TIF Study Commission Meeting #4 - Tonight

The fourth TIF Study Commission meeting will begin at 6 pm tonight, in room 260 of the City-County building.  Here's the agenda:

Meeting Agenda

Selected Projects, Airport and other TIFs, Policy Issues

I.              Welcome and Introduction of Commission Members (5 minutes)     Steve Talley, Commission Chair

II.            Selected Projects and Expenses in Marion County TIF Districts – Part 2 (60 minutes)

A.            Airport TIF – United General Overview of (5 minutes)                                                                        

                                                                                              Deron Kitner, Executive Director, Indianapolis Bond Bank

1.            Review the Concept of Consolidation (debt, revenue, project location)

2.            TIF Districts

3.            Outstanding Debt

4.            Real Property Tax Revenue (Historical and Projected through Bond Retirement)

5.            Personal Property Tax Revenue (Historical and Projected through Bond Retirement)

Note for each selected project, discussion to include, at a minimum, the following:

·   How was the project selected?

·   Who was the developer?

·   How was the Developer chosen?

·   How did the plan and financing methods align with overall economic development plans?

·   What other development tools were used for the project?

·   Outcomes, Comparing Realized to Projected or Goal

·   Successes

·   Lessons Learned

·   Measurement of the Return on the Public Investment

B.            United Airlines Facility (10 minutes)

C.            Dow Agro Sciences (10 minutes)

D.           Barrington HoTIF (10 minutes)

E.            UNWA (10 minutes)

F.             Ertel (10 minutes)

III.          Identify Issues – Comments and Recommendations for the TIF Policy Discussion (90 - 120 minutes)

A.            Topics identified in preceding meetings

B.            Setting Goals and Measuring the Return on the Investment

C.            Transparency, Accounting and Reporting

D.           Procedural Issues

E.            Legislative Agenda

IV.          Perspectives and Public Testimony on Public Policy Issues

A.            Commission Members (5 minutes each)

B.            Public Testimony

IV.          Next Meeting:  May 3, 2012, 6:00 pm at Bethel Park Community Center, 2850 Bethel Avenue, Indianapolis, IN 46203.

IV.          Adjournment

Third TIF Study Commission - Heavy on Theory, Light on Practice

Last Thursday's TIF Study Commission meeting was the first I found unsatisfying.  Sure, the over three hours was chock full of high level information - the theory of how TIFs are set up and operated.  What was missing, however, was any mention or examination of the actual practice used for TIFs in Marion County.  This thought took a while to perk in my head, and I think the best way to express it is to list the instances where I saw the theory stated, but the actual practice left unmentioned.  And please note, I surely do not know all the ways TIFs are set up and to what purposes their funds have been put.  So, this a highly limited reflection on what was missing last Thursday.

The first instance of a divergence I noticed was actually in a recital of what purposes abatements could serve.  The theory stated was that residential abatements could be granted in places which were either 'residentially distressed' or for multi-family residential projects for low income or mixed income tenants.  What popped into my head was the abatement granted in the Peterson administration that was part of the incentive package for the Conrad Hotel.  The condos on the top floor were given an 8 year abatement - and clearly the area is not residentially distress, nor are these condos for low or even mixed income tenants/owners.

Thus the divergence struck me and here are more examples from the evening:

The theory -- the option to float Midwest Disaster Area Bonds were mentioned as being set up by the federal government to help recovery from 2008 flooding in the Midwest.  Marion County experienced this disaster and so is eligible for these tax-free bonds.  It was stated that these bonds are floated on the credit of the developer, not the municipality.

The practice -- the only instance of Indianapolis/Marion County using these bonds that I know of was for the North of South (aka City Way) project.  However, neither the credit worthiness of the developer, nor the investment worthiness of the project was used to sell those bonds.  It was the promised of a repayment revenue stream from the Consolidated Downtown TIF that was used to sell those bonds.

The theory -- Certified Technology Park designation, with the approval of the Indiana Economic Development Corp., must be used for 'public facilities' and the tax revenues redirected to the project may only be used to reimburse the City for its contributed infrastructure improvements.

The practice -- again we have to turn to the North of South (City Way) project that did not really have any tech component, but borrowed the relocation of some staff of Rolls Royce several blocks away to qualify. The redirected tax revenues are not going to repay the City for infrastructure, but rather to pay for the financing fees associated with floating the Midwest Disaster Area bonds.

