A bill that would create tourism improvement districts (TIDs) around Indiana to attract visitors in and out of the state failed in 2024, but its author says it will return in the 2025 legislative session.

In this year’s session of the House Ways and Means Committee, Sen. Travis Holdman, R-Markle, discussed Senate Bill 61, which would have allowed people to petition their local governments to establish tourism improvement districts within their communities, allowing them to receive grants and some state tax funding.

According to Indiana Tourism Industry News, a TID is “a supplemental financing mechanism for tourism promotion and destination development activities. Funds are raised through a non-tax assessment on business stays within a designated geographic area. Funds are used to provide services desired by, and directly benefiting, businesses in the district.”

Carrie Lambert, executive director of the Indiana Tourism Association, said the assessment could be a fee or a percentage of the cost 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 is some concern about small businesses taking on some of the responsibility and evaluation,” Holdman said. “People wouldn’t be limited in size in the district, so they could make the district quite large so that the impact on local businesses and communities would be rather small.”

Holdman said there are a dozen or more communities across the state that have expressed interest in establishing tourism improvement districts. She said the Indiana Tourism Association supports communities’ efforts to establish these districts.

Lambert gave an example of a tourism improvement district: Metamora in southeastern Indiana, which includes the state’s only wooden aqueduct, the Duck Creek Aqueduct, the oldest mill and the Whitewater Canal.

“At one point they talked about how it would be great if we created a tourism improvement district and outlined what businesses would be included, whether it be lodging facilities, restaurants or retail stores, and they can create what assessment they like,” Lambert said.

He said there are other places in Indiana with tourism improvement districts, such as Fort Wayne and Shipshewana.

Lambert believes tourism improvement districts would work in Indiana. He said many states have had great ideas for development based on marketing, but they have not worked financially for everyone.

“They haven’t been able to do it based just on the funding streams and the capacity of what they’ve had recently,” Lambert said. “And there are grants that we know are available for different things across the state.

“Our Indiana Arts Commission has some grants. I know the Indiana Destination Development Corporation has some grants. We feel that this is one more opportunity, as we say, another tool in the toolbox, for our communities.”

Lambert said TIDs allow for greater participation by businesses.

“What’s unique is that people will say, I’ll raise my hand and use my business to get evaluated on what percentage,” Lambert said. “But then I will also be on a committee that decides how those funds will be spent.

“They have an interest in what it will be used for, which is a little unique compared to other funding sources and mechanisms. So I love the idea. I mean, having the right legislation that local communities can enact is really fantastic.”

He explained that the additional percentage added to the cost of a room is collected by the lodging establishment and goes directly to the county to fund its marketing and tourism development.

“It’s a really interesting opportunity that I think can benefit not only our larger communities but some of our smaller ones as well,” Lambert said. “And I think that’s not always the case with everything that can be transferable across the board.”

At the House Ways and Means Committee in February, the National Federation of Independent Business (NFIB), which represents small businesses, opposed the bill due to rising costs, high tax rates and inflation.

“It is an increasing burden on small business owners. Basically, these districts create a tax on top of a tax. “This bill would allow TIDs to coexist with TIFs (tax increment financing), which could actually end up creating a triple tax on businesses and there are no limits in place,” said Natalie Robinson, NFIB state director in Indiana.

“To say that creating special tax districts at this time is a bad time would be a gross understatement. “This comes at a time when property taxes are already rising, health care costs are skyrocketing and all of that is adding to our record inflation,” Robinson said.

Robinson said small business owners are under pressure from inflation and have to pass the increased costs on to their customers.

“I urge the committee to consider the impact these special districts have on small businesses and help implement policies that help support them,” Robinson said.

Despite these concerns, Lambert said he is optimistic for small businesses, especially those specializing in tourism.

“When I was at the Capitol, some small businesses were against it; Well, some small businesses that would probably never agree to participate,” 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 see it as promoting small businesses and then being in the conversation about how these funds are used and how they can benefit their community and the quality of the place in general.

“Because that’s what tourism is really about. “It’s not just for the people who come, but also for the residents who are there, creating a great environment for families and experiences for everyone.”