Legislature sends new rules for Indy downtown tax district to governor

Lawmakers are expected to adjourn for the year on the 2024 session late Friday, potentially eliciting a collective sigh of relief from Indianapolis’ majority-Democratic leadership after a rough few months.

At the start of the session, legislation filed by Republican lawmakers sought to interfere in several Indianapolis projects or programs. The docket included a bill that would have completely removed the city’s ability to create a tax district to pay for downtown improvements and a new homeless shelter and another that would void the city’s recent decision to regulate pet store sales.

Some of the Indianapolis-related legislation ended in compromises, including an effort to ban IndyGo from using dedicated lanes for bus rapid-transit lanes. House Speaker Todd Huston, R-Fishers, said IndyGo and the city of Indianapolis had agreed use fewer dedicated lanes on the planned Blue Line route, which is to run along Washington Street. As a result, Huston said the Legislature would let the bill die.

Here’s a look at where other legislation aimed at where Indianapolis has landed.

Tax district likely delayed

Legislation that would originally have killed Indianapolis’ new planned downtown tax district was amended to give the owners of apartment buildings and other properties the ability to opt out of paying the tax. The bill, which the House and Senate have approved, would also require the City-County Council to start over in approving the taxing district.

House Bill 1199, authored by Rep. Julie McGuire, R-Indianapolis, initially included language that would have stripped the taxing authority away from the city.

But after discussions between lawmakers and stakeholders including the city of Indianapolis, Downtown Indy Inc. and the Indy Chamber, members of a Senate committee unanimously approved a completely rewritten version of that bill.

That legislation passed the full Senate, and on Thursday, the House concurred with the changes in an 86-4 vote. Among the dissenters was Rep. Julie McGuire, R-Indianapolis, the original author of the legislation that sought to undo the district.

The bill is now headed to Gov. Eric Holcomb for him to sign, veto or allow to become law without his signature.

The downtown economic enhancement district initially would have encompassed the Mile Square. In those boundaries, single-family homeowners would be required 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.

Indy Chamber and Downtown Indy Inc. have said that tax would raise $5.5 million annually that would be used to pay for downtown cleanliness efforts, homeless outreach teams and the planned low-barrier shelter.

The Indiana Apartment Association opposed the legislation. Apartment building owners were expected to be the largest payers of the tax.

Sen. Scott Baldwin, R-Noblesville, authored the changes that allow apartment owners to opt out of paying the tax. Lawmakers voted to extend that option to the owners of allproperties in the district that receive a homestead tax deduction.

The amendments also changed the setup of the board that will oversee the taxing district’s spending. Under the original law, the Indianapolis mayor had two appointments and the governor had one to an eight-member board. Under the changes, the mayor will have one appointment and the governor will have four to a nine-member board.

That could change the political makeup of the board. Proposals will require six affirmative votes to pass.

The amended bill requires that a majority of the board members must be property owners within the district.

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.

Because of the changes, the legislation–if it becomes law–will require the Indianapolis City-County Council to redo the approval process for the taxing district. In December, the Democrat-controlled legislative body voted 19-5 along party lines to create the Mile Square taxing district under the existing law.

The new legislation requires that the council hold a public hearing on the district with a 60-day notice to all property owners within the boundaries. And it caps the total revenue the district could collect at $5.5 million. The district would also expire after 10 years.

The legislation also prevents the tax revenue from paying off bonds associated with the proposed low-barrier homeless shelter on Shelby Street, but the money can be used to cover operational expenses.

On behalf of City-County Council President Vop Osili, the council’s chief communications officer, Sara Hindi, said in a statement that the legislative body will meet with partners to “strategize and determine the most appropriate next steps forward regarding the economic enhancement district.”

The council is required to pass the new ordinance by the end of the year.

The Indy Chamber applauded the House approval Thursday.

“We thank legislative leaders for their partnership in moving this structure forward, as well as the hundreds of downtown businesses, residents, and property owners who raised their voices to make the EED a reality,” the Chamber said in a statement.

 “We are committed to continuing work with our partners at the City-County Council, Downtown Indy Inc., and appointing authorities to launch the EED and invest in the heart of our state’s capital.”

Pet sales ordinance voided

Gov. Eric Holcomb has already signed legislation that wipes out an Indianapolis ordinance that prohibited pet stores from selling dogs.

House Bill 1412 voids a total of 21 local ordinances including those in Bloomington and Carmel, as well.

In committee, the legislation was supported by Indianapolis-based pet store Uncle Bills, national chain Petland and breeders based out of a northeastern Indiana’s Amish community. It was opposed by the Humane Society of the United States and the American Society for the Prevention of Cruelty to Animals.

The Indianapolis City-County Council voted unanimously last March to ban the retail sale of dogs, cats and rabbits. The ordinance required that any pets sold in those stories be acquired through a partnership with local animal rescues in an attempt to decrease shelter populations and discourage puppy mills.

Because that ordinance gave existing pet stores in Indianapolis until 2025 to comply, it had not yet been implemented.

Councilor John Barth, a Democrat representing Indianapolis’ District 7, was a co-author of the ordinance. In a statement, he pointed to the two-year delay for businesses and said the ordinance will no longer go into effect.

“I was proud to work with the Humane Society and animal welfare advocates on the initiative to address the negative effect of puppy mills, and I am committed to continuing to work, as a broad coalition, on additional efforts at a local level,” Barth wrote.

Under the state legislation, localities would be able to require that pet stores utilize Canine Care Certified breeders, USDA-licensed breeders or brokers without “direct” violations for the previous two years, or hobby breeders.

Rep. Beau Baird, R-Greencastle, the author of the legislation, called it “anti-puppy mill.”

“By implementing statewide protections, we not only safeguard the wellbeing of dogs but we also prevent the emergence of puppy mills in our rural areas where animal shelters are already struggling to manage their capacity,” Baird said during a January committee meeting.

Baird raises and breeds Great Pyrenees dogs at his west-central Indiana farm.