Despite opposition from cities and towns, the Indiana House passed a Senate bill Monday night that will mean more oversight of redevelopment commissions and force decades-old tax-increment financing districts to expire.
Senate Bill 118, approved on a 71-27 vote, is a victory for Sen. Luke Kenley, R-Noblesville, who for the past two years failed to get similar legislation through the House. The bill was authored this year by Sen. Pete Miller, R-Avon, and combined with related bills by Republican Sens. Greg Walker and Jim Smith.
The legislation will return to the Senate for concurrence.
The bill prohibits redevelopment commissions from issuing public debt greater than $5 million without approval from their local town or city councils.
“Senator Kenley feels strongly that when you’re making a significant obligation … you should have an elected official involved,” Miller said.
He said Kenley asked him last summer to carry a bill similar to one Kenley had filed in the past.
The Carmel Redevelopment Commission was the poster child for lax oversight until 2012, when the city passed a local ordinance that gave the Carmel City Council final say on the CRC’s spending. The CRC had issued millions in debt without council oversight, and the council ended up helping to refinance $184 million by pledging the local property-tax base.
Miller said the bill's limits on tax-increment financing districts caused "some heartburn" for cities and towns, including Greencastle, Brownsburg and Avon in his own district. There are 40 to 50 TIF districts around the state that were grandfathered into perpetuity by the existing statute. Under the bill, any TIF district created before 1995 now must be dissolved by 2025.
That means the incremental property-tax revenue that the districts captured for redevelopment will become available to local government units, such as schools and libraries.
“They just were never meant to be a perpetual funding source,” Miller said of TIF districts.
The bill contains an exemption for Indianapolis’ downtown TIF, Miller said, because it’s such an important economic-development engine. He added that Marion County has a history of sharing revenue from the downtown TIF district with local government entities.
Miller thinks the sunset date gives cities and towns enough time to leverage their pre-1995 TIF districts for one more round of debt.
“This gives them one more chance, if they want to make some investment in the next year,” he said.
Miller thinks the House passed his bill because members have realized that property-tax caps are eating into local-government budgets, contributing to school corporations’ inability to pay for bus transportation.
“This has taken a few years to crystallize in peoples’ minds. This is all interconnected,” he said.