Raleigh city council reverses, votes down proposed west Raleigh tax

Raleigh City Council voted down a measure Tuesday that would have levied an additional tax on a portion of west Raleigh that's home to some of the city's biggest attractions: PNC Arena , the N.C. Museum of Art and the state fairgrounds.

Why it matters: With two stadiums, a hospital, a vet school, greenways, parks, and soon a new state health department campus that will house some 2,500 employees, the area is busy. And it's about to get busier.

Context: The tax would have generated hundreds of thousands of dollars annually to provide more services to keep the rapidly growing area, known as the Blue Ridge Corridor, safe and clean and aid in its development to make it a year-round destination, supporters say.

Driving the news: Ahead of the vote, one North Carolina lawmaker told Axios said he would move to block the tax from being implemented, should City Council pass the measure.

• Council members ultimately voted against doing so.

How it works: Had they voted in favor of the proposal, the move would've classified the Blue Ridge Corridor as a Municipal Service District (MSD) and triggered a property tax of 3 cents per $100 of assessed property value, generating nearly $475,000 in revenue, according to a recent city estimate .

• Many condos, apartment buildings and other residents were to be exempt from the tax, leaving some businesses in the area, including Raleigh-based software company Bandwidth , on the hook to fund the district.
• Raleigh currently has two MSDs: one on Hillsborough Street and one on Fayetteville Street downtown.

Republican State Sen. Jim Perry told Axios Monday he planned to move a bill addressing MSDs through the Senate Finance Committee he chairs.

• If city council approved the MSD, Perry said, he was considering legislation that would halt the tax from being implemented altogether — at least temporarily.
• "Worst case scenario, I could just suspend their ability to create anything like that until we get it cleared up," Perry said.

Perry plans to gather a group of stakeholders to study and consider how state law governing MSDs might need to be tweaked.

• The law allows for MSDs to be established for several reasons, including the revitalization of an area. Perry argues that the establishment of an MSD in the Blue Ridge Corridor "has nothing to do with revitalization."
• "Somebody needs to have conversations to reconsider this, or maybe more broadly, we just need to reconsider the policy and have more curbs around it," Perry said Tuesday.
• The change would be a tax burden on businesses who didn't want the district in the first place, Perry said.

Between the lines: If the legislature were to block the implementation of the tax, it wouldn't be the first time it has moved to exercise its power over cities.

• In last year's state budget, for example, lawmakers blocked local governments from passing ordinances that ban or restrict certain containers as two cities were considering regulating plastic bags.

The intrigue: City council approved the new MSD on a first reading earlier this month, but unanimously voted against it Tuesday, The News & Observer reports .

• According to the N&O, Mayor Mary-Ann Baldwin said before the meeting that "more work needs to be done in terms of citizen engagement and identifying which services will be provided."

Editor's note: This story and headline was updated after the City Council acted, and an earlier note removed that incorrectly stated the Council had voted only not to consider the designation.