The Indiana House approved legislation Tuesday that would take away the city of Indianapolis’ ability to impose a fee on downtown property owners to help pay for the operating costs of a homeless shelter and various improvements in the city’s Mile Square, a mechanism authorized by the Legislature just a year ago.
The Republican-controlled House voted 64-29, mostly along party lines, to send House Bill 1199, authored by Rep. Julie McGuire, R-Indianapolis, to the Senate.
The bill would repeal a law the Republican-dominated Legislature approved last year in the waning hours of the legislative session that gave Indianapolis city government the authority to create an economic enhancement district, which the Democrat-controlled City-County Council voted to approve in December.
The district, expected to generate $5.5 million annually, would continue downtown enhancement efforts started by Downtown Indy, Inc. using $3.5 million in federal COVID-19 relief money that will run out this year.
The House also passed a separate measure, House Bill 1121, that would provide the city with alternative way top pay for improvements and service projects in the Mile Square. That proposal would allow the City-County Council to increase the countywide local income tax by .02%.
Rep. Jeff Thompson, R-Lizton, who chairs the House Ways and Means Committee, said the bill gives Marion County “another tool in its toolbox” to make improvements in the city’s urban core.
“It allows some more autonomy and also would set up a board that would oversee those kinds of improvements in that Mile Square,” Thompson said.
Democrats were critical of the proposal, saying it amounts to government overreach and taxation without representation.
“This is really micromanaging at the fullest,” said Rep. Cherrish Pryor, D-Indianapolis.
In a rare move, House Speaker Todd Huston, R-Fishers, testified on the House floor in favor of both pieces of legislation.
He responded to accusations that the state was treating Indianapolis as an adversary, noting city and state cooperation in 2019 to create the Capital Improvement Board, which benefits capital projects in Marion County but is funded by the entire state, and state investments in the IUPUI campus.
Huston also accepted some blame for the economic enhancement district language getting into the budget, saying “it wasn’t properly vetted.”
He also questioned why the city couldn’t find money in its $1.5 billion budget to make improvements to Mile Square.
“We’re interested in a strong downtown. We’re interested in clean streets,” Huston said. “We just want governments to look responsible, and if it’s important, then raise your [local income] tax. Convince your constituents that live outside the downtown Mile Square…just like we tell our constituents when we invest in downtown Indianapolis.”
The effort to undo the Mile Square taxing district faces an uncertain future in the Senate.
Sen. Kyle Walker, a Republican whose district includes portions of Marion and Hamilton counties, was a key player in getting language into the state budget that allowed Indianapolis to create the district. He previously told IBJ he opposes the bill as written but could support “additional guardrails” around the tax.
While the economic enhancement district has enjoyed strong support from a broad coalition, including groups like Downtown Indy, Inc., the Indy Chamber and Visit Indy and companies including AES Indiana, Elanco Animal Health and Salesforce, it has powerful opponents in the Indiana Apartment Association, the Indiana chapter for Americans for Prosperity and some downtown property owners.
Supporters of the repeal also argued that the city could have established an economic improvement district, or EID, 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.
The effort to take away the district has also had help from outside groups.
The American Jobs and Growth Fund, a Virginia-based group supporting conservative causes, spent more than $11,000 on Facebook ads on behalf of DefendDowntown.com, which has the support of the influential Indiana Apartment Association. The American Jobs and Growth Fund also hired a lobbyist—Republican strategist Kory Wood, who worked on Carmel Mayor Sue Finkam’s campaign—to testify before House lawmakers urging them to repeal the district, Mirror Indy reported.