KEVIN LEININGER: Use of special tax districts deserves more scrutiny than it usually gets
Since deadlocking 3-3 last month on a proposal to pay for $1.4 million in street improvements near the Parkview Regional Medical Center with property taxes generated by improvements in the fast-growing area, members of Allen County Council have been lobbied hard to back a plan supporters insist will protect public safety and promote even more economic development on the city’s north side.
The persuasiveness of the arm-twisting could be known as soon as next week, when council is scheduled to hold a public hearing on the plan during its 8:30 a.m. Thursday meeting. Should all seven members show up — Robert Armstrong was absent May 16 — another tie is unlikely. In fact, I suspect passage is likely, meaning the area near Dupont and Diebold roads and Parkview Plaza Drive will soon be equipped with new turn, traffic signals and other features designed to improve traffic flow.
But should it pass? That’s the question, and the answer has nothing to do with the obvious legitimacy or necessity of the improvements in question.
At issue here is the proper use of so-called tax increment financing districts, or TIFs, which allow property taxes generated by improvements in designated areas to pay for infrastructure or other improvements within the district. TIFs can be a valuable economic development tool, and even though they are occasionally abused (Fort Wayne used TIF revenue to make about $1 million in repairs to Citizens Square elevators in 2012 and earlier this year a St. Joseph County township wanted to pay for a fire truck that way), local officials have generally been judicious about their use.
Even so, the use of TIFs does not always get the scrutiny it deserves because the practice is not without risk. Twice in the last month, in fact, I have reported complications connected to two different TIFs. The failure of the $55 million Maplecrest Road extension to attract the expected amount of tax-generating growth to the corridor forced officials to tap other sources for the money needed to repay the $25 million construction bond and is one reason Allen County is considering an increase in bridge taxes now. Just a few days later the city’s Redevelopment Commission agreed to provide up to $3.5 million in TIF revenues to pay for private street improvements as part of a $16.6 million upgrade of Jefferson Pointe shopping center.
Why? At least in part because Jefferson Pointe anchors a TIF that was used to fund Parkview Field and other downtown redevelopment projects. If Jefferson Pointe languishes, the TIF’s $3.8 million annual revenue stream could be jeopardized, potentially risking a Maplecrest-like shortfall.
It’s not a potential lack of funding that concerns Allen County Auditor Nick Jordan about the proposal for the “Dupont-Diebold” TIF near Parkview. On the contrary, the TIF is generating $200,000 annually — more than enough to repay $1.4 million in bonds by 2043. In fact, as the County Redevelopment Commission noted when it approved a development plan for the area in 2017, the district, which includes 6,250 employees on Parkview’s campus, “represents one of the most significant employment centers in Allen County.”
That’s a good thing, to be sure, and so is the growth that is expected to continue well into the future. But as Purdue University’s respected Larry DeBoer noted in a 2016 analysis, “Indiana law now makes it clear that TIF is intended to fund infrastructure to promote development that would not occur but for the added infrastructure financed by the TIF revenues . . . if TIF used when development would have happened anyway, the overlapping units (of government) lose revenue.”
Jordan contends the rapid growth that has occurred near Parkview for the past several years prove the TIF-funded improvements are not needed to spur development. “I think you will have a significant difficulty arguing that the private investment will hold out until you make a move,” he wrote in a letter to Redevelopment Commission President Richard Beck last year.
Jordan said the county doesn’t need TIF to reimburse Parkview for the improvements it will pay for initially. “I am more and more of the mindset that we are stretching the TIF intent, especially when our highway fund hasn’t dropped below $4 million in 10 years and the (economic development income tax) fund hasn’t dropped below $7 million.” Using TIF would mean other taxing units, especially the Northwest Allen County Schools, would lose revenue unnecessarily, Jordan added.
Beck, who is now also one of three County Commissioners, called the improvements “critical. We have three accidents a week at that (Dupont and Diebold) intersection.” Fellow Commissioner Nelson Peters, meanwhile, said much of the county’s reserve cash is earmarked for other projects and said the TIF plan will prepare the area for additional growth “at no loss to the taxpayers.”
Last month some council members said they opposed using TIF in part because of Parkview’s tax-exempt status, while Sharon Tucker — the seven-member body’s lone Democrat — said TIFs are intended to improve blighted areas, not areas exploding with activity. But the commissioners and others have since pointed out that, although some Parkview property is indeed tax-exempt, the group also pays $3.3 million in property taxes annually in Allen County. Nor do TIFs any longer target only blighted areas, according to county attorney William Fishering.
But Jordan’s point remains a good one, and council should give it due consideration because TIFs aren’t going away. In 2013, Jordan said, the assessed value of property within TIFs in Fort Wayne and Allen County was $965 million, 54 percent of which was available for projects. Those numbers have since jumped to $1.2 billion and 65 percent, respectively.
This column is the commentary of the writer and does not necessarily reflect the views or opinions of The News-Sentinel. Email Kevin Leininger at email@example.com or call him at 461-8355.