City Council to vote on downtown Iowa City tax plan

The City Council and the public will have their say next week on a proposal to raise taxes on downtown commercial properties to help market and improve the area.

The council is scheduled Nov. 1 to have a public hearing and first consideration of an ordinance to establish a self-supported municipal improvement district, or SSMID. Three readings are needed for it to pass.

A SSMID is a special tax district in which property owners within its boundaries pay an additional tax levy.

A petition requesting the SSMID was submitted to the council in August. Business owners and the Downtown Association of Iowa City, which would be replaced by the SSMID, organized the effort.

The district would cover the downtown and the Northside Marketplace.

The proposed levy is $2 per $1,000 of taxable value, with residential property exempt. The levy would take effect next fiscal year, in July 2012, and last four years. It could be amended or renewed through a similar petition process, according to the city.

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

The money would be used to hire a business development manager and assistant manager, market the area and undertake beautification projects. For the past year, city officials and downtown business owners have put a lot of emphasis on revitalizing downtown and attracting more retailers, office space and owner-occupied housing.

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.

More people have signed the petition supporting the SSMID since August, and it now has approval from 39 percent of the property owners in the proposed district, according to the city. They account for 49 percent of the assessed property value in the district.

State law requires those numbers to each be at least 25 percent.

The proposal would be killed if a protest petition signed by 40 percent of the property owners with 40 percent of the assessed value is submitted before the ordinance's adoption. A counter-petition successfully defeated a 2004 SSMID proposal

Only four of the seven council members will consider the SSMID request because of conflicts of interest for downtown business owners Connie Champion, Terry Dickens and Mayor Matt Hayek. Approval will be needed from at least three council members for it to pass.

The city's Planning and Zoning Commission and city staff are recommending approval.

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