TIF Fact #4 --- TIFs Comprise 11% of All Taxable Property in Marion County - How Much More Is Prudent?

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

Marion County has 45 TIF districts.

4 new ones with no track record

1 on non-taxable airport land (so an automatic zero base)

40 older ones with taxable property and a track record

Taken together these TIF districts comprise 11% of the total assessed value of Marion County and pull in about $100 million a year in property tax revenues that go to the TIF funds, and not to the schools, libraries, and other taxing units.

Have you been involved in a discussion of how much of Marion County's property value can be consumed by TIF districts without putting our tax base at risk and without forcing uncontrollable circuit breaker penalties on our schools, libraries, and other taxing units?

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.

Citations : TIF neutralization forms filed by the Marion County Auditor with the Indiana Department of Local Government Finance for pay-2013, impact of homestead credit elimination on taxing units by Jeff Spalding, City Controller

 

TIF Fact #3 --- TIFs Cause Higher Property Taxes For Everyone And Cause 41% of Circuit Breaker Penalties To the Taxing Units

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

For the pay-2012 property tax year, Marion County TIFs combined to cause increased property taxes throughout the County and caused 1/3 of the circuit breaker penalty imposed on schools, libraries, and other taxing units.

From the TIF Study Commission:

For pay-2012 , all of Marion County's TIFs combined caused

$56 million in increased property taxes to taxpayers

$43 million in increased circuit breaker penalty to taxing units

The total circuit breaker penalty to all taxing units in pay-2012 was $105 million.

Have you asked what impact the proposed expansions of the consolidated downtown TIF are projected to have on higher property tax rates and circuit breaker penalties?

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.

Citations : TIF Study Commission Report, Appendix 2, part 1 - pages 6 and 25-26

TIF Fact #2 --- $490 million of property value was transferred from the base to the increment this year

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

One of the fairy tales told to the public before a TIF is approve is that the property taxes that flow to the schools, libraries, and other taxing units before the TIF was created, will continue to flow to those units after the TIF is established.  Nice story; just not a true story.

This year, in preparation for the pay-2013 property tax year, Marion County TIFs saw $490 million assessed value transferred from the base to the increment.  That is 1/3 of the entire value of the base.

Base = the property value within a TIF district where the property tax revenues flow to the various governmental units

Increment = the property value within a TIF district where the property tax revenues flow to the TIF fund to make payments on bond debt and other expenses or projects

Did you ask how secure the base is for the proposed expansion of the downtown TIF?

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 neutralization forms filed by the Marion County Auditor with the Indiana Department of Local Government Finance for pay-2013

TIF Fact #1 --- We've Been Bailing TIFs Out For Years

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

Marion County TIFs have been getting bailed out for years.  Over the last 4 years the City-County has pumped $40.5 million dollars into TIFs beyond what they took in from property taxes on their own.

• $1.2 million from Local Option Income Tax

• $6.1 million from garage operations receipts of city-owned garages

• $16.6 million transfers from consolidated downtown TIF and airport TIF to other TIFs

• $16.6 million in additional property tax levy to the County as a whole

• __________

• $40.5 million 

Did you ask for the financial analysis that shows how the expansion of the downtown TIF will not require future bailouts?

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.

Citations: City-County budget ordinances Prop 09-321, Prop 10-234, Prop 11-241, Prop 12-285

First Do No Harm - Impact of TIFs - Wayne Township

In my last two posts I mentioned the fairy tales that are promulgated in order to sell TIF districts. In case you are reading this entry because of its Wayne Township focus, let me repeat some significant fairy tales and facts.

Fairy Tales Used To Sell TIFs:

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.

Little Know Facts About Marion County TIFs:

• 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")

On Monday night the Council is set to consider Prop 15, which seeks to expand the consolidated downtown TIF in two directions - to the east by 112 acres to finance development on 0.8 acres and to the west by 604 acres to finance development on a couple of blocks.

Shouldn't the impact of current TIFs be considered before more TIFs are piled on?  Unfortunately for all residents of Marion County, but particularly for those in Center and Wayne Township, Councillors did not ask a single question about Prop 15 at the August 27 meeting of the Metropolitan & Economic Development committee meeting.  It was an appalling affair for many reasons.  And the lack of prudent public representation was part of the reason it was appalling.

There is a huge impact on Wayne Township due to the existing TIFs.  Of all taxable property in Wayne Township, 10.9 % is in a TIF district increment and all property taxes flow to the TIF fund and not the schools, libraries, etc.

• for Speedway government and Speedway schools, 19.1 % of total property value is in a TIF
• for Wayne Township government and Wayne Township schools, 9.5 % of total property value is in a TIF

All of the Marion County TIF districts cause a combined

• $175 thousand increase in circuit breaker penalty to the Town of Speedway
• $20 thousand increase in circuit breaker penalty to Speedway City School Corporation
• $1.7 million increase in circuit breaker penalty to the Wayne Township government
• $3.4 million increase in circuit breaker penalty to the MSD Wayne Township School Corporation

There are 6 older and 1 new TIF district in Wayne Township.  None of them have a zero value for the base.

