In the House Ways & Means Committee Wednesday, Sen. Travis Holdman, R-Markle, author of the bill, discussed Senate Bill 61, which allows people to petition their local governments to establish tourism improvement districts within their own communities if they get 65% support from citizens within the community.
The National Federation of Independent Business, representing small businesses, opposed this bill because of increasing costs, high tax rate, and inflation.
According to the latest version of the bill, the initial term for a district is at least 3 years, but is limited to 10 years. It may not be reestablished unless all the requirements and procedures for establishing a district are done within 10 years.
“There is a 10-year sunset provision and there’s not a renewable feature. The district organization itself sunsets in 10 years and if they want to do another 10 years, they have to reup…,” Holdman said.
In addition to the sunset provision, Holdman gave background on other states with TID’s in other states.
Holdman said there are 23 other states in our nation with TID’s and he wants to include them in Indiana.
“There’s as little as $10,000 raised nationally in these districts and up to $43 million and it’s been interesting to look because there’s been a good mix of red states and blue states,” said Holdman.
He said California and Texas are two states that have led the nation in tourism improvement districts.
Holdman said ”I think the fact that it’s non-renewable carries a lot of weight for us because if they want to renew or start over, they have to go through the whole process all over again, which I think has a lot of value to it.
Holdman said this bill also requires 65% of approval through signatures of those having 65% of the assessed value within the district to adopt an ordinance to establish the districts.
Rep. Gregory Porter, D-Indianapolis asked Holdman, “so how did you come up with the 65%?”
“Holdman answered “It was just an agreed upon number that we wanted to make the bar high enough to make it not a slam dunk for the district to have its way, but at the same time honor property owners of businesses with both the assessed value and the number of owners in that district as well.”
David Ober, Vice President of Taxation and Public Finance for Indiana Chamber of Commerce said he supports the bill. He said as the legislation was introduced he offered ways to improve the legislation.
The bill originally required 50% approval when it was first introduced on Jan 8, 2024. It was moved up to 65% after Holdman amended the bill on the senate floor on Jan 31.
Ober said he prefers the 50% that was originally filed in the bill, but he’s flexible with any number between 50 and 65% for approval of homeowners based on assessed value.
David Ober said he’s comfortable including all counties in the state for establishing tourism districts.
“This should be a tool available to any community who’s able to get it across the finish line locally and have that local discussion,” Ober said.
Natalie Robinson, Indiana State Director for NFIB (National Federation of Independent Business), a small business association, opposed this bill due to increased costs on small business owners around the state. Robinson said her organization put out a special ballot to survey the NFIB members on this issue and 89.5% opposed it.
“It’s an increasing burden to small business owners. These districts essentially create a tax on top of a tax. This bill would allow TID’s (tourism improvement districts), to coexist with TIF’s (tax increment financing), in which that could actually end up creating a tripled tax for businesses and no caps in place on top of that,” Robinson said.
“To say creating special taxing districts right now is bad timing would be a huge understatement. This is coming up at a time like property taxes are already soaring, healthcare costs are skyrocketing, and all of that is layered on top of our record high inflation,” Robinson said.
According to Robinson, small business owners are under pressure from inflation and from having to pass the increased costs to their customers.
Robinson said rather than having tourism districts, it’s more important to protect small business owners who she considers the “backbone of our state’s economy.”
“I urge the committee to consider the impact that these special districts have on the small business and help implement policies that help support them,” Robinson said.
Patrick Tamm, CEO of Indiana Restaurant and Lodging Association, said his association strongly supports this bill to improve the quality of a location.
“The TID mission is to promote improved tourism in designated boundaries. TID revenue can allow for funding support and capital investment in a destination development and initiatives to improve the quality of a place,” Tamm said.
Tamm gave some examples of developments such as the leverage of the new development for sports tourism growth, new convention center, or investments for creating a new riverfront, new nightlife amenities, retail districts and venue capital improvements to improve economic activity.
This bill passed the committee unanimously 12-0. Previously it passed the Senate with 47 yeas and 1 nay with Sen. Aaron Freeman, R-Indianapolis, voted no.