MSD Sales Tax and Assessment Rate: What You Need to Know

SALES TAX

Recently, there has been significant confusion and concern surrounding the sales tax revenue generated as a result of the Downtown Municipal Service District (MSD). MSDs are a North Carolina state designation, and Asheville's is administered locally by the Asheville Downtown Improvement District (ADID). Approximately $400,000 in sales tax revenue is estimated to be collected in fiscal year 2027, with City Council allocating $226,000 to police services and $174,000 to arts and events.

The ADID Board, Asheville Downtown Association, and our partners continue to work with City leadership and elected officials to ensure these funds are invested within the district and used for services and improvements that are above and beyond the City's existing Level of Service Agreement. We are also working with the UNC School of Government to better understand the statutory requirements and intended use of these revenues.

We know this is an important issue for Downtown property owners and stakeholders, and we share the desire for greater clarity around how these funds are collected, allocated, and ultimately invested. We'll continue to advocate for Downtown and share updates as we have them.

MSD PROPERTY TAX ASSESSMENT

Additionally, we want to provide clarity on the MSD property tax assessment following City Council action a few weeks ago. Because the North Carolina General Assembly did not authorize local governments to use Buncombe County's new 2026 property valuations this fiscal year, the City will continue using 2021 valuations. The ADID Board therefore elected to maintain the existing MSD assessment rate of 8.77 cents per $100 of assessed value rather than increase the rate to fully fund the previously adopted $1.42 million budget. ADID will absorb the resulting revenue difference and make adjustments as needed throughout the year.

Thank you for your continued investment in Downtown Asheville and your patience as we work through these issues.