Of the 6 older TIF districts, there was a combined transfer of $118 million from the base to the increment.   Meaning that property taxes from $118 million of property value that was promised to always go to the schools, fire department, etc, is now transferred to the TIF so that it will now and forever be deposited in the TIF fund instead.

• $5.5 million of the amount transferred out of the base was in a Speedway TIF
• $112.9 million of the amount transferred out of the base was from TIFs within Wayne Township, but outside of Speedway.

This is a significant draw down.  The transfer of property value out of the base amounts to 4.4% of the property Wayne Township schools rely upon for funding and 2.0% of the property Speedway schools rely upon for funding.  The impact will be felt in increased taxes and increased circuit breaker penalties.

While very little of the proposed expansion of the downtown TIF appears to be in Wayne Township (the available map is grainy and very difficult to read), its impact needs to be viewed in light of existing conditions within Wayne Township and the impact of existing TIF districts on taxpayers and governmental units.

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?

First Do No Harm - Impact of TIFs - Marion County As a Whole

Many people in positions of power in the County prefer to sell the vision that TIFs create 'found money' that would not have existed but for the TIF, and that the property tax revenues that went to the schools and libraries and IndyGo before the TIF was set up will continue to flow to those units of government after the TIF is set up.

Either they don't know the difference between those fairy tales and reality, or they don't care.

TIF districts in Marion County

• do not fulfill the promise of catalysing economic development that would otherwise not happen (see "Most Marion County TIF Districts Underperform the County As a Whole",
• do not fulfill the promise of securing the property taxes that flowed before the TIF was created (the "base") (see "Marion County's TIF Districts See Base Erode By Nearly Half a Billion Dollars in One Year",
• need bailouts in the tens of millions of dollars every year (see "Big Time Bailouts of Indy's TIFs")
• cost property owners and renters more money, and
• cost the units of government in money they qualify to receive but cannot due to the property tax caps ("circuit breaker penalty").

From the TIF Study Commission Report, Appendix 2, part one (page 6) you can find the impact of the TIF districts on taxpayers and governmental units alike. In total, this table tells us that for 2012, the TIF districts in Marion County

• cost property tax payers an additional $56 million in increased taxes, and,
• cost schools, libraries, etc, $43 million in additional circuit breaker penalties to the governmental units.

Property taxes are passed through to renters, so even those who do not own property are on the hook for a higher cost of living because of TIFs. The loss of revenue to the schools, the library, IndyGo and more, results in loss of services - and $43 million can pay for a lot of services.

The percentage of taxable property tied up in TIF districts and which, therefore, do not contribute tax revenues to the schools, libraries, etc, varies from Township to Township.  From the TIF Study Commission Report, Appendix 2, part two (page 4) you can find the following percentages of taxable property tied up in TIF districts in 2012:

Marion County as a whole --- 8.9 %
Center Township --- 33.3 %
Decatur Township --- 14.0 %
Wayne Township --- 9.5 %
Lawrence Township --- 3.6 %
Warren Township --- 1.1 %
Perry Township --- 0.6 %
Pike Township --- 0.6 %
Washington Township --- 0.3 %
Franklin Township --- 0.1 %

The percentage of taxable property tied up in TIF districts in 2013 has grown to 11.1%, in large measure to $490 million of assessed value being removed from the base and given to the increment.  [The "base" is the part of the TIF district that existed before the TIF district was created.  The "increment" is the part of the TIF district that grew after the district was created plus any value taken from the base and turned into increment over the years.]

For next year, two more TIF districts will see their base drop to zero.  Out of 40 TIF districts, we will have 16 where ZERO tax revenues flow to the schools, libraries, IndyGo, etc.  For 2013 we see 3 TIF districts with an increased base, while 23 have a decreased base.

In the past 4 years we have seen $40.5 million bailouts of the Marion County TIFs districts.  These bailouts came from income taxes, garage receipts from city owned garages, transfers between TIFs, and, startling enough, from increased property taxes outside the TIFs to secure the TIFs.

One can only look at all of this information and conclude - Marion County TIFs are in trouble.  They continue to need more property value extracted from the base and continue to need other tax money to keep them propped up.  The more we keep property off the tax rolls or the more property value we add to the TIF increment, the more it costs taxpayer, residents and businesses to make up the difference.  And, the more property we keep off the tax rolls or the more property value we add to the TIF increment, the more it costs the schools, libraries, and IndyGo in noncollectable revenue due to property tax caps.

The TIF districts that we already have in Marion County are costing us a pretty penny each and every year.  They have not spurred development that would not have otherwise occur.   We should at least ask what impact any new TIF districts will have.  Yet, appallingly enough, not one question was asked about the proposed TIFs at the August 27 meeting of the Metropolitan & Economic Development committee meeting.  Such is the fairy tale and those who do not want to know about the reality of Marion County's TIFs.