A new Downtown tax is gaining momentum. Here's what it would mean for you

Downtown property owners are getting closer to voluntarily taxing themselves so they can raise more than $3 million a year over the next decade to improve the Mile Square.

Downtown Indy Inc., the city marketing organization leading the move, has more than half the signed petitions it needs for the tax to pass. Downtown Indy President Sherry Siewert said she is confident in getting the rest of the required signatures.

"Folks want to have more living amenities," Siewert said. "There's a whole list of services that have been compiled over the last couple of years."

An organization that represents Downtown apartments questions whether the money is needed. Commercial property owners would bear the brunt of the cost. 

Here's what this tax to create an Economic Improvement District, or EID, means for you, even if you're not one of the property owners footing the bill.

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What would the money be used for?

There isn't a specific line-by-line budget in place yet, which is one of the sticking points for opponents, but the funds are divided into a few buckets.

About half of the $3.16 million collected annually would be used to help keep Downtown clean by hiring 10 to 15 people to remove weeds, sweep streets, power wash, plant trees and perform other general maintenance as needed.

An additional $700,000 or so would be put toward homeless outreach and finding solutions for panhandling, as well as adding more foot and bike patrols of off-duty police officers. The rest would be used for marketing and branding Downtown and improving the "Downtown user experience" by adding amenities such as dog parks, more bike parking and Wi-Fi options.

Who would pay this tax?

Commercial property owners would contribute most of the money, but the tax would apply to the 1,167 property owners — both commercial and residential — within North, South, East and West streets.

Residential property owners would pay $100 annually and commercial owners would be responsible for 12.5 cents for every $100 of assessed property value. Commercial property owners would cover more than 90 percent of the $3.16 million, which is another point of contention for those who don't support the proposal.

What exactly is the issue opponents are rising and why?

The Indiana Apartment Association has come out against the EID and sent a letter to commercial property owners, asking them not to sign the petition.

"The group seeking to oversee the EID and spend money generated from the new tax has not adequately demonstrated the need," the letter said. "We are confident once it is evaluated internally you too will have concerns so it is important that you refrain from returning this petition."

There are too many unknowns and unanswered questions about the necessity of the services proposed in the EID, the way the money would be spent and the disparity between the amount residents would pay versus commercial property owners, Indiana Apartment Association President Lynne Petersen said. 

"The biggest expenditure on this is improving streetscape maintenance, so we start looking at this and going, 'OK, what are they going to do and what additional services are going to be provided based on what's currently been done now?'" she said. "We all want a clean and beautiful downtown and want it to thrive, but how are we going to measure those services?"

An apartment building owner would likely have to eat the cost of the tax as a commercial property owner, Petersen said.

"It's being based on our assessed value, which is thousands," she said. "We might not be able to pass it through because rents are very competitive, and we want to remain affordable for Downtown."

Who controls how the money is spent?

The money would be managed by a 15-person board of stakeholders, three of whom would be residential property owners. The rest would be commercial property owners, primarily, as well as some other stakeholders.

The petition includes a list of members proposed by Downtown Indy. They would be approved by the Indianapolis City-County Council if the petition moves to the next step.

What's next?

About 38 percent of property owners since September have signed the petition to create the EID, representing 36 percent of the value of the property Downtown.

The proposal requires a simple 51 percent majority of property owners representing each of those thresholds — number of property owners and value of property — to create the EID.

Although no deadline exists to gather enough petition signatures, Siewert said Downtown Indy and the proposed district board will work until February.

"We do understand that those petitions go stale," she said.

After that, the proposal would head to the City-County Council for a vote and then, if approved, on to Indianapolis Mayor Joe Hogett's desk for a final signature.

Wait, doesn't the city pay for some of these services already?

Kind of, yes. But technically, no.

According to Indiana statute  guidelines to establish an EID, one can't be created to perform services that already exist.

Downtown Indy Inc. received private and city funding when it was created in the 1990s for many of these tasks but has not received direct funding from the city since 2015.

"Knowing that when our organization was created 25 years ago, we were created both with the support of the Downtown businesses and residents," Siewert said. "Over time, the city has faced some significant budget constraints, and they're not able to provide the ongoing support for services for Downtown."

The Department of Public Works still contributes to Downtown Indy for maintaining Georgia Street, but the organization is now funded mostly through private membership fees.

How does an EID work, anyway? Are there others in Indiana?

An EID is a district with a self-imposed tax to be used toward city betterment not already covered by city services. Typically, EIDs (or BIDs, business improvement districts, as they also are known) are self-managed by a board of stakeholders to manage the money based on community need.

Most major metropolitan cities have similar districts, some more than one. Fort Wayne has had one since 1995, and the residents of Indianapolis neighborhood Woodruff Place put one in place in 2015.

Indy's would be a 10-year tax, totaling $31.6 million. After the term has ended, the EID board would re-evaluate and decide whether to seek approval to do it again. 

Call IndyStar reporter Amy Bartner at (317) 444-6752. Follow her on Facebook, Twitter, and Instagram.