What is the True Role of the Circle Area CDC?

Regular readers of this blog know full well I am not a journalist.  Just this once, though, I will try my best not to bury the lede.

Why is the City of Indianapolis funneling millions of dollars through an obscure group housed in the Indianapolis Bond Bank on the 23rd floor of the City-County Building?   Of what benefit is keeping this middleman's actions just out of sight?

I speak of the Circle Area Community Development Corporation.  I will tell you about grants from the Metropolitan Development Commission to spend millions of dollars that the MDC can easily spend on its own.  I will tell you about land purchases on behalf of the City.  I will tell you about transfer of operations for City assets to the group.  I will tell you about one documented instance of the creation of 'nesting doll' corporations, further removing the expenditure of public funds from accountability and transparency.  All that I will tell you has documentation that I will provide, should you want to review it for yourself.

This story is still developing.  At this point I am being actively pushed back from my requests for further documentation from the Circle Area CDC and the City that harbors, supports, and guides its actions.  My hope is some investigative journalist with better talent at navigating these warrens than I, will step forward and beat me to the rest of the story.  I will keep digging in any case.

1997 - Establishment of CA CDC and Purchase of Circle Block Parking Garage

The Circle Area CDC was set up by then Mayor Stephen Goldsmith in 1997, in order to purchase a parking garage near the Circle, primarily for the use of Emmis Communications.  This property is referred to as the 'Circle Block Parking Garage'.  I believe the reason for creating the CDC was because the City is barred from taking out an ordinary bank loan, but a CDC is not so barred.  Receipts from the garage were used to pay off the loan over the years.

The CA CDC has 5 board members, all appointed by the Mayor.  It is listed among the Boards and Commissions on the City's website.  Current board members include Nick Weber, former Deputy Mayor, who serves as the Board's President.  The By-Laws for the CDC are also posted on the City's website.

A series of filings about the CA CDC with the Indiana Secretary of State, show an initial Board composition including John Klipsch of the Department of Metropolitan Development and James Snyder of the Mayor's Office.  Beginning in 2000 a lineage of all the Executive Directors for the Bond Bank through today became integral to the organization -  Robert Clifford, Barbara Lawrence, Kevin Taylor and Deron Kintner. 

The principle office address is the same as the Indianapolis Bond Bank in the Secretary of State filings, on the City's Board's and Commission webpage for the CA CDC, and in the SOS filing last year that notes Nick Weber as President of the CDC.  The City's website reports that the Bond Bank is, in fact, the 'Administering Agency', just as DMD is the Administering Agency for the Metropolitan Development Commission.

The same address is also listed on GuideStar.org, which gets its documents from the IRS.  According to GuideStar, the CA CDC is registered with the IRS and that "the organization is not required to file an annual return with the IRS because it is an arm of a state or local government".

Even though it apparently claims to be an arm of government, it is not currently being audited by the State Board of Accounts.

2004 - Participation in Financing Conrad Hotel

According to an email from Deron Kintner, the CA CDC parking receipts from the Circle Block Parking Garage were pledged for the repayment of the 2004 bonds used to finance the construction of the Conrad Hotel.  That would have been during the Peterson Administration.

2009-2010 - Takes Over Operations of Market District Garage

In 2009, after a lengthy public debate on its wisdom, the MDC signed a lopsided agreement designed by the Ballard Administration, with Tadd Miller Enterprises to purchase an existing parking garage at 101 N. New Jersey for $18.5 M, which was the actual cost to Miller's organization for the parking garage plus the old Bank One Ops Center building plus the block that building sits on.  The parking garage, now know as the 'Market District' garage, was purchased by the MDC/DMD on July 19, 2010.  From one of only 4 sets of minutes of the CA CDC Board meetings that I have been able to obtain, the CDC voted on November 17, 2010, to enter into an agreement with the City to operate the Market District garage on behalf of the City.  According to the MDC/Tadd Miller Enterprises agreement, receipts from the garage were to provide part of the payment for the $1.85 M loan Miller arranged with a bank.  It is not clear at this point how the money collected by the CDC makes its way to the bank, or even if that method of payment was altered in a later agreement.

From the minutes, "Mr. Kintner also explained that the CAC [what I am calling the CA CDC] will not own this garage and will only be an intermediary".  And, "Mr. Kintner recused himself from voting on this resolution, citing that the Bond Bank has been working with the City on this deal and will be accepting a fee for consultation on this deal".

