A committee of state lawmakers heard nearly four hours of testimony Wednesday on legislation that would undo a taxing district that Indianapolis government approved last month to impose a fee on downtown property owners in the Mile Square.
House Bill 1199, authored by Rep. Julie McGuire, a Republican from southern Indianapolis, would repeal a provision the Legislature approved last year to allow the Indianapolis City-County Council to create the taxing district. The revenue is intended to help pay for a low-barrier homeless shelter, homeless outreach, downtown cleanliness initiatives and safety ambassadors.
Proponents of the legislation, which include some downtown property owners, the Indiana Apartment Association and the Indiana chapter of Americans for Prosperity, a conservative think tank, argued that the provision approved last year was done without transparency and should have been properly vetted in a public forum.
The authorizing language was slipped into last year’s state budget bill in the waning hours of the legislative session and never went through the typical committee hearing process.
“Supporters of the tax want you to believe there’s overwhelming support,” said Brian Spaulding, vice president of government affairs for the Indiana Apartment Association, in testimony to the House Ways and Means Committee. “If that’s the case, why is there no transparency?”
Supporters of the repeal also argued that the city could have established an economic enhancement district, or EED, 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.
Dave Flaherty, CEO of Indianapolis-based Flaherty & Collins Properties, which owns 846 apartments in the Mile Square, said Wednesday that the tax will scare away development.
“This makes it super hard to develop,” he told the committee. “This kind of action … is not a good look for the city in my opinion.”
The majority of people who testified were against the bill and support the taxing district.
They included several downtown residents, who argued the legislation would undo the work of corporate and civic leaders to boost perceptions of downtown in the aftermath of the pandemic and the 2020 protests for racial justice.
Groups including the Indiana Sports Corp., the Indy Chamber and Visit Indy also voiced support for the taxing district. A letter of support for the district signed by representatives from the Central Indiana Corporate Partnership, Elanco Animal Health Inc. and Salesforce also was submitted to the committee for consideration.
City officials also appeared at the Statehouse to show their support for the district, including Chris Bailey, interim chief of the Indianapolis Metropolitan Police Department, and Dan Parker, chief of staff to Mayor Joe Hogsett.
Some supporters noted that the Mile Square taxing district did receive a public hearing when the City-County Council voted in December to approve it.
Wednesday’s Statehouse hearing was for testimony only. Committee chair Jeff Thompson, R-Lizton, said after the meeting that members of his caucus are still discussing whether to hold a vote on the measure. Thompson is listed as a co-author on the bill along with Rep. Mike Speedy, a Republican from Indianapolis.
House Speaker Todd Huston told IBJ he supports more public debate on the issue but stopped short of endorsing a full repeal.
Under the taxing district ordinance approved by the City-County Council, single-family homeowners would pay an annual $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 of the $5.5 million expected to be generated annually. The association represents 280,000 rental units throughout the state, including 5,000 in the Mile Square, according to spokesman Charlie Tinkle.