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

Raleigh will not move forward with a new property tax for parts of west Raleigh after community members and a state senator raised objections.

City leaders were set to vote Tuesday on 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 in the area as PNC Arena is renovated and land is redeveloped nearby.

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.

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 said in an interview with 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.

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

On Tuesday, Council member Jane Harrison, who represents part of district, 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 within the district is state-owned and would be tax exempt from the municipal service district. The city council also agreed to exclude residential properties from the district after concerns about passing on tax increases to renters.

If approved, the city would have added a 3 cents per $100,000 of assessed value that would generate $473,200 in annual revenue. A group would then apply to manage those funds similar to how the Downtown Raleigh Alliance is financed through a municipal service district in downtown Raleigh.

What people said:

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

The Blue Ridge area has grown in just the five years that Rebecca McGrail, has led the Follow the Child Montessori, which is located within the district.

“We believe that becoming an MSD will ensure that future growth in our community will have 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 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 new tax district brought significant investments to the area. The city has two municipal service districts: in downtown and along Hillsborough Street.

“It was a dump,” he said. “It was seedy. It was anything but a destination. 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 representatives did speak out against a new tax.

Property taxes have already gone up significantly and business owners are facing increased property valuations 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.

Matt Shelton, senior director of real estate facilities for Bandwidth, also spoke against a proposed new tax and tax district. Too much of the proposed budget will go to overhead, he said, and more than 60% of the property within the district would not have to pay the tax because they are tax exempt.

“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.”