2011 - Purchase of 302 E. Washington St. Parking Lot, $600K Grant From MDC

At its July 26, 2011, meeting the CA CDC, approved the purchase of a privately owned parking lot across the street from City Hall, and directly south of the two MSA parking lots, at 302 E. Washington Street.  The purchase price was $4.34 M.  The Assessed Value of the property was half that; $2.2 M. 

The minutes report, "Mr. Bice asked how the purchase price was determined? Mr. Kintner stated that the price was based off of negotiations and the amount that the CAC organization could afford to repay."  And, "Mr. Pratt gave a brief overview of the financials for the parking lot and was confident that the parking lot would generate sufficient revenues to repay the loan for the purchase of the real estate." 

On April 5, 2011, the CA CDC approved a Resolution to

"allow the Circle Area Corporation ("CAC") to oversee the distribution of proceeds from the Metropolitan Development Commission in the amount of six-hundred thousand dollars for the PNC Bank and Indianapolis Arts Garden connector. 

"Bruce Donaldson explained that there will be a process put in place that would document the tracking of disbursements for the project.  The Bond Bank will oversee the tracking.

"Board Member Jennifer Pyrz, asked if the project would need to abide by City guidelines in terms of selecting contractors?  Mr. Kintner answered in the negative stating that since the CAC is administering this loan, the project is not required  to follow those procedures."

The MDC dispersed the $600,000 in the form of a grant to the CA CDC.  The MDC used TIF funds and passed it through to the CDC, presumably for the reason queried at the Board meeting - the CDC did not have to following rules governing competitive bidding and transparent selection of contractors; procedures that were required of the MDC.  The grant document does not require that the CDC report back, provide invoices, nothing except return any money not spent.  Here is the most 'demanding' paragraph of the grant:

"CAC hereby agrees to accept the grant of the Project Funds in the amount of $600,000 and to use such funds solely to pay or reimburse costs of the Project.  CAC agrees to enter into a project agreement with the owner or manager of the PNC Center pursuant to which CAC will disburse or provide for the disbursement of Project Funds only upon submission of proper evidence of work completed on the Project and the value of such work.  Any interest earned on the Project Funds shall be returned to the Commission.  If CAC has not spent all of the Project Funds on the Project by December 31, 2012, any remaining balance shall be returned to the Commission."

 

2012 - $9 M Grant From MDC

On April 2, 2012,  the MDC 'granted' the CDC money for the construction of two parking garages in City Way (aka North of South).  This grant was for $9 M.  This time, some review by DMD was required prior to spending the money. 

"CAC hereby agrees to accept the grant of the Project Funds in the amount of $9,000,000 and to use such funds solely to pay or reimburse costs of the Project upon receipt of DMD's approval of such payments or reimbursements.  Any interest earned on the Project Funds shall be returned to the Commission.  If CAC has not spent all of the Project Funds on the Project by December 31, 2013, any remaining balance shall be returned to the Commission."

2013 - Purchase of 131 N. Alabama Parking Lot and Creation of Nested LLC

On May 6, 2013, the CA CDC purchased two parcels with the common address of 131 N. Alabama Street.  This parking lot abuts the north side of the two MSA parking lots.  The financing for the development of the northern MSA parking lot goes to the City-County Council tomorrow night for a vote.  The purchase price for 131 N. Alabama Street was $1.08 M.  Assessor records show a combined Assessed Value of the parcels to be $1.103 M. Nick Weber signed for the CDC.

On September 20, 2013, at a Special Meeting of the CA CDC, they voted to authorize the creation of CAC 1440, LLC, for the sole purpose of purchasing property at 1440 N. Meridian, and potentially another parcel only referred to as 'the 1520 site'.  The minutes indicated that the City was providing the funds.  The City's complicated deal to create the Mass Ave TIF and relocate the IFD station and headquarters located there, hinges on relocating the Red Cross as the last domino to fall in place to make the entire deal actually work.  The desired new location was 1440 N. Meridian, but due to delays by the national organization, it was feared that the closing could not occur by the target date of September 30.  The site was referred to as the 'Norle site'. 

From the minutes:

"Mr. Fullbeck agreed that the situation was accurately explained.  He added that he has spoken to the Director of the Indianapolis Red Cross, who apologized for the delay and the need to take this step.  The Director has indicated to him that the holdup is simply bureaucracy and has nothing to do with the actual site.  The City of Indianapolis did originally ask for an extension from Norle when they learned of the need to do additional environmental work.  Norle said they would be willing, but asked for a significant sum of money in order to do so.  City feels that involving the CAC in the purchase in this manner is the more prudent option."

