Amended bill would retain taxing district but some could opt out

An Indiana Senate committee on Tuesday adopted an amendment to a bill originally aimed at disbanding the recently-created Mile Square economic enhancement district, essentially keeping the designation in place, but with several changes.

The changes to House Bill 1199—adopted 14-0, by the Senate’s Tax and Fiscal Policy Committee—fully rewrites the single paragraph bill introduced in January by Rep. Julie McGuire, R-Indianapolis, that aims to abolish the enabling legislation for the EED passed by the General Assembly during the final hours of the 2023 session.

The amended bill heads to full Senate for consideration.

The Democratic-controlled Indianapolis City-County Council set the wheels in motion for the tax in December, when it voted 19-5 along party lines to create an economic enhancement taxing district within the boundaries of the Mile Square.

As it stands, the current district would require single-family homeowners to pay an annual $250 flat fee starting in 2025, while owners of commercial properties would be expected to pay nearly 0.17% of their properties’ gross assessed value, or about $1,681 per $1 million in gross assessed value.

The amended language would give apartment building owners, who through the Indiana Apartment Association have opposed the district, an option of whether to opt in to the tax. The same opt-in would be extended to properties in the district that receive a homestead tax deduction.

The amendment also adds another seat to an advisory board—giving the governor a third member—and allows for the district to be drawn larger than the Mile Square, although any boundaries would have to be equal on each side.

Sen. Scott Baldwin, R-Noblesville, who authored the amendment, said the move follows several weeks of discussion between lawmakers and groups including the city of Indianapolis, Downtown Indy Inc. and the Indy Chamber.

While the amount the district would generate with the amendment taken into account has not yet been determined, the maximum revenue remains capped at $5.5 million per year, with a lifespan of 10 years. The revenue cannot be used to pay for bonds associated with the proposed low-barrier homeless shelter on Shelby Street, but can be used to cover operation expenses.

The money is expected to replace the $3.5 million in federal COVID-19 relief money secured by Downtown Indy Inc. nearly two years ago that was granted to enhance and beautify downtown, and help homeless individuals in the neighborhood.

Baldwin said the city being on centerstage with the NBA All-Star Game over the weekend further emphasized a need for a sustainable solution to homelessness and ensuring stability for downtown residents and workers.

“Generally what it does is that allows for the operational revenues that [Indianapolis leaders] seek to pay for their low-barrier homeless shelter, and I think everybody can agree that there are problems that need to be addressed,” said Baldwin. “After this weekend’s success, I think this is kind of pivotal for the city of Indianapolis, regardless of politics. It’s important that the General Assembly supports our downtown.”

Of the more than two-dozen people who testified about the bill during Tuesday’s committee hearing, most were in favor of maintaining the economic enhancement district—albeit with some confusion stemming from the adoption of the amendment earlier in the hearing, leading to some inadvertently saying they opposed the bill.

The Indy Chamber and Downtown Indy Inc. led the coalition supporting the amendment, and they were joined by representatives from Cummins Inc., Elanco Animal Health Inc., and several downtown property owners.

Likewise, a representative for the Indiana Apartment Association said the group would support the bill in its new form, as did Dave Flaherty, CEO of Flaherty & Collins Properties—both of whom had previously opposed the EED, in part because it didn’t have a provision for apartment owners.

Flaherty did not give a clear answer on whether the company would opt its downtown properties into the EED, but told the committee it plans to donate $400,000 toward downtown beautification and homelessness mitigation efforts.

Others expressed outright opposition to the bill, including a handful of property owners and a representative for DefendDowntown.com, an organization that says it represents business owners and residents who live and work in the Mile Square.

Likewise, bill author McGuire indicated she is opposed to the amendment, because it strips away the intent of the legislation’s initial goal. She said she believes there are other avenues for the city to generate revenue for operating a low-barrier shelter, whether through reallocation of funds from other parts of its budget or by Downtown Indy Inc. using donations from member organizations.

Baldwin said he is hopeful the move to flesh out parameters for an economic enhancement district will allow legislators to move past the matter.

“I don’t think I’m uniquely operating here,” he said. “There were several bills that were competing in scope on these topics … and we as a General Assembly, need to figure out what direction we’re going to go. I think it would be tough to leave this building in March and not allow Indianapolis to heal itself after COVID, is generally the thinking.”