Do-it-yourself business tool

Gazette Editorial Board


Tonight, the Iowa City Council can take the first step toward approving a tax that many downtown business owners are asking for. Asking to be taxed more may sound unusual, but there’s solid thinking behind the proposal.

The council is considering a self-supported municipal improvement district — SSMID for short. An additional $2 per $1,000 of taxable value in property taxes, starting a year from now, would give the downtown business district substantial funds for marketing, beautification and other improvements — well beyond what other business groups currently provide.

We think the proposal ties in with city leaders’ stepped-up emphasis on revitalizing downtown with a mix of more retailers, owner-occupied housing and office space. The SSMID wouldn’t raise taxes on residents or businesses not in the district. And it gives downtown owners a say in how the money should be used, via their own board.

Most of the state’s largest cities, including Cedar Rapids, Des Moines, Davenport, Cedar Falls and Waterloo, have a SSMID. It can help a business district go as far as reinventing itself in the face of changing economic forces or simply making a few targeted improvements.

Iowa City’s downtown faces tough competition from the Coralridge Mall and other nearby retailers. But it also offers distinctive flavor because of its popular Ped Mall area and the proximity of the University of Iowa. Since voters OK’d the 21-only bar rule and it took effect in June 2011, both city and UI leaders have a big stake in pushing downtown’s evolution from a predominantly alcohol-fueled entertainment district to a thriving city center with more variety.

The SSMID can be a valuable tool in the evolution. And heading into tonight’s city council public hearing and discussion, support from business owners is substantial. State law requires at least 25 percent of the property owners and 25 percent of the assessed property value in the district to sign a petition to consider a SSMID. Iowa City’s numbers are 39 percent and 49 percent respectively.

The process comes with transparency and safeguards. Three of the seven city council members will not vote because they are downtown business owners. Approval requires at least three “yes” votes on each of three readings. A protest petition can stop the plan if signed by 40 percent of owners with 40 percent of the property value.

The UI has said it will contribute another $100,000 annually, reflecting the downtown’s importance to the institution, boosting total SSMID funding to about $380,000.

The proposal comes with no guarantees of success, of course. But who better to take this calculated risk than the business owners? They understand that being proactive improves the odds for a prosperous future.

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