Indianapolis officials are continuing to push back on efforts in the Indiana General Assembly to strip the city of a new taxing district in the Mile Square.
Dan Parker, chief of staff for Mayor Joe Hogsett, told state legislators on Tuesday that the city is opposed to a bill that would offer a county-wide income tax increase to replace the downtown economic enhancement district fee approved by the City-County Council in December.
The provision, a small part of House Bill 1121, is tied to a separate piece of legislation that aims to undo the General Assembly’s own work from the waning hours of the 2023 session that created the framework for the economic enhancement district, or EED.
“I’ll get straight to the point: The city respectfully opposes the one specific provision that has been dominating the conversation here,” Parker said during a Senate committee hearing on tax and fiscal policy bills, referring to the proposed income tax increase.
“As partners, we must understand one another to work together on this specific provision,” he said. “We have a difference in philosophy” here.
He said there are three reasons the city is opposed to the measure. First, it could ask more from a taxing perspective of Marion County residents who visit downtown than of those who commute downtown from outside the county. Another, he said, is that it would “be a shift in the unique costs of the Mile Square EED away from those who would benefit the most onto those who might not benefit at all.”
He also said that the city under Hogsett has tried to avoid tax increases by balancing its budget and increasing credit ratings.
The EED was created to act as a funding source for various downtown efforts, including the creation of a a low-barrier homeless shelter on the near-east side, homeless outreach, downtown cleanliness initiatives and safety ambassadors.
Some lawmakers, including bill author Rep. Jeffrey Thompson, R-Lizton, contend Indianapolis would still be able to accomplish its goals for the Mile Square with a county-wide tax.
Thompson said the tax, which would be capped at two-hundredths of 1%, is meant to offer an alternative for Indianapolis if the EED is repealed as part of House Bill 1199, which has not yet been scheduled for a hearing. It would generate about $6 million annually for the city, but without a hard cap on actual revenue, the figure could increase as incomes across the county continue to increase.
“It just gives them an option,” Thompson said during the committee hearing. “I think it’s just more tools in the toolbox and nothing more.”
Under the downtown taxing district ordinance approved by the City-County Council, which is currently capped at $5.5 million annually, single-family homeowners would pay a yearly $250 flat fee starting in 2025. Owners of commercial properties would pay nearly 0.17% of their properties’ gross assessed value, or about $1,681 per $1 million in gross assessed value.
Apartment owners as a group would be hardest hit by the new tax, contributing an estimated $1.87 million to the district. The Indiana Apartment Association represents 280,000 rental units throughout the state, including 5,000 in the Mile Square, according to organization spokesman Charlie Tinkle.
Parker was joined by a representative with Indy Chamber and City-County Council President Vop Osili in opposing the county-wide tax provision. Nobody testified in favor of the measure.
“We believe that property owners in the district should bear the user fee [for] these services,” said Adam Burtner, vice president of government affairs for IndyChamber. “The Chamber simply does not support raising taxes on residents throughout the county for a unique services that property owners support and receive in the Mile Square.”
Osili said he believes it would be difficult for the council to support a tax increase that benefits only the Mile Square when other neighborhoods don’t have dedicated funding streams.
Some Senators, including. David Niezgodski, D-South Bend, and Ryan Mishler, R-Mishawaka, signaled they are apprehensive about the provision; both own property in downtown Indianapolis.
“For anything in my life, [I] have never sought the assistance of others to help me pay for my personal needs,” said Niezgodski. “If I am going to receive something that is going to be of benefit to me and to others, I think those dollars should be paid for by the area that is receiving those added benefits.”
The committee hearing comes as Senate leadership eyes a separate hearing date for the 1199 bill focused on repealing the EED, which was authored by Rep. Julie McGuire, R-Indianapolis. Thompson is listed as a co-author on the bill, as is Rep. Mike Speedy, a Republican from Indianapolis.
Sen. Travis Holdman, R-Markle, told IBJ he is considering either Feb. 20 or Feb. 27 to hear the bill. He said amendments are still being considered, but none have been filed.
Sen. Kyle Walker, a Republican who represents portions of Indianapolis and Fishers, said while there are ongoing conversations about what should be done with the legislation, he is “opposed to the bill in its current form.”
Proponents of the legislation to unravel the EED, which include some downtown property owners, the Indiana Apartment Association and the Indiana chapter of Americans for Prosperity, a conservative think tank, have argued that the provision approved last year was done without transparency and should have been properly vetted in a public forum.
The authorizing language to create the district was slipped into last year’s state budget bill in the final hours of the legislative session and never went through the typical committee hearing process.
Supporters of the repeal have also argued that the city could have established an economic enhancement district under a previously existing law that requires a certain number of signatures from property owners who support the taxing district.
Under that law, a 2018 effort by Downtown Indy Inc. to establish an economic improvement district failed in the face of heavy opposition from the Indiana Apartment Association and a dispute over whether the not-for-profit had collected the required signatures from more than 50 percent of property owners.
Groups including the Indiana Sports Corp., the Indy Chamber and Visit Indy have voiced support for the taxing district, as have businesses including the Central Indiana Corporate Partnership, Elanco Animal Health Inc. and Salesforce.
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