The SSMID fund would collect $350,000 annually
By Gigi Wood
The Downtown Association of Iowa City turned in a petition Aug. 25 asking for the city’s permission to increase property taxes in the downtown business district.
The DTA received enough petition signatures to support a SSMID (Self Supported Municipal Improvement District) tax, which would add $2 per $1,000 of taxable value tax property tax bills. If approved, the tax will expire in four years.
The SSMID would be used to market downtown businesses and hire a manager to coordinate commercial vacancies. The idea of a SSMID tax has been a perennial one and has often been suggested as a way for downtown businesses to compete with the Coral Ridge Mall, which has a management team. It resurfaced after tough economic years due to the recession and flood. Most recently, the conversation was spurred by the closing of large bars downtown after the bar-entry age changed a year ago from 19 years and older to 21 years and older after 10 p.m. Those closures have left gaping vacancies in the pedestrian mall.
The DTA submitted the petition last week so it would be part of the Iowa City City Council’s Sept. 6 meeting agenda. At the meeting, the council will likely vote on whether to accept the petition. The petition will likely then be sent to the city’s planning and zoning commission for review and recommendation. That recommendation will later be considered by the council for formal approval, said Karen Kubby, a member of the DTA’s SSMID committee and downtown business owner who spent 11 years as a city councilor.
The SSMID would likely be voted on as an ordinance, based on the language of the petition and would need to undergo a public hearing and pass three readings to go into effect.
Meanwhile, a protest petition representing 40 percent of property owners and assessed property value would kill the SSMID proposition.
Once it reaches the city council level, the SSMID will be faced with a unique challenge. Three councilors either own businesses or have business interests downtown and would need to recuse themselves from a vote. Therefore, three out of the four remaining councilors would need to vote in favor of the SSMID for it to pass, regardless of a protest petition.
Petition timing
The timing of the SSMID petition submission to the city was planned.
“No matter when the SSMID is approved, assuming it will be approved by city council, the first SSMID levy can’t happen until September of 2012 because the SSMID has to be certified through the budgeting process,” she said. “So we certainly wanted to have this completed this fall, so it could be incorporated into the budget that will be certified by the state.”
The SSMID committee needed to collect signatures from 25 percent of the property owners in the proposed district, as well as signatures of the property owners representing 25 percent of the assessed value of the district.
Ms. Kubby said 25 percent of the district’s assessed value is equal to $141.2million and petition signatures represented 42.16 percent, or $59 million of that.
The goal was to collect 35 percent of each requirement.
Within the proposed district, there are 142 unique owners, so 36 signatures were needed from property owners to meet the petition requirement. Ms. Kubby said about 51 signatures, representing 35.66 percent of owners, were collected. The number was low because the committee chose not to hire someone to collect signatures, so only the signatures of locally-based property owners were pursued. Some signatures still need to be turned in, as well.
“We’re all trying to run our own businesses, which is more than a full-time job, so connecting with those out-of-town owners is a little more difficult than in-town owners,” she said. “What’s really exciting is it’s not only retailers signing it, it’s been financial institutions, it’s been second-floor office-use users, property owners downtown, it’s been restaurants. So it’s been this nice mix.”
Some businesses chose to remain neutral on the SSMID issue and not sign the petition because those companies, such as banks and law firms, did not want to upset clients, she said.
“So few people are against this and now some of the people who were formerly against it have signed the petition, so we weren’t as attached to having 80 percent of property owners sign the petition,” Ms. Kubby said. “A lot of people told us that they wanted to remain neutral.”
What’s next
The DTA’s SSMID committee will disband and its 501(c)(4) status will be transferred to a new, separate SSMID board, which will oversee and choose how to spend the tax dollars.
Board members will be selected by area economic development agency representatives and will include members from large and small downtown businesses, property owners, the northside neighborhood and theUniversityofIowa.
The current SSMID committee plans to ask the city and UI for bridge funding for the coming year, to cover costs while it waits for the city’s budget to be certified.
“Assuming this passes, we’re going to be approaching the city and the university with a very specific, truncated first-year (funding request), so we can get the board online, we can get all the organizational bylaws and the structure of the organization worked out and complete the hiring process,” Ms. Kubby said. “We would like to be able to start those activities after the start of the year.”
If the UI and the city are unwilling or unable to provide bridge funding, the SSMID committee would consider taking out a private-sector loan.
“We (SSMID committee) would be willing to take on that debt in order to move forward,” she said.
If enough petition signatures are collected and the SSMID is approved by council, the district would extend south toBurlington Street, westto include theOldCapitolTownCenter, east toGilbert Streetand just north ofBloomington Street, to include a Laundromat and Pagliai’s Pizza.
