Property owners across the state have picketed and protested after seeing tax bills skyrocket this year.
But the same factors causing homeowners to cringe may also have kept the Harrison Square development from being scrapped.
Property trending, rising tax levies and other factors allowed the city to keep the project alive even after a key component – the private investment in a downtown hotel – was slashed. Yet there is still a chance a tax appeal from the owners of Jefferson Pointe could put the project’s promised financing in jeopardy.
The $120 million downtown development is financed from an almost even split of public and private investment. The development includes a $35 million Courtyard by Marriott with parking garage, new condominiums, new retail and a $30 million city-owned baseball stadium. Mayor Graham Richard has long promised that the project can be done without using any general property taxes.
To do this, the city structured a deal that includes public money from a variety of other sources. The primary sources of public money are income taxes, property taxes generated by the project itself and property taxes generated by the Jefferson Pointe area.
Yes, that Marriott Hotel involves the same hotelier Indianapolis is offering a $65 million subsidy to build a new hotel next to the Indiana Convention Center--White Lodging Services. As Lanka's story notes, White's decision to downsize the size of the hotel would have sent the entire project into a tailspin but for the new taxes the city is getting from higher assessments and higher tax levies. Harrison Square sits in a tax increment finance (TIF) district, which saw its total assessed value increase by $41 million this year, allowing the city to capture $42 million in tax revenues over the life of the project. Much of those new-found revenues are coming from nearby Jefferson Pointe, which is contesting the tax assessments. The project will face a shortfall if Jefferson Pointe succeeds in challenging its assessment, which increased from $27.6 million to $64.3 million. That's more than a 100% increase!
In an interesting side note, Lanka quotes the city's consultant on the project, John Stafford, who is the same person Gov. Daniels appointed to his commission to study reforming local government financing. Lanka writes, "John Stafford, a consultant for the city on the project, said it would have been next to impossible to keep that promise [not to use more than half of the revenues from the TIF district] without the increased taxes." "It certainly would have been very difficult," he said. In other words, Stafford thinks it's just fine that other taxpayers have to pick up the tab so a billionaire like Dean White can get a massive public subsidy for building a new hotel in downtown Fort Wayne, just like he got in Indianapolis.