The district was formed back in 1969, when the city's downtown was a far cry from today's restaurant row. By taking virtually all of the property tax revenue generated inside the district, the city has been able to focus on building improvements over the years that, by all accounts, have been tremendously successful.
But due to restrictions on use of the funds — 20 percent of the income must go to affordable housing and the rest to financing improvements — the loss will not greatly impact the city's ongoing operations. Instead, funds for sprucing up downtown buildings and streets will no longer be available, a loss that could be felt over time but not in the short term. (None of the district's income can be spent on basic maintenance jobs, such as mowing grass in the medians or trimming street trees.)
Nevertheless, the council and city manager are concerned about losing such a large sum, prompting council members to approve a $625,000 package of studies to find out the impact of several proposals, including charging for parking downtown and forming a business improvement district that would extract fees from downtown businesses to pay for certain improvements.
Another possibility is to attempt to extend the life of the current tax district, a move that would not be popular with local school districts, which eventually will get to collect property tax revenue from this region once the district expires (and its debts are fully paid off). At this stage, the city is not certain about all the rules governing a request to extend the district — but after the recent uproar over giving schools a larger share of the Shoreline Improvement District, City Hall should take great care before it attempts to rejuvenate a tax district and cut local schools out of an important revenue stream.
If a new district is formed, we believe it would be better for the city to share a significant portion (say 50 percent) of the revenue with local schools. That would address at least some of the income lost to the city, and reduce the possibility that local school supporters will cry foul over an attempt to keep all the revenue in the city coffers.
Whatever direction is taken, the city should make sure its consultants conduct a comprehensive survey of downtown merchants and property owners before any decisions are made about paid parking or a business improvement district. The major stakeholders should have their say before a move is made that impacts the entire downtown area.