TIF Study Commission - TIF FAQs

The recently concluded TIF Study Commission has posted a very impressive document summarizing the findings of the Commission as well as recommendations for public policy modifications regarding TIF creation and management in Indianapolis. You can access the 96 page report, as well as the appendices.

For this entry, I am going to summarize what I thought were the ten most important findings of the Commission.  Of course, this is my opinion and it will undoubtedly be valuable for you to scan through the document's executive summary, if you aren't going to try to digest the entire report.

1) TIF (tax increment financing) is a development tool enabled in all States, except Arizona, and the District of Columbia.  The type of taxes collected, the footprint of the districts, and the uses for TIF money are all types of things that vary between States in the creation and management of TIF districts.

2) While many believe the base (the existing assessed value on the day a TIF district is created) continues to provide it's property taxes to Indianapolis' various taxing units, that is not necessarily or usually true.  The base can erode and be converted into part of the TIF itself.  Additionally, any growth in the value of the base due to improving market value, always goes into the TIF.

3) There are many types of TIFs here in Indianapolis, with a variety of purposes.  There are TIFs that accumulate funds, then spend them - as well as TIFs that are used to float bonds which promise the expected new tax revenue stream for repayment.  There are TIFs created to encourage redevelopment in older areas and new development in thriving areas.

4) TIF funds are spent on a wide variety of projects.  While most of the public may assume that roads and other basic infrastructure is what TIF funds are used for, that is just the beginning.  TIF funds are used to build buildings, make loans to developers, repay previous city expenditures (so that the money could be used to fund the 2012 city budget), pay money to the CIB (so they can send the money on to the [cough, cough, Pacers] ICVA), build housing, and make other improvements in business areas.

5) State law recently changed, requiring that no new TIF district exist for more than 25 years.  TIFs established prior to to the change can live forever - this would include all of our current TIFs, unless their establishment included a 'drop dead' date.

6) Some TIFs district bonds guarantee repayment with more than the property tax revenue stream created by the TIF.  For instance, the airport TIF for United promised County Option Income Tax revenues for the repayment, when property taxes were insufficient.

7)  When a TIF district is accumulating more money than is needed to repay the bonds or needed for further projects within the district, the City can pass the excess "through to the base" (to the other taxing units).  This process is annual and each year's decision is independent; if the City decides to pass $10 of the excess through to the base this year, they can change their minds next year and keep the $10 in the TIF.

8) TIF districts that do not have an expiration date can become 'dormant' and all of the property tax revenue passes through to the base.  A dormant TIF can be reactivated with only the approval of the MDC.

9) There are other economic development tools that can be used to encourage development, redevelopment, or ongoing infrastructure improvements besides TIF districts.  This includes general obligation bonds, like those used for the new Wishard Hospital project,as well as abatements and other incentives.

10) There is a key mathematical relationship between TIF district property tax revenues and the amount of money the taxing units lose due to the property tax caps.  The more property tax revenue diverted to TIF district funds, the greater the loss of revenue to all taxing units.

There is one more piece of information presented to the Commission that I think is striking and has importance well beyond the TIF district policy discussions.  Lets call this item number 10+.  That was the idea planted by Brad Beaubien, Director Ball State College of Architecture and Planning, Indianapolis Center (see "A Clip From The Latest TIF Study Commission Meeting").  He said that Indianapolis avoided the urban core decay that challenged many cities decades ago, by establishing Unigov.  Unigov brought in a huge number of acres of undeveloped land which provided ever increasing revenue to the City as that land was developed.  That process is now nearly over, and Indianapolis is now in the situation that the other cities were back in the 60's.

As anyone can plainly see, I've limited the information gathered by the Commission to just 10 items.  This is keep things as simple as possible, while, hopefully, not oversimplifying things.  All of the Commission meetings are archived on WCTY's website and the final report is well written, if thick.  I recommend either and both to anyone interested in wading through it all.  If you are interested in these things, it will be worth it.

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.

