Downtown development groups in Charlotte fear Senate budget provision

The Louisville Cardinal mascot and the NC State Wolfpack mascot help direct the Hawthorne Lane United Methodist Church handbell choir at Thursday's annual "Lights on the Square" tree lighting in uptown Charlotte. Charlotte Center City Partners hosted the annual tree lighting in Uptown Charlotte this Thursday, Dec. 4.
The Louisville Cardinal mascot and the NC State Wolfpack mascot help direct the Hawthorne Lane United Methodist Church handbell choir at Thursday's annual "Lights on the Square" tree lighting in uptown Charlotte. Charlotte Center City Partners hosted the annual tree lighting in Uptown Charlotte this Thursday, Dec. 4.

A little-noticed provision in the state Senate’s 500-page budget bill could jeopardize special tax districts that fund downtown development agencies throughout the state, including in Charlotte.

Sen. Trudy Wade, a Greensboro Republican, inserted language in the budget bill that would set up a referendum process for residents seeking to kill the tax districts, known as municipal service districts. In Charlotte, such property tax districts fund two major economic development groups: Charlotte Center City Partners and University City Partners, which market and promote their areas.

Under Wade’s proposal, if 15 percent of registered voters within the district petitioned for a referendum, voters living within the district boundaries would vote on whether to end the special tax and the services it funds. Business and property owners who live outside the district wouldn’t be able to participate in the process.

Wade said she’s responding to concerns about tax districts covering two historic neighborhoods in Greensboro. Property owners in the College Hill and Aycock neighborhoods pay an extra tax to fund landscaping, street lamps and other projects that “enhance the historic character of the districts,” according to the city’s website.

“I had some constituents call that were concerned there wasn’t an exit strategy for collecting taxes,” Wade said. “The citizens really didn’t have a strategy or a method to end it.”

Current law requires a majority vote of the city or town council to remove a municipal service district tax.

But many of the state’s municipal service districts cover mostly commercial property in downtown areas. The special property tax is established to fund events and services that draw visitors downtown and boost sales at shops and restaurants.

“We’re very concerned ... I think it’s important for this community to understand what’s at risk,” said Darlene Heater, executive director of University City Partners. She said the partnership’s efforts to market the fast-growing University City area and ensure that amenities such as sidewalks and parks are built could be imperiled by a minority of voters.

“I think the threat is if there are a few individuals that may not agree with some of the decisions (we make), they have the power to make decisions that impact the whole municipality,” said Heater. Her group is funded with a tax of 2.79 cents per $100 worth of property. That would equate to $55.80 a year on a $200,000 house, for example. Heater said she’s asked her board of directors to contact elected officials about the proposed change.

One objection raised by Heater and Michael Smith, CEO of Charlotte Center City Partners, is that under the proposed new policy only voters who live in the special tax district would be able to vote on a referendum to repeal the tax. That would exclude the businesses and commercial properties that pay a majority of such taxes.

“If there was a challenge to a municipal service district, that process would leave no voice for Bank of America, for Wells Fargo, for Duke Energy, for Grant Thornton, large property owners that own apartment complexes, large owners of hotels,” said Smith.

He said individual registered voters only make up about 15 percent of the taxpayers who fund the Center City Partners district, with the rest mostly commercial properties. “It’s not a representative formula,” said Smith.

He said the existing process, under which the same local municipal governments that establish tax districts can vote to abolish them, is sufficient.

“The existing legislation allows for stakeholders to register a complaint and bring it to the attention of the representatives who established it,” Smith said.

The provision appears on page 325 of the Senate’s budget bill and didn’t garner a single mention during the floor debate.

Asked why she didn’t put the proposal in a separate bill, Wade said the Senate’s bill filing deadline had passed before she began hearing complaints about the Greensboro tax districts.

House members – as well as Gov. Pat McCrory – have criticized the Senate for adding numerous policy provisions to its budget bill. Many of the policy provisions have far-reaching implications, such as a Medicaid reform plan and a proposed redistribution of sales tax revenue among counties.

The broader policy issues discussed in budget negotiations have meant that smaller items, such as municipal service districts, haven’t generated much talk as House legislators air their concerns about the Senate budget. It’s unclear which provisions – if any – will appear in the final budget agreement.

Rep. John Blust, a Greensboro Republican who has clashed with Wade recently over a local redistricting proposal, said the budget bills should be limited to addressing government spending. “Wouldn’t it be a great idea to prescribe that in our rules going forward?” he asked recently.

Charlotte’s municipal service district-funded groups

There are five municipal service districts in Charlotte. These special property tax districts fund two major groups: Charlotte Center City Partners, which also includes Historic South End, and University City Partners.

Center City Partners

What it does: The group encourages development in uptown and South End. It has a number of initiatives underway, such as plans to increase the amount of retail space uptown and strategies to drive growth on North Tryon Street.

How it’s funded: About 76 percent of Center City Partners’ $6 million budget comes from four municipal service districts. Property in the districts, which cover parts of uptown and South End, is taxed between 1.68 cents and 6.68 cents per $100 worth of value, or between $16.80 and $66.80 for every $100,000, in addition to other local property taxes.

University City Partners

What it does: The group promotes and markets the University City area, recruits businesses and funded a study to quantify University City’s economic impact.

How it’s funded: Property in the municipal service district is taxed at an additional 2.79 cents per $100 of assessed value, or $27.90 per $100,000. That money funded University City Partners’ $640,000 annual budget last year.

Ely Portillo