Tuesday, August 14, 2012

More TIF Craziness

The abuse of TIFs by municipal governments is in the news again today. Two school districts in Johnson County are upset by a decision of the Greenwood City Council to build a $10 million aquatic center using TIF revenues rather than conducting a public referendum and seeking taxpayer approval to levy a tax to pay for the project. Greenwood schools are particularly upset because the aquatic center is not even located within the TIF district from which the revenues are being tapped. The Star's Vic Ryckaert has the reaction from the schools:
"When cities and towns start finding loopholes like this for tax dollars, the legislature will close them pretty quickly," David Edds, Greenwood Community School's superintendent, warned. "I can't imagine that the legislature would let a city or town do an end-run around the referendum process." . . .
Kevin Caress, superintendent of Clark-Pleasant Schools, which is located within Greenwood's city boundaries, questioned whether the council's plan was legal because the pool would not be located anywhere near where the new tax revenues in town would be generated.
"Under the law that was changed in 2008, the physical location would have to be within the TIF district," Caress said. He said the school district, which would otherwise receive some of the TIF money, is considering its legal options in case it wants to block the council's move.
Ryckaert explains in the story how the aquatic center was killed after city leaders originally floated a bond issue back in 2009, which taxpayers successfully remonstrated against. School officials in Johnson County raise legitimate concerns about the use of a TIF in this fashion. The school officials worry about the TIF district continuing to exist in perpetuity as city leaders come up with new projects to fund, permanently depriving the school district of those revenues. Frankly, I've never understood why IPS has not spoken out publicly against the expanding TIF districts in Indianapolis that are decimating its tax base that seem to live on in perpetuity. The only explanation I can think of is that the district is represented by Baker & Daniels, which also represents the interests of businesses which seek subsidies financed with TIF funds.

In Indianapolis, Democratic councilors are upset that Mayor Greg Ballard is proposing to end the homestead tax credit for homeowners as a way of closing the budget deficit. Today, they suggested requiring the Capital Improvement Board to make a payment in lieu of taxes ("PILOT") on the sports and convention facilities, which currently pay no taxes. Some councilors were upset when the Ballard administration and the CIB decided to tap a downtown TIF district's revenues to help pay for a 3-year, $33.5 million subsidy to the Indiana Pacers. Neither the Pacers nor the Colts pay property taxes on The Fieldhouse or Lucas Oil Stadium even though the facilities are used exclusively for the for-profit benefit of the billionaire professional sports franchise owners. I've always believed that any public facility that is leased to a private concern for a for-profit purpose should be subject to property taxes. That's how I read the Indiana Constitution's limitation on property exempt from real estate taxes anyway. Because the stadium and fieldhouse aren't being used for a municipal purpose, they should both be taxed. Even the nonprofit Citizens Energy Group makes PILOT payments on its utility properties. If a nonprofit utility pays taxes, then why shouldn't the billionaires like Herb Simon and Jim Irsay have to pay property taxes on their for-profit, rent-free use of the sports palaces built with taxpayer dollars?


Jon said...

Gez, you can't expect billionaire sports team owners to be treated like regular folk!

marksmall2001 said...

TIFs are a means by which city officials can cover up holes in budgets. The TIFs act as slush funds that citizens---later and long after those officials have left office---must address. We need only look at Chicago, where Mayor Daley used TIFs as a slush fund.