City leaders insist Harrison Square financing is solid
http://www.fortwayne.com/mld/fortwayne/news/local/17073131.htm
From the article:
"The Jefferson Pointe Tax Increment Financing District will cover $25 million of the Harrison Square project. Another $25 million from the district will fund other improvements along the Jefferson Pointe-to-downtown corridor in the future."
"Richard said money would still be available for other projects, such as developing land north of downtown and the St. Marys River. A tax increment financing district has been created for the area, emcompassing the OmniSource property and the banks of the St. Mary’s between North Harrison and Clinton streets."
"On the agenda: Mayor Graham Richard’s administration will present council with a detail financing package for Harrison Square."
Ft. Wayne's Mayor Insists Harrison Square Will Help Not Hurt City Finances
Link
From the article:
"Richard is adamant that the city can contribute $20-million dollars of CEDIT income tax money to the downtown baseball stadium development and still have $19-million in uncommitted CEDIT dollars available over the next ten years to spur and support other economic development initiatives around town. "
Friday, April 13, 2007
HS Finance 101
Posted by brian spaulding at 4/13/2007 04:24:00 PM
Labels: CEDIT, Harrison Square, North River, TIF
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16 comments:
We've got to stop spreading TIFs all over town. At some point we're going to need extra money to fund government spending increases (see FWCS). If all the new development is tied up in TIF districts then there will be no choice but to drastically raise our property taxes.
The city is staring down the barrel of $1-1.5 BILLION in debt depending on the FWCS remonstrance outcome. So YES, we need development badly, but if all property taxes from the development are tied up in a TIF then it really doesn't solve the problem. Good politics is not always good public policy and vice-versa.
The mayor needs to address this at the council meeting...
Jeff - I'm in full agreement with your comments. I am repeating myself but here goes:
Per Indiana Code covering TIF which states, in regard to the fund generated by the excess property tax dollars, " When the monies in the allocation fund are sufficient to pay, when due, all the principle and interest on the bonds, and is not needed for other purposes stated in the declaratory resolution establishing the district, monies in the allocation fund in excess of that amount SHALL BE PAID TO THE RESPECTIVE TAXING UNITS in the same manner as general property tax revenue." In other words, since the bonds to be paid from the TIF district called Apple Glen and Jefferson Pointe, for the infrastructure improvements in that district, are apparently covered already by the excess TIF dollars collected, any future income is available for "general property tax-using units" - like our schools, our library,funding for pensions for our retired police and fire department workers, et al
What the city is trying to do is extend this special TIF district further than in already has. In 2005, by city council resolution, this TIF district was "gerrymandered" to include a narrow stretch of Jefferson Blvd. from the intersection of Illinos Rd.(Jefferson Pointe) to the Grand Wayne Center. This was done so that TIF dollars generated at Apple Glen & Jefferson Pointe could be used to pay off bonds issued covering infrastructure improvements at Grand Wayne.
Now on next Tuesday at the next City Council meeting, council will discuss and probably vote on resolution #2007-13 which is asking them to again extend this district to include the entire Harrison Square area. So the $25 million to $50 million in expected TIF revinue over the next 30 YEARS will not be available to pay city bills - schools, library, parks, city salaries, et al - so who gets to pay these with increased property taxes - all of us who live in Fort Wayne.
In addition, the other state law covering a CReED (Community Revitalization Enhancement District)also states that if any bonds are covered by the fund generated then the excess reverts to the state. This law covers State Sales & Income Taxes paid by those that shop there and those that work in the revitalized district.
As Jeff is warning - we could end up with a city where all of it's area is in a special district like these - and then who wioll pay the taxes to support it?
John K.
It depends on whether the property is privately or publicly owned. The retail, condos, and hotel, being privately owned, will still contribute to the taxing bodies. The excess will help pay off the project.
The ballpark and parking garage will not pay any property taxes since they will be publicly owned and will not contribute to the taxing units.
Money for the schools, etc. will still come from Harrison Square, just not from the publicly owned portions.
Scott - The only property taxes that will go to general use from the private areas, during the 30 year (I read 39 years in resolution 2007-13) life of the TIF district created will be determined by the "base amount" - the property taxes that would have been paid on the property had there NOT been the development.
You also did not understand that I am talking about the TIF monies coming from an area over 3 miles from Harrison Square - in my mind totally a unrelated area! John K.
Exactly John. The taxes will still go to the taxing units as if there were no new development. TIF districts are used in this way in order to maximize the amount of money that can be put towards a project.
However, since this is a catalyst project, the idea is that more money will be paid to taxing bodies from new development that occur as a result of the project. If investment occurs because of Harrison Square then those taxing bodies will actually get more money. Whether or not someone believes further investment will happen is their own opinion, but that is part of the reasoning for doing a catalyst project.
