A Guide to Business Improvement Districts in North Carolina

<p>UPDATE: The General Assembly changed some procedures for Municipal Service Districts after this post was written. Analysis of the changes can be found here.<br /> </p> <p>A city’s governing board wishes to support and promote its downtown area. It wants to install sidewalks and street lighting. It wants to renovate the storefronts that line its main street. It wants to hire personnel to provide additional security in the area. It wants to invest in downtown art initiatives and other beautification projects. It wants to sponsor a series of festivals and markets in the city center. Finally, it wants to aggressively market its downtown area and local merchants. But how can the city pay for it all?</p> <p>The city could use its property tax proceeds or other unrestricted revenue sources to fund most, if not all, of these activities in its downtown area. The city also could accept voluntary donations from the commercial entities located in its downtown area to support these expenditures. But, can the city compel the commercial and other entities located within the downtown area to fund all of these activities? The answer to this question is yes. And the mechanism for doing so is to establish a special taxing district.</p> <p>G.S. Ch. 160A, Art. 23 (Municipal Service District Act), authorizes North Carolina municipalities to establish special taxing districts to fund, among other services or functions, downtown revitalization projects. Specifically, the Municipal Service District Act implements Section 2(4) of Article 5 of the North Carolina Constitution, which allows a local government to define special areas (districts) [...]</p>