Raleigh backtracks on new property tax for parts of west Raleigh after concerns raised

Raleigh will not advance a new property tax for parts of west Raleigh after community members and a state senator objected.

City leaders were set to vote Tuesday on establishing a new tax district for the area near PNC Arena, the N.C. Museum of Art and the Blue Ridge Road corridor. Significant development is expected there as PNC Arena is renovated and land nearby is redeveloped.

City leaders voted in favor of the municipal services district earlier this month but on Tuesday voted unanimously against it. Council member Corey Branch was excused and absent from the meeting.

“More work needs to be done in terms of citizen engagement and identifying which services will be provided,” Mayor Mary-Ann Baldwin said before the meeting.

State senator contacted

Some local businesses reached out to N.C. Sen. Jim Perry to oppose the new municipal service district and tax.

“The indication from them was that a tax was going to be put in place beginning July 1 for services that they don’t need, haven’t asked for and don’t want,” Perry, a Republican who represents Beaufort, Craven and Lenoir counties, told The News & Observer before the vote Tuesday.

“I’m not really a flame thrower,” Perry said. “I just do think hitting pause is the prudent thing to do.”

Perry declined to name the businesses that reached out to him to avoid a “target on their back.”

“We don’t want to stand by and have anyone paying any tax, especially something so, seemingly, unnecessary,” Perry said. “Now, I think they they were looking at it for all good reasons. I’m not doubting the motives at all. But it’s up to us to set tax policy. And it seems like this one’s a little, just a little loose.”

Perry is chairman of the Senate Finance Committee, and said he’d be forced to file a bill to take action against the proposed tax if city leaders moved forward.

Two council votes required

Creating a new tax district requires two votes by the City Council. The first occurred June 4 with all but council member Megan Patton voting in favor of the district.

On Tuesday, council member Jane Harrison, who represents part of the proposed district area, said she’d like to see more community engagement around this topic.

“I really value the potential services of a Blue Ridge MSD, and I want west Raleigh to have strong planning as Raleigh grows,” she said.

Part of the concern is that most of the property in the district is state-owned and would be tax exempt from the municipal service district. The council also agreed to exclude residential properties to avoid passing on tax increases to renters.

The city had been looking at a tax of 3 cents per $100,000 of assessed value, estimated to generate $473,200 in annual revenue. A group would then apply to manage the funds similar to how the Downtown Raleigh Alliance serves the municipal service district in downtown Raleigh.

What people said:

A majority of people who spoke during a May public hearing supported the new tax, though most were affiliated with the Blue Ridge Corridor Alliance, which has pushed for it.

The Blue Ridge area has grown in just the five years that Rebecca McGrail has led the Follow the Child Montessori School.

“We believe that becoming an MSD will ensure that future growth in our community will have a greater chance of being well planned and encourage stakeholder engagement,” she said. “That signage and wayfinding will be optimized, especially for those new to the area, that [will assure] both cleanliness and safety will be prioritized.”

Former Wake County Commissioner Sig Hutchinson also spoke in favor of the new tax, saying he remembers Hillsborough Street before a tax district there improved the area. The city has two municipal service districts: in downtown and along Hillsborough Street.

“It was a dump,” Hutchinson said.

“It was seedy. It was anything but a destination,” he said. “Only with the investment of the infrastructure and the funding of an MSD that could focus on the thousands of small decisions that needed to be made every day did it becomes successful.”

But a handful of business people did speak out against a new tax.

Property taxes have already gone up significantly and business owners are facing increased property values after the most recent revaluation, said Brian Mazzocchi, representing three apartment complexes in the district. Those increased taxes should cover some of what is being proposed under a new tax district, he said.

Matt Shelton, senior director of real estate facilities for Bandwidth, said too much of the proposed budget would go to overhead, and that more than 60% of the property in the district is tax exempt and would not have to pay the tax.

“Bandwidth supports responsible development of the west Raleigh area,” he said. “We chose this area for our corporate home, and we’re invested in its success. We just don’t think the MSD is the best way to do it in this capacity.”