So, the CDC set up a nested organization, CAC 1440, LLC, that very day.  The CDC is the lone member of the LLC, but is not mentioned at all in the filings with the Secretary of State.  Why was it so important to remove the City from the purchase to an organization nested within the CDC? 

I have not found any evidence that the parcel was actually purchased by the City, the CDC, or the LLC.

--

From simply glancing at the timeline of the history of the Circle Area CDC, one can see that its utilization by the Ballard Administration is novel and picking up speed.  Understanding why it is being used so heavily is another matter.  The CDC does nothing in concept that the City cannot do on its own and out in the open.

Perhaps the utility of the CDC lies not in what it can do, but rather in the polices and practices it can circumvent, and its ability to hide its actions from public view, that makes it so attractive to Ballard and his crew.  So, what policies does diverting City functions to the CDC avoid?  What public records laws don't apply to the CDC, but apply to the City?  What bidding processes can be avoided?  What hiring quotas required of the City, can be circumvented by the CDC?  Why go to the trouble of creating nested organizations?  (It sure looks like they were trying to cloud the trail to the real purchaser's identity.)  What accountability and transparency is sacrificed by the granting of public funds that the MDC could easily spend without employing a middleman?  Does it relieve the City of its obligations for due diligence and proper oversight of the expenditures of public funds?

I don't know.  But, something is going on that needs a whole lot of explaining. 

I'll keep trying to get documents.  All I have obtained to date are minutes from a mere 4 meetings of the Circle Area CDC Board.  Just look at the curious activity they revealed.  Imagine what might be in the rest of them.

Gas Tax "Windfall" - Not What the Mayor Makes it Out to Be

Here's how it looked back on August 14, 2013, when IBJ reporter Kathleen McLaughlin penned an article about Mayor Greg Ballard's proposal to float a bond to add revenue to the nearly depleted RebuildIndy fund:

City officials said Thursday that they intend to spend $350 million over the next three years to improve streets, sidewalks, trails and bridges.

Most of that money will come from existing funds, but $135 million will be borrowed against increased state transportation funding.

...The city expects its share of state gas tax revenue to increase by $7 million, and will leverage that into the bond issue.

The increase in gas tax revenue sent to the City from the State was refined to $7.8 million.  That's were it stood on August 29, when the Public Works Committee of the City-County Council rejected Proposal 250.  I noted in a blog entry the next day that the Mayor's statements to the press were far from the truth.

Well, add one more lie to the list.

I received the real gas tax revenue numbers from the State Auditor's office.  The estimated 2013 distribution of the "Motor Vehicle Highway" revenue to the City of Indianapolis and the County of Marion is $20.25 million.  The estimated 2014 distribution is $23.75 million.  That is a difference of $3.5 million.  Less than half of the $7.8 million the Mayor, Bond Bank Director/Deputy Mayor Deron Kintner, and DPW Director Lori Miser have been touting as the windfall that will pay for the bond.



I added the color highlights to better direct attention to the figures applicable to the City and County

As I noted earlier, the Proposal actually called for annual payments of $9 million on the bond.  So, given that the real gas tax revenue increase is a paltry (by comparison) $3.5 million - they had plans to tap $5.5 million every year for 30 years of money that is usually needed for other things in DPW.  That's not only taking the next generation's increased gas tax, its also trading existing services that by rights should remain in place for the next 3 decades.

There still remains the $240 million of revenue that is already earmarked for road and sidewalk repair over the next 3 years - and that is no small amount of money.

But, to hear Greg Ballard tell it, if the Council does not allow the City to float this additional bond, there will be no infrastructure improvements at all.  That's the story he and his administration are repeating to the media, to the neighborhoods, and to the Council.  It is all a pack of lies.  Mayor Ballard even went so far as to accost Democrat At-Large Councillor Zach Adamson at the Hob Nob with "We're going to murder you guys on this.  You're dead."

They must think they have a lock on the press, a lock on what information gets to the neighborhoods, and a lock on the facts as they prefer to make them out to be.  They must think we are all stupid.

As more of the truth comes out, and it will, I am increasingly grateful to the members of the Public Works committee who voted against this fiscally unsound and cynically presented Proposal to float these bonds - Councillors Vernon Brown, Pam Hickman, Bill Oliver, Monroe Gray, and Zach Adamson.

