You might soon be paying an annual fee for owning property downtown. Here's why

Ko Lyn Cheang, Indianapolis Star
Updated ·5 min read
A view of the south side of the Soldiers and Sailors Monument on Wednesday, July 5, 2023, from Meridian Street in Indianapolis.

Less than a week after a majority of Indianapolis City-County Councilors were reelected, the council will introduce a proposal Monday to levy a new fee on downtown property owners to pay for street cleaning, homelessness outreach workers, surveillance cameras and other measures as part of a new economic enhancement district.The Council proposed a similar idea in 2018 but that failed after opposition from downtown property owners and the Indiana Apartment Association. Now, they see another opportunity as the city continues to try to bounce back from aftermath of the pandemic.

"Everyone agrees downtown is facing significant challenges and needs a strategy," Taylor Hughes, Vice President of Policy and Strategy at Indy Chamber, which is behind the proposal, said.

The district would require all property owners in the Mile Square, from homeowners to apartment companies to parking garage owners to office building owners, to pay a fee that would go toward downtown upkeep and revitalization.

Homeowners would pay a fixed fee of $250 a year. The fee for all other property owners would be 0.1681% of the property's gross assessed value. So, if a property is worth $50 million, the owner would pay about $84,000 a year.

An estimated $5.5 million will be collected annually from these fees, according to fiscal analysis by Policy Analytics, an Indianapolis-based finance and data analysis firm.

“This is a critical tool to help downtown thrive and attract new residents and businesses,” Indianapolis City-County Council President Vop Osili, wrote in a news release announcing the proposal.

If the proposal passes, an eight-person appointed board would oversee the district, including its annual budget. Four members will be chosen by the state and four by Indianapolis' council and mayor. A majority of board members must be property owners within Mile Square.

The district will be in effect for 10 years, after which it can be renewed if approved by the Indiana General Assembly and City-County Council.

The Indiana General Assembly created the tool that allows Indianapolis to propose this special district in the state's two-year, $44.5 billion two-year budget passed this year.

There are more than 2,000 similar districts nationwide, most commonly implemented in downtown areas, said Taylor Schaffer, President and CEO of Downtown Indy, which helped develop the proposal and will administer the funds collected in this new district.

Here's the proposal for how the Mile Square fees will be spent

Downtown Indy, Indy Chamber and the City-County Council are proposing the money be spent in this way:

Mile Square districts builds on existing downtown clean-up program

The city announced last November that it would funnel $3.5 million of federal American Rescue Plan Act money toward an 18-month pilot initiative operated by Downtown Indy focusing on cleanliness and public safety.

Indianapolis downtown clean-up: Indy announces $3.5M for downtown public safety, cleanliness projects

That initiative has already seen positive benefits, Schaffer said. In the year since it started, downtown streets have seen an increase of cleaning staff from 12 in 2022 to 36 in 2023, according to a Downtown Indy fact sheet provided to media.

An additional 5,000 bags of trash were picked up this year, 1,000 graffiti spots cleaned up, and there have been nine times the amount of law enforcement foot and bike patrols each week.

But that federal money runs out in June 2024.

This new economic enhancement district would allow that work to continue past then.

The district would start collecting fees from property owners in spring 2025 tax payments.

Previous effort to create downtown Indianapolis tax failed

This isn't the first time the city has tried to create what essentially is a special taxing district for downtown upkeep.

The City-County Council rejected an effort in 2018, led by Downtown Indy, to create a downtown "economic improvement district", though the council did pass a similar proposal then for Virginia Avenue between Fletcher Place and Fountain Square.

While the 2018 taxing district required the approval of at least 50% of property owners in the district in addition to passing a vote in the Council, the new proposed district would need only a majority vote of the 25 members on the City-County Council.

Back then, the proposal faced heavy opposition from the Indiana Apartment Association and struggled to capture — and retain — signatures from more than 50 percent of owners.

Downtown challenges: Indianapolis City Market to close for renovations next year, reopen with private management

Another difference is this new district would be governed by a board, a majority of whom which must be downtown property owners, therefore increasing the amount of control they have, Schaffer said.

"Property owners are squarely in the driver's seat," Hughes said.

The board will act like a homeowners association for all of downtown property owners and get to decide how the money collected is spent each year through an annual budget that the council will have to approve.

The proposal is expected to be heard in committee on Nov. 20, with the opportunity for the public to comment and a final vote is expected on Dec. 4, according to the city.

Contact IndyStar reporter Ko Lyn Cheang at kcheang@indystar.com or 317-903-7071. Follow her on Twitter: @kolyn_cheang.

This article originally appeared on Indianapolis Star: Downtown Indianapolis property owners may see fee to help Mile Square