Editorial: Focus for downtown tax should be ensuring money is well spent

Now that the battle to impose a new fee on some downtown property owners appears to have finally succeeded, it is time to give more attention to precisely how the revenue should be spent.

The City-County Council cleared the way for the tax by establishing a downtown taxing district that includes the Mile Square and a little bit beyond.

But the tax ordinance doesn’t outline a budget for the revenue that would be generated in 2025 through a fee on all property in the taxing district with the exception of apartment buildings and single-family residences. Property owners would be charged 0.17% of their property’s gross assessed value.

The state law that authorizes the tax sets some broad parameters on how the projected $4.65 million in annual revenue should be spent on Mile Square enhancements. The law focuses on public safety, cleanliness and beautification efforts, and outreach to the homeless, including operating costs for a proposed low-barrier homeless shelter.

But ultimately, a new state-city enhancement district board will set the detailed budget, which will require sign-off from the City-County Council.

That nine-member board still needs to be formed and will include four members appointed by the governor, two by the City-County Council, and one each by the Indiana House speaker, the Senate president pro tempore and the Indianapolis mayor. A majority of the board members must own property within the district.

It is critical that these board members be appointed as quickly as possible so property owners in the taxing district have a chance to offer their views on the best uses for the revenue—especially since the board is being encouraged to submit its spending plan to the city by November.

Last December, we urged the new board to hold a series of public meetings to hear from the Mile Square-area property owners. There will be little time for that if city and state leaders don’t put this whole process into high gear and quickly make their appointments.

Of course, we thought the tax was already a done deal back in December. After all, the City-County Council had approved it. But that was before the Indiana Apartment Association managed to persuade the Legislature to alter the state law allowing the tax and exempt apartment owners from the new fee.

That carve-out was approved by the Legislature earlier this year, forcing the City-County Council this week to go through the whole process of approving the tax for a second time.

The change significantly increased the share of the tax that must be paid by hoteliers and office-building owners. Of the $4.65 million in revenue expected to be generated annually, office owners would contribute $1.92 million, while hotels would pay $1.68 million, according to analysis from Policy Analytics LLC.

Hopefully, now, the time for last-minute shenanigans is over, and Democratic-dominated city government and Republican-ruled state government can come together and do what is best for the downtown of the state’s capital city.•

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