The Case Against Prop 15

Tonight the Indianapolis-Marion County City-County Council is poised to vote on Prop 15 - which would expand the consolidated downtown TIF district in two directions for a total addition of 1.1 square miles.

There are three components :

A) 112 acre easterly expansion, less than half of which runs along Mass Ave (see "What's Wrong With This Picture - The Proposed Mass Ave TIF" for maps of the proposed TIF) all supposedly needed for the development of 0.8 acres.

B) 604 acre westerly expansion (see "Proposed Bush Stadium TIF - Google Aerial View" for maps of the proposed TIF) all supposedly needed for the development of a couple of block area.

C) Also pasted on top of the expansion TIFs are three programs - a $2 million microloan, a $10 million microloan, and a $1.5 million job training program - to be funded by the TIFs.  It must be noted here that TIF funds may only legally be spent on projects within the TIF boundaries and these programs run significantly beyond boundaries.

These are the reason that come readily to mind as to why Prop 15 should be defeated.

1) Prop 15 is dead --- Council rules require that any proposal that is tabled for more than 6 months be removed from the list of pending proposals.  This is exactly what happened to Prop 16, another TIF proposal, which had been introduced and tabled on exactly the same dates as Prop 15.

2) There is a lawsuit pending against the Council for taking any action on Prop 15 because it is dead.  It should give any member of the public pause as to why the Council did not simply follow its own rules and reintroduce the proposal under a new number.  It would only be two weeks from now, before it would be back to the full Council.  Likely, they did not want the TIF Study Commission recommendations (Prop 316) to beat it into law.  This brings me to 3)....

3) The TIF Study Commission recommendations (Prop 316) (see "Finally, TIF Study Commission Recommendations At Committee"), which would require full disclosure of the underlying finances of the proposed projects and the abilty of the TIF to generate adequate revenue to make payments on any debt incurred.  The way I have been framing the need for information is so that the Council and the public could see for themselves - Why a TIF?  Why this location?  Why this project? Why this footprint?  Clearly, the rush on Prop 15 is because there is a concerted effort to avoid full disclosure.

4) The Mass Ave area is thriving, if not downright booming, and has at least 3 large projects already slated for 2013 and 2014 - needing no public dollars.  (Well, suddenly the developers are supposedly telling Deron Kintner, deputy mayor for economic development and director of the bond bank, they think they might need public dollars after all.  Believe him if it makes you feel better.  Many Councillors, who know for a fact that Kintner has previously lied to the Council and to the press, will be citing his words when these TIFs don't work out well.  But, I digress.)  Creating a TIF here is ass backwards from how TIFs are supposed to be created.  The intent is to create a TIF to fund a project to spark development with private dollars.  Instead, the Mass Ave TIF is being created to cannibalize tax revenues from development made with private dollars.  By all rights those tax revenues should be flowing to the schools, library, IndyGo, etc, instead of to a TIF fund.  This is how you set up a thriving slush fund - not a beneficial TIF.

5) The Mass Ave TIF contains three 'nodes' - two along Mass Ave and one abutting the current consolidated downtown TIF.  At least half of the 112 acres is contained in this mystery node.  I have only heard one question asked in a public venue about this huge footprint.  Councillor Zach Adamson (who ultimately was the lone, brave, vote against Prop 15 in committee) asked why that node was needed.  Kintner's answer was that he could not divulge that information at this time.

6) One of the bids responding to the RFP put out by the City to solicite plans to relocate the Mass Ave fire station, actually offered $2 million to the City to buy the property and did not request any public dollars. This proposal was rejected.  The three proposals still in the running curiously all ask for a TIF to be established and for public dollars to be invested in the project.  Now, why would a developer care where public dollars came from?  Really !  This is an example of exactly how stupid and gullible Kintner and the Vaughn/Grand/Ballard administration think the public and the Councillors are.

7) I have not heard one question asked as to why there must be 604 acres of TIF to support a couple of blocks of infrastructure improvements in the Bush Stadium area.  This is the only project publicly acknowledged by the administration.  Obviously, the Councillors have no answer to why this footprint is necessary and wise.  Instead, they focused their attention on getting residents of the area to speak in favor of the TIF because their neighborhoods need help.  Mark Fisher of Develop Indy worked to turn out the residents.  While any caring human being wants to help, we have no gauge for whether or not this TIF is the answer, whether or not other public funds can address the issues, and where this area lands on a prioritized list of neighborhoods in need.

