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Fate of $3M downtown fund precarious despite advancing council hurdle

June 11, 2018

Plans to create a so-called economic improvement district in Indianapolis’ Mile Square and impose fees on some property owners to pay for services such as landscaping, amenities and security advanced through an Indianapolis City-County Council committee Monday night.

But its fate is precarious. Though the plan to create a 10-year district in the Mile Square with a $3 million annual budget was approved 9-1 by the Metropolitan and Economic Development Committee, the council members stopped short of recommending the proposal be passed by the full council. The full council will consider it later this month.

The petitioners advocating for the Mile Square district’s passage, led by not-for-profit promotion group Downtown Indy, have just barely garnered the number of signatures required by law to advance the proposal, the council’s lawyer said, and enough are in dispute by their opponents that they could end up short of the requirements.

In order for the economic improvement district to pass muster, it needs signatures of more than half of the property owners in the Mile Square and enough owners to represent a majority of the area’s total assessed value.

The most recent data provided to the council listed 885 owners and 455 signatures, said council lawyer Fred Biesecker, or 51.4 percent of owners.

But the apartment industry is contesting some signatures. Taking into account people who have rescinded their support, some whose spouses need to sign, and condo owners that have turned over, there are 435 firm supporters—just shy of the 443 needed to pass the 50 percent threshold, Biesecker said.

The council members said advancing the proposal without recommending its approval would give more time for the list of supporters to get ironed out and for both the proponents and opponents to make last-minute pitches to owners, who would be charged the fee.

The proponents are under the gun to get their economic improvement district passed. A new state law that goes into effect July 1 would raise the threshold for approval to 60 percent on both prongs.

Getting to $3.1 million annually would come from different fees imposed on various classes of owners: Commercial property would be taxed one-eighth of one percent of assessed value. Residential owners would pay an annual flat fee of $100. And hotels would pay 50 cents per room occupied per night.

The budget would include $1.5 million for cleaning and beautification, $710,000 to provide outreach to the homeless and increase safety and security, $585,000 to provide an “enriching user experience,” and $360,000 toward economic development.

If approved by the full council, the first fees would be collected in November.

Dennis Dye, a principal at TWG Development, said perceptions of safety and cleanliness downtown have declined over recent years and that it’s important to spend money on improvement.

“This is a real issue,” Dye said. “It’s not something that's going to go away without some effort.”

Supporter Heather Kessner, whose family lives downtown, said she hopes the money will tackle panhandling so residents and guests will “not be harassed by panhandlers and street hustlers.”

Hugh McGowan, of McGowan Insurance, said he feels a responsibility “to our tenants, our customers, our employees to keep them safe” and it’s “something I worry about.”

Alan Witchey, of the Coalition for Homelessness Intervention and Prevention, said the funding to combat homelessness downtown would be significant.

He said the number of people experiencing homelessness downtown is "directly related to a lack of resources helping the homeless” and that the vast majority of people who are homeless want help and to be housed.

But a few people from the apartment industry spoke against the proposal.

A representative of Core Redevelopment said the fee, which could amount to $7,000 annually for the company, is arbitrary and would likely be passed along to lower-income residents who can’t afford it.

Steve Shockley, a Taft Law partner representing some apartment building owners, said the differences in how classes of property owners are assessed fees under the district could open the city up to lawsuits.

“I’m very concerned that if this is passed, it will be vulnerable to a challenge under state statute,” Shockley said.

Biesecker told IBJ he wasn’t prepared to comment without further research on whether he believed the downtown proposal would hold up in court.

The council committee also on Monday night passed 8-2 an economic improvement district in the Virginia Avenue corridor near Fountain Square and Fletcher Place. The significantly smaller district would raise about $80,000 annually. Their proposal had enough backing—about 54 percent of property owners—that council members passed it with a recommendation for approval by the full council.

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