IOWA CITY – The City Council is prepared to approve an additional tax levy on downtown property owners – at the request of many of those people.
The council Tuesday night took the first step to establish a special tax district known as a self-supported municipal improvement district, or SSMID, covering downtown and the Northside Marketplace.
The council took up the issue after receiving a petition signed by 40 percent of the property owners representing 50 percent of the assessed value in the district.
They say paying higher taxes would be worth it to hire a business development manager and assistant manager for the downtown, market the area and undertake beautification projects.
“I’ll assure you the decision to voluntarily raise your own taxes is not an easy one,” said Dan Black of MidWestOne Bank.
The City Council voted 4-0 on the first of three considerations needed to pass the SSMID. Three council members with downtown business interests – Mayor Matt Hayek, Terry Dickens and Connie Champion – are abstaining from the issue because of conflicts of interest.
“I think this is going to be a win for downtown Iowa City,” council member Mike Wright said.
That feeling is not universal. Downtown property owner Scott Cray said the tax increase will be passed on to tenants, and a survey of the 12 commercial tenants in his building resulted in only one person in favor of the SSMID.
He said the SSMID proposal doesn’t put enough money toward marketing efforts and is trying to reduce the number of vacancies downtown, but he doesn’t believe there is a vacancy problem.
He was among the people who signed a counter petition opposing the SSMID. It was signed by 17 percent of the property owners holding 23 percent of the value in the district.
If each of those numbers were 25 percent, it would take a 4-0 vote by the council to approve the SSMID. At 40 percent in each category, the SSMID would be defeated.
Signatures can continue to be collected until the council’s final vote, which is expected to occur in one month.
The SSMID levy would be set at $2 per $1,000 of taxable value, with residential property exempt. The levy would take effect in July 2012 and last four years. It could be amended or renewed through a similar petition process.
The levy would generate an estimated $282,000 a year, according to the city. The University of Iowa, which does not pay property taxes, has said it will contribute another $100,000 annually because of how important downtown is to the school. That support has been cited by downtown business owners and city officials as a boon to the effort.
Bill Nusser, the owner of Hands Jewelers, said the levy would cost him a few hundred dollars more a year.
“I don’t know of any other way that I could pay so little … and get so much value,” he said.
A 14-to-19-person board would direct activities of the SSMID, and some of those people would serve as an advisory board to the City Council.Cedar Rapids, Des Moines and some of Iowa’s other largest cities have SSMIDs.