Friday, February 17, 2012

The 800 Pound Gorilla - Indianapolis Airport (Part 2 - More than a parking facility)

Central Indiana certainly needs a goodly sized airport.  There are attendant difficulties forced on those in Decatur and Wayne Township, Marion County, that are necessary for an airport to exist.  We understand that, and by and large accept the burden placed on us for the greater good.  However, I have always felt that the burden placed on Wayne, Decatur and parts of Hendricks County, should be limited to only the burden that is absolutely necessary.  In a future entry I will detail how, in recent years, the Airport has moved beyond what is necessary and now wishes to impose unnecessary hardship, not only on our side of town, but to a real extent, all over Marion County.  But, for this entry, I want to focus on the impact of Airport operations on Decatur and Wayne Townships.  I am not familiar with the ins and outs of impacts on neighboring Hendricks County, but assume their story will be similar.  And, of course, I know far more about the details of Decatur's issues than those of Wayne.  Long story short, assume as you read this, that the burden on Wayne Township is quite similar to that on Decatur, but I will have fewer exact details as to where those impacts are located precisely.

The Indianapolis Airport grew over the decades to what we see today - a 7700 acre government run aviation operation that includes land actually used for aviation purposes, banked land for future expansion, and accumulated land not needed for aviation purposes.  In the late '80s, the Airport instituted a residential buyout program for single family homes that fell within certain noise contours of the airport that were deemed by the FAA as imposing too much of a burden on the families that resided there.  The FAA finances these purchases, they do not come out of Indianapolis' operating funds.  The Airport uses actual noise monitor readings and computer projections to establish the noise conture lines.  Those homes within a calculated decibel contour line are automatically able to participate in the guaranteed purchase program.  Nobody is forced to sell, but when they are ready to do so, they have a willing buyer.  I have never heard anyone complain about the purchase price that the airport offered for a home in this program.

Land uses around the Airport and within the noise abatement program areas, may not include single family residential uses.  Any other use is not prohibited, although building height restrictions are imposed, with the height limit dropping as you get closer to the end of a runway.

For a number of years in the late 80's and early to mid-90's, Decatur Township saw its population and total assessed value actually drop due to the purchase of so many of our homes and the property's removal from the tax rolls.  I am trying to locate more recent data, but what I can tell you is that between 1972 and 1988, the Airport grew from 1200 Decatur acres to 2150, consuming over 10% of our Township land area.  And that was just before the big buying spree from the noise abatement program.

Ever since that buyout program, there has been a continual tug of war with the Airport to return land to the tax rolls.  The Airport was stubborn back then, but not totally unyielding - unlike today when I am not sure they give any thought to what is in the best interest of the surrounding community.

The mid 90's saw the now infamous $300 million United Airlines Maintenance Facility built on the north side of the Airport, in Wayne Township.  At the same time, to pay for Indy's portion of the costs ($100 million), extraordinarily large land areas of Decatur and Wayne were established as TIF areas.  I have uploaded a scan of the different areas that comprise the consolidated Airport TIF.  The dashed line running on the north side of TIF area 241 is the Township line dividing Wayne and Decatur Townships.  Thousands upon thousands of acres of Wayne and Decatur Township have been siphoned off to pay for Airport debt for the United deal.  When you hear Airport officials talk about how they do not take property taxes, please remember all of the property taxes being contributed to their TIF to pay for their United debt.

Almost all of the land mass of Ameriplex Industrial Park lies within one or another of these Airport TIFs.  Almost all of the existing buildout of Ameriplex is within the TIF.  After all of these years, we finally have two hotels, one warehouse, and the corner of another that are outside the TIF and contribute taxes to our school district and Township government.  Because we have few businesses outside the TIF, our tax base is skewed to the homeowners of Decatur.

Ameriplex was envisioned by Civic leaders in Decatur in the late 80s and early 90s.   It was hoped that, like Pike Township had done with Park 100, building an industrial park would help our Township grow and prosper.  There were 1100  acres along the south side of I-70 that were then being used for farming.  The frontage would have the type of exposure sought by business headquarters.  But as plans developed for Ameriplex, the Airport and then Mayor Goldsmith forced a land swap.  The prime frontage would have to be sacrificed to the Airport so they could land bank 100s of acres for a future 3rd parallel runway - for the anticipated exclusive use of FedEx.  The Airport would bundle the property it had been buying through the noise abatement program and swap it to form the current Ameriplex outline.

