MSD expansion blasted at hearing

By Tom Joyce

May 18, 2014

Speakers at a public hearing on the proposed expansion of Mount Airy’s Municipal Service District (MSD) were unanimous in their criticism of a move they say would subject affected property owners to more taxation while offering questionable benefits.

“We are opposed to it,” said Mary Gardner, an official of Carter Bank & Trust who spoke at Thursday night’s hearing on behalf of that institution. “We don’t see what it’s going to do for the bank,” Gardner added of the expansion.

Carter Bank, located on Willow Street, is among 18 different properties that are targeted for annexation into the Municipal Service District that now basically encompasses the North Main Street corridor downtown. The extra territory would include certain sites on Independence Boulevard, Virginia Street and Pine Street, along with the entire north side of Franklin Street stretching from Willow to South streets.

The local Municipal Service District was formed in 1975 to generate funds to construct parking lots in the downtown area through a special tax levied on property owners there. That tax is now 21 cents per $100 of assessed valuation, which is charged on top of regular property taxes of 52 cents.

A process to expand the MSD was undertaken by the city earlier this year at the urging of a group known as Mount Airy Downtown Inc. It administers the extra tax revenues, which in recent years have been used for facade improvements along with parking facilities.

That group also has taken on an additional role due to the city’s recent involvement with the state Main Street Program that includes aggressive approaches to keep downtown areas vital.

“This is a very key piece of land when you consider it is a gateway to the downtown district,” Mount Airy Downtown’s governing board president, Ted Ashby, said of territory eyed for the MSD expansion during a presentation before the public hearing. “This area needs our help to utilize its full potential.”

“Part of the reason we want to expand is to offer the same services to that area,” Main Street Coordinator Lizzie Morrison said during the presentation regarding design expertise and other benefits offered to present MSD sites. “There’s a lot of potential with the buildings and area we’re wanting to expand (to).”

However, those who would be affected by the move were not convinced, noting that some of the area considered is essentially isolated from the central business district and its makeup is different from properties there.

“We don’t see where it’s going to benefit our part of town,” said Gene Clark, who is associated with a business group known as Triple C of Mount Airy which owns property at the corner of South and Franklin streets now zoned for industrial use. “We love Mount Airy — but we just don’t see how it’s going to benefit us down there,” Clark added of the proposed expansion.

That sentiment was echoed by another hearing speaker, Wes Collins, owner of two properties in the same vicinity.

“I don’t see how expanding the MSD will benefit the Franklin Street area,” remarked Collins, who said he “went broke” trying to operate a business there. “The reason we went broke is, we couldn’t get any traffic off Main (Street).” Collins said there is no reason to believe being annexed into the MSD would change this dynamic.

Gardner, the Carter Bank representative, said she can understand how Main Street programs might benefit some entities, but not “a business such as ours,” which can be described as a basic branch office.

Properties eyed for the expansion reflect a mix of industrial, residential and business zones. The listed owner of five of the 18 tracts is Spencer’s Inc. of Mount Airy.

Homes Included

Another hearing speaker, David A. Cooper of Franklin Street, said his property — sandwiched between two parking lots — is one of only two residences lumped in with the area targeted for annexation.

“We won’t reap any benefits,” Cooper said in response to claims about how the expansion would be good for businesses involved. “What we will reap is higher taxes.”

Cooper suggested that it was unfair to pay the extra MSD tax on his home, which would amount to more than a 40 percent increase in taxation when the 52-cent property tax is added. The homeowner said he doesn’t think officials would attempt such a move citywide.

“You would all be voted out,” he said.

Cooper asked that the residences be exempted from the expansion plans.

Clark, the Triple C spokesman, also said it isn’t right to impose extra taxation on property owners in the district, and that funding for MSD activities should come from the community at large rather than putting it on their backs. “These business owners have already invested more than the people in the community.”

The speaker added that instead of a proposed 4-cent property tax cut included in the latest city budget proposal, taxes could be reduced by 3 cents and the extra penny used to fund MSD programs.

City Attorney Hugh Campbell interjected to say that MSD tax funds can be used for items such as facade grants, which is not the case with regular city dollars.

But in challenging that, Clark says his research of applicable state laws shows there is flexibility for revenues from traditional property taxes to be used for public improvements within an MSD. An example is a recent decision by the commissioners to allocate $70,000 for the development of a downtown mini-park.

“I don’t think it should be expanded,” Clark said of the MSD. “But I do think the city should address it (the funding of programs there) somewhere in the budget.”

Clark also said that other than parking lots, he hadn’t seen many examples of ways the MSD has improved the appearance of the downtown area in the 39 years since the special tax district was formed.

The commissioners took no action on the expansion plan Thursday night.

If approved, the annexation would become effective on July 1, the start of the city’s next fiscal year.

Tom Joyce may be reached at 336-719-1924 or on Twitter @Me_Reporter.