The Cost Of TIF Districts

Fellow blogger Pat Andrews is doing yeoman's work as usual at her blog producing information about the horribly unfair taxing policies implemented by the City of Indianapolis for the sake of economic development. Indianapolis/Marion County now has 40 TIF districts and the Ballard administration is trying to start up even more TIF districts. The combined assessed value of the TIF districts represents $4.81 billion. Taxing districts included within the TIF districts are allowed to collect taxes currently on only the base assessed value, which is suppose to be determined at the time of the creation of the TIF district. According to figures Andrews received from the county auditor's office, the base AV for the 40 TIF districts in Indianapolis/Marion County is $1.45 billion. That means the taxes paid on the $3.2 billion representing the incremental increase in TIF district's AV is captured by the respective TIF districts, which totals more than $90 million in annual property tax revenues. Note that those figures don't include property taxes the taxing districts lose from property tax abatements that may be awarded to businesses and homeowners within the respective TIF districts.

What comes as a total surprise is Andrews' discovery that the base AV for TIF districts can actually decline rather than being frozen as we've always been told it is. Naturally, the base AV of a TIF district won't increase during its lifetime, but one has always assumed it would not drop either. Yet as property assessments have fallen across the county, so has the base AV upon which taxes are assessed for the other taxing districts within the taxing districts even though total AV within the TIF districts grew. According to the most recent figures gathered by Andrews from the auditor's office, all 40 TIF districts combined represented $203 million in real AV growth. At the same time, however, the base AV within the TIF districts fell by $43.4 million. This problem as Andrews notes is further exacerbated by the fact that TIF districts are never retired as they were intended when they were originally created. Instead, new projects are constantly being concocted to continue their life seemingly in perpetuity.

Remarkably, Andrews learned that the base AV in 15 of the TIF districts has actually sunk to zero, which suggests an erosion of the base AV has occurred over a number of years. Andrews notes that two of those 15 TIF districts with zero AV base entailed all government-owned property, which explains the zero AV base, but it does not explain the zero base AV for the other TIF districts. So under the rules of TIF districts the base AV may never increase but nothing prevents it from being decreased all the way to zero, which results in no tax revenues flowing to the affected taxing districts. What this all means is just more tax shifting to the rest of the taxpayers. Those of us who don't enjoy the direct benefits of the projects undertaken within TIF districts are required to pay higher property taxes to support basic governmental services such as police, fire, streets, sidewalks, schools and welfare services.