Iowa City property owners debate tax increase

A call to increase taxes on downtown property owners is being met with some resistance but leaders are optimistic about the plan's prospects.

Downtown business owners met in Iowa City on Tuesday night to discuss establishing a self-supported municipal improvement district. Under the proposal, the approximately 130 commercial property owners downtown would see a small tax increase. That revenue would go toward projects that support businesses in the district - like extra maintenance and marketing campaigns. Property owners blocked a similar plan seven years ago.

To put the district in place, organizers need to get signatures from 25 percent of downtown property owners as well as the owners of 25 percent of the assessed value of the district. The plan would then go to a vote from the city council.

Karen Kubby, a proponent of the plan, operates a bead shop downtown. She said she'd pay an extra $600 in property taxes each year.

“I can buy a lot with $600 - most of us can - but I can't buy the things we're talking about with $600. We're really talking about doing things collectively that we can't do individually,” she said.

The improvement district plan calls for a $2 commercial property tax increase for every $1,000 of assessed property value.

But Joe Murphy, a downtown bar owner, said even that increase is too much.

“I need to be profitable. I've got to take care of my business for myself,” he said.

Murphy doesn't own the space he operates on but his lease calls for him to cover property tax increases. He said it's unfair for a quarter of the property owners in the area to be able to increase tax rates for everyone.

“You're not asking me, you're telling me the city is going to come and take this money from me,” he said during a back-and-fourth with a project organizer.

Because he's a renter rather than an owner, Murphy doesn't get an official say in whether the tax increase takes hold, but in 2004, opposing property owners took down a similar proposal. If 40 percent of the owners in the district or the owners of 40 percent of the assessed value of the district sign onto a counter petition, they can kill the tax district proposal.

Kubby said she revisited 2004's counter petition. Enough property has changed hands that, Kubby said, if the same 2004 opponents who still own land in the area launch another opposition campaign, they won't reach 40 percent.

Mark Ginsberg, a tax district supporter who owns a jewelry shop, said he's spoken with opponents of the plan but said he's optimistic there's enough backing for it this time.

“I think we have to take responsibility to figure out a way to cohesively brand ourselves and market ourselves,” he said. “All of us are thinking beyond our blocks and beyond our state even. This is a tourist destination.”