Ballard / Vaughn Reneging On Promise

An abrupt reversal has been announced on the fate of ladder truck 21 that currently services Councillor Christine Scales' district.  Lame duck Director of Public Safety, Frank Straub, is the nominal decision-maker on this matter, but it seems more likely that Mayor Ballard and/or new Chief of Staff Ryan Vaughn are the ones actually at the center of this change of policy.  Paul Ogden over at Ogden On Politics has blogged on this recent development (see "Councilor Scales Calls Mayor Ballard Out on Failure to Live Up to Commitment Regarding Keeping Ladder Truck 21 at Northside Station")

Last year it was announced that Washington Township IFD Station 21would lose its ladder truck.  Many residents became concerned and involved their Councillor in the effort to keep their ladder truck and the protection it afforded their families, homes and businesses.  Scales led the charge by immersing herself in national fire protection protocols, best practices, and best standards.

The combined effort worked out well and Mayor Ballard, personally and through his then Chief of Staff, Chris Cotterill, promised that funding for ladder truck 21 would be provided at least through the end of 2012. Vaughn knows all about it, having gotten Cotterill to reduce the promise to writing.  Knowing that their word did not include any funding beyond 2012, Scales continued to ramp up her information base regarding fire equipment placement, response times, and more.

The June 20 announcement that the ladder truck would not be left at Station 21, but removed on July 1, left little time for the community to mount an effective and vigorous campaign to reverse the reversal.   That was probably deliberate.  The way our City budgets work, there is nothing special about July 1.

Scales shot back, sending out three documents that review the importance of keeping ladder truck 21 in place.  I have uploaded them to Google docs ("What do ladder trucks do", "The decision last year to remove ladder truck 21 was fought by firefighters", and "Councillor Scales statement").

Scales notes that Washington Township has more tall buildings than anywhere outside of Center Township, there are only two White River crossings which limits response times, and the current construction on the Allisonville Bridge with its attendant super-congestion makes this an ill chosen time to remove the ladder truck 21.  She also mentions that she had many private conversations with knowledgeable firefighters who side with her on the need for this truck in this location.  And, she asserts that the City could be opening itself up to a lawsuit should it make good on this latest threat and actually remove the truck.

From the public perspective, this looks bad for Ballard and Vaughn.  Even if you find yourself in positions of power, your word is still your honor.  The commitment made to residents and firefighters should be followed through to completion.  If there is any entertainment of not funding this truck at Station 21 in 2013, then it should be thoroughly discussed with the affected community prior to a final decision.  AND the reasons for that decision should be fully explained to the community.

Mayor Ballard still likes to say his is an open and transparent administration.  Yet, there is little evidence of that.  It is instances like this one that makes a running joke of using Ballard and 'transparency' in the same sentence.  Hopefully, the Mayor will follow through on his word, leave the ladder truck where it is, and pursue real dialogue and real transparency with the residents and firefighters affected by Station 21.

Public Comments Requested On TIF Study Commission Report

The final report of the TIF Study Commission, included recommended TIF policies, is now available in draft form (click here).  The last meeting of the Commission will be this Thursday, June 28, beginning at 6 pm in room 260 of the City-County Building.

While public comments will be taken at this meeting, prior to the votes on the various recommendations, it is requested that any suggestions for changes be sent to Hope Tribble, hope.tribble@indy.gov, prior to Thursday so they can be weighed for inclusion.

The recommendations are listed on the last pages of the executive summary - the link to which was provided at the top.

Key Indiana Court of Appeals Decision - Airport Zoning Authority Lies With City, Not Airport

In a key decision with wide-ranging implications, the Indiana Court of Appeals has sided with Zionsville in a dispute with the Indianapolis Executive Airport over who has the authority over zoning matters on airport owned property.

In an article posted today, IBJ reporter Scott Olson, says that the airport is run by the Hamilton County Airport Authority, even though a portion of the property lies within Boone County. 

Zionsville’s dispute with the airport’s operator, the Hamilton County Airport Authority, began in 2008 when the town annexed Union Township.

Hamilton County purchased the airport, which is located on East State Road 32 just within neighboring Boone County’s eastern border, in 2003.

Boone County Commissioners and the Boone County Area Plan Commission had allowed the airport authority to govern land use at the airport by creating a special airport district under the county zoning ordinance.

