Opinion and Editorials

EDITORIAL: Time to put TIFs in the spotlight

February 25, 2012

So-called TIF districts have been a powerful economic tool for Indianapolis mayors from both parties for decades. They’re one of the reasons Indianapolis’ vibrant downtown is the envy of many other Midwestern cities.

The city now has roughly two dozen tax-increment-financing districts. Additional property taxes on new developments within their boundaries go toward paying off debt issued to pay for roads, sidewalks and new buildings.

TIF proponents argue that the new private-sector developments—from the JW Marriott downtown to the Dow AgroSciences expansion on the northwest side—wouldn’t happen without the incentives. So, they reason, the units of government normally in line for property tax dollars wouldn’t have gotten the money, anyway.

We don’t quibble with any of that. But we have grown uneasy that tens of millions of dollars now course through these districts in a process that’s largely invisible to the public. It isn’t even clear how well the overall strategy is working, since individual TIFs’ revenue and expenditures aren’t tracked in a comprehensive manner.

That’s why we embrace Democratic City-County Councilor Brian Mahern’s recently unveiled proposal to form a study commission to examine the effectiveness of TIF districts, how property tax caps will affect them, and ways to increase their transparency.

The Mayor’s Office has embraced the review—as long as it does not put the brakes on economic development efforts. That’s an understandable concern, but we’re willing to sacrifice a little speed in the interest of ensuring the city’s TIF strategy is on the right track.

Timing is important in real estate development. But the ongoing economic recovery suggests opportunities for creative projects are going to be increasing, not waning. We’re pleased that Mayor Greg Ballard and his team have an ambitious agenda and are racing ahead to achieve it. But more introspection about how and when to use TIF districts could pay off for the city in the long run.

The first project down the pike isn’t always best. Consider the plan Mayor Steve Goldsmith assembled for the northeast corner of Washington and Illinois streets in 1999, just before he left office. He backed an $11 million, two-story project that would have included a Barnes & Noble bookstore, an Italian restaurant and another restaurant or retailer.

Fortunately, the new mayor, Bart Peterson, had grander ideas for the site, perhaps the best undeveloped parcel in the entire state. He sealed the deal that led to construction of the 23-story, $100 million Conrad Indianapolis hotel there.

It’s exciting that real estate activity is picking up again. Developments like the Marsh-anchored mixed-use project recently announced for Michigan Street and Capitol Avenue will give a major boost to downtown. (The $85 million cost includes $11 million in TIF funds.)

As activity increases, there will be more choices for the city to make about which deals to grease with TIF money. City leaders need to come to the negotiating table with a greater understanding of how projects fit into a larger strategy, and with an increased commitment to making the whole process transparent and understandable for the public.•

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