While we are still on North of South (City Way), I must note that for the umteenth time, Deron Kintner, Director of the Bond Bank, said that no abatement was given to the project.  Then what do you call it when all property taxes 'paid' by the project for 10 years does not go to the taxing units, nor does it go to the Consolidated Downtown TIF fund?  It is being credited entirely to the developer and regarded as partial repayment of the bonds by the developer.  That sounds like a 100%, 10 year abatement to me.

The theory -- it was said that the purpose of TIFs are to build the tax base.

The practice -- two thoughts come to mind on this one.  First is the United TIF; since this was to provide for a non-taxable building on non-taxable land, then this TIF missed the mark by quite some distance.  Additionally, when you never retire a TIF district, then building the tax base is not really building a public asset, rather it is building a slush fund.

The theory -- a list of projects funded by the Consolidated Downtown TIF district was shown; things like Circle Centre Mall, Union Station, and the JW Marriott.

The practice -- not listed but leaping to mind is the $8 million per year going to the CIB (cough, pacers, cough), the $40 million being drained to balance this year's City-County budget, and the $600,000 to build the fourth spoke to the Artsgarden.

I hope the discussion can move to the actual practices being employed here in Indy.  Some are excessive and unwise, in my view.  But at the end of the day, if the Commission does not drag them into the open and discuss them, then they stand less chance of fixing what really ails the implementation of TIFs in our City.

Star Editorial Board Sides With Voters

The Star's Editorial Board has come down on the side of the voters and calls on the Election Board and Voter Registration to open voter lists to unslated candidates.

These candidates are legally on the ballot.

The voter lists are public documents.

But the Voter Registration Office is run by the county party chairmen - even though the taxpayers foot the bill.  These men are extreme partisans, to the point where even democracy is less important than the unbridled power they wield.  Slating is a farce and worse.  None the less, one does not need to go through slating in order to put their name on the ballot.  In fact, only Marion County and perhaps Lake County in Indiana even have slating.

Those who give voters a choice in the primary are feared by the party chairmen precisely because they provide a choice for the voters.   So, they put as many hurdles in front of those defenders of democracy as possible - including delaying or  outright denying voter list so these candidates can get their message out.

Running for Judge are Republican Paul Ogden and Democrats Greg Bowes and Mark King.  Democrats running for State Rep are Brian Cooper in District 92 and Zach Mullholland in District 100.

All have filed a lawsuit against the Election Board in an attempt to remedy this problem for all of us here in Marion County - the last bastion of Boss Hog politics.  The case is to be heard tomorrow in Judge Rosenberg's Court.

Its Thursday - Time For Another TIF Study Commission Meeting

The third TIF Study Commission meeting will be held tonight, but beginning at 6 pm.  This one will be held at the Library Services Center, 2450 North Meridian Street.  That is just south of Fall Creek and the location of the Friends of the Library book sales that you might be familiar with.

TIF Study Commission webpage

Tonight's Agenda:

The Development Toolbox and Selected Projects from the Downtown TIF

I.              Welcome and Introduction of Commission Members (5 minutes)     Steve Talley, Commission Chair

II.            Alternative Perspectives of TIFs and Complementary Economic Development Tools

A.            TIFs in Other States (10 minutes)                                              Brooke Thomas, DMD, Planning

B.            Alternative and Complementary Development Tools (20 minutes)

                                                                                               Bruce Donaldson, Barnes & Thornburg

1.            Economic Development Bonds

2.            Real Property Tax Abatement

3.            Personal Property Tax Abatement

4.            Certified Technology Parks (CTP)

5.            Economic Improvement Districts (EIDs)

C.        Comparing the Costs and Benefits of TIFs to Other Development Tools (20 minutes)

                                                                          Loren Mathes, Principal, H.J. Umbaugh and Associates

D.            Tax Increment Financing as a Factor of Project Financing (10 minutes)                           

                                                                     Deron Kintner, Executive Director, Indianapolis Bond Bank

III.          Selected Projects and Expenses in Marion County TIF Districts – Part 1 (50 minutes)

A.            Consolidated Downtown TIF - General Overview (5 minutes)                                 Deron Kintner

1.            Review the Concept of Consolidation (debt, revenue, project location)

2.            TIF Districts

3.            Outstanding Debt

4.            Real Property Tax Revenue (Historical and Projected through Bond Retirement)

5.            Personal Property Tax Revenue (Historical and Projected through Bond Retirement)

Note for each selected project, discussion to include Circle center Mall and City Way, the following:

                  ·    How was the project selected?

