Apr 27, 2023 - Politics

Lawmakers slip new downtown tax into budget

A monument surrounded by buildings

Property in the Mile Square could be subject to a new tax soon. Photo: Bryan Steffy/Getty Images.

In the final hours of the legislative session, lawmakers paved the way for Indianapolis to impose a new tax on downtown property owners that would help fund a homeless shelter and improvements to make downtown cleaner and safer.

Why it matters: Downtown Indianapolis has struggled to rebound from the pandemic as the rise of remote work has meant many commuters never returned, leaving foot traffic down, storefronts closed and pre-COVID-19 safety problems more visible.

  • After years of searching for money to pay for improvements, this opening by lawmakers "looks to be an interesting tool in the toolbox for that conversation," said Taylor Hughes, vice president of policy and strategy for the Indy Chamber.

Driving the news: GOP leaders at the Statehouse released a final biennial budget Wednesday evening, the day before the legislative session is expected to finish, that included new language allowing the city to create a new taxing district downtown.

  • Rep. Jeff Thompson, top budget writer in the House, declined to say where the language came from but said there had been ongoing discussions about it.
  • Since the language wasn't introduced through a bill or amendment, those discussions did not take place in the traditional, public-facing arenas in which policy is usually debated.
  • The budget also includes a $20 million grant to open low-barrier homeless shelters, which have fewer restrictions for entry than traditional shelters.

Details: The provision allows the City-County Council to create an economic enhancement district where it can impose a new fee on all taxable property.

  • According to the statute, the fee could be used to operate a low-barrier shelter, provide security for public areas, employ people to "deter aggressive panhandling," clean sidewalks, remove graffiti, beautify the district and support business development, among other things.
  • The council would establish the district's boundaries but they may not exceed the Mile Square.
  • The district would be governed by an eight-member board, half of it chosen by city officials and half by state leaders.
  • Downtown Indy Inc. would help staff the board.
  • The language only applies to Indianapolis.

Flashback: Downtown Indy pushed for a similar taxing district in 2018 but lost an uphill battle to convince residential and commercial property owners to fund $3 million annually for downtown upkeep.

  • Mayor Joe Hogsett in November allocated $3.5 million for downtown upkeep through early 2024, a short-term fix.
  • Since then, the mayor's office, Indy Chamber and Downtown Indy have pushed for a long-term solution.

What they're saying: Rep. Blake Johnson, an Indianapolis Democrat and former member of the City-County Council, said he just learned of the proposal Wednesday morning but thinks it could be a "mechanism for positive improvements to downtown."

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