Terence McEnally, an American, said displaying the flag is partly to advertise to his primarily Hispanic clientele and partly to demonstrate pride in the country.
But the flag would fly over city property and encroach on that space.
The city questions the advertising aspect of McEnally's desire to hang the flag. Raleigh's Law and Public Safety Committee decided Tuesday to study the issue further before ruling on whether flying the flag violates a city ordinance.
McEnally said the controversy brings up a number of free-speech issues. If people can fly American flags and NASCAR flags, why not a Mexican one, he asked.
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