                  ·    Who was the developer?

                  ·    How was the Developer chosen?

                  ·    How did the plan and financing methods align with overall economic development plans?

                  ·    What other development tools were used for the project?

                  ·    Outcomes, Comparing Realized to Projected or Goal

                  ·    Successes

                  ·    Lessons Learned

                  ·    Measurement of the Return on the Public Investment

Developer of Broad Ripple Parking Garage Wants Variance From Flood Ordinance

The Broad Ripple parking garage has been covered extensively on this blog, and others (see "Speaking of Boondoggles - The BR Garage is Back for Another Variance" for the last update here -- "Ballard Administration Pulls Bait and Switch On Broad Ripple Garage" by Gary Welsh at Advance Indiana -- and "Broad Ripple Deserves Better Representation Than The Broad Ripple Village Association" by Paul Ogden at Ogden on Politics).

As noted in February, the Developer is back with a request for a Variance from the Flood Control Ordinance.  The hearing is now scheduled for tomorrow before the Board of Zoning Appeals II.  Since December, I have received more information from many sources that fill in a lot of blanks.

The short version is that the Developer, an offshoot of the Keystone Group, wants to save a few bucks by building 2 feet below the base flood elevation and 4 feet below the elevation required by the Ordinance - saying that someday the floodwall in this area will be completed and at THAT time, they will be one foot above the flood elevation.  They, of course, would still be 1 foot below the building elevation required at THAT time as well.  Keystone goes so far as to claim that if it does not get this Variance, that it will not be economically feasible to build the garage.

“The redevelopment could not occur without relief from the requirement that the base floor elevation be at least two (2) feet above the base flood elevation due to excessive costs in meeting such requirement.”

Sounds like somebody, including the City, did not do it's due diligence when scouting for and accepting this as the best location for additional parking in Broad Ripple.

There are a few problems with allowing this variance.

The Flood Control Ordinance was put in place to keep Indy in the FEMA Flood Insurance Program in the first place.  The Feds are the only ones who back flood insurance.  And they ask, reasonably so, that any new building in flood prone areas, be built a safe distance above the 'base flood elevation', which is determined from the 100 year flood elevation data.  This protects the building and protects the integrity of the insurance program that covers so many existing buildings.  It is reasonable to have these protections in place.

So what if the Broad Ripple parking garage floods?  Well, the City's $6.34 million 'investment' in the building gets flushed down the toilet.  The IMPD substation could have damage to its equipment. The retail portion of the ground floor would be the developer's problem.

More importantly, though, the very existence of the Variance can push FEMA to once again slap Indianapolis with higher flood insurance premiums, or worse, exclude us entirely from the program.  This falls on the shoulders of homeowners and other building owners throughout the County that rely on flood insurance to protect their investment.

The single focus that has been evident on building a garage at this location should not be extended to the point where other people within our City could suffer financial costs and losses.  That is exactly what granting this Variance would do.

Happily, the City Staff is recommending denial of this Variance and the City's Department of Code Enforcement has sent a letter also requesting denial of the Variance as it could put our participation in the FEMA Flood Insurance Program in real danger.

Hopefully, the BZA will deny this request tomorrow.

TIF Study Commission Meeting 2 - TIF-a-licious

Hard to imagine, but the second meeting of the TIF Study Commission was even better than the first.  I found it provided some hard numbers to flesh out the concept of our TIFs, brought together some variables that impact one another, and exposed the 'language' problem when discussing such arcane (but important) tools of government.  You could see new avenues for exploration opening as the discussion moved along.

I have to say that the City and County are being impressively well served by this group.  All are serious; all are weighing in with important things to say or ask; all have done their homework.  The agendas are chock full and the exchanges are riveting.  The topic is not being taken lightly or merely skimmed.  These guys are hip deep in real, meaty issues.

I don't want to simply report what was said.  I believe that we need a community discussion as well as a policy maker discussion of TIFs - how long should they live - on what should their funds be spent - how should they be prudently structured - what kind of oversight should be in place - how public input can be improved - how they can better serve their stated purpose - and more.  So, at this point at least, I want to recraft some of the information that was put forth to frame the important concepts that are falling out of these meetings.

One important idea that bubbled up last night was the use of language (my Anthropology friends will like this).  It is said that the Inuit language has hundreds of words for 'snow'.  While we feel that 'sleet', 'snow', and 'hail', coupled with the adjectives 'wet' and 'fluffy', suit our needs nicely.  There is purpose in a TIF technical language, but it can exclude information from those who do not understand the language, and it can confuse all when common English and the TIF technical language share a word, but use it to mean different things.

