City to again maximize TIF dollars
Having opted for the first time last year not to leave any money on the table, the Greencastle City Council has again agreed to capture the maximum assessed value possible from the TIF (tax increment financing) district.
Asked to approve a Greencastle Redevelopment Commission (RDC) letter requesting $100 million as the amount of assessed value to be captured from the Greencastle Economic Development Area — the TIF district — for 2019 payable in 2020 the City Council instead chose in a split decision to capture the full 100 percent of the available AV.
In the 4-2 vote, councilors Dave Murray, Gary Lemon, Tyler Wade and Stacie Langdon voted in the affirmative, while Mark Hammer and Steve Fields cast dissenting votes.
While a vigorous discussion of the matter took up a large portion of the monthly City Council meeting Thursday, the motivation for the four Council members voting in favor of the measure seemed to be simple: Why leave money on the table?
It should be noted that the city and RDC are not taking an additional $50 million in cash (aka the increase in AV from $100 million to $150 million), as might be misconstrued. Instead, what is at stake is the captured tax increment off that AV.
That “money on the table” is likely to be in the neighborhood of $1.7 million in 2020.
Had the council voted to roll back to the $100 million AV level, it would have generated an estimated $2.8 million in TIF funds. At the estimated $150 million AV, there the TIF will instead generate an estimated $4.5 million.
No sooner had the $100 million proposal left Mayor Bill Dory’s lips than Murray offered the suggestion to capture the full amount.
”I’m going to move we capture the full rate,” Murray said. “It’s a $1.7 million difference.”
Lemon soon added his voice in favor of the same proposal, reminding his fellow council members the proposed community center is coming with a hefty price tag.
“We have a major project coming up where we can use this money,” Lemon.
While some borrowed money will no doubt be part of the financing for that project, minimizing debt would be ideal, Lemon argued.
“My parents grew up in the Depression and cash was always king,” he said. “This will reduce the amount we have to borrow.”
Some of the money will also be used for needed infrastructure projects.
“There are a bunch of infrastructure projects that are out there,” Murray said.
Through the use of TIF, municipalities can typically divert future property tax revenue increases from a defined district -- like Greencastle’s industrial area on the East Side -- toward public improvement projects within the community.
The money from the captured AV has allowed the city to do things like reconstructing the road past the high school and middle school (Percy L. Julian Drive) to the tune of $1.2 million, along with the roadway next to Crown Equipment (Edgewood Lake Road) and the current widening of Indianapolis Road to three lanes with sidewalks, from east of the main Kroger entrance to Percy L. Julian Drive.
However, the restrictions on what the money can be used for prompted one of the arguments against capturing the maximum.
Fields noted that capturing 100 percent through TIF will have the counter-effect of limiting what the city collects through its regular tax levy.
This happens because it will make more properties hit their tax caps, therefore limiting the amount collected.
The estimate is that it will cost the city $300,000 in its 2019 budget. While a smaller amount, those dollars are far less restricted in their use.
“We have more flexibility and freedom,” Fields said. “In other words, we’re paying for our flexibility.”
At this, Dory, who presented the RDC suggestion without offering his own opinion Thursday, noted that a bill was drafted in the Indiana General Assembly this spring that would have allowed up to 15 percent of TIF dollars to be used for maintenance purposes.
“If you could find a way to get that TIF money over to the other funds, that would be great,” Clerk-Treasurer Lynda Dunbar said.
However, Dory believes it may take a couple more years for the proposal to become law.
“I wouldn’t bet on the state to give more money to local government,” Wade said to a round of laughter.
Regardless of any of this, Lemon did not find the six-to-one tradeoff to be worth it.
“What we’re going to do is give up $6 in TIF money to get $1 in city money?” Lemon asked. “We’re giving up $5.”
Another argument came in what capturing maximum AV for this year did to some property tax bills.
While Lemon has previously stated that tax rates would not increase, Hammer said he had seen an increase in property taxes at all three properties he owns, adding that he had heard this from others.
“I think it’s a pretty severe hit for some people,” Hammer said.
Other council members said they had not seen an increase in their tax rates, having long since hit the state’s one-percent property tax cap on residential properties and its two-percent cap on rentals.
Prior to taking the maximum amount, another argument had been that it would hurt other entities such as Greencastle Community Schools. Langdon asked what the effect had been and Murray said it was small.
Superintendent Jeff Hubble was in the audience and did not argue with Murray’s characterization.
One question that remained following the vote was from Fields, who asked if the decision could be changed. Dory said the wording could be changed.
This echoed an earlier statement from Murray, who noted that the community center project is not a sure thing. He suggested that if the project somehow stalls, the rate could be reduced.
“I urge the council to adopt the 100 percent,” Murray said, “and we can back it off if we need to.”