Altered downtown Indy tax district legislation hits governor’s desk

Indianapolis’ planned Mile Square economic enhancement district will likely operate from a smaller tax pool and with a majority state-appointed board under state legislation that reached the governor’s desk this week.

House Enrolled Act 1199, a bill that would shift funding mechanics for the district, is on its way to becoming law with a last-minute change.

The economic enhancement district funds are intended to pay for the operational costs of a low-barrier shelter near the 1000 block of East Georgia Street in Fountain Square, along with cleanliness, beautification and homelessness outreach efforts in downtown Indianapolis.

In the final moments of the legislative session Friday night, lawmakers added a provision to a separate bill related to state and local administration that would exclude single-unit residences, unless property owners choose to opt-in to the annual payments.

Those properties join an exempted property category created by the Republican-dominated Indiana General Assembly that already included property that received a homestead deduction and apartments. Apartment building owners would have covered the largest piece of the total $5.5 million that the Indy Chamber and Downtown Indy Inc. hoped to raise, and the Indiana Apartment Association vocally opposed the passage of the economic enhancement district.

Before the changes, the proposal from the Indy Chamber and Downtown Indy Inc. included all property types with no exemptions. The Democrat-led Indianapolis City-County Council voted to approve that version of the framework mostly along party lines in December.

The initial plan called for the downtown economic enhancement district initially to encompass the Mile Square. In those boundaries, single-family homeowners would have been required to pay an annual $250 flat fee starting in 2025, while owners of commercial properties would have been expected to pay nearly 0.17% of their properties’ gross assessed value, or about $1,681 per $1 million in gross assessed value.

The changes would allow Indianapolis to expand the size of the district beyond just the Mile Square to a total of 2 square miles. However, the legislation requires the boundaries to be equal on all sides.

It also caps the funds raised from the district at $5.5 million and makes the district framework expire after 10 years with no renewal option.

The amendments also change the setup of the board that will oversee the taxing district’s spending. Under the original ordinance, the Indianapolis mayor had two appointments and the governor had one on an eight-member board. Under the changes, the mayor will have one appointment and the governor will have four appointments to a nine-member board. Two members will be appointed by the City-County Council. The other two will consist of one member of the state Senate appointed by the president pro-tem and one member of the House appointed by the speaker.

Proposals will require six affirmative votes to pass. The amended bill also requires a majority of the board members to be property owners within the district.

In an emailed statement, Indy Chamber Vice President of Policy and Strategy Taylor Hughes told IBJ that the organization “appreciates the dialogue and the agreement that an EED structure is needed to invest in the vitality of the city.”

“The final version of 1199 includes some items we anticipated like an increased district area and codifying some version of the cap included at the local level,” Hughes wrote. “It also included some items that will take some discussion to figure out how to implement, like the removal of an ability to grow the overall district budget as costs rise with inflation, especially with the need to serve a larger district.”

The former version of Indianapolis’ economic enhancement district would be voided under the legislation, meaning the Indianapolis City-County Council and other stakeholders will have to restart the implementation process for a new district that complies with the state legislation.

The bill awaits Gov. Eric Holcomb’s signature or veto, but will also become law without his signature.