I am going to avoid as much TIF jargon as I can - mostly so I don't misuse it.  However, I do want to paint the concepts so that we can all partake in this important conversation.

The first concept, and the topic of this entry, is that property tax rates, property tax revenues, and tax caps are all affected by TIF districts in a complex way.  Sometimes it is useful to look at the extremes in order to illuminate the trends.  So, lets look at the effect of TIFs from two extremes - all or nothing.

(This falls out of the information presented by City Controller, Jeff Spaulding, for those who have or will watch the WCTY replay.)

Before the tax caps --  If there were no TIF districts, the total value of Indianapolis/Marion County property would be used to determine the property tax rates.  The rates would be the lowest they could be and each property owner would pay the lowest amount needed to fund the services of the City, Library, IndyGo, Township (with and without fire), and schools. 

Before the tax caps -- if everything but my house was in a TIF district, the value of my property would be used to calculate the property tax rates.  My bill would be $1 billion.  But, don't be laughing at me.  My tax rate would apply to every parcel in the TIF district - so you'd be paying quite a large sum as well.  However, only my tax payment would pay for City services and the Library and IndyGo and the Townships and the schools (jargon: the taxing units).  Your payments would go to service the TIF bonds and projects being funded out of the 'everything but Pat's house' TIF.

After the tax caps -- If there were no TIF districts, the total value of the Indianapolis/Marion County property would be used to determine the property tax rates.  The fewest number of taxpayers would max out and hit the tax caps; mostly in areas where the school district has oversized debt.  These folks are protected by the tax caps.  The rates would be the lowest they could be and each property owner would pay the lowest amount needed to fund services.

After the tax caps -- If everything but my house was in a TIF district, the value of my property would still be used to calculate the property tax rates.  But because of the protection afforded by the tax caps, my bill would be $2000.   (jargon: my tax cap credit would be $999,998,000)  All the services provided by the various taxing units would be hurt or shut down completely (the taxing units all have other sources of revenue - but property taxes is a large fraction for each unit).  The calculated property tax rate would apply to the 'everything but Pat's house' TIF, and like  me, every property owner would receive protection from the tax caps.

Bottom line -- before the tax caps were in effect, increasing the total number or size of TIFs would cost all taxpayers more money, but the taxing units would still receive all the revenue they qualified for.  Now that the tax caps are in effect, increasing the total number or size of TIFs cost taxpayers more money until they hit the cap (and are protected by it), but the taxing units do not get all of the property tax revenue they requested.  Their property tax revenue is reduced by the same amount as the tax cap protection afforded the taxpayers.  (jargon: the tax cap credits provided to the taxpayers are subtracted from the property tax revenue that the taxing units hoped to receive.)

In 2011, the total property tax revenue requested by all taxing units was $1.057 billion.  The tax cap credits totaled $134.5 million, or 12.7% of the amount requested.  So the taxing units 'only' got $922.5 million.

Certainly, TIF districts aren't the only reason taxpayers hit the tax caps.  But, TIFs are the topic of discussion right now and as they grow, they cause an increase the number of taxpayers hitting the tax caps, and they therefore cause a decrease in the property tax revenue that actually gets to the taxing units to spend on services for the public.

Spaulding noted that if all TIF districts were dissolved (not going to happen; just hypothetically speaking), an additional $43 million of property tax revenue would flow to the taxing units because the tax rate would go down and fewer property owners would hit the tax caps.  Taken together with the 2011 tax cap credits mentioned earlier, it can be calculated that the TIF districts in Indianapolis/Marion County cause 31% of the tax cap credits.   Some call the tax cap credits a 'problem' to be solved, while others call it 'protection' to be applauded.  I obviously fall in the latter camp.  But, at the end of the day, it is obvious that the expansion of TIF districts or the increase in the size of existing TIF districts has a notable impact on the tax caps and the reduction of tax revenue that the government has to spend on needed services.

TIF Study Commission Meets For Second Time Tonight

The TIF Study Commission will hold its second meeting tonight.

This time the roving Commission will begin at 7 pm at the Indianapolis Arts Center, 820 East 67th Street.

Here are some links for more information:

TIF Study Commission webpage -- which includes links to all presentations from prior meetings

Tonight's Agenda -- which includes the history, location and funding of TIF Districts here in Marion County