Wednesday, October 6, 2010

Are TIF Districts the New Slush Funds?

The recent action by the Metropolitan Development Commission to funnel $8 million a year to the Pacers, by way of the Capital Improvement Board, has brought a lot of attention to the consolidated downtown TIF district and how much money is actually there.

Last week, Francesca Jarosz, newly transplanted to the IBJ, wrote an article with a great deal of detail - some of it very unexpected ("Downtown tax district reaps unexpected windfall"). There is an accompanying map, showing that this TIF district consumes most of the mile square and much of the area bounded by I-70 and I-65.

Jarosz mentions that there is $576 million in debt, payment of which property taxes collected in this TIF area are directed, but still leaving an excess revenue stream of about $12 million annually. These excess moneys have accumulated in recent years. Jarosz writes:

By the end of this year, the city estimates there will be close to $91 million collected from the downtown TIF beyond what’s needed to make its debt payments. The money eligible to be spent would dwindle to about $24 million after factoring in a $9 million cushion for tax money lost to appeals or non-payments and another $58 million for the city to hold a reserve of 10 percent of its debt.

And that number likely will further dwindle to about $12 million, pending the issuance of bonds for the proposed development near Lilly and Clarian Health’s planned neurosciences center near Methodist Hospital. Those would increase the downtown TIF debt to more than $700 million and hike the amount needed for a 10-percent reserve to $70 million.

The staggering amount of money sitting in this one TIF district raises lots of questions. Jarosz quotes City-County Councillor Brian Mahern:
“We hear about projects here and there,” said Brian Mahern, a council Democrat. “It appears there’s more money than needed for [debt]. It only makes sense that there’s a broader discussion about where to use those dollars, and I don’t think that’s been the case.”

This is an excellent point. Most of us, even those who know what a TIF district is, didn't have a clue that so much money was accumulating. A community discussion on the use of those funds should be a priority. Instead, we see that Mayor Greg Ballard is lining up one use after another for those funds, without setting any forth any vision of what he is trying to accomplish with what appears to be a random and piecemeal fashion of awarding money to favored projects.

Cathy Burton, President of the Marion County Alliance of Neighborhood Associations, is also quoted:
“If there’s that much excess money, wouldn’t it be wiser to apply the funds to upgrading parking meters or helping to handle the infrastructure deficit or paying off the bonds more quickly?” said Cathy Burton, president of the Marion County Alliance of Neighborhood Associations.

Jarosz also quotes a Mike Shaver:
Mike Shaver is a Carmel-based community and economic development consultant who works with municipalities across the state.

He said it’s common for cities to collect excess TIF funds and use the money for other economic development projects, citing the towns of Seymour and Converse as examples.He said in those cases it’s important for government officials to have a highly public discussion about how the money will be used.

“What you have to do in that process is be very transparent about it in order to convince the public you’re not creating a slush fund,” Shaver said. "That’s a very real potential problem.”

Mr. Shaver hit the nail on the head. Because, from the cheap seats, it looks to be exactly the case that Mayor Ballard is indeed using excess TIF dollars as a slush fund.

1 comment:

Central Indiana Jobs with Justice said...

And a major expense from the Slush fund was allocated today to the PNC/Hyatt for $600,000 to build Ballard's Bridge to Nowhere, despite public testimony from Councilor Brian Mahern, and five other Indianapolis residents.