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Budget provision would target Downtown Salisbury, Kannapolis

By Josh Bergeron

josh.bergeron@salisburypost.com

Sandwiched between utility commission fees and science program allocations in the Senate’s budget is a provision that would allow voters to petition for the abolition of Downtown Salisbury Inc. and other municipal service districts, including a recently created one in Kannapolis.

In Salisbury, the municipal service district funnels funds to Downtown Salisbury Inc. through an additional tax on property owners. The tax adds 16 cents per $100 to bills for buildings, cars and other property. In return, Downtown Salisbury plans events and guides development downtown with the revenue. Downtown Salisbury was formed in 1980 and incorporated as a non-profit group in 1983.

Kannapolis’ municipal service district is similar, but intended to function differently. It was created in June to specifically help with the city’s downtown development plans. By creating a municipal service district, the city can take out special obligation bonds rather than general obligation bonds. Special obligation bonds allow the city to use tax revenue rather than real property as collateral for a loan.

A provision inserted into the Senate’s budget by Sen. Trudy Wade, a Republican from Guilford County, would allow voters to eliminate the service district through a petition process. The bill would require 15 percent of voters in the service district to sign a petition requesting the municipal service district be repealed. It would then go onto a ballot and only voters in the service district could participate.

Among other policy-related provisions in the Senate’s budget proposal, Wade’s measure was criticized by State Rep. Harry Warren — a Republican whose district includes a large portion of downtown Salisbury — as being a policy measure rather than being relevant to funding state government.

“My concern with it being in the budget is that this is a piece of policy never vetted through the committee process,” Warren said. “I have an objection to it being sandwiched under the shadow of the budget.”

The House version of the budget doesn’t contain the municipal service district provision.

Without being able to review the measure through a typical committee process and, later, on the House floor, Warren said he would object to the Senate’s budget provision.

If a vote occurs and favors repealing or abolishing the municipal service district, it would be effective at the end of the coming fiscal year.

Kannapolis Mayor Darrell Hinnant, who was in Raleigh this week, said he was told the measure is being changed as the legislature sorts through budget proposals. Hinnant, however, is unsure Kannapolis and other cities wouldn’t still be negatively affected by the final proposal. He cited the elimination of the business privilege licenses as an example of his skepticism.

“When they eliminated business licenses, we were told ‘you will be held harmless and have another income stream to pay for the loss of revenue,'” Hinnant said. “I haven’t seen that number yet either.”

But the interest may not exist to eliminate the municipal service districts in either city.

“I don’t know how our downtown would have developed and continued to develop without Downtown Salisbury Inc,” said Paula Bohland, the director of Downtown Salisbury Inc. “We’re not just a leader in Salisbury and the county, but across the state.”

Business owners and residents echo Bohland’s sentiments.

Frank Goodnight, who lives downtown and has a business just outside of the municipal service district, said the additional tax rate paid by property owners is put to good use.

“I hate cliches, but if there’s ever been a bang for the buck, Downtown Salisbury is it,” Goodnight said. “There is something going on downtown fairly regularly. There’s not hardly a Friday night where you can’t find something to do.”

He said much of the activity and business downtown is, at least partially, a result of Downtown Salisbury Inc’s efforts.

Councilwoman Karen Alexander, whose architecture firm is downtown, cited a number of small grant projects that have helped business. Before Alexander had served on the city council, she received a Downtown Salisbury Inc grant for renovations to her building.

“Downtown Salisbury has allowed for improvement in the facades of small businesses that would not have happened otherwise,” Alexander said. “If you look at before and after pictures of downtown, it’s like stepping into a time warp.”

In Kannapolis, a small number of residents actually live within the downtown district. Kannapolis’ goal is to renovate its downtown buildings and bring businesses and residents to the area.

In the series of seven community forums about Kannapolis’ downtown redevelopment plans, residents have all been supportive, Hinnant said.

“Overwhelmingly, the response has been that the city ought to do this,” he said. “Citizens recognize there is going to be a financial cost, but are still in favor of doing it for a number of reasons.”

Increasing the vibrance and vitality of downtown is one reason, Hinnant said. He said Kannapolis chose to create a municipal service district after being told it would be the best way to go about downtown revitalization.

He said “monkeying around” in North Carolina’s tax code that’s occurring in Raleigh isn’t helping cities and counties plan for schools, buildings, water and sewer systems or infrastructure improvements.

Contact reporter Josh Bergeron at 704-797-4246

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