilford County – in some other counties that’s far from the case. Sometimes, Howell said, the state’s classified ads asking for applicants get little to no response.

“In some counties we’ve had to advertise more than once for applicants,” Howell said.

One reason some counties have trouble finding a private provider is that it’s a highly regulated business with strict guidelines. The office must have handicapped accessibility and must provide sufficient parking and restroom facilities. In addition, before a contract is awarded by the state, private provider applicants undergo a background check, and they must provide evidence of their financial stability.

Also, the amount that can be charged for services is set – as is the amount the state pays the license plate agency. The state pays agencies – whether run by a local government or a private contractor – $1.43 per standard transaction such as a plate renewal. The state’s license plate office contractors get $1.27 for collecting the “highway use tax” on newly purchased vehicles, which is the sales tax, or 3 percent that must be paid to the state when a vehicle is bought. For most title work, the state pays the office $1 for each transaction.

One applicant who lost out to Guilford County in his quest to open the office spoke with The Rhinoceros Times but said he did not want his name used. He said he didn’t want to lose a chance to bid on future state contracts, but he said he was informed by state officials he had lost out on the state contract to run the new office.

He said he thought he had a good chance at winning the right to open a license plate agency before the county got into the competition.

He said he and his partners filled out the application “extensively” and went down to Raleigh for the interview. He said that, after the interview, he and his partners felt they had a good shot at getting the state’s approval.

“We had a good interview and everything went well,” he said.

He added that state DMV officials asked all sorts of questions about ethics and financial viability, and that they also asked about available parking – something, he said, that was clearly a key concern for DMV officials.

“There were a lot of open-ended questions,” he added.

Guilford County sent a high-powered contingent to its interview in Raleigh to make the county’s case for the office. That entourage consisted of Fox, Guilford County Tax Director Ben Chavis, Guilford County Attorney Mark Payne and the county’s Assistant Tax Director Greg French.

The losing vendor said that, around the first of December, the state informed him they had “found someone who was more qualified.”

The applicant said he then read the Thursday, Dec. 15 article in The Rhino Times about the county’s plan to open the office.

In that article, Yow stated he had heard initial estimates that, with benefits, each license plate office employee will cost the county $48,000 annually, with the office manager likely costing the county over $60,000 a year.

The source who lost out to the county said his reactions to the business model proposed by the county was astonishment.

“This is unreal,” he said.

He said he didn’t think there was any way the county would make a profit based on everything he’d heard, and private providers couldn’t compete. “We worked the numbers quite a bit,” he said.

He also said that he and others were wondering about parking at the Independence Center, which is Fox and Chavis’ first choice for a location.

Chavis has said it may be necessary to take parking spaces needed for the license plate service from county employees. He said Guilford County doesn’t promise parking spaces to employees when it hires them.

Yow said the Independence Center is already home to enough county services. Yow said no one could have asked for a better illustration of the parking problems at the Independence Center than to drive by the office on Wednesday, Dec. 28 – a day when county property owners were scrambling to pay their tax bills before the end of the year. “They’re lined up in the street,” Yow said that day.

Yow is right: On the afternoon of Wednesday, Dec. 28, the parking lot at the Independence Center, which is a block and a half from the World Headquarters of The Rhinoceros Times, was packed and cars were waiting in the street to get in.

The Independence Center already has four county functions that draw a lot of people to the building daily. The center houses the county’s Tax Department, the Planning and Development Department, environmental health staff and Child Support Enforcement.

The new county jail is opening in 2012, one block from the Independence Center, and that jail is expected to create a need for about 250 to 300 parking places in an area of town where parking is already hard to come by, and where no new parking is planned.

Howell said the DMV is eager to get a third office open in Guilford County as soon as possible. It’s not clear what will happen if the county commissioners vote against the move after staff has already done all the paperwork and planning. While Yow clearly opposes the move and several commissioners say they simply don’t know enough yet because staff hasn’t kept them informed, at least one commissioner is very gung ho on the idea: Chairman of the Board of Commissioners Skip Alston said he likes the prospects.

“I think it’s a great idea,” Alston said.

Alston said the license plate office could turn out to be a real revenue generator for the county and he added that the details of the business, such as salaries and the locations, were in no way set in stone simply because some initial figures and preliminary options had been tossed around.

Commissioner Kirk Perkins said he wasn’t sure about the wisdom of Guilford County getting into the license plate business, but, he said, he thinks putting a new agency in the Independence Center makes no sense whatsoever.

“I know I’ve got issues about putting it in the Independence building,” Perkins said. “Taxpayers don’t want to wait in line because someone’s getting a tag renewed.”

He said he had very serious concerns about parking in that area.

The Board of Commissioners is scheduled to discuss the license plate office idea for the first time on Thursday, Jan. 19, their first regular meeting of 2012.

Chavis said one consideration in determining the proposed county salaries paid had to do with the existing county pay structure and the fact that the new employees would fall under the Guilford County Tax Department.

Chavis said the license plate office operators would have a minimum salary of $25,000 – the salary of an office specialist in the department – and the license office manager salary offered by the county will start at a minimum of $31,000. Those are the minimum salaries and the county’s attractive benefits package and retirement plan bump those wages up to the range Yow cited.

Chavis gave his rationale for using $25,000 and $31,000 as starting salary levels. “This is the lowest level entry position in the Tax Department—an office specialist,” Chavis said.

On the application, the state form asks if the county has any experience running a license plate agency, Fox checked the “Yes” box, but no explanation of the county’s experience is given on the form.

When Chavis was asked what experience the county had in the license plate business, he responded in an email that Guilford County uses the DMV’s computer system in the course of its tax collection duties.

“It is the Assessor’s responsibility to determine ownership of property as it relates to motor vehicles for taxation,” Chavis wrote. “Since 1993 our office has accessed and used DMV’s online system to examine ownership, title, license plate renewal, lien holder, block information, etc. We use the same screens and system currently used by the LPA to do title and registration work.”

Chavis also wrote in the email that, if the county opens the office, there will be ample training.

“Should we be allowed to open this LPA,” Chavis wrote, “DMV would require 3 weeks of onsite training for staff that would cover all the details related to Standard Operating Procedure. Given our experience since 1993, we are going to [be] well prepared for training and also operating this office.”

Chavis may be right about that, but that doesn’t mean the 39 private vendors who got beat out by the county will approve of it, and the same goes for the county employees who are set to lose their parking places – and, for that matter, the county residents who dread having to go downtown and fight for parking to renew their vehicle registration.