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A new fee on downtown property, up for a final vote Aug. 12, likely will be approved by the City-County Council. But the owners of some of the tallest buildings in Indianapolis say the additional tax will put financial stress on hotels and office buildings still recovering after the pandemic.
Because the tax is a percentage of assessed value, it tracks that the owners of some of the most prominent towers in Indy’s skyline would foot the biggest bills.
For the JW Marriott, the fee would be nearly $348,000 a year; for Salesforce Tower, the cost is about $251,000.
Representatives of the two properties still support the proposed taxing district’s intent to fund downtown improvements, but both said the tax places a burden on downtown businesses post-pandemic.
Downtown Indy Inc. and the Indy Chamber created the framework for the taxing district with assistance from Indianapolis-based Policy Analytics LLC. The Indianapolis City-County Council initially passed a version of the fee structure in December 2023.
However, state lawmakers earlier this year carved out exceptions for apartments and single-family homes this year. That means the bulk of the funds will come from offices and hotels.
The tweaked version of the measure passed 8-4 along party lines out of the City-County Council Metropolitan and Economic Development Committee, with Republicans voting against it. Democrats have a 19-6 majority on the legislative body.
The downtown taxing district would pay for downtown cleanliness, beautification, public safety and homelessness outreach. It also would pay costs related to a homeless shelter on the south side of downtown.
Phil Ray, general manager of the JW Marriott, testified before the council committee that White Lodging, the company that oversees several Indianapolis hotels, would pay $600,000 more in taxes if the proposal goes into effect.
That’s due to the changed boundaries of the taxing district, which in an initial iteration only included the Mile Square—and therefore only included White Lodging’s downtown Marriott. The new boundary is 1.5 square miles, and now includes three additional White Lodging properties: the JW Marriott, Courtyard by Marriott and Springhill Suites, and Fairfield Inn and Suites.
“We’re not opposed to what the city is trying to do,” Ray told IBJ. But he said it’s a large ask of hoteliers post-pandemic.
Similarly, Salesforce Tower General Manager Jeff Reynolds argued before the council committee that office buildings have been under “significant stress” and would pay a disproportionate amount of the tax. He said those costs might be passed onto leases during an already-troubled office market.
Salesforce Tower is owned by Oklahoma-based Square Deal Investments.
In a written statement, Downtown Indy Inc. CEO Taylor Schaffer said her organization and the Indy Chamber have worked closely with property owners to understand how implementation would impact their bottom line.
“Ultimately, the language before the council takes a more conservative approach than what was allowed in state law – ensuring that no property owner in the original district would pay a higher rate due to the removal of residential property types and that services will be concentrated, visible, and effective for payers,” she said in a statement.
While the state law allows the district to raise up to $5.5 million, the proposed tax would generate $4.65 million. Properties within the taxing district would pay 0.17% of their gross assessed value.
When it comes to offices, Colliers Senior Vice President Andrew Urban says downtown property owners face both a short-term and a long-term issue.
In the short-term, they are underwater and leasing activity has been slow. In the long-term, they are faced with the challenge of bringing activity back downtown.
He said the additional fee might be harmful, particularly for smaller office buildings. But generally, he said his gut feeling is that the payments now are better than regrets later.
“We need to make those investments now, even though they might hurt a little bit and people always want to gripe about new taxes,” Urban told IBJ. “At the same time, a lot of those same people are griping about how unsafe downtown is. You can’t have one without the other.”
Indianapolis City-County Council President Vop Osili called the measure “crucial for our city’s economic vitality” in a statement.
“The results from this initiative help ensure continued growth and development, enhancing downtown’s appeal. I look forward to the support of this proposal on August 12.”
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You mean eliminating the tax for some taxpayers meant others have to pay more, just because they couldn’t throw a few thousand at a legislator and in exchange be exempted from millions in taxes like the Apartment Association did?
I’m always amazed at how cheaply our legislators … lower their principles …
Right? This was a HIGHLY predictable outcome.
The JW Marriot pulled in $63.1 million in revenues last year. They’re fine.
The original tax district was more equitable and better balanced the downtown tax across properties, but the landlord special interest lobby is powerful in Indiana and they are good at greasing the palms of legislators in the corrupt and inept General Assembly to get what they want.
Nonetheless, I do not feel sorry for big commercial landlords who built their properties with massive tax breaks and other public subsidies whining because they have to pay a few bucks more (comparatively) in new taxes
DING DING DING! That’s what really rubs me the wrong way. So many of these hotels and commercial buildings got TIF support and/or property tax abatements and now they’re upset about having to actually pay a small tax (relative to the overall tax rate and their total revenues). Don’t get me wrong, the Indiana Apartment Association is a nightmare and absolutely caused this mess, and their lack of accountability is horrific.
their customers will pay the bill ultimately in higher lodging fees and increased prices on goods.
I never hear anything about the government trying to run more efficiently though – only time i hear about cutting costs a teacher will lose their job. it’s all a load of crap.
