The recently concluded TIF Study Commission has posted a very impressive document summarizing the findings of the Commission as well as recommendations for public policy modifications regarding TIF creation and management in Indianapolis. You can access the 96 page report, as well as the appendices.
For this entry, I am going to summarize what I thought were the ten most important findings of the Commission. Of course, this is my opinion and it will undoubtedly be valuable for you to scan through the document's executive summary, if you aren't going to try to digest the entire report.
1) TIF (tax increment financing) is a development tool enabled in all States, except Arizona, and the District of Columbia. The type of taxes collected, the footprint of the districts, and the uses for TIF money are all types of things that vary between States in the creation and management of TIF districts.
2) While many believe the base (the existing assessed value on the day a TIF district is created) continues to provide it's property taxes to Indianapolis' various taxing units, that is not necessarily or usually true. The base can erode and be converted into part of the TIF itself. Additionally, any growth in the value of the base due to improving market value, always goes into the TIF.
3) There are many types of TIFs here in Indianapolis, with a variety of purposes. There are TIFs that accumulate funds, then spend them - as well as TIFs that are used to float bonds which promise the expected new tax revenue stream for repayment. There are TIFs created to encourage redevelopment in older areas and new development in thriving areas.
4) TIF funds are spent on a wide variety of projects. While most of the public may assume that roads and other basic infrastructure is what TIF funds are used for, that is just the beginning. TIF funds are used to build buildings, make loans to developers, repay previous city expenditures (so that the money could be used to fund the 2012 city budget), pay money to the CIB (so they can send the money on to the [cough, cough, Pacers] ICVA), build housing, and make other improvements in business areas.
5) State law recently changed, requiring that no new TIF district exist for more than 25 years. TIFs established prior to to the change can live forever - this would include all of our current TIFs, unless their establishment included a 'drop dead' date.
6) Some TIFs district bonds guarantee repayment with more than the property tax revenue stream created by the TIF. For instance, the airport TIF for United promised County Option Income Tax revenues for the repayment, when property taxes were insufficient.
7) When a TIF district is accumulating more money than is needed to repay the bonds or needed for further projects within the district, the City can pass the excess "through to the base" (to the other taxing units). This process is annual and each year's decision is independent; if the City decides to pass $10 of the excess through to the base this year, they can change their minds next year and keep the $10 in the TIF.
8) TIF districts that do not have an expiration date can become 'dormant' and all of the property tax revenue passes through to the base. A dormant TIF can be reactivated with only the approval of the MDC.
9) There are other economic development tools that can be used to encourage development, redevelopment, or ongoing infrastructure improvements besides TIF districts. This includes general obligation bonds, like those used for the new Wishard Hospital project,as well as abatements and other incentives.
10) There is a key mathematical relationship between TIF district property tax revenues and the amount of money the taxing units lose due to the property tax caps. The more property tax revenue diverted to TIF district funds, the greater the loss of revenue to all taxing units.
There is one more piece of information presented to the Commission that I think is striking and has importance well beyond the TIF district policy discussions. Lets call this item number 10+. That was the idea planted by Brad Beaubien, Director Ball State College of Architecture and Planning,
Indianapolis Center (see "A Clip From The Latest TIF Study Commission Meeting"). He said that Indianapolis avoided the urban core decay that challenged many cities decades ago, by establishing Unigov. Unigov brought in a huge number of acres of undeveloped land which provided ever increasing revenue to the City as that land was developed. That process is now nearly over, and Indianapolis is now in the situation that the other cities were back in the 60's.
As anyone can plainly see, I've limited the information gathered by the Commission to just 10 items. This is keep things as simple as possible, while, hopefully, not oversimplifying things. All of the Commission meetings are archived on WCTY's website and the final report is well written, if thick. I recommend either and both to anyone interested in wading through it all. If you are interested in these things, it will be worth it.
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Resistance And The Environment
9 hours ago
4 comments:
Using GO bonds, because you have a referendum, is about the most unwieldy way to fund development imaginable. Almost all the other 'tools' outside of Tif, have disappeared or are in that process.
The central theme of all the Tif Commission meetings, in terms of testimony, was that it's inevitably project driven, and if you develop good projects that really do increase assessed value, it's a great tool.
I really don't see that the other tools are disappearing.
And, I have to vigorously disagree with you on the testimony. Comments were more of the ilk that TIFs look like they are favored developer driven, not project driven, and certainly not need driven. One of the strong outcomes was for more transparency, more supporting data on why this tif - this project - this place before a tif is created, and county wide economic development planning so that we aren't just shooting from the hip when we do choose tif funding.
And... I'll take an unwieldy public referendum over a quick and dirty back room deal any day.
The Wishard referendum was dirty also - it was as crooked as can be - another fraud on the general public.
Brad B., comments were the reason for INDYGOV- steal money from the former suburbs to transfer wealth to private parties (a tax-funded, geographic Ponzi scheme) - and I would say that it did not derail urban decay - look around - it just funded a few developer's and sports owner's wet dreams - there are a boatload of downtowns and particularly urban cores that are much better than Indy's.
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