City-County Council rejects proposed $3M downtown tax on property owners

A crucial vote to establish an economic improvement district in the Mile Square—which involved imposing a fee on property owners to help pay for improved infrastructure—failed Monday night in a major setback for supporters who were lobbying for the Indianapolis City-County Council to establish the district before a stricter state rule regarding such districts kicks in.

The proposal was voted down 15-8, with one council member abstaining. The proposal was supported by seven Democrats including Council President Vop Osili, Vice President Zach Adamson, and former President Maggie Lewis.

But most Republicans, along with six Democrats, voted against the proposal, which would have created a 10-year district with a $3 million annual fund to pay for improvements such as landscaping, amenities and downtown security. The meeting room was filled with residents who came to show their support or disapproval of the proposal.

The vote came after little discussion, and no council members expressed publicly why they were against the proposal.

“Any time finances or additional tax dollars come into play, it’s just hard to get on board with it,” said Adamson of why he believed the proposal failed. “This was a substantial amount of money. That was part of it…whether or not it was an appropriate amount of money. It was hard for people to wrap their brains around this being an additional source of revenue.”

Shortly after voting against the Mile Square economic improvement district, the council voted overwhelmingly 21-2 to approve a similar, though much smaller, proposal to create an economic improvement district in Fletcher Place and Fountain Square along Virginia Avenue.

Adamson said it was clear that proposal “had much larger numbers of support, a much more modest budget and [was] much smaller in its scope.”

The Mile Square proposal appeared to be in jeopardy as recently as the council’s June 11 Metropolitan and Economic Development Committee meeting, where it passed without the committee’s recommendation for approval.

At that meeting, it became clear that those advocating for the Mile Square district’s passage, led by not-for-profit promotion group Downtown Indy, had just barely received the number of signatures required by law to advance the proposal—and several were disputed by opponents of the proposal.
In order for the economic improvement district to pass, it needed signatures of more than half of the property owners in the Mile Square and enough owners to represent a majority of the area’s total assessed value.

At the June 11 meeting, the data provided to the council listed 885 owners and 455 signatures, said council lawyer Fred Biesecker, or 51.4 percent of owners.

But the apartment industry contested some signatures, pointing out people who had rescinded their support, those who needed spouses to sign, and those properties where owners had turned over. Taking into account those people, the proponents were just shy of the 50 percent threshold.

Biesecker said in the final accounting, “it was close” and “we were prepared to recommend they had made it, barely, by two votes."

Now that the vote for the economic improvement district has failed, it will be much harder for the same proposal to pass in the future.

A state law that goes into effect July 1 raises the threshold for approval of such districts to 60 percent on both requirements.

Minority Leader Mike McQuillen said he thinks a downtown economic improvement district proposal could eventually pass despite the new state law.

"I think it’s very likely this will be reworked, rewritten, come back again for the next process,” McQuillen said. “Presented slightly differently, I think there’s a good chance something could get through."

The $3.1 million under the failed proposal would have come from different annual fees imposed on various classes of owners: Commercial property would have been taxed one-eighth of one percent of assessed value for their properties. Residential owners would have paid an annual flat fee of $100. And hotels would have paid 50 cents per room occupied per night.

The budget would have included $1.5 million for cleaning and beautification; $710,000 to provide outreach to the homeless and increased safety and security; $585,000 to provide an “enriching user experience;” and $360,000 toward economic development.

Downtown Indy Inc. President Sherry Seiwert declined to comment after the vote.

But Andrea Hunley, a downtown resident and local school principal, said the vote was a “huge setback.”

“The fact that it failed is really disappointing and it’s really a slight on our entire city, and it shows the lack of progression of our City-County Council,” Hunley said. “I think we have to keep pushing because our city needs us to. We’ll have to pause and regroup, but we’ll come back stronger."

The council members who voted for the proposal were Adamson, Monroe Gray, Blake Johnson, Lewis, Jeff Miller, William “Duke” Oliver, Osili and Leroy Robinson.

Those who voted against it were Jeff Coats, Susie Cordi, Jared Evans, Colleen Fanning, LaKeisha Jackson, Scott Kreider, Frank Mascari, Janice McHenry, Mike McQuillen, Brian Mowery, Marilyn Pfisterer, David Ray, Christine Scales, Joe Simpson and John Wesseler.

Jason Holliday abstained because of a conflict and Stephen Clay was absent.