There's Exaggerating - Then There's Outright Lying

I attended last night's Public Works committee meeting for two items - the proposed hike in stormwater management fees and the budget.  Among other agenda items, there was Prop 250, which looked to use some new gas tax money from the state, to float bonds to pay for infrastructure improvements.

Gary Welsh over at Advance Indiana, and Jon Murray over at IndyStar, both did a good job relaying particulars.

The late night newscast by WTHR, channel 13, however, did not do a good job.  All they did was quote the Mayor's press release - which was so far beyond exaggeration as to be an outright lie.

Here's what the press release said, from Murray's report:

“Democrats on the City-County Council turned their backs on every neighborhood in Indianapolis,” Ballard said in a written statement. “By placing politics ahead of the best interests of the community, they rejected a plan that would have provided sidewalks in many of our neighborhoods, repaved every one of our worst streets, made our bridges safer and fixed flooding problems in some of our poorest neighborhoods.”

Lie, lie, lie.

Here are the particulars from last night's debate on floating these bonds.

The state is sending the City/County an additional amount of money from the gas tax revenue it receives.  Lori Miser, head of DPW, and Deron Kintner, head of the bond bank/deputy mayor, said it was $7.8 million in new money.  Hope Tribble, CFO for the Council, said it was $6.2 million.  This is not guaranteed every year, although it appears that the State has committed to try to send it - if they can.  The gas tax has been a hot topic in Washington for years now, as it is not as much of a revenue source for transportation as they would like.

In either case, the proposal was to pay $9 million per year in debt service on new bonds.  Depending upon the interest rate at the moment the bonds were floated, this could generate anywhere from $135 - $150 million.  The bonds would be paid back over 30 years - so the taxpayers would spend $270 million over time to get maybe $150 million now.  That computes to paying $120 million in interest and fees - nearly half.

The City would add this $135 million to money it will spend on infrastructure anyway, to make a grand total of $350 million in spending over the next 3 years.  Without bonding, they would have $242 million to spend over the next 3 years (I added the $9 million per year to the base $215 million).  So, the City can still repave 'every one of our worst streets', and make 'our bridges safer'.  The flooding issues I'll leave to another blog post.  Suffice it to say, the City doesn't direct stormwater projects to the poorest neighborhoods in any case - they direct the money to flooded neighborhoods.

DPW has been circulating a list of infrastructure projects that total between $500 and $600 million.  Of course, any neighborhood looks to see if it's roads are listed.  But that is clearly far more projects than can be done with the money - bond or no bond.

So, the pivotal question was, is it fiscally sound to borrow additional funds using a shaky revenue source as collateral?

The committee vote was along party lines - 5 to 2.  The Democrats were fiscally responsible, choosing to avoid the situation where an unreliable stream of money from the State would be used to float bonds that would have to be repaid even if the State stops sending that extra.  If the extra money continues to come in, well we and the next generation will have $270 million to spend on streets and sidewalks.

I just don't understand why $242 million is somehow chump change to spend on infrastructure over the next 3 years, and why we have to continually reach into the pockets of the next generation to get what we want today - and wasting half of the money we steal from them on interest and fees, to boot.  There should be no sin in patience, prudence, and protecting the next generation.  There is, however, a sin in lying to the public.  Shame on Mayor Ballard for lying and shame on WTHR for passing that lie along as the entire story to its viewers.

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.

Prop 15 Up For Public Hearing Monday Night

In a very unusual move for a non-fiscal ordinance, the Council agenda for Monday night includes a public hearing regarding Prop 15 - the expansion of the consolidated downtown TIF district.

This is the proposal for which we know little beyond the foot print for the 112 acre expansion to the east and the 614 acre expansion to the west and a deal worked out behind closed doors between Deron Kintner and Vop Osili.

This is the proposal that should, by Council rules, be dead on arrival because it was tabled for more than 6 months.

This is the proposal the was not legally amended at the committee level, yet passed out of committee 'as amended.

So, dear public, you have the weekend to prep your comments.  7:00 pm in the public assembly room of the City-County building.  Expect the usual suspects to be rounded up to speak on behalf of this very expensive pig in a poke.

By the way - yet another TIF is being introduced Monday night. 

