City Government and Greg Ballard and Economic Development Incentives and Opinion and City-County Council and Tax-increment financing and Editorials and Government & Economic Development and Government and Economic Development

EDITORIAL: Time to break TIF logjam in Indianapolis

August 11, 2012

When City-County Council Democrats early this year launched the tax-increment-study commission, we praised their efforts to bring some big-picture thinking and transparency to the widely used economic development tool.

But enough already. The commission began its work in March. It issued recommendations three months later. And now Steve Talley, the Democratic council member who chaired the commission, is preparing to submit proposals mirroring those recommendations for council consideration.

As that plays out, Republican Mayor Greg Ballard’s proposal to expand the downtown TIF languishes before the council. As IBJ reported last week, it’s been eight months and counting—a delay Ballard aides say could jeopardize pending economic development projects, including the redevelopment of the Massachusetts Avenue fire station.

Five development teams submitted bids on the project in November, and the city narrowed the field to three this spring. The bidders won’t wait forever, mayoral aides say.

The delay expanding the downtown TIF also could bog down another high-profile project—downtown apartments anchored by a Marsh grocery story—as well as efforts to create a high-tech corridor along West 16th Street.

We don’t quarrel with Democrats’ cautious approach to using TIFs, which capture increased property-tax revenue generated by a project to cover the cost of infrastructure or other government spending.

Democratic Councilor Brian Mahern argues that continuing to make TIF districts the tool of choice for economic development will choke off revenue that’s already declined since Indiana capped property-tax rates.

As Mahern told IBJ’s Kathleen McLaughlin, “It’s not something you immediately run up and break the glass and use. It has long-term implications.”

Republicans view things differently, arguing that using TIFs don’t cost other units of government a dime since the projects never would have occurred without the incentive.

Talley, chairman of the council’s Metropolitan and Economic Development Committee, plans to introduce his package of TIF reforms Aug. 13. They include putting a sunset date on the downtown TIF and requiring a cost-benefit analysis as part of all TIF project recommendations.

Let the debate over TIF reforms rage, but not at the risk of derailing potentially transformative Indianapolis real estate projects.

Democrats, who gained control of the council in the last election, understandably want to flex some of their newfound political muscle. But they shouldn’t do so by holding hostage pending projects clearly beneficial to the city.•

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To comment on this editorial, write to ibjedit@ibj.com.

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