8) The language added to Prop 15 to satisfy some of the neighborhood leaders' interest in tearing down the old Bryant Heating & Cooling facility, is slipshod and may not be enforceable. Lets see if anyone introduces an amendment tonight to clear up the language, or if the Councillors are content to leave it in doubt.

9) There has been no financial data or analyses introduced that would justify why a TIF, why this location (although some need was demonstrated), what project much less why that project, and why this footprint for the proposed Bush Stadium area TIF.

10) The $2 million microloan and the $1.5 million job training programs would be made available to anyone within a 2 mile perimeter of the outline of the two-way expanded consolidated downtown TIF. The language is so poorly written that the recipients may not have to be low income, and/or may not have to have a business located in a low income neighborhood.  Promises have been made to nearby neighborhoods and the Indianapolis religious community at large, that these programs are to help the residents within or abutting the TIF area.  These promises are false promises - if you go by the agreement that has actually been reduced to writing.

11) Expending TIF funds, or swapping TIF dollars for other City dollars, to pay for the $2 million microloan and $1.5 million job training programs outside of the footprint of the TIF would be illegal.

12) The $10 million microloan program has no details except it would be funded by the TIF and spent throughout Indianapolis.  Expending TIF funds, or swapping TIF dollars for other City dollars, to pay for the $10 million microloan program outside of the footprint of the TIF would be illegal.  The City could use $10 million to fund raises for IMPD and IFD, and/or a recruit class for IMPD and IFD.  Money the administration insists is not available.  What will be sacrificed for this microloan program, if the law is actually followed and TIF funds are not used for the program?

13) There has been no consideration given to the question, how many TIFs are too many TIFs for Indianapolis and Marion County.  Already 11% of all taxable property is contained in a Marion County TIF, 33% of all taxable property is contained in a Center Township TIF, and 22% of all taxable property is contained in an IPS district TIF.  Prop 15 seeks to add another square mile of TIF to each of those jurisdictions.  Prop 15 will cannibalize taxes that would have flown to the schools, library, IndyGo, Health & Hospitals, Townships, Fire, IMPD, Parks, as well as the City and County government.  Prop 15 will decrease the tax revenues that flow to these units, as well.

For completeness sake, I recommend the following blog entries as well -- "TIF Fact #1 -- We've Been Bailing Out TIFs for Years", "TIF Fact #2 -- $490 million of property value was transferred from the base to the increment this year", "TIF Fact #3 -- TIFs Cause Higher Property Taxes For Everyone and  Cause 41% of Circuit Breaker Penalties To The Taxing Units", "TIF Fact #4 -- TIFs Comprise 11% of All Taxable Property In Marion County - How Much More is Prudent?",   "TIF Fact #5 -- 16 of 40 Marion County TIFs Have Seen Their Base Driven to Zero Value",  "TIF Fact #6 -- 5 of 6 TIFs Comprising the Consolidated Downtown TIF Have Seen Their Base Driven to Zero Value", "TIF Fact #7 -- 33.3% of All Taxable Property in Center Township is Contained Within a TIF -- How Much is Prudent?", "TIF Fact #8 -- 20% of IPS Taxing District Contained Within a TIF -- How Much is Prudent?", "TIF Fact #9 -- Most TIF Districts Underperform County as a Whole" )

There are many excellent reasons for Prop 15 to be voted down tonight.  But, instead, what we will witness is greed, ambition, threats of retaliation, blackmail, and willful ignorance drive the Council to pass this retched dreck.

TIF Fact #7 --- 33.3% of Taxable Property in Center Township is Contained Within a TIF - How Much Is Prudent?

I sent the following email message to all City-County Councillors, select media representatives, and Senator Luke Kenley.

At some point too much taxable property contained within TIF districts is too much and will cause irreparable harm to the taxing units and the services they can provide due to a crippling increase in circuit breaker penalties. 

33.3% of all taxable property in Center Township is contained within a TIF.

How much is prudent?