But, in February 2010, nearly two years after the annexation, Zionsville officials notified the authority that it needed approval from the town’s planning department before obtaining construction permits.

The Airport Authority took the matter to Court in Marion County, and that Judge decided in favor of the Authority.  Now, on appeal, the decision has gone the other way.

The Indiana Court of Appeals’ opinion was written by Senior Judge Randall Shepard, who retired in March as chief justice of the state’s Supreme Court.

“The Indiana Supreme Court has held that a general unit of government maintains zoning authority within its boundaries, even as to other general governments,” Shepard wrote.

Here in Marion County, the Indianapolis Airport Authority does its own zoning - with no public input mind you.  They do whatever they feel like, without regard to neighbors and their property values.  Take for example the hideous container storage use on the airport's north side in an area previously used for airport parking.  The effect of this eyesore on abutting private property is apparently of no concern to the Airport Authority.

With this ruling now in place, Indianapolis should restore its sole jurisdiction in zoning matters over at the Indianapolis Airport so that the Airport is forced to be a better neighbor, and so residents and private property owners can get a fair hearing - as opposed to no hearing at all.

A Clip From the Latest TIF Study Commission Meeting

As we await the draft report of the TIF Study Commission, my thoughts continue to return to the comments of one the very last presenters to the Commission - Brad Beaubien, Director Ball State College of Architecture and Planning, Indianapolis Center.  This one speaker stood out in the clarity of his remarks and the meaty interchange it sparked with the Commission members.  Many of the core ideas that have been revealed and reviewed by the group over these last couple of months are contained within this one segment.  If you would like to see a copy of Beaubien's presentation documents, click here.
from May 31, 2012 (embedded from WCTY archives):
 

Broad Ripple Parking Garage - $8 Million 'Value'

Cory Schouten's, IBJ reporter, latest revelations about the Broad Ripple parking garage and its new flood proofing scheme, got me looking over the permits that have been requested.  From the City's online permits feature, it appears that the flood proofing plans have been approved (FLD11-00216), the improvement location permit has been issued (ILP12-00845), and the structural permit(STR12-02419) awaits approval and issuance. (for those who know how to navigate this feature of the city's website - click here and input either the address 6280 N. College or search for the individual permits by the numbers I listed above)
What caught my eye was the "estimated value" line in the Application Information section of the structural permit.  This information would be supplied by the applicant, not the City.

$8 million dollars is the estimated value of this parking garage.  Not the oft repeated $15 million number.  And, this $8 million dollars would include the new flood proofing designs that were so onerous that the developer said it would kill the project.

The City taxpayers, through the up-front proceeds from the sale of the parking meter assets, is paying for this garage to the tune of $6.34 million.  We were told there would be 350 parking spaces and no more than 20% of the building devoted to retail and other uses.  The permit weighs in with 349 parking spaces, but the full first floor being retail (or 33% of the building) devoted to non-parking functions).  You will recall that the supposed need was for the parking spaces, not more retail.  Schouten reports that 100 of the spaces are actually required for all that retail, netting the taxpayers 249 spaces.

What to make of the $8 million "estimated value"?  Three possibilities leap to mind.  First - the taxpayers of Indy are paying $6.34 million, or the very hungry lion's share of the price for this garage/retail building.  Even if the per square foot construction costs of retail were equal to that of parking spaces (which I trust is no where near true), the cost of the parking spaces would be $5.33 million.  So, we have paid too much for what we are getting.  We have been led to believe that the costs were closer to $15 million by our City leaders, so our contribution would part of $10 million in costs for the two floors of parking.

Could the developer be so bad with money that he would spend $15 million and only create $8 million in value?  Possibly.

The last thought is that this $8 million value just might be what gets into the database for assessed values for property tax purposes.

I don't know what the costs truly are.  I have outstanding open records requests for just that information from the City.  But, the Ballard administration's self-proclaimed transparency is still not evident in its divulgence of public documents through City Legal.

Until further information is provided by the City, we are left with at least three possibilities - the taxpayers are paying more than their share of the building - the developer is very bad with money - or the true value of the new garage is deliberately being low balled.