Special tax district considered for downtown Iowa City

IOWA CITY – Some downtown Iowa City business and land owners are taking another crack at an old idea they think would give the area a boost.

Officials are studying whether to establish a special tax district that would, among other things, help pay for a professional manager to market the area.

A similar effort failed in 2004, and the idea also went no where after it was recommended by a consultant who conducted a market study of downtown in 2007.

But it has been resurrected with the downtown at a crossroads following the passage last year of the 21-only law, which bans people younger than 21 from being in bars at night.

Downtown missed an opportunity for a coordinated response after Coral Ridge Mall opened and altered the retail landscape downtown, and downtown may be changing again with several bars closing recently, said Karen Kubby, owner of Beadology Iowa and a member of a committee studying the issue.

“We can choose to do nothing or we can choose to guide what happens,” she said.

Kubby spoke Wednesday at a members-only forum hosted by the Iowa City Area Chamber of Commerce and attended by about 20 people.

The question is whether to establish a self-supported municipal improvement district, or SSMID, in which the property owners agree to pay an additional tax levy. The money would be used to pay a downtown manager and assistant manager, perform additional maintenance and undertake beautification work.

The proposed boundary would include the nine-block downtown proper and the Northside Marketplace. About 200 properties would be included, said Wendy Ford, Iowa City's economic development coordinator.

Downtown Cedar Rapids has a special tax district and professional management, with property owners paying an extra $2.75 per $1,000 of taxable value, said Doug Neumann, president and CEO of the Cedar Rapids Downtown District. A second SSMID has been proposed for the city's new medical district.

Birmingham, Mich., were Tom Markus was city manager before taking the same position in Iowa City in December, has a similar concept. Markus said a SSMID in Iowa City would help land and business owners create a shared vision for downtown.

“I think this helps them get a good handle on the big picture,” he said. “Instead of just reacting, they can be proactive in their future and really create a destination for themselves and for their businesses.”

Iowa City already has the Downtown Association, but it doesn't have the resources or expertise to do what a SSMID would, Kubby said.

The SSMID committee is proposing a rate of $2 per $1,000 of assessed value, which it estimates would generate about $200,000 a year. The average payment would be $455 annually, Kubby said.

Brian DeCoster, who owns Bloomington Street Laundromat, said property taxes already are high and questioned why the city didn't pay for the effort.

“Why are we being asked to be taxed on top of the taxes we already pay?” he said.

Mark Ginsberg of M.C. Ginsberg jewelers noted state law requires the tax levy, but he believes it should be viewed more as an investment.

“I look at it more as a marketing opportunity for us,” he said.

The UI also will contribute, if the City Council approves the SSMID, on a level equivalent to what it would pay in property taxes if its land wasn't exempt, said spokesman Tom Moore. A preliminary estimate puts that figure at $100,000.

“We want to participate because it's important for us to do so as a major presence in the downtown,” he said.

To establish the district, support must be garnered from at least 25 percent of all property owners representing at least 25 percent of the assessed value in the district, according to state law. The City Council also would have to adopt an ordinance creating the district.

The proposal could be killed with a petition signed by at least 40 percent of all property owners within the district or the owners of at least 40 percent of the assessed value in the district.

Kubby said the goal is to get a petition supporting the district to the City Council in May.