Friday, January 13, 2012

Expansion of Downtown TIF District & Fall Creek TIF Moved To Council

Introduced to the Council last Monday night were two proposals to approve the MDC's decision to expand the Consolidated Downtown TIF District (Prop 15) and the Fall Creek TIF District (Prop 16). 

I have posted a document that has both MDC Resolutions, 2012-R-001 (related to the expansion of the Consolidated Downtown TIF) and 2012-R-002 (related to the Fall Creek TIF) on Google Docs - click here.  There are valuable maps included to help visualize the expansion areas.

For reference, I have also uploaded a map of Marion County showing all TIF districts.  Click here for that map.

The expansion of the Consolidated Downtown TIF will, miracle of miracles, bring that behemoth TIF district over to include Bush Stadium and its environs (see map on page 7 of the posted pdf).  You may recall how Mayor Ballard was going to pilfer at least $3.5 M from the Consolidated Downtown TIF for Bush Stadium area infrastructure improvements last June (see "Are They Insane, Stupid, or Totally Corrupt?  Had Enough, Indy?") even though it was a clear violation of State Laws regarding the used of excess TIF revenues in areas not within the TIF district.

If you are trying to track the Consolidated Downtown TIF on the Marion County TIF districts map, they are districts 140, 142, 143, 144, 145, 146, 153, and 157.

One clear question that needs asking is:  Why not create a new stand-alone TIF district?  A couple of possible reasons come to mind. 
1) they still want to pilfer money that already exists in the Downtown Consolidated TIF fund and this expansion just legalizes the effort. 
2) even after full development, the property taxes that would result in a stand-alone TIF aren't sufficient to pay off anticipated bonds. 
3) an expansion of an existing TIF would be governed by the existing TIF's rules and regulations.  In effect the expanded area, even though new, would assume the grandfather status of the existing TIF district and find protection from newer State laws designed to limit the life span of a TIF district.

Prop 16 and MDC Resolution 2012-R-001 also propose a second expansion of the Consolidated Downtown TIF district toward the northeast up Massachusetts Avenue, in two non-contiguous sections (see map on page 10 of pdf).  According to this expansion is to fund the Mass Ave parking garage and future development of an 11 acre parcel now owned by IPS and the site of 'The Trail Side at Mass Ave', now under construction.  You may have seen mention of the potential for a million dollar plus commission for CB Ellis related to the parking garage in IBJ reporter, Cory Schouten's, article "Mass Ave deal's brokerage fee raising eyebrows".

These proposed expansions of the Consolidated Downtown TIF should be raising concerns for all taxpayers, since this are is already a 'dead zone' for tax collections and the rest of us have to chip in more tax money to cover vital services to the area.  Then they cry about the tax caps, which are the only protection we have from their tax-commandeering ways.

Prop 16 is an expansion of the Fall Creek Area TIF (see page 20 of the MDC resolution pdf and districts 148 and 154 of the TIF districts map). The existing Fall Creek Area TIFs are housing TIFs set up to spur new housing in what once was called 'Dodge City'.  This is widely considered to be a successful endeavour, with any negative opinions centering around the gentrification of the area to the exclusion of low income residents.  Unintended gentrification needs to be dealt with as a pulic policy at some time, so that safeguards can be put in place for future redevelopments.

What is curious from the outset is that the expansion being proposed for the Fall Creek Area TIF is at least a mile and a half from the other two areas. The expansion is just south of the intersection of Binford and Keystone, west of the State Fairgrounds and in the Meadows area. There has already been redevelopment proposed here, backed by Warren Buffet. As Scott Olson of the IBJ reported :
East Village at Avondale is a $27 million project with eight layers of financing, including an investment from Atlanta-based Purpose Built Communities, co-founded by Buffett.

The developer of the project is a joint venture of Chicago-based Strategic Capital Partners, Mishawaka-based The Sterling Group, Meadows Community Foundation, Purpose Built Communities and the city of Indianapolis.

Strategic Capital Partners received $19 million in tax credits that were sold to Chicago-based National Equity Fund to help finance construction of the 248-unit apartment complex. It is being built on about 15 acres of land that Strategic Capital put under contract in 2010.

The city of Indianapolis also kicked in $5 million in tax credits.

