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State board denies petition objecting to Indianola’s use of local option sales tax for Streetscape Project


Architectural rendering of Indianola’s City Square Reconstruction Project. Special to the Business Record

The Iowa State Appeals Board has dismissed a petition objecting to the city of Indianola’s use of Local Option Sales Tax funds for its City Square Reconstruction Project.

The $7 million project, commonly called the Streetscape Project, would revitalize and improve roads and water, storm and sanitary sewer systems in the area, and enhance the square as a community gathering space. It includes widening sidewalks, replacing head-in parking on one side of street with parallel parking, and adding trees and other greenery. It will also convert one-way traffic to two-way. Work is scheduled to begin on Monday.

Citizens who objected to the use of Local Option Sales Tax to fund the improvements argued it violated the intent of a resolution approved in 2016, which stated the funds would be used to help build a new water treatment plant. In the resolution, voters were told the Local Option Sales Tax could be used for public safety facilities, public works and street maintenance, and not be used for property tax relief.

According to a news release from the city, Local Option Sales Tax revenue exceeded the projected annual estimate of $1 million, so the surplus will be used on the Streetscape Project. Officials said in the release that the one-time use of Local Option Sales Tax will not affect the city’s ability to meet the financial obligations for the water treatment plant, nor will it affect property taxes.

According to City Manager Ryan Waller, the Local Option Sales Tax has “outperformed our expectations” since it was passed in 2016, generating more than $3 million more than what was estimated.

Each utility will pay for its part of the improvements, a $1.7 million water quality grant from the state will allow, among other things, the city to install brick pavers around the square to help move stormwater runoff from the area, and improve a parking lot near the square. The city is also using Tax Increment Financing to help fund the project.

On Monday, the State Appeals Board dismissed the petition, saying it was filed after a deadline for protesting city budgets. The board is a three-member panel composed of the state auditor, state treasurer and director of the Department of Management.

In its ruling, the appeals board said Local Option Sales Tax revenue was included in the city’s fiscal year 2021-2022 budget, which was approved on March 15, 2021, and submitted to Warren County before the March 31, 2021, deadline for certification. To protest the budget, the petition would have had to have been submitted by April 10. The petition was filed April 27.

Because the petition was filed after the deadline for protesting budgets, the board said it “has no power to review and finally pass upon a proposed expenditure in the city of Indianola’s budget absent a timely filed appeal.”

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