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No change in special tax district, business panel says

Hendersonville's Business Advisory Committee rejected one member's proposal to scrap the downtown special tax districts and spread the burden on taxpayers citywide.

Board member Bob Papes said it makes sense to raise the money from all taxpayers because they benefit, too, from a vibrant downtown.

The city’s downtown Municipal Services District charges property owners a tax of 28 cents per $100 valuation. The tax is imposed on about 120 properties between King and Church streets, including more than 20 restaurants. It raises about $250,000 a year. The 12-cent MSD tax in the Historic Seventh Avenue District raises $17,000 a year.

“The original impetus for the MSD (in 1975) was in fact a drastically changing retail environment,” downtown development coordinator Lew Holloway told the committee during its January meeting. “We had the movement of Belk and JC Penney out of downtown into the mall … Now malls are under assault and you have large retailers evacuating there.”

Holloway visits downtown businesses to find out what they need to prosper.

“I spend a lot of time talking about potties and parking because there is a need for bathrooms and parking downtown,” he said. “Our average rents range $8-10 a square foot. Outside the district you’re going to have a hard time getting space for $8-10.”

Proceeds from the downtown tax district cover things like façade grants and downtown promotions. Raising the money through the general fund would require a 2-cent property tax increase for all and would cost the city the flexibility the special taxing districts have under state law.

“We are able because it’s MSD dollars to do some creative things with grants and other things that are very difficult to do with general fund dollars,” Holloway said. “Because it’s generated in the district, we’re able to turn around and reinvest it in the district.”

Committee member Beau Waddell said the change would have Main Street and Seventh Avenue competing at budget-crafting time with things like police, fire and streets.

“That money just goes into the pot,” Waddell said. “They have to fight like everybody else because it’s not mandated that it be used there.”

The committee took no action on Papes’s request.