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The Upcoming Tiff over TIFs

The next big fight between Indianapolis Mayor Greg Ballard and the Democrat-controlled City County Council is like to center around the use of the economic develop tool known as tax increment financing, or TIFs.

TIFs are a common tool used by local governments.  Under the TIF structure the increased property tax revenue from a certain area is not given to local governments but instead used to pay off the bonds floated to finance projects that otherwise would not have been created.

Proponents call them necessary for jobs and development while opponents say their overuse takes badly needed revenue from local governments and schools.

I spoke with Deron Kitner, Executive Director and General Counsel of the Indianapolis Bond Bank to discuss how TIFs are used in the city and why is there such a growing controversy over their use.  You can hear his interview below, it runs about 9 minutes.

Leon-Tailored Interview: Deron Kitner, Indianapolis Bond Bank

Council Democrats have questioned the Ballard administration’s use of TIFs and have put some projects on hold which the Mayor wants to move forward.  The Indianapolis City-County Council’s Metropolitan and Economic Development Committee is taking up the issue of TIFs at its meeting this evening.

You can view a map of the city’s active and inactive TIF districts here.  Note, it is saved with Slideshare which may be incompatible with some Apple products.

 

Posted: 02|27|12 at 4:42 pm by Abdul Hakim-Shabazz
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  • Ramon

    No new TIF district should be approved until the city provides some transparency on the current TIFs.  Mayor Ballard needs to open the books and show how much money each TIF is raising,  when they are due to expire,  a progress report if the promises made in the TIF are not being adhered to, and a method developed so that the library, IndyGo and public schools are carved out of the TIF.  The secrecy of the Ballard administration must end.

  • Open ID

    Ballard’s campaign promise. ” Open and transparent government”. My A$$

  • Dave

    Levying or increasing any tax, to put government in the private sector business of real estate development, is an abuse of power.  

    As upward pressure on levies predictably outpaces the resources of owners to cover the tax, who lose their property to the consumptive sector; churning private property to feed an abusive state, of tyranny.  The cycle is repeated with a new generation of suckers, as the quality of life is hollowed by caustic statism (Detroit).

    Disneyland is private enterprise; not a legitimate or Constitutionally authorized function of government.  Economic development is government getting out of the way.         

  • Abdul

     TIF’s generated $120 million in revenue county-wide last year.

  • Ramon

    !.  Was all TIF money collected used within the TIF district for which he was created?

    2.  Is TIF money being collected in districts where the original purpose has been totally paid?

    3. Does the city have an accounting of each TIF district and the balance owed and the projected pay off date?

    4. Will the city be willling to share this with the city council,  taxpayers and the general public?

  • cynical sam

    Well said, Dave.  Could not agree more.  An increase in revenue for gubmint ALWAYS results in an increase in gubmint itself.  Here is a thought; less revenue for gubmint.  Lets see if the reverse holds true.

  • Marksmall2001

    Check out the use of TIFs in Chicago. Richie Daley used them as a slush fund. By the time he had left office, a ton of money was gone. Transparency is critical to this odd device of revenue generation, because once voters and taxpayers see how TIFs operate, I doubt there will be much more mention of them.

  • Think Again

    But the real question is: could, they have generated more, OR: have all the TIF-area improvements been paid-for, and thus the TIF should expire?  

    Get to know the TIF laws.  And then double-check the city’s follow-up after they’re in place. It’s been a dirty little secret for 20 years: record-keeping is sloppy, at best.

    The enabling laws are well-meaning.  Too many times, the follow-through and accountability are lakcing.

    When they work, they work very well.  They’re over-used.  And that’s not a “D” or “R” complaint–Peterson did the same thing way too often.  

    TIFs are supposed to expire when the sidewalks, streets, bridges, etc., are paid-for.  

  • Think Again

    Amen, Ramon…it’s a matter of public record at the time of TIF application and approval.  

    I fear the Bond Bank doesn’t have the staff to track all the in-place TIFs, and they trust the beneficiaries to self-report.

    Bad practice.

    And you know what happens with that money when the improvements are paid-for?  The city uses it to cover other things.  A hundred grand here, a hundred grand there, and pretty soon it’s real money.

    That practice is repeated all over town.  Annually.

  • Think Again

    He’s not alone.  This sloppiness was perfected to art form by Goldsmith.  Peterson continued it.

    But Ballard can stop it stone-cold in its tracks.  It’s simple:

    Improvements in the TIF district are paid for, the TIF evaporates in the same tax year.  Period.

    The sloppiness contibutes to lower revenue for the various taxing districts: schools, library, fire service, etc.  

    I’m aware of one northside TIF created to build a bridge, and take care of accompanying river drainage, and some related issues.  The tax collected inside that district accomplished the goal in 6.5 years instead of 10.  The city refused to budge on the 3.5 years of collected taxes, and used the extra money to divert to other projects.  Completely against the law.  But they did it, and the school district and fire department and conservancy district in that area lost those funds for the 3.5 years.  The school district howled, the city said “tough.”  

  • Think Again

    Folks, learn about TIF districts: it is NOT a tax abatement.  It is a tax receipts re-allocation.

    The prop taxes are diverted to the capital construction project inside the TIF area.

  • Think Again

    Our laws are completely different than Illinois’s TIF laws.

    But your story sends shivers down my spine nonetheless.

  • Pascal

    Without TIF the revenues are consumed by public sector unions?

  • Pascal

    That was the original idea, I suspect, and the plan, but money has a way of going outside of TIF areas.

  • Mike

    No mention of this fact: When new development occurs on any land within the TIF district, they don’t pay into the local government. But the local government must stretch further to pay for services consumed by that growth. Instead, the TIF money goes to paying off bonds for all-too-often special interest projects while the rest of the community is left to pick up the bill. The rest of the community is paying for the increase in demand for fire, school, police, and other infrastructure services.

    Tif proponents claim the special interest projects aren’t paid for by tax payers, because elected representatives don’t always approve projects and they aren’t paid for through the general city funds. If we can assume they aren’t ignorant, then they are knowingly deceiving the community with this game of semantics. The bottom line is TIF can be badly abused (see Carmel) and the consensus of state legislators recognizes this.

  • Pauldivine

    They should be skeptical.  Ballard ran AGAINST TIFs in 2007.