It's no secret that the TIF is being extended from Jefferson Pointe, either. I thought it was strange myself when I first heard that it was part of the same TIF. It's not exactly unrelated if you consider Jefferson to be a corridor into downtown.
Scott- You don't understand - Try this example:
The Harrison Square area presently, without the planned development, pays a total of $100 in property taxes per year. After development, general property taxes will still be $100 per year until the end of the period specified in the resolution or until the bonds are paid off ( or in this case, whenever the city stops asking council to extend tyhe TIF district elsewhere in Fort Wayne. What this means is that any property taxes over the $100 per year will flow to the fund from which the bonds principle and interest are paid, as outlined above. So, until the bonds are paid (original plus any added -like the ones planned for Harrison Square) NO ADDITIONAL PROPERTY TAX DOLLARS GO TO schools,parks, city salaries et al!!! John K.
Scott,
You're missing the point. The TIF district will last for 30 YEARS. Do you honestly believe there would've been NO development in 30 years? Because that's what the TIF district does - it encloses all that development.
And if you want to argue that it will be a catalyst for development outside the TIF then fine but where do you expect this development to occur? The city continues to EXPAND the TIF at every opportunity (see the latest river option) so exactly what areas outside the TIF will get developed?
John K is absolutely right - the TIF districts are NOT the way to go for a city that's facing crippling debt. We're going to put ourselves in a position where we have a revitalized city but no tax money to pay for anything.
This is an obvious outcome and I just can't believe people don't see it coming...
I'm not the one arguing that the project will spawn development outside of the TIF, that's the City's reasoning. It's not just new development adding to the tax flow, either. The City is trying to lure young workers (like myself) so that we also will expand the tax base with our salaries.
Contrary to what you might think, I agree with you about limiting the amount of TIF area that is created. I'm interested in seeing what happens with the north river development.
I don't know if many of our city council members are into this blog (they should be !), but I believe that our two medical doctors, Crawford and Hayhurst, should look at the ballpark at Harrison Square with their medical oath in mind - the part that says "DO NO HARM". Harrison Square as they are being asked to approve, WILL DO HARM to our community and will require many years to correct. John K.
I told Councilman Hayhurst about the blog the other night at the library but whether or not he's visited I don't know. Haven't gotten a chance to talk to Crawford yet. He might be checking already, who knows.
Scott - We need young people like yourself to join our city when they start to earn a living. I have been impressed by your initiative to establish this means for us to communicate on this subject. I have been involved for many years with our youth attempting to get them interested in choosing a technological career. This has been through such activities as the million dollars that area engineers and companies have given during Engineer's Week in February of every year for the last 50 some years in Northeastern Indiana, the Future City Competition for 7th & 8th grade students again in this same area, The local Society of Manufacturing Engineers support of the Regional Science & Engineering Fair held each year at your university, and I serve as one of the five members on the International SME Educational Foundation Scholarship committee ( this year we are awarding over $375,000 in engineering scholarships many to IPFW, Tri-State, Indiana Tech, Purdue, Rose-Hulman,et al engineering students.
I find it very difficult to believe that your decision could be affected by the lack of or existance of a downtown baseball stadium !! But then you say, "It's not about Baseball" - I hear you and hope you stay in our community. Whichever you do - good luck and God bless. John K.
Sure wish I could have gotten some of that money to help with my education, being a Computer Engineering Technology student and all :)
Scott,
For our city's sake I hope you get a job outside the TIF district! :)
Haha, good point Jeff!
From the city's website:
"The City is also developing strategies to meet police and fire pension fund obligations. There is no connection between downtown development and these obligations. By statute, geographic-specific funding tools, such as TIF funds could not be applied to resolve the public safety pension issue. The City of Fort Wayne is working to meet the pension fund obligations while still maintaining the sound fiscal health of the City. "
Scott - As some of us have commented, this lie that TIF monies can only be used in the geographic area is not supported by the Indiana statutes. Just look at the paragraph in the resolution that was presented to council last Tuesday (resolution 2007-13) that refers to this - "When suffucient funds are available from the TIF geographical area to pay off the principle and interest on the bonds, ANY REMAINING FUNDS WILL REVERT TO THE GENERAL PROPERTY TAX REVENUE ENTITIES - school district, et al. Our Common Council is the governmental unit that controls where the city's share of general property tax revenue is budgeted and spent. So, if all bonds for Apple Glen/Jefferson Pointe are covered and there will be $25 million to $50 million collected over that due to the TIF district designation (as Becker and Richard have been stating), then (if council does NOT approve the "gerrymandering" of the TIF district), funds will be available that, PER STATUTE, could be used to fund the pension shortfall. John K.
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