Have you asked for the impact of expanding the consolidated downtown TIF by another 716 acres (1.1 square miles) on the percentage of taxable property in Center Township contained in TIFs - as well as a projection over the next few years of that impact?  Do you know how much is prudent?

The Council should demand full disclosure before Prop 15 or any other TIFs are considered.  Otherwise you won't know what you are voting on.

Citation : TIF Study Commission Report, Appendix 2, part 1 - page 4

First Do No Harm - Impact of TIFs - Center Township & IPS

In my last post I mentioned the fairy tales that are promulgated in order to sell TIF districts.  First, the taxes that flow from the district before the TIF is set up will continue to flow to the schools and libraries and other taxing units, just like before.  Second, the project being funded is just the thing to spark other, privately funded, economic development.  This boost in economic development will spur an increase in property values that will pay for everything and we'll all be better off.

Hopefully I've put forward enough data from governmental sources to show that:

• taxes promised to continue to flow (the "base") have been shifted over to pay off TIF bonds and expenses (the "increment")  (see "Marion County's TIF Districts See Base Erode By Nearly Half a Billion Dollars in One Year"),
• tens of millions of dollars from income taxes, other TIFs, and additional property taxes have been poured into existing TIFs to shore them up  (see "Big Time Bailouts of Indy's TIFs"),
• most TIF districts have been growing more slowly than the County as a whole (see "Most Marion County TIF Districts Underperform the County As a Whole"),
• existing TIF districts cause 1/3 of the circuit breaker penalty, directly causing $43 million reduction in collectable taxes and a concomitant reduction in services (see "Frist Do No Harm - Impact of TIFs - Marion County As a Whole")

The two expansions of the consolidated downtown TIF contained in Prop 15, will have a particularly pointed impact on Center and Wayne Townships, simply because that is where they are located.

Now, there will be much handwaving about economic development - but no specifics released to the public to substantiate the claims.  I am willing to listen to substantiated claims, but find it patronizing and worse to have government officials simply wave their hands, when they are sitting on the financial analyses that will either prove or dispatch their handwaving claims.

I cannot understand why, if the handwaving is true, full disclosure of the financial underpinnings of the two expansions of the downtown TIF isn't being demanded by Council members.  If the handwaving is prop and show, then I can understand not divulging the information; facts might interfere with selling the TIF fairy tale.

The current impact of existing TIFs on Center Township and IPS are pretty staggering.  The following data are taken from the TIF Study Commission Report, Appendix 2, part two (pages 4 and 6).

for the year 2012 TIF districts

• within Center Township accounted for 33.3 % of all taxable property,
• within IPS boundaries accounted for 22.0 % of all taxable property

for the year 2012 all Marion County TIF districts caused

• an increased circuit breaker penalty to Center Township government of $214,770
• an increased circuit breaker penalty to IPS of $7,767,505

There are 21 TIF districts already in Center Townships - out of a total of 40 established TIF districts throughout Marion County and an 4 additional TIF districts created over the last year or two. Two of the 21 in Center Township are new.

Of the 19 older TIF districts in Center Township, 10 have seen their base erode to zero value. Combined, the 19 older TIFs saw their base erode this year by an additional $5.9 million - about 0.1% of the total assessed value of the base.

I do not have the computer models to discern the increased taxes paid by Center Township and IPS district taxpayers due to existing Marion County TIF districts.  But, the City does and could have provided that information to Councillors, had any been interested.

The City could also provide information to answer these questions:

• How much property value is in the base for the two expansions?
• What steps, if any, will be taken to ensure that the base is NOT reduced in future years?
• What is the cost to the public of the project at the core of the TIF district expansion?
• Why are you including parcels where private development is already slated over the next few years?  The TIF district will not be spurring those developments, they were happening already.
• Why do you need a 112 acre footprint to develop 0.8 acres in the Mass Ave expansion area and a 604 acre footprint to develop a couple of blocks in the Bush Stadium expansion area?  Are extra revenues anticipated over and above the debt service for the projects?  Does this amount to a slush fund for unnamed future projects that have not yet been disclosed?

And, that's just some of the questions that should have been asked.  But, they were not asked.

With the huge impact of non-taxable TIF district property already in Center Township and IPS, how on earth can two significant expansions of the consolidated downtown TIF district be contemplated with NO disclosure, beyond the footprints, being demanded by our Councillors?