Huber Cashes Out of One Government Job to Another

IndyStar reporter Jon Murray is reporting that Deputy Mayor Michael Huber is leaving his post with the City and taking a spot at the Airport that pays a whopping $190,000 a year.  Deron Kintner, currently Director of the Bond Bank, is being supported by Mayor Ballard to step into Huber's old post.

So, Huber is moving from selling taxpayer assets, creating TIFs, and spending excess TIF funds on the projects of favored developers --- to -- keeping hundreds, if not thousands of acres of land OFF the tax rolls so that the airport can make $65 million more a year in clear profit.  This is the airport city concept I have mentioned before, that is a shell game swapping private property taxes paid by private entities on private land ---  for ----  airport profits from land leases of government owned property for private businesses that have no need to be located at an airport, nor which assist the airport in its mission of providing air transportation functions.

Its a double dip that keeps taxpayers digging deeper into their pockets, while favorite local developers become accustomed to large handouts and forgiven taxes.

Edited to add: I guess they didn't clear those folks out of the airport in order to save money after all.  The $200,000 'saved' is just about Huber's salary.

TIF Study Commission Wraps Up Its Work

With the 10th and final meeting, the TIF Study Commission wrapped up its work last night.  The vote was 5 to 2 to adopt proposed recommendations along with a very lengthy report that distilled the testimony presented.   To summarize this herculean effort effectively, I will cut this into three parts - the Commission itself, the ideas and facts collected, and the recommendations.

The 8 Commissioners were Councillors Steve Talley, Brian Mahern, Ryan Vaughn (and his replacement Jeff Cardwell), Auditor Billie Breaux (and her proxy Richard Hunt), State Representative Bill Crawford, MDC President Ed Mahern, City Controller Jeff Spaulding, and Bond Bank Director Deron Kintner.

All came to the table with their own perspectives, and the give and take was on the highest level - all to the gain of the public in this process.

The presentations were mostly in plain English, yet had an academic rigor to them. 

All of the meetings can be found archived on the WCTY webpage (click here and scroll down to the last category, "Special Events").  The 10 meetings are listed there.  I added up the time for all of the meetings and it came to 24 hours.  You can find all of the documents that formed the presentations on the TIF Study Commission webpage, organized by date.

Needless to say, all of the information from this 24 hours makes a thick document - even when distilled.  The draft of the Executive Summary has been posted online.  I'll put up a link to the final document when it is posted, as well.  The final document without the appendices comes to 86 pages.

I cannot finish this roundup of the Commission without paying respects to two members of the Council Staff.  First, Leslie Williams took copious minutes, which can be found on the TIF Study Commission webpage.  I think the amount of work involved in taking the minutes of a meeting, especially long ones, is often undervalued.  I know that is a job I studiously try to avoid doing in organizations because of the number of hours actually required. 

Second, Hope Tribble, the Council's CFO.  I cannot begin to guess at how many hours Tribble put into this Commission - along with doing her regular job.  It appeared to me that she invited the guests, set the agendas, provided presentation and agenda materials to all through email, got super quick responses to questions fielded through email, and wrote (and likely re-wrote numerous times) the report that is being issued by the Commission. She most assuredly was the secret weapon for this Commission and a key reason why it functioned at the high level it did.

From the last two meetings it was clear that there were two camps assembled on the Commission.  All seemed to agree to more transparency and more documentation for why a TIF District should be set up.  The camps were apparent when the discussion turned to recommendations that would put limits or more oversight on the use of TIF funds or would place time limits on the life of an existing TIF District.  The majority wanted to rein in the use of TIF dollars, provide more oversight, and limit the lifetime of existing TIFs so that more of these property tax dollars could flow to the various units of government to provide the services that have been strained due to the property tax caps that were implemented a few years ago.  The minority wanted to retain the 'flexibility' that the Ballard Administration now has in determining on what to expend any excess TIF funds and maximize the options for future Mayors to reactivate dormant TIFs - all with an eye to being nimble enough to remain competitive with other municipalities that compete for the same businesses.

The work of this Commission is the finest example of good government that I have witnessed in my years of closely watching Indianapolis' government.  Everyone who attended had to have learned something new, if not a lot of stuff that they did not realize before.  The meetings are archived on WTCY for review and the report is being finalized for release.  The recommendations of the Commission will need to be reviewed and acted upon by the Council, the Mayor, the MDC, and the State Legislature.  So, this is not the last you'll hear of the TIF Study Commission's work.  Like a rock thrown into a lake, the ripples will be around for some time to come.

