WATERLOO — The city is exploring the return of a special downtown tax district to help support Main Street Waterloo.

The issue came up Tuesday as City Council members voted unanimously to sign a new two-year contract with the downtown promotional organization and the Iowa Economic Development Authority.

The contract calls for the city to contribute $40,000 a year in tax-increment financing funds and $10,000 annually in hotel-motel tax to help support Main Street Waterloo operations.

But council members Pat Morrissey and Sharon Juon both said the funding amount, unchanged from the past two years, is inadequate.

The city “for years has been sorely underfunding Main Street,” said Morrissey, noting Jessica Rucker, Main Street’s executive director, has just one part-time paid helper.

Juon, who serves as the council liaison to the Main Street board of directors, said the board is continuing to discuss bringing back a Self-Supported Municipal Improvement District to provide additional funding.

The SSMID, essentially an additional tax downtown property owners agree to pay, was utilized by the city and Main Street for downtown improvements from 1981 through 2003. But it dissolved when a large number of downtown property owners objected to keeping it.

“We have talked about the SSMID and I know it’s moving ahead a little slower,” said Juon, who suggested the issue likely will return for council discussion in the future.

The city has participated in the Main Street program since 1996. The program provides grant opportunities for downtown businesses as long as the Waterloo group retains accreditation and receives city support.

The nonprofit organization promotes downtown, works on redevelopment efforts, owns and maintains downtown planters and decorations, and holds events like Friday’Loo with the help of many volunteers.

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