So, withing a 10 year period, Decatur lost population and property to the Airport through the noise abatement program, was hobbled by the establishment of the Airport/United TIF that utilized Township services but did not contribute property taxes to cover the costs, and forced to accede to a land swap that simultaneously guaranteed further future intrusion by a 3rd runway and a downgrade to the prime real estate location for Ameriplex.

Planned for some years, a new midfield terminal opened in 2008 on the west end of the Airport proper, within Decatur Township.  The facility is reported to be 1.2 million square feet and cost almost $1 billion to build.  The public was told, prior to the decision to build the new terminal, that airline landing and docking fees would cover the debt service on the bonds.  The Airport Authority is backing down from that promise so that they can charge the airlines lower fees. 

Meanwhile, the old terminal, parking lots and car rental lots on the east end of the Airport, stand idle and unkempt.  The Airport is not planning on turning any of these hundreds of acres back to the tax rolls, where they would do Wayne Township some good.  Instead, the Airport has grandiose plans to help itself to revenue from that property, even though it is no longer useful for aviation or aviation support.  This should be recieving far more scrutiny by the public and government officials than it has.  I will elaborate on this issue in the near future.

[part 1 -]


The Urbanophile said...

When are the United TIF bonds scheduled to be paid off? That district must be generating big revenues.

Had Enough Indy? said...

There is one more complication than I noted in the body of this entry. That is that in addition to the $100 million for the United facility, there were two additional bonds floated for infrastructure within Ameriplex totalling $14 million. The United bonds should be paid off in 2013 and 2017. The Ameriplex bonds are scheduled for payoff in 2021 and 2023.

The data I have are a bit hodge-podge for balances, etc. But...

The overall airport TIF (including Ameriplex) was estimated in 2010 to produce $14.7 m revenue, but have $15.8 m in debt service. So, I'm not sure how healthy it all is.

As of the end of the first quarter 2010, there was a fund balance of $13.9 m. About $10 m was transferred from the Ameriplex portion fund balance over the last two budgets to give some money to the Indianapolis-Marion County Library and to cover some other underperforming TIFs elsewhere in the County. So, I doubt much money is left.

I need to get those fund balances updated. But that is what I have at this moment.

Had Enough Indy? said...

Sorry - the 2010 estimate mentioned was for bond coverage in the 2011-2012 year.

guy77money said...

Hmm seems they are transferring money from one fund to another to shore up the constant short falls in other areas of the city budget. The mayors handlers (Greg Ballard is clueless) really need to start worrying about the city as a whole instead of just the downtown area.

I did read the article in the Star. Very vanilla coverage as usual.

Had Enough Indy? said...

Guy - I think the taxpayers deserve clear updates on all TIF funds. I need to look over Councillor Mahern's proposal, but it just might be exactly what we need before any new TIFs are established.

Nicolas Martin said...

Airlines need airports, and airlines should build them, or at least some private entity should. There is no reason at all for taxpayers to be dragged into the airport business.

Anonymous said...

I support your investigation into the fiances and management of the Indianapolis Airport Authority and the city/county TIF districts.

However, how realistic are you in thinking the airport authority should divest itself of land accumulated over decades for noise buffers, future airport runways, and commercial development to the surrounding counties because you want more tax revenue???

I think you will find the Indianapolis Airport Authority currently has significant challenges in paying its debts after building a new midfield terminal at a time the struggling passenger airlines are cutting flights in a nationwide industry consolidation.

Yes, the airport should redevelop the former airport terminal and its vast parking lots for everyone's sake.

The only thing everyone should expect is that the airport will look out for its own interests first and that is a very good thing for all of central Indiana.

Anonymous said...

Please note the operating losses and the composition of its revenue.

Indianapolis Airport Authority: Annual Financial Reports

Had Enough Indy? said...

Nick - I would have to differ with you on the airport. I think the government is the best entity to deal with nationwide transportation infrastructure.

Had Enough Indy? said...

anon 7:31 - the airport said it would cover the cost of the new terminal with landing fees and gate fees collected from their customers - the airlines and cargo carriers. THEY decided on the price tag of the building. THEY decided what they could afford. There is no reason to move off that model and begin to capture property tax dollars and to compete with private enterprise, especially in non-aviation businesses.

If you look at their budget ( you will see that the operations (system fund) will still have a very healthy $160 million balance at the end of 2012.

Capturing property taxes is an option the airport wants, not needs. And it is not in the best interest of the taxpayers of Marion County to shoulder the grandiose wants of the airport.