Public Law Monitor
New Economic Improvement District Rules in Indiana
April 3, 2018
Economic Improvement Districts (“EIDs”) are public-private partnerships in which local property and business owners elect to make a collective contribution to the maintenance, development, and promotion of their property. There are about 430 EIDs nationally, but the trend has only recently caught on in Indiana. Most notably, both Evansville and Fort Wayne adopted EIDs for portions of their downtown districts.
EIDs provide a unique and straightforward economic and community development tool for municipalities, developers, and property owners because they allow targeted control, financing, and development of projects without creating an additional financing burden on taxing units. EIDs also allow tax units to avoid some debt caps which might otherwise limit bonding or borrowing.
With the passage and adoption of Indiana House Enrolled Act 1278, signed by the governor on March 25, 2018, it now becomes more difficult to establish an EID in Indiana communities. HEA 1278 requires that an EID petition garner signatures from 60% of property taxpayers AND 60% of the assessed valuation in that area. Previously the threshold had merely been 50%. HEA 1278 also caps the time to accomplish the EID petition process at 120 days.
Impetus for the bill appears to have come from disputes over a proposed EID in downtown Indianapolis. Since September 2017, not-for-profit advocacy group Downtown Indy has been trying to persuade a majority of property owners in the Mile Square to agree to a new EID in the city’s core that would raise about $3 million annually for a decade.
Opponents of the plan persuaded state legislators to eventually pass HEA 1278 making it even more difficult to meet the required threshold for instituting the tax. HEA 1278 faced opposition from a number of interest groups, including the Indiana Chamber of Commerce, which advocated that a simple majority of property taxpayers and assessed valuation should be sufficient to allow for an EID to be set up in a community.
Joshua A. Claybourn is Counsel in the Public Finance and Utilities industry groups, focusing primarily on municipal finance, utility regulation, and commercial transactions. He practices out of the Firm’s office in Evansville, Indiana.