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Iowa City business owners speak out against new municipal district

BY ASMAA ELKEURTI | NOVEMBER 16, 2011 7:20 AM

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Business owners want their peers, City Council, and others promoting the Self-Supporting Municipal Improvement District tax levy to understand its implications.

Though the proposal for a tax levy to diversify Iowa City's central and North Side areas has been well-received — with only 17 percent of business owners signing a petition against it — some business owners find themselves at odds with the representation of tenants who are affected by the tax.

The municipal district would require businesses to pay $2 for every $1,000 in taxable property value. That money would then go to the maintenance, improvement, and marketing of the commercial areas.

In order to sign a petition in favor or against the district, business owners must own property, which leaves some tenants feeling they don't have enough say.

"I think this is an example where the people who bear the cost don't really have a vote, but that doesn't mean that [district is] not a good thing," said Holly Sanger, a partner in the Anderson Arnold & Partners LLP therapy clinic, 229 E. Washington St.

Some landlords have recognized the issue.

Scott Cray, an owner of the Paul-Helen Building, 209 E. Washington St., is the landlord for a variety of businesses that the tax increase will be passed on to. Cray decided to sign a petition opposing the levy because many of his tenants objected.

"Since we were presented competing petitions to sign, we felt the fair thing to do was to take a survey of our tenants, and see if they wanted us to support the [district]," Cray said.

Business owners are also uncomfortable with the idea of having a downtown manager; one aspect of the district plan incorporates a downtown manager and an assistant manager. Their salaries, office space, and other factors are budgeted for $205,000.

"I was told this person would know the intimate details and be able to market my space much better than anybody else," said Ben Chait, the owner of Chait Galleries Downtown, 218 E. Washington St. "Traditionally, as a landlord, I want to market myself, not have the government do it."

Karen Kubby, the owner of Beadology, 220 E. Washington St., and chairwoman of the Downtown Association's municipal-district committee, said the budget is merely tentative and can be adjusted.

"One of the risks of being so specific with our proposal is that people wouldn't like the details of the budget, and we're fine with accepting that risk because we felt it was our obligation to put out that budget," she said.

Colin Gordon, a senior research consultant at Iowa Policy Project, said he doesn't feel objections to the municipal district are unique.

"People pay school taxes even if they think schools are doing a lousy job," he said. "Even though it's a different kind of tax, being that it's self-imposed, I don't see the opposition as really distinct or surprising."

But for business owners such as Sanger, spreading awareness is a priority.

"The bottom line is, we support a vibrant downtown. That's great — let's give that a try," she said. "I just want people to pay attention to how it's being funded and to be aware that not all businesses that are bearing the cost of this benefit in the same way."

The ordinance has received enthusiastic response from each city councilor, with the first of three hearings passing in a 4-0 vote.

The ordinance, however, will not last forever. If unsuccessful, the tax levy will expire in four years, with a renewal option.

"I think it's good that it has a sunset, so if people are dissatisfied with it, it's not going to go on forever," said City Councilor Connie Champion. "It'll be tested before it's renewed. I think that's important."

Two more public hearings will be held on the municipal-district proposal this year in which community members will have a chance to voice opposition or support, followed by a City Council vote.


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