Saturday, January 14, 2012

Statehouse Considers Tighter Redevelopment Commission Debt Rules

Today's Star has posted a letter to the editor from former Carmel City Councilor, John Accetturo, regarding SB 25, which would provide oversight of Redevelopment Commissions (called the Metropolitan Development Commission here in Indy) when they determine to accumulate debt.  This would apply to TIF districts in particular, I should think.  I do not know of another means available for a Redevelopment Commission to go into debt.  If one of my fantastic readers can clarify, please add a comment.
Here is Mr. Accetturo's letter:
In Indiana, certain boards and commissions can create taxpayer debt without any legislative approval and accountability to the taxpayers. One of these is a city or county redevelopment commission. The majority of the members of these commissions are appointed by the executive and, unlike elected officials, are not accountable to voters.
The power to encumber future generations of Hoosiers with hundreds of millions of dollars of debt is enslaving and potentially destructive. Therefore, checks and balances need to be in place to ensure this authority is used responsibly and in the spirit of the law.
In 2010, an opinion of the Indiana Attorney General upheld the existing statute that provides that power to redevelopment commissions. This opinion has opened the door in several cities for redevelopment commissions to borrow millions without limitation or public scrutiny for projects that are questionably titled “redevelopment.” Default on payments by any redevelopment commission could have a devastating effect on debt rating and borrowing capability for all redevelopment commissions in Indiana.
Existing Indiana law grants too broad powers to local commissions to unilaterally create debt. We need to change the redevelopment commission law to protect taxpayers and development in Indiana. I believe that Senate Bill 25 will do that. It will protect the public interest of Indiana taxpayers from an executive who chooses to avoid the scrutiny and diligence embodied in constitutional checks and balances.
Redevelopment Commissions and other boards serve a purpose in municipal government. However, checks and balances need to be in place over them just like any other part of government.
Here is the digest of SB 025 (emphasis added and digest reformatted by me):
Redevelopment commissions and authorities.  
Provides that a redevelopment commission may not enter into any obligation payable from public funds without first obtaining the approval of the legislative or fiscal body of the unit. Provides an exception if the obligation is for the acquisition of real property and the payments are for three years or less or the purchase price is less than $5,000,000.  
Specifies that the approving ordinance or resolution must include certain items.  
Provides that a redevelopment commission and a department of redevelopment are subject to oversight by the legislative body of the unit, including review by the legislative body of annual budgets.  
Specifies that a redevelopment commission and a department of redevelopment are subject to the same laws, rules, and ordinances of a general nature that apply to all other commissions or departments of the unit.  
Specifies that a redevelopment commission, a department of redevelopment, and a redevelopment authority are subject to audit by the state board of accounts and covered by the public meeting and public records laws.  
Requires a redevelopment commission to provide to the legislative body of the unit at a public meeting all the information supporting the action the redevelopment commission proposes to take regarding the sale, transfer, or other disposition of property.  
Provides that if the amount of excess assessed value determined by the commission is expected to generate more than 200% of the amount of allocated tax proceeds necessary to carry out the commission's plan, the determination of the amount of the excess available to other taxing units must be approved by the legislative body of the unit.
Permits the legislative body of the unit to modify the commission's determination
One item in particular jumps out  to me in this list of improvements to the law, and that is the review of the redevelopment commission's budget by the legislative body.  In Indy those would be the MDC and the City-County Council, respectively.  During the time of the infamous 'interlocal agreement' between the MDC and the CIB that gave the CIB $8 million annually from property taxes gathered in the Consolidated Downtown TIF District, which the CIB in turn gave to the Pacers, the City-Council ducked its responsibility to review that agreement, saying it was not the fiscal body for the CIB or the MDC.  This would make it absolutely clear that the Council does have that responsibility.

SB 025 is certainly worth following through this short session.


Septly said...

The legislation may or may not be good public policy, but I should clarify some errors in your post at the end:

(1) The CIB is not a redevelopment commission, and as such, it would be completely unaffected by this proposed legislation.

(2) The City-County Council legally is required to review and approve the CIB's budget.

(3) I have read the bill, and I am not sure it would have subjected the inter-local agreement you criticize to any extra scrutiny. The MDC (a city agency) transferred funds to another local municipal authority, and I do not think "obligation" as used in the proposed bill seems to cover inter-governmental transfers. The bill seems to focus on preventing redevelopment agencies from taking on long-term debt without approval by the relevant local legislative authority. Effectively, the MDC transferred funds to another agency which then transferred it to the Pacers. It would seems this loophole would still be open, even if the proposed legislation passed.

Had Enough Indy? said...

Septly - I didn't say the CIB was a redevelopment commission. The MDC is, however, the redevelopment commission for Marion County. It is not an agency of the City.

Pete Boggs said...

A minimal grasp of American history should remind us that taxation without representation is unconstitutional- period.

Those of us concerned with redistribution of wealth need to likewise focus on the unconstitutional intramural "sport" of crony capitalism; self serving practices of principals, at the unsustainable expense of principles.

Across the country, bond bankers & lawyers are running out of other peoples' money schemes, erosion seen in poorly attended public debt auctions as municipal to municipal & union to union swap dollars (less a reserve or "limited edition" currency, as its printed in a stack that reaches toward Mars from earth) are in predictably short supply.

It's over! But, the "referee" (what's supposed to be "government") won't say it; suffering laryngitis born of guilt / complicity. The markets have & are saying "it's over," but media infection from that same laryngitic virus had rendered them inarticulate- dysfunctional. It's now for the people to say...

Septly said...

Had enough,

The Metropolitan Development Commission is the board that oversees the Department of Metropolitan Development (a city agency). Yes, in the Consolidated City of Indianapolis, the MDC also functions as the redevelopment commission, but it has a much broader purpose than just redevelopment.

In any event, my point is that the transfer you criticize was from one municipal authority to another, and I did not read anything any the proposed legislation which would have restricted such a transfer.

The real issue is that the money eventual went to the Pacers, and yes, this is something the City-County Council should have ultimately approved and reviewed, as it involved the budget of the CIB, which the City-County Council is already legally charged with reviewing and approving--there is no additional legislation needed to establish this authority/responsibility.