TO: Mayor and Members of City Council
THRU: Kelly Strickland, Assistant City Manager
Jeffery Yates, Assistant City Manager
FROM: Christopher Cauley, MPA, Economic and Community Development Director
DATE: November 24, 2025
RE:Title
Administrative Report on Downtown Municipal Service District Boundary and Inclusion of Park View TownhomesTitle
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COUNCIL DISTRICT(S):
Council District(s)
District 2
b
Relationship To Strategic Plan:
GOAL 2: Responsive city government supporting a diverse & viable economy
2.1: To ensure a diverse City tax base
2.2: To invest in community places to ensure revitalization and increase quality of life
GOAL 4: Desirable place to live, work, & recreate
4.4: To provide a clean and beautiful community with increased green spaces
4.5: To ensure a place for people to live in great neighborhoods
GOAL 5: Financially sound city providing exemplary city services
5.1: To ensure strong financial management with fiduciary accountability and plan for future resource sustainability by aligning resources with City priorities
Executive Summary:
At the September 2, 2025, City Council Work Session, staff was directed to review the inclusion of Park View Townhomes (Park View) in the Downtown Municipal Service District (MSD). The following report outlines the history, creation, legal framework for changes, and financial impact of this request.
Background:
The City established the Downtown MSD in 1978 under Article 23 of N.C.G.S. §160A, authorizing an additional ad valorem tax to fund enhanced downtown services. The district expanded in 1983 and has been renewed every five years since, most recently in June 2023 (Resolution R2023-024). The current rate for Fiscal Year 2026 is $0.1489 per $100 of assessed valuation.
The MSD supports activities such as downtown maintenance, marketing, economic development, and events that are beyond the scope of the City’s general fund. Its management evolved as follows:
1978 - 2002: City staff coordinated services.
2002 - 2016: City contracted with the Downtown Alliance for business recruitment, marketing, and activation.
2017 - present: City contracts with Cool Spring Downtown District, Inc. to manage enhanced services with an arts- and entertainment-focused mission.
The Park View Townhomes development at 301 Bragg Boulevard was completed in 2013 on the former Days Inn property through a public-private redevelopment agreement with H&H Holdings. The project delivered 47 townhomes valued collectively at approximately $12.98 million and is managed by the Park View Townhome Association. City GIS confirms these parcels are entirely within the current MSD boundary. There are other exclusively residential properties within the MSD boundary.
Issues/Analysis:
While Park View is a fully residential community, it lies within the established Downtown Municipal Service District. The MSD was initially designed to promote downtown revitalization through business development, events, and placemaking efforts. Over time, however, downtown has evolved into a mixed-use environment where residents, businesses, and visitors all share in the benefits of enhanced maintenance, security, marketing, and cultural programming.
Residents of Parkview directly benefit from the proximity to downtown amenities and events such as the Dogwood Festival, the International Folk Festival, and seasonal programming that enhance quality of life and property values. The continued investment and activation of downtown through the MSD have helped sustain higher demand and market appreciation for residential properties near the urban core, including Parkview.
If Council wishes to alter the Downtown MSD boundary, the procedure is governed by
N.C.G.S. § 160A-538.1. In this case, subsection (a1) could apply. Under (a1), a property owner may submit a written request to the City Council to remove the owner's tract or parcel of land from a service district. The owner shall specify the tract or parcel, state with particularity the reasons why the tract or 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 and provide any other additional information the owner deems relevant.
Upon receipt of the request, the City Council shall hold a public hearing as required by N.C.G.S. § 160A-538.1. If the City Council finds that the tract or parcel is not in need of the services, facilities, or functions of the district to a demonstrably greater extent than the remainder of the City, the City Council may, by ordinance, redefine the service district by removing therefrom the tract or parcel.
The removal of any tract or parcel of land from any service district shall take effect at the end of a fiscal year following passage of the ordinance, as determined by the City Council, according to N.C.G.S. § 538.1(b).
Budget Impact:
Should Council amend the boundary to remove Parkview, the Municipal Service District (MSD) Fund would lose approximately $19,300 in annual revenue. To maintain the current service level, Council could alternatively increase the MSD tax rate from $0.1489 to $0.1610 per $100 of assessed valuation, an increase of $0.0121 per $100. Without a rate adjustment, the reduction in revenue would require either a proportional decrease in the MSD management contract or an increase in the General Fund transfer to offset the shortfall.
Options:
This report is for information only.
Recommended Action::Recommended Action
For information only, no action required unless Council moves to add to an upcoming Work Session.
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Attachments:
Map of Municipal Service District Boundary with Park View Townhomes Highlighted