Monday, March 11, 2013

Reflections on Mid-North TIF Hearing Last Week - clip 1 included

I have a few thoughts lingering after last week's MDC hearing on the North Midtown TIF.  Of course, it went through with a 7-1 vote (Ed Mahern being the lone no vote).  But, there were some interesting points made that are worth noting.  You will see how the fairy tales about TIFs continue to be repeated - to folks charged with deciding whether or not to create them by folks considered experts.

First, let me say how outstanding it has been to work in concert with the good folks from Meridian Kessler Neighbors Helping Neighbors.  These folks (Clarke Kahlo, Paula Light, Ellen Antoniades, Terry Sanderson, and Doug Sherow) understand the connection between TIF proliferation and cutbacks in funding for basic services like police, fire, and schools.  They know the Meridian Kessler does not want for much, and presented the facts and figures that clearly demonstrated that the northern half of the North Midtown TIF should be removed from any consideration of a TIF.

Of concern is the fact that the only representatives of the City, who were in fact consultants, did not understand the wider view of TIFs beyond their particular focus of expertise.  I refer to Barnes & Thornburg attorney, Bruce Donaldson, and Crowe Horwath's Angela Steeno. 

Donaldson evidently writes up the documents that lead to the creation of  TIF districts, and likely does a masterful job with that.  Yet, when asked about erosion of the base by turning it into TIF increment, he was way off the mark.  He relayed to the Commissioners the mistaken impression that the annual filing by the County Auditor of a form known as the "TIF neutralization" form, only causes the base to float up and down with normal fluxuations of assessed values.  His lack of understanding of the actual effect of these forms is damaging.  He helps perpetuate the fairy tale that the tax dollars flowing from a TIF district the day before the TIF is created, will always flow to fund the schools and police, etc.  He had not heard anything about nearly half a billion dollars of base being converted into increment this past year.  (see "TIF Fact #2 --- $490 million of property value was transferred from the base to the increment this year" and click here to review the forms for yourself [edited to add - line 7 reports the old base assessed value and line 13a the new base AV determined through the form]).  I was given a few minutes to respond to his error.  Hopefully, the Commissioners will follow up on this matter with Deron Kintner so that they are fully informed on how this aspect of TIF districts actually functions.

One brief comment by Donaldson surely sent a chill up the spines of many of the proponents.  He told the Commission that they didn't have to do any projects in Broad Ripple (as a for instance) if they didn't want to.  They could, instead, use TIF revenue from Broad Ripple to fund projects in other parts of the district.

Steeno had a couple of interesting moments.  Her focus was on the impact of the Broad Ripple parking garage (that was paid for with $6.34 million of taxpayer dollars) on the amount of tax revenue that could be generated, the amount of bonds that revenue could secure, and the effect of its inclusion in the increment on the circuit breaker penalties tied intimately with TIFs due to the property tax caps.  She seemed unaware that the owners of the garage could appeal an assessment using the cost to build, by arguing that the cash it generates should instead for the assessment - and leading to a lower assessed value than she was predicting. 

More importantly are two numbers she reported, but failed to link together.  She stated that the garage should generate $317,000 a year in property tax revenue to the TIF.  She also stated that the garage would cause "only" about $200,000 a year in circuit breaker penalties throughout the County. 

This is important as it predicts the minimum effect of this TIF on cuts in property taxes that our various governmental units qualify for, but cannot collect due to property tax caps.

The minimum effect is that for every dollar generated in the North Midtown TIF district, circuit breaker penalties will rise by 63 cents.  That's pretty substantial.  So, if the TIF generates $10 million, expect penalties to rise by $6.3 million a year.  That's $6.3 million less in services - from schools, to the Library, to IndyGo, to police, and to fire - and more.

The failure of those in control of the money in our City to come to terms with the reality of how TIFs really operate, is likely to haunt our community for at least one more generation.  It is curious indeed, that those who promoted this TIF because of executives fleeing our more affluent Marion County neighborhoods, have likely exacerbated the underlying reason.  The reason families flee the county is not for a lack of commercial development, it is often because of the lack of good quality schools. Inappropriate TIF districts make the problem worse for schools, not better.

I am having technical problems loading more than one clip from the hearing.  I will attempt to added the other clips to subsequent posts.   You can view the entire hearing by clicking here.

Meridian Kessler Neighbors Helping Neighbors comments, plus my own.


Gary R. Welsh said...

Pat, I know lying eyes when I see them. Bruce Donaldson flat lied to the MDC on your point about how the TIF districts' base can be zeroed out. He followed the TIF study commission findings and saw the report like everyone else. He knows all the dirty secrets about the city's TIF districts better than anyone else. There's no excuse for him making the misrepresentations he made to the MDC, given that he's paid by the taxpayers to provide competent and honest legal services.

Anonymous said...

It is always a pleasure to see the entire membership of MKNHN congregated in one place.

Had Enough Indy? said...

Gary - I think he didn't know. He clearly stated that he was unaware of the massive loss in base last year.

Deron Kintner knows all the 'dirty little secrets', and he was not present.

Had Enough Indy? said...

Anon - its always nice to see folks who do not use others to get something for themselves.

Lets see when, and if, there ever is a project in Mapleton-Fall Creek.

Gary R. Welsh said...

Pat, I think you would be hard pressed to find anyone in Indiana that knows more about TIFs than Bruce Donaldson. It is not possible that he wouldn'd know that some of the tax bases have been zeroed out in Indianapolis. He has been the principal legal counsel on these matters for several years now.