My rough back of the napkin math on the JW Marriott indicates that this would increase the cost of a room by one half of one percent. This is something that people who are already paying $300+/night for a room can easily afford and the overall negative impacts would be negligible while adding significant value to our city center in cleanliness, comfort, safety, and aesthetics.
You also never hear Marion County Republicans proposing any actual different ways to run the government of the city of Indianapolis, they just complain about the job Joe Hogsett does and then blame the voters for being idiots when they vote for him instead of their nebulous “plans”. Then they run off to the state house and pass various laws by fiat instead of giving the voters of Marion County a say.
This Issue where an actual functioning Marion County Republican Party would be proposing where the spending cuts should be to instead pay for all this with existing revenue.
This isn’t “raising taxes to cover general expenses”. This is a specific fee for a specific service that will have benefits to the people paying the fee, who would otherwise be “free riders” on the City’s efforts to do what the landowners want: “clean up downtown”.
Okay, D.D….time to put up. Please identify up to 25 efficiency improvements that will not result in decreased service to Marion County residents, and will result in savings from budgeted expenditures of at least 5% to10% in each category for which you make an efficiency improvement. Once you submit that list, we’ll put it up for review and vote of the readers. Ready, set, go…you get 10 days, and you can just put your list into some other IBJ article the week of August 12 .
Is this too harsh? Sorry, not sorry. I’m fed up with people saying it would all be better if government was just run more efficiently, like a business. Well, that hasn’t worked for Indiana; as a state, we’re regressing compared to larger, higher tax states. Our roads are generally worse than our neighboring states, our K-12 achievement is lower, and our university grads tend to move away. The new high school diploma programs apparently won’t be recognized by IU or Purdue as sufficent to enroll in those schools.
I can’t imagine downtown hotels, which cater to business travelers, are really that price sensitive to any potential increase due to these taxes.
Hey Indy, Welcome to the BIG LEAGUES. Most major cities around the country have some form of this tax distribution in their downtowns as well. This is just another creative tool to help do the things that a lot of folks complain about when they’re visiting downtown. It’s economics and if you can afford to enjoy the pleasures in life you won’t even notice the small increase no matter who ends up footing the bill.
Maybe the 5 mil would be better spent retaining our Police Force. As fast as these folks are leaving for greener pastures and better working conditions we won’t have any Public Safety left before long.
A portion of the funds are going to public safety, homeless outreach, and O&M for a secular shelter. These are all objectively good things that will help reduce public safety and sanitation issues.
They increased the budget $10 million for the police from last year’s budget. Maybe they’d have more money for police if the state of Indiana wasn’t underfunding roads in Marion County.
Maybe, with this extra funding, we can now close the entirety of Monument Circle to traffic. If there’s anything left over, it’d be great to also “activate” a few interstate on-ramps with ping-pong tables and porta-potties. Cars are bad, mkay?
It’s funny that you think the Circle (not legally classified as any kind of thoroughfare) is comparable to a freeway on ramp. Talk about disingenuous…
The cheapest room downtown today is $1000. Cry me an ocean. Pay your taxes.
I find this better than selling off city assets like previous administrations did for short-term gains (parking meters, as an example).
You guys are quibbling like kids.
Back up and see how well run are the organizations that will be gifted the doe.
I’ve asked the city and INDOT to mow lawn that’s grown over two years. No luck there.
1. 3rd party clean up crews. Maybe there is a more efficient way to get that done.
2. I’m a victim being put upon by a plan to save the homeless. The city spent over 2 million on land they don’t have a good plan to solve the homeless problem. Now they want to tax you 1 mike square folks to pay for a poorly assèmbled plan. They probably had to by something or lose the money. Now they are penalizing the mile square for their mistake. If you think this will keep homeless out of Dodge, or solve the homeless problem, you need to see how well it’s working across the country.
This is all an ego trip that attaches taxes to solve mistakes. ( Ie..indy 11).
And those of you who think I should leave indy after 30 years of my contributions are probably right.
3. All this crime is not the homeless. Lack of laws and cops on the beat and training the parents is a crime fix.
These are solutions to why your taxing in the first place.
But noooo, you want to make the hotels and skyscrapers taxes while your giving incentives to the new contractors and the homless.
Thanks
Ha. The hotels and skyscrapers were all
built with massive tax breaks and other subsidies. And, these downtown landlords want the city to plant flowers and pretty up downtown to make their properties more desirable. No one from the city comes and plants flowers and pretties up the neighborhood my mother has lived in for decades.
It is nothing *corporate welfare*, and then they cry when they finally have to pay their fair shares. No tears from me for them.
They can pay up and deal with it.
They certainly seem to have more of a plan in place than you do…
This may come as a shock to you, but the nice things that Downtown wants costs money and there’s no reason for the rest of the City to continue to prop up wealthy landowners. If they want the nice things, they can pay for them. Your homelessness commentary was absolute nonsense and speculation, completely void of value.
John, outside of being located next to your property that you were hoping to flip for a profit, what’s poorly assembled about a plan that’s been discussed for years?
I understand your frustration but “just move it away from me” is probably less effective than asking the city to prohibit people living or loitering outside the shelter.