Big Changes for MDC and TIFs - Thanks to SB 118 - edited

The Legislature continues to chip away at the more flagrant abuses of TIFs.  This year SB 118 provides a lengthy list of changes in the oversight of the Metropolitan Development Commission (and similar entities throughout the state), calls for an in depth review of the work of these entities, and causes old TIF districts to get sunset dates.

Let's start with that last item, because it is immensely important.  TIF districts established before July 1, 1995, could have, but did not need to have, a sunset date - a time certain when the TIF district is dissolved.  With the passage of SB 118, we will now have a sunset date placed on all of our older TIFs - EXCEPT those that comprise the Consolidated Downtown TIF.  The biggest slush fund must be protected !  On July1, 2015, each old TIF (except downtown) will get a sunset date of either June 30, 2025, or the date of the last payment on any outstanding bond tied to that TIF district, whichever is later.  According to information provided to the TIF Study Commission, there are at least 11 TIF districts in Marion County do not currently have a sunset date.

Also of considerable importance, is the requirement that the City-County Council review many more aspects of the MDC's exercise of its powers than it does now.  These include review of its annual budget, purchase of property over a term more than 3 years or a price greater than $5 M,  and sale of property. [edited - the Indianapolis-Marion County City-County Council is the only legislative body that will not be able to review the budget of its redevelopment commission.  The City-County Council will only be able to approve or deny a property purchase of the MDC if the term of repayment is more than 5 years.]  The MDC must get Council approval to take on any obligation payable from public funds. [edited - the rest of Indiana's redevelopment commissions will be bound by this, but not the MDC] The Council must approve the term of any debt, the maximum interest rate, provisions for early payment of the debt, and any inclusion of collateralized interest. [edited - the Council already has the authority to review all bonds the MDC wants to issue.]

The Council approval will now have to be sought for the annual determination of how much of the assessed value of a TIF district increment will be treated as 'base' for the upcoming year.  If the taxes that would be generated are more than twice what is required for payment of debt in a given year, then the MDC will be required to get Council approval for how much of the excess is passed through.  The downtown TIF is so huge, the MCD regularly 'passes through' tens of millions of AV.  This provides a tiny bit of cushion to IPS.  Say next year the Mayor wants to horde every penny of the Downtown TIF and not let any of its AV pass through, well the Council can say differently and pencil in how much it thinks should be made available.

In the future, the MDC will have to submit to the Council one important piece of documentation sorely lacking right now, whenever it wants to establish a new TIF or expand an old one - it will have to document that any new taxes generated in the TIF would not have been generated if the TIF were not there.  As an example, the Broad Ripple parking garage could not have been included in the North Midtown TIF if this law had been in place for the last couple of years.  It is also likely that the Mass Ave TIF and most of the North Midtown TIF would be a no-go, since those areas were already seeing a heady rate of organic private investment.  This provision will put an end to the Mayor's practice of establishing TIFs in booming areas in order to create healthy slush funds.

The MDC will be subject to audit by the State Board of Accounts.  By August 1, 2014, the Department of Local Government Finance must submit a report on all redevelopment commissions, authorities and departments with the following items:

(1) The activities of each redevelopment commission, authority, and department throughout Indiana, including projects proposed and projects completed.

(2) The budgets for 2009 through 2013 for each redevelopment commission, authority, and department, including a summary of these budgets.

(3) The audit findings for 2009 through 2013 for each redevelopment commission, authority, and department audited by the state board of accounts, including a summary of these audits. 

(4) The actual increase in assessed values in redevelopment areas compared to the estimated increases set forth in the redevelopment plan. 

(5) The actual increase in assessed values in redevelopment areas compared to the increase in assessed values outside redevelopment areas. 

(6) Suggested changes in the law with regard to redevelopment commissions, authorities, and departments.

These are certainly improvements that can benefit the taxpayers.  It is also welcome news that there will be an actual review of the work of these redevelopment authorities; a review that includes data that can expose the usefulness of TIF districts to catalyze growth that would not have happened without the TIF.

But, mostly, I am so happy that almost all TIFs will be required to disband someday.  Next year, maybe the sunset provision will be extended to the Downtown TIF so that downtown can begin to give back to the rest of us.