House Bill 1018
Introduced House Bill (H)
Authored by Rep. Robert Cherry.
Tax increment financing. Provides that if a redevelopment commission adopts a declaratory resolution or amendment after June 30, 2015, that establishes, renews, or expands an allocation provision or area, the base assessed value used to determine the amount of allocated tax proceeds for the redevelopment district must be increased each year so that the incremental assessed value is 50% of the incremental assessed value in the allocation area without the increase. Provides that for the allocation area in Marion County that is identified as the Consolidated Allocation Area, the expiration date for the allocation area is June 30, 2026, or the last date of any obligations that are outstanding on July 1, 2016, whichever is later.
You may be asking why the dislike of Tax Increment Financing. Used properly, it has the potential for economic impact. Unfortunately, too many Redevelopment Commissions have abused the funds.
California, which was a leader in TIF, no longer allows TIF districts to be created. Illiniois is over their head in debt, and Carmel, Indiana is raising some questions.
First, those who manage TIF funds are appointed, so there is no accountability. Not by the appointed or by those which appoint the members. Millions of tax dollars are captured and one can barely keep abreast of how the money is spent.
Locally, you won’t find any fiscal documents, but you will find plenty of PR on the City’s website. Sometimes the local newspaper writes a column or two. TIF districts are often difficult to understand, the financing, how money is collected, how it is spent flies under the radar of some. Not everyone, though.
A prime example, Indiana State Board of Accounts audit released in 2013 citing $3,521,706 and no financial control.
Economic development is a popular phrase which has been thrown around for decades. Just the two words Economic & Development conjure up all types of feel good. Jobs, progress, tax money, prestige. Elected and appointed officials deem everything “economic development”. Take, for example, the $12,000 bench paid with Storm Water fees. The bench, built to compliment the $700,000 County Building Plaza and touted as economic development has not brought in so much as one penny of financial return.
.Former county commissioner and current president of the Muncie Redevelopment Commission is big on economic development.
During his tenure as Commissioner Donati penned a letter to the editor outlining his strong economic development efforts:
We created more than $300 million in new capital investment, we created an additional $115 million in saved or new payroll and we have added more than 2,000 jobs. Source: The bright future of our community 5-13-2011
During Mr. Donati’s campaign for re-election, the local newspaper interviewed the candidates. Donati had this to say on his four-year tenure as county commissioner/president:
This along with job growth of over 2,200 committed jobs and $230 million in capital investment means that things are working in the right direction. And I will continue down that same path for improvement and progress. Source: TSP Candidate Forum circa 2012
After Donati lost the election, the City appointed him to continue down the same path. With capital investments in the millions, we have yet to see any returns, the county is still broke. It’s been over six years. Muncie is nearing $62 million since he was hired in 2013.
Millions in the county, millions in the city.
Those experienced in economic development, including using TIF funds, agree successful investments should see results in two years. Add to it, the development is supposed to benefit the community at large. Locally, we find tax dollars siphoned to feed Redevelopment Commissions’ budget from other taxing entities like schools, libraries, sanitation districts, etc.
Not only do these areas not receive the benefit of tax dollars, municipal general funds suffer, too. This creates a conundrum for officials and leads to an increased tax levy picked up by every property owner, even those which see no direct benefit.
This is why HB1018 is an interesting bill to watch. The purpose of this bill limits the percentage of taxes TIF districts and Redevelopment Commissions can collect. It limits the expansion, the debt and protects tax dollars intended for schools and other taxing entities.
I know Tax Increment Financing is difficult to digest. With the City of Muncie’s abundance of TIF districts and the millions being spent, it would behoove the average citizen to at least understand the basics.