Friday, August 12, 2011

Oy Vey ! They Are Robbing The Downtown TIF District - AGAIN !

I don't know if it was luck that I had too much to do yesterday, so I couldn't blog about how intrigued I was with the Ballard Administration's interest in creating a 'fiscal stability fund' with $80 million of the money they will soon receive from the sale of the water and sewer utilities to Citizens Energy Group.  Now I read in today's Star a report by Chris Sikich, that the Mayor intends to steal $40 million from the Consolidated Downtown TIF District for use in the 2012 budget.  Yes, I used the word 'steal'.   There is so much wrong with this idea, that I will have to slow myself down just to be clear.

Back up to the fiscal stability fund.  I attended the Council Rules committee meeting Wednesday night because they were going to consider the super bowl ordinance, and I had comments to make that I knew would fall on deaf ears - which they did.  Not long before leaving the house I got an email alert from the IBJ about Scott Olson's report regarding the fiscal stability fund's creation and uses.  So, I decided to stay and hear more.  The fund would have a single deposit of $80 million from the proceeds of the sale of the utilities.  Its purpose would be to maintain the same dollar amount now used to calm bond buyers that we can repay our water and sewer utility bonds.  The responsibility to repay those bonds will transfer along with the assets of the utilities upon closing to Citizens Energy.  The nut of the idea was to assure bond buyers that the City was flush with cash and our bonds were extra outstanding.  It should be noted that during the Ballard term, our bond rating did slip temporarily from AAA.  The stated intention of the fiscal stability fund was to keep the AAA rating.  The need supposedly would only be for a year or two, then the money could be moved over to the RebuildIndy fund for use toward infrastructure projects. 

I did ask one question that may be more pertinent than I thought at the time.  That question was: could the MDC use accounting tricks in order to allow the reserve amounts in the TIF district funds to drop below prudent levels, by assuring bond holders that we had this extra $80 million just sitting there - so we were going to be able to make our payments on the bonds they bought.  The answer came back - no.

I know that Democrats were trying to make the case that this fiscal stability fund was just being used as an accounting trick to make the City's 2012 budget seem balanced.  I figured, and still do, that the validity of that assertion would become clear with the release of the budget numbers Monday night.

Fast forward to today's news about the City stealing $40 million from the Consolidated Downtown TIF district.  The Mayor is saying that the City has the right to get a refund from that TIF district for all of the infrastructure work it has done over the years on downtown.  Well...  I wouldn't bet the farm that the City has that legal right.  It has overstepped its legal authority time and again with that TIF district in the past couple of years to the point that they just say whatever they think they have to in order to use that TIF money as a slush fund.

Here are the thoughts running through my head on this news:

There is a difference between the MDC having a public hearing on the expenditure of funds from the Downtown TIF district for infrastructure improvements downtown BEFORE they occur, and the Mayor demanding a refund AFTER they occur.

Show the public the receipts from these improvements.

Any extra money in a TIF district belongs to all of the taxing units, not just the City.  In fact, only about 1/3 of the property taxes would have gone into City/County coffers.  About half would have flowed to IPS.  There is a real disconnect when the City simply claims it all as their own.

Are the reserve funds that will be left in the consolidated downtown TIF district fund at the prudent level for the assurance of bond holders?  The Council's economic advisor, Jim Steele, mentioned 15% as such a prudent benchmark.  Or, is the City going to force that reserve to drop below prudent levels, then point to the $80 million fiscal stability fund to reassure bond holders that we can repay our debts?

Are the Democrats correct about the shell game?  Is Mayor Ballard taking $80 million from the sale of the utility, using that as a substitute for the prudent reserve that should be left in the Downtown TIF fund, and absconding with $40 million from that fund to pay the City's bills in 2012?  Is the real reason to maintain the fiscal stability fund for one or two years in order to give the Downtown TIF fund time to take in enough property taxes to replenish the prudent reserve?

Even if there is no shell game and the reserves of the Consolidated Downtown TIF fund are kept at the 15% prudent reserve level, there remains the basic issue of Mayor Ballard time and again using the extra funds in the TIF as his slush fund - to spend any way he wants instead of sending the excess back to the taxing units and relieving the taxpayers of some of their burden.

Will the Council stop this latest theft from the Downtown TIF?  The Council has recently said they want to find ways to ensure that TIF districts are dealt with in a responsibility manner (see "Excellent").  Even Council President, Ryan Vaughn, was quoted as being in favor.  Is that really true?  If so, they should back it up by denying Mayor Ballard this one last mega-misuse of the TIF district fund.

Oy Vey !


Anonymous said...

"The fund would have a single deposit of $80 million from the proceeds of the sale of the utilities. Its purpose would be to maintain the same dollar amount now used to calm bond buyers that we can repay our water and sewer utility bonds."

Ok, you lost me. First, the utility money is bonded money and comes from the ratepayers - the same ratepayers who would pay the water and sewer utility bonds. So, how would this calm bond buyers? Did you (or they) mean to refer to other types of bonds?


Anonymous said...

Oh, and everything they do is theft!

Had Enough Indy? said...

The City has bonds (debt) on the water and sewer utilities. They also have a fund that currently has $80 million in it as a prudent reserve to let bond holders know we are good for at least another payment or two.

The bonds (debt) will transfer to Citizens Energy. The city will take $80 million from the sales price and put it in the new fiscal stability fund. What they said was that bond buyers will see that there is no decrease in reserve amount for the City and the bond rating agencies will think we deserve to keep our AAA rating.

That's the story.