Business owners discuss tax increase for downtown 'beautification' project

BY HAYLEY BRUCE | APRIL 27, 2011 7:20 AM

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Karen Kubby, owner of downtown store Beadology, could buy a lot of beads and supplies with $600 — but she says she's willing to spend it on taxes.

The owner of the shop at 220 E. Washington is a key proponent of a Downtown Association proposal to start a self-supported municipal improvement district that would carry out a widespread "beautifucation" project in downtown Iowa City.

Kubby — the chair of the Self-Supported Municipal-Improvement District Committee in the Downtown Association — met with roughly 50 downtown business owners Tuesday evening to discuss the possibility of implementing a small tax increase for property owners. The money would go toward adding events and activities, recruiting new retailers, increasing maintenance, and hiring a downtown business-development manager.

Because of the 21-ordinance and recent development projects in Coralville, proponents of the district said it's a necessity to keep downtown Iowa City competitive with surrounding areas. But several at Tuesday's meeting said they simply couldn't afford a jump in taxes.

"I need to spend that money paying my bills so I can invest and buy my property," said Joe Murphy, owner of TCB, 114 E. College St., growing red in the face. "This is not needed."

Though Murphy doesn't own the building, he said, his lease would require him to pay the tax.

"I can't afford it, that's the bottom line," Murphy said after the meeting.

The tax is expected to generate $200,000, part of which would go toward hiring a business-development manager whose job would be building business opportunities downtown.

"I would say, at this point, we can't afford not to do this," Kubby said. "We all make investments in our businesses and, even though it's a property tax, it's an investment that will bring things back to downtown and Iowa City businesses."

Organizers need to get signatures from 25 percent of downtown property owners who make up a quarter of the assessed value of the district. If approved by the property owners, the four-year pilot project could go to the Iowa City City Council in August and begin in September. Kubby said an opposition petition would require 40 percent of property owners to block the ordinance.

An opposition petition prevented the City Council from voting on a similar ordinance in 2007.
Without the taxing district, proponents of the plan said, they could not go forward with the marketing. The current structure of the Downtown Association doesn't generate enough revenue for them to fund the plan without a tax increase, committee members said.

The committee has also turned to the University of Iowa for funds. UI officials have pledged $100,000 for each of the four years of the pilot project for the district, Kubby said.

Kubby said few members of the Downtown Association actually contribute to the group financially, adding to the necessity of the district.

"With the [Downtown Association], we have the same people donating time, money, and energy going toward the well-being of downtown, and this will have contributions from everyone," Kubby said. "It's an issue of fairness."

Other downtown business owners said they would like to see downtown marketed as a whole entity.

"I like the idea of leveling the playing field to incorporate greater participation," said Astrid Bennett, the owner of Iowa Artisan's Gallery, 207 E. Washington St. "I don't want to pay extra property taxes, but by paying an extra assessment, I feel like that's money in my own pocket."

Mark Ginsberg, owner of M.C. Ginsberg, 110 E. Washington St., said at the meeting that the project is meant to benefit everyone.

"The bottom line for most of us is how do we make a profit," he said. "The more people we get living down here, the more feet we put on the street, the better. This isn't meant to be us against them, or [the district] against the community."

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