The North Carolina General Assembly’s 2015-16 budget included a provision that changed some of the requirements of Metropolitan Service Districts, known as MSDs.
MSDs are a geographical creature of local governments that wish to establish additional taxes in a particular place for a particular service. MSDs are created for a variety of outcomes, such as beach control, erosion protection and drainage, sewage or transit projects.
Another common use of MSDs in North Carolina is for downtown revitalization, and Waynesville’s MSD has been doing exactly that for more than 30 years.
In Waynesville, property owners within the mile-long MSD — which centers on Main Street and runs from Veterans Circle on South Main Street to the intersection of Wall and North Main streets — pay an extra 20 cents per $100 in assessed property valuation on top of the city’s current 48.57 cents.
That extra revenue approaches $100,000 each year. Other donations and contributions push the total budget closer to $200,000 each year, which is spent on planning, marketing and streetscaping the downtown district.
The private organization that provides those services in exchange for that revenue is the Downtown Waynesville Association.
The DWA has managed Waynesville’s MSD since its inception in January 1986, and indeed predates the MSD itself, having been established in late 1985. It consists of a large volunteer board, a full-time executive director, a small paid staff and an even smaller office.
Because of the October 2015 legislation, the free ride for the DWA is now over.
It — like any other interested, qualified entity — must now submit to the town by 4 p.m. July 14 a formal proposal to compete for the management of the MSD, setting up a potential battle for control over the MSD’s revenue and authority.
Not that there are organizations lining up to compete for the right to provide this service, which is highly specialized, relies heavily on the cooperation of and volunteerism from MSD property owners and offers slim opportunity for any profit-taking.
On June 25, the Mt. Airy Board of Commissioners unanimously approved a proposal from Mount Airy Downtown Inc. (MAD) to continue managing its MSD, which taxes property owners 21 cents per $100, earning about $80,000 a year.
No other entity submitted a proposal for the Mt. Airy contract, and it appears likely the same will happen in Waynesville — at least this year.
During the town board meeting, Mayor Gavin Brown said the only two organizations off the top of his head he could imagine even considering the possibility of competing for the contract to manage Waynesville’s MSD were the Haywood County Chamber of Commerce and the Haywood County Tourism Development Authority.
TDA Executive Director Lynn Collins said the chamber has “plenty to do” marketing the county and isn’t interested; Chamber President CeCe Hipps said they weren’t interested, either.
Contracts to manage an MSD may be awarded for up to five years, but it’s certainly now a possibility that this peculiar line of business — managing MSDs — could attract entrepreneurs utilizing economies of scale to manage many North Carolina MSDs from centralized offices miles away at a lower cost.
Granted, it would probably take a lot to unseat the DWA, especially thanks to the support of Alderman Jon Feichter, who called the solicitation of proposals “a solution in search of a problem.” He also cast what he called a “protest vote,” which was the lone opposition to the measure.
Feichter is vice president of the executive board of the DWA, and his father Rex was instrumental during the time of its formation.
Other stipulations in the new regulations for MSDs include the requirement that governments seek “meaningful input” from property owners as well as residents. That can come in the form of focus groups, public comments, or a public hearing, which the town of Waynesville has called for July 12.
The town must also hold a public hearing before the contract is awarded.
Perhaps the greatest threat to the DWA is another new law — stemming from the same 2015 requirements forcing competitive bidding on MSD service contracts — that may allow property owners within an MSD the opportunity to leave.
In accordance with Session Law 2016-8, introduced by Rep. Ted Davis, Jr., R-Wilmington, property owners within an MSD may submit in writing a request to have their parcels removed from an MSD if that parcel is “not in need of the services, facilities, or functions of the proposed district to a demonstrably greater extent than the remainder of the city.”
If the municipality finds after holding a public hearing that the reasons for removal are compelling, they can by ordinance redefine the MSD and exclude the parcel.