Excellent job.  Well done all.

TIF Study Commission Off To Rollicking Good Start

You simply must wonder what wrong turn your life took when you find yourself energized by the geeky, wonky, TIF-er-ific lecture/discussion that happened at last night's opening TIF Study Commission meeting.  That is the situation I find myself in this morning.

WCTY, our government channel was present, capturing it all for your viewing pleasure.  As of this moment, it has not been posted, but I'll post a link as soon as I see it go up. [Edited to add link to the March 27 meeting - click here]

The TIF Study Commission falls out of City-County Council Prop 70, which set its composition and broad agenda.  On the panel are Councillor Ryan Vaughn, Controller Jeff Spaulding, Councillors Steve Talley and Brian Mahern, Auditor Billie Breaux, Bond Bank Executive Director Deron Kintner, MDC President Ed Mahern, and State Senator Bill Crawford.  Kintner was absent last night and sent a 'proxy', but I am afraid I did not get her name.

Missing last night was the taxpayer perspective, which left me squirming in my seat and my head flooded with my own internal comments.

Much information was thrown out there.  Bruce Donaldson, Attorney with Barnes & Thornburg, gave a overview of what the law allows TIF to be set up for and how TIF funds can be spent as well as the process whereby a TIF district is legally established.  Deputy Mayor Michael Huber was up next, going through the TIF philosophy of the Ballard administration.  Jeff Spaulding joined in for more of the administration's perspective on why use a TIF over other means of economic development.  Taking up the rear and pretty much rushed due to the late hour, was the Director of the Department of Metropolitan Development, Maury Plambeck.  Plambeck went through examples of the variety of TIF districts we have in Indy.

More detail is assured for future meetings.  So, let your geek flag fly !

Here are some of my observations from the cheap seats.

Billie Breaux brought up one of the great points last night - since you can create TIF districts to help spark redevelopment or for general economic development - why do we seem to be doing mostly the latter?  This really struck me as pertinent.  There is evidence that using TIF for economic development only moves economic development from where it would occur organically, to a location of the government's choosing and profits a developer of the government's choosing.  It does not accomplish much more.  But, trying to turn around a truly blighted area, is a different matter.  We can identify and prioritize, if you will, the areas most in need of a catalyst to improve a blighted area.  For the rest, we all want development in our neighborhoods, and prioritizing is more open to political interpretation.

I mentioned it earlier and it bears repeating, missing was the taxpayer perspective.  A number of platitudes were uttered last night that we have all heard before.  They are the 'promises' of TIF districts that do not necessarily come to fruition and for which TIFs are not necessarily the best approach. 

Spaulding mentioned "a rising tide lifts all boats" - that is true up to a point.  The never ending TIF district, however, has built around it an imaginary retaining wall - so the 'tide' cannot escape to outside areas to lift the 'boats' found there.  Huber opined that expanding the consolidated downtown TIF to nearby neighborhoods is way to share the wealth within that district.  I say, pay off the bonds, dissolve that TIF and let us all partake in the wealth.

On the same topic, Huber said that the development in a TIF would not have happened without the TIF, so it benefits all taxpayers.  While that is debatable on its face, by ending a TIF you would definitely help all taxpayers.  It might be a few dollars per taxpayer, but the aggregate it stunning.  The TIF districts in  Marion County take in over $100 million a year in property tax revenue.  If those TIF districts were retired, it would set off some critical dominoes.  First, the tax rates throughout the County would drop.  This makes Indy more attractive to homeowners and business owners alike.  It also means that fewer people hit the property tax caps.  When fewer people hit the tax caps, more money flows to the taxing units like the schools, the library, IndyGo, and the City.  When more money flows to the taxing units, more services or higher quality services can be provided.  This increases the quality of life in Indy, again improving the attraction of our city for people to live and work.  And, lets not overlook the impact on the taxpayers for those property tax savings.  For some, it means a better chance to keep their homes or business, and for others it is disposable money left in their pockets that can be spent on restaurants or new equipment or new cars, etc, etc, etc.  Retiring TIF districts can fulfill one of the promises made when the TIF was created - that it will benefit everyone.  When you do not retire the TIF, it only benefits those within the district, since the rest of us are footing the bill for the necessary public services that they still enjoy but do not pay for.