East Village at Avondale is the first phase of a larger, $150 million development that is to include additional housing—both apartments and single-family—and retail development fronting 38th Street.
It is not clear if the purpose of this expanded TIF is to secure funds for the initial phase or subsequent phases.
One also has to ask the same question as for the expansion of the Consolidated Downtown TIF.  Why not create a stand-alone TIF? Especially given the distance between the existing and expansion areas.  The two districts currently comprising the Fall Creek Area TIF are expected to net an extra million dollars in property taxes in 2012 beyond what is needed to service debt, or so says documents submitted to the State.  I have no information on the fund balances and do not know if there are ample funds just waiting to be plucked or if it is bone dry.  But, why is the City refraining from creating a stand-alone TIF? Won't it generate the investment and taxes that they touted at the ribbon cutting?  Or, are they trying to grandfather the expansion so it does not get a State-imposed expiration date?

Those of my readers who are concerned about, or even just interested in, the burden on taxpayers should remember the establishment of these TIF district expansion areas every time a politician crys about property tax caps.  There very well may be adequate reasons for all of these project, or just some, but they are tied to a bigger picture that reaches into every Marion County taxpayer's pocketbook.  Hopefully somebody on the Council will ask enough questions so that the public can have confidence that these TIF districts are absolutely necessary.


Anonymous said...

TIF don't seem to be beneficial to local government, especially when the taxes collected won't pay off the bonds. Where are we with respect to TIF#960, the United Facility? They are gone, they didn't meet their set targets. Did the city recoup anything?

Much like econimists agree that stadiums are bad for local growth, TIFs are bad for local growth as well. See this article;

Had Enough Indy? said...

Thanks for the link. I'll read it with interest. I must say that I do believe a TIF can be beneficial, but it needs to be vetted, temporary, and excess revenue needs to go back to the base. But, that's just me.

Gary R. Welsh said...

The Mass Avenue TIF is being created in an already thriving business district that has grown by leaps and bounds without any TIF. This is only being created to skim money from other taxing districts to fund the redevelopment of the fire station land that will no doubt be awarded to one of Ballard's cronies. There's a major mixed retail/housing project proposed on the empty parcel bounded by Michigan and College just outside this TIF district that is not requesting (at least yet) city financing that includes surface lots and underground parking to meet its needs. Yet we'll be told that no redevelopment of the fire department parcel will ever occur unless tens of millions of public dollars are plowed into it.

Had Enough Indy? said...

Gary - you nearly took the words out of the MDC's mouth. They said in the resolution (written by the Administration)
1. The Commission finds that the 2012 Expansion Area [they do not distinguish between the two expansion areas] is an area needing redevelopment pursuant to IC 36-7-1-3, because there has been a lack of development, a cessation of growth, deteriorated or deteriorating improvements, substantial obsolescence, substandard buildings and other factors that impair values or prevent a normal use or development of property.


3. The conditions described in IC 36-7-1-3 cannot be corrected in the 2012 Expansion Area by regulatory processes or by the ordinary operation of private enterprise without resort to the powers allowed under the Act.

Had Enough Indy? said...

anon - try this paper from the same researches cited in the link you provided

from 2007, Kashian, et al

They do statistical analysis on municipalities with and without TIFs, areas within one municipality that are TIF'd or not - covering a 13 year period. The abstract of the paper says:

"We find evidence in support of three primary hypotheses: (1) EAV grows faster in TIF than non-TIF portions of themunicipality; (2) non-TIF portions of municipalities with a TIF grow more slowly than
they would have in the absence of TIF; and (3) TIF has no net effect on aggregate land values within a municipality."

Thus (these are my words now) cities are just picking winning neighborhoods and the rest of the neighborhoods pay for it.

Thanks for providing that initial link.

Gary R. Welsh said...

The more I see from the MDC, the more despised by its very existence I become. It exists only to carry out all the kickbacks and payoffs promised to campaign contributors. It could give a shit less about the public's interests. At the same time they decimate the tax base, these Jackie Nytes types will lecture to us about how it's all the legislature's fault for imposing property tax caps that schools and other taxing districts can't raise enough money from the property tax. It's the MDC's fault for stripping the tax base bare with so many TIF districts and tax abatements.

Jon said...

Question, how much in taxes is being diverted by TIFs? With property taxes capped won't the increase in TIFS further exacerbate funding for entities that rely on property taxes?

Anonymous said...

TIFs and all supposed economic development tools are frauds. They are just a complicated method to funnel money to campaign contributors, uh, developers.

Citizen Kane said...

"TIF has no net effect on aggregate land values within a municipality."

There you go - a zero-sum game. There is no free lunch. Demographic and entrepreneurship create growth. Government is supposed to provide the "common" infrastructure so that there are not impediments to "real" growth.