New Allen County program hopes to entice private developers to fund public projects
Even privately funded factories, shops, hospitals and homes often require some sort of public expenditure on streets, lights, utilities and other forms of infrastructure. A new proposal is intended to bring more investment and jobs to Allen County by rewarding developers and businesses to bear the cost instead.
County Council on Thursday is expected to consider a program already approved by the county Redevelopment Commission that would reimburse developers for up to 70 percent of their public infrastructure costs using taxes generated by the projects themselves.
“This will help keep us competitive (in economic development),” said County Commissioner Rich Beck, who also serves as president of the Redevelopment Commission.
County Council has long issued tax abatements that gradually phase in property taxes on new buildings and equipment, with zero taxes owed in the first year and the full amount being due after 10 years or so. The new program, modeled on a similar initiative in Elkhart County, would offer an alternative form of incentive.
Participating developers in so-called tax increment financing districts could recover a portion of their infrastructure investments, with the amount determined by the type of development involved. Projects deemed to support “desirable” industries could qualify for 70 percent. Data and fiber operations could get 60 percent, robotics and automation operations 55 percent, commercial-retail projects and hospitals 50 percent, specialty insurance 45 percent and others, including small clinics and financial institutions, the minimum 40 percent.
The varying percentages are intended to prioritize the attraction of high-wage jobs, Beck said.
Developers participating in the program generally would not also qualify for an abatement, although a tenant could receive an abatement on personal property (equipment) taxes only. County officials could also make exceptions in large individual cases, Beck said.
Tax increment financing (TIF) districts capture property taxes generated by improvements in the area for use within the district. If the improvements did not generate the expected amount of tax within 10 years, Beck said, participating developers might not recover the full expected amount. But abatements pose some risk for developers too, he noted, because they can be rescinded if the expected investment and jobs do not materialize.
It’s not uncommon for TIFs to fund infrastructure improvements. The city of Fort Wayne, for example, will pay for about $1.4 million in “streetscape” improvements for the $35 million redevelopment of the Columbia Street “Landing” using taxes generated by the project. But this is the county’s first foray into an organized program of this type, Beck said. If projects seeking reimbursement are not located in an existing TIF, the county could create one, he added.
Developers and businesses would be responsible for obtaining all necessary permits and must obtain at least three quotes from contractors typically involved in public infrastructure construction.
Although the program has not officially begun, Beck said “a couple of projects” are already waiting to apply.