A bill that would create tourism improvement districts (TIDs) around Indiana to attract in-state and out-of-state visitors failed in 2024, but its author says it will be brought back in the 2025 legislative session.
In this year’s session, in the House Ways and Means Committee on Feb. 14, Sen. Travis Holdman, R-Markle, discussed Senate Bill 61, which would allow people to petition local governments to create improvement districts. tourism in their communities, allowing them to receive subsidies and some government tax funding.
According to Indiana Tourism Industry News, the TID is “an additional funding mechanism for tourism promotion and destination development activities. Funds are raised through a tax-free assessment of business stays within a defined geographic area. Funds are used to provide services desired by , and directly benefiting businesses in the area.”
Carrie Lambert, executive director of the Indiana Tourism Association, said the assessment could be a fee or a percentage of the price of a hotel room, food and beverage sales or shopping sales.
This week, Holdman told TheStatehouseFile.com why the bill didn’t pass.
“I think there’s some concern about small businesses taking on some of the responsibility and assessment,” Holdman said.
“People wouldn’t be limited in size in the area, so they could make the area quite large to make the impact relatively small on local businesses and communities.”
Holdman said there are a dozen or more communities across the state that have expressed interest in creating tourism enhancement areas. He said the Indiana Tourism Association supports communities’ efforts to create these areas.
Lambert gave an example of an area to improve tourism: Metamora in southeastern Indiana, which includes the state’s only wooden aqueduct, the Duck Creek Aqueduct, the oldest grist mill and the Whitewater Canal.
“They talked at one point about, you know, it would be really cool if we created a tourism enhancement district, and we’re going to outline what kind of businesses are going to be included, whether it’s going to be accommodations, restaurants or shops, and they they can create whatever grade they like,” Lambert said.
She said there are other places in Indiana with tourism enhancement areas, such as Fort Wayne and Shipshewana.
Lambert believes tourism enhancement districts will work in Indiana. She said many states have had great marketing-based development ideas, but they haven’t worked out for all of them financially.
“They haven’t been able to do it just based on the financial flows and the capacity of what they’ve had with it recently,” Lambert said. “And there are grants that we know are available for different things across the state.”
She added, “Our Indiana Arts Commission has some grants. I know the Indiana Destination Development Corporation has some grants. We feel this is another opportunity, as we say – another tool in the toolbox for our communities.”
Lambert also told The Statehouse File that TIDs allow for greater business participation.
“What’s unique is that people will say I’m going to put my hand up and use my business to be valued at what percentage,” Lambert said. “But then I will also be on a committee that decides how these funds will be spent.”
“They have a stake in what it’s going to be used for, which is a bit unique from some other funding sources and mechanisms. So I like the idea. I mean, having the right legislation that local communities can pass is really great.”
She explained that the additional percentage added to the room rate is collected by the lodging facility and goes directly back to the county to fund tourism marketing and development.
“It’s a really great opportunity that I think could benefit not only our larger communities, but some of the smaller ones as well,” Lambert said. “And I think that’s not always the case with anything that can be transferred anywhere.”
In February’s Ways and Means Committee, the National Federation of Independent Business (NFIB), which represents small businesses, opposed the bill because of rising costs, high tax rates and inflation.
“This is a growing burden for small business owners. These areas essentially create a tax on top of a tax. This bill would allow TIDs to co-exist with TIF (Tax Increment Financing) where it could actually create a triple tax on businesses and no restrictions on that,” said Natalie Robinson, NFIB Indiana State Director .
“To say that the creation of Special Tax Districts right now is a bad time would be a huge understatement. This is happening at a time when property taxes are already rising, health care costs are skyrocketing and all of this is layered on top of our record high inflation,” Robinson said.
According to Robinson, small business owners are under pressure from inflation and must pass the increased costs on to their customers.
“I urge the commission to consider the impact these special districts have on small businesses and help implement policies that help support them,” Robinson said.
Despite those concerns, Lambert said he is optimistic about small businesses, especially those specializing in tourism.
“When I was in the Statehouse, some small businesses were against — well, some small businesses that probably will never vote,” Lambert said. “The reality is that the small businesses that would be part of this are the ones that are heavily involved in tourism.
“So I look at it as actually promoting small businesses and then being part of the conversation about how those funds are used and how it can benefit their community and the quality of the place as a whole,” Lambert said.
She added: “Because that’s really what tourism is all about. It’s not just about the people who come, it’s about the residents who are there, creating such a great environment for families and experiences for everyone.”
