Zionsville to share TIF revenue with school district

May 13, 2013
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UPDATE: As expected, the land deal closed May 23.

 

Zionsville’s cash-strapped school district could collect almost $5 million from the town’s tax-increment financing district over the next 15 years if an unusual land deal is finalized later this month.

Zionsville Community Schools plans to use $3.4 million from a 2005 bond issue to buy 91 acres of prime Dow Chemical Co. property along 106th Street, keeping about nine acres to house a new warehouse and maintenance facility and selling the rest for $3 million to the town, which will make payments to the school district through 2028.

Indianapolis-based Rockland Development LLC, which struck the original land deal with Dow, has exclusive development rights for the site. It expects the first commercial building to be complete in 2015, and construction should continue for at least five years.

Members of the Zionsville Redevelopment Commission authorized the property acquisition at a special meeting May 10. Closing is scheduled for May 23.

A financial analysis prepared by accounting firm Crowe Horwath estimated development on the site, located within a TIF district, will generate more than $1 million a year in additional property tax revenue once buildout is complete.

And the town has agreed to split that bounty with the school district, which has struggled financially in recent years due to state property-tax caps and a new school-funding formula.

If the projections—and time line—hold true, Zionsville Community Schools could receive more than $4.8 million in TIF proceeds over the life of the deal. (The Redevelopment Commission also will repay $3 million in principal, plus $2.3 million in interest.)

It’s a creative way to find additional money for the school district, which cannot use the 2005 bond proceeds for anything other than land acquisition and construction projects. Payments from the town, on the other hand, are likely to be directed into the schools’ largely unrestricted General Fund.

The Redevelopment Commission also hopes to see a return on its investment. The town has agreed to spend an estimated $1.5 million on infrastructure improvements and expects the developed property to sell for about twice as much as the raw land.

What’s your take on the deal?

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  • Good for community
    Great move by the town. Kudos for understanding the value of the schools. It is a lesson that town officials in Brownsburg don't have a clue about.
  • End Run
    I think its a misuse of the agreement set up by voters and another example of the school system spending money they dont have for land grabs and others deals instead of the kids. Regardless of what the end results are that was not what the 2005 bond was for.
  • I'm not yet convinced
    I have grave concerns about this shady, back room deal to use good bond money and invest it in a speculative real estate gamble to buy what is, effectively, a brownfields site, a good portion of the rest of which is still under IDEM-monitored remediation because of some bad stuff that is in the soils on this property. I would like everyone involved in promoting this sale to ask themselves two questions: 1) Would I happily have my child attend a daycare built on this land? and, 2) If I had the surplus millions that ZCS has, would I buy a site on this land when, for less money, I can buy better overall lots nearby? And the school's excuse that it needs 9 acres on this site for a maintenance facility, when the land is so far from any of the ZCS schools, is a load of hogwash to justify use of the ZCS bond money to fund the purchase of this land. If you really want to learn more about this real estate gamble, check out a blog called Eagle Eye On Zionsville (www.eagle-eye-on-zionsville.com)
  • Creative way to grow under restrictions
    The project uses the bond funds as set forth by its restrictions, but also yields income to general operating for the schools. Kudos for the creative ways to wring as many functions and dollars as possible out of one set of funds. Reminds me of an ancient story about ten talents (coins), and how different people either hid, squandered, or increased the initial investment. Looks like the latter in this case.
  • Questions?
    Didn't our property taxes go up in 2006 to pay for this bond? When will we see them decrease since the town has agreed to make the bond payments?
  • When will Zionsville wake up?
    A friend just shared with me the sales agreement between Dow Chemical and Rockland Development for this planned purchase. At the bottom of page 37 and the top of page 38 in the agreement, the parties are admitting that there is an environmental problem on 8.31 acres that needs to be remediated; they're just not detailing it. The irony, of course, is that these 8.31 acres are on the Remediation Area no. 1 land that, eight years ago, was declared clear by IDEM and resulted in then-Gov. Daniels signing a Covenant not to Sue on Remediation Area no. 1. (FYI, originally, about 100 acres was to be purchased in this deal. The circa 91 acres that will now be purchased under this agreement comprises the rest of the land in Remediation Area no. 1. The 8.31 acres are euphemistically referred to in documents as the "Adjacent Property." One might wonder what other buried problems might come to light on the rest of the "clear" 91 acres once development begins.) Here is what is in the sales agreement: "6. Seller shall have the obligation to remediate the environmental condition of the Adjacent Property after the Closing Date in a diligent manner to "regulatory required industrial risk based standards" as determined under the then current regulations by the Indiana Department of Environmental Management (the date on which such remediation is complete being referred to herein as the "Trigger Date")." So, they both know there is an environmental problem that needs to be remediated, but they are sufficiently unconcerned about it that they are willing to wait until the deal closes before remediation begins! Could it be that they don't want the sight of the equipment needed for remediation to appear before the closing because it might make people wonder what they're buying with this ZCS bond money? Are that many people potentially affected by this deal so somnambulistic that they have no problem with this whatsoever?

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