Mentioned by Donaldson was the idea that the tax revenue coming from a TIF district before day 1 of the district, will continue to flow to the schools and library, etc, after the TIF is formed.  This is called the 'base'.  He noted one readjustment as the tax caps were initiated that allowed a new calculation for the 'base' of our TIF districts, so that the new laws would not impede the City's ability to pay off existing bonds.  He did not mention that this readjustment is done annually.  I have blogged on the base and the annual calculations that the Auditor must submit before (see "TIF Districts - Who Knew The Base Could Drop?") .  From 2010 to 2011, these re-calculations caused $43 million in property value to be moved from the base, into the TIF revenue.  That was likely due to the drop in property values caused by the bursting housing bubble and recession.  But, if you look at the forms, there is no way that the value will be returned to the base once the recession is over.  The forms leave you with a choice - either stick with the same base as last year, or let it drop to recover more money to pay the bonds of the TIF district.

So, dear reader, if you've gotten this far, I thank you for your perseverance.  Its geeky, nerdy, wonkish stuff to be sure.  But, TIFs can be a promise for a better future, or a drain on the rest of us, or a slush fund, or all simultaneously.  As taxpayers, as citizens of a City we all want the best for, we owe it to ourselves to get at least ankle deep in the topic and lend our guidance to our elected officials as they try to navigate the best course for TIFs in Indianapolis.

Council Committee - Some Curious Items Introduced In Mysterious Ways

I was pulling down the public notices of this week's Council committee meetings when what did I see, but an example of a proposal that comes in by the side door - usually too late for the public to realize what is happening - and some Councillors don't even realize that this side door exists.

The prescribed pathway for introduction of Proposals is to meet a date certain to submit the Proposal in writing - usually 10 days prior to a full Council meeting. Then, the Proposal is read into the Council record along with all of the other Proposals introduced that night. The introduction of the Proposals always includes the name of the committee to which that Proposal is assigned. The committee then takes up discussion of all Proposals assigned to it, the next time they have a scheduled meeting.

This pathway does not hold for some Proposals that come before the Economic Development committee. I am still not clear on the limitations of topics that may avoid the usual pathway, but they include applications for State financial assistance to build apartments that will include some low income units - or section 42 housing. It seems there are other uses for the side door, as well - as in hiding the setup for a development called 'North of South' - or No-So, as dubbed by a commenter on another blog. There is also a pesky little $14 million bond for Harlan Bakeries that is using that side door tonight.

Proposals 284 and 293 will be considered by the Economic Development committee of the Council when they meet tonight at 5:30 pm in room 260 of the City-County Building.

The digest of Prop 284 states:

consents to the waiver of certain recovery zone bond volume to the state in exchange for an allocation of midwestern disaster area bond volume

The digest of Prop 293 states:

authorizes the issuance of one or more series of Economic Development Revenue Bonds in the aggregate principal amount not to exceed $14,000,000 for Harlan Bakeries, LLC for the design, construction, renovation, improvement and equipping of a new building and expansion located at 7575 Georgetown Road (Council District 1)

If you were to look for these Proposals online, you would be disappointed. They have not been posted. I have asked for a copy of Prop 284. But, each individual having to make an open records request for a Proposal to be discussed within 12 hours is more than preposterous, and begs the question - what are they trying to hide?

The only thing that comes to mind for Prop 284 is No-So, because it calls for the use of 'midwestern disaster area bonds'. That caught in my memory, because the area proposed for the development isn't the site of a disaster, by any means.

Yup, this side door has been opened to allow the consideration of these Proposals without taking a chance that the public might object and want to appear in person to speak out against them.

How's that for transparency?

[edited to update - 11-8-10] I received a copy of Prop 284 from Melissa Thompson, Clerk of the Council office. It proposes swapping an UNSPECIFIED amount of stimulus money bond volume that is due to expire at the end of 2010, for an equal amount (whatever that might be) of bonds from the 'Midwestern Disaster Area' bond volume, that will expire at the end of 2012. The swap would be between the City and the State. The Proposal further says that this deal was struck by the Director of the Indianapolis Bond Bank, who would be Deron Kintner. Kintner is the City's point person in pushing the No-So deal. At the Economic Development committee of the MDC meeting that I attended a week or so ago, Kintner told the Commissioners that they wanted to close the No-So deal by the end of the year to take advantage of the stimulus bonds. Guess that's not so important now. Since the MOU with the No-So developers mentioned the Midwestern Disaster Area bonds and not the stimulus bonds, I have to be suspicious of his comment to the Commissioners, anyway.]