IBJOpinion

HOLIFIELD: Build consensus before building facilities

Jerry R. Holifield
February 6, 2010
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When Indiana’s property-tax uproar reached a fever pitch several years ago, new schools and other public-facility projects became lightning rods for taxpayer anger. Responding to a perception that school districts and other local government bodies were building facilities that were too large, too expensive or otherwise inappropriate, the General Assembly enacted legislation requiring a referendum process.

Not only have the new laws slowed public-facility construction; they appear to have pushed the pendulum all the way in the other direction, bringing construction to a grinding halt. Only a handful of building projects have earned permission from voters, leading other local officials to delay or consider abandoning much-needed projects.

Avoiding building projects certainly keeps property taxes lower in the short run, and lower taxes appeal to taxpayers. But failing to pursue sensible, needed projects will ultimately hurt communities more than temporary tax increases. Delaying needed projects can cause a deteriorating environment, overcrowding and pushing the physical plant beyond reasonable wear and tear. Because construction costs nearly always rise over time, once the improvements are eventually made, they are likely to be far more costly.

Additionally, whether a referendum succeeds or fails, the intense battles surrounding the vote can leave long-lasting scars in communities. Failed referenda may derail economic development efforts and dissuade potential residents from buying or building homes. Instead of viewing the results as a response to a tax issue, outsiders may come away with the impression that the community doesn’t value education or other municipal services.

In the past, it wasn’t unusual for school districts and other local governments to take a “trust us, we’re the experts” attitude, dictating projects to taxpayers who had few ways to object. With the referendum process in place, the voters are now the decision-makers, and school superintendents and other local government officials must be aggressive about involving them in the process.

The most effective and productive way to do that is to pursue true collaboration in every step of the decision-making process. Public relations strategies such as convening a citizens’ committee to take the heat for a controversial project aren’t the answer. Instead, school districts and other local governments must work with constituents to discuss needs, identify trends, explore alternatives and reach consensus on the best course of action long before anyone starts to think about buying land or designing facilities.

Not only is this approach more responsible to communities and taxpayers, it increases the likelihood a referendum will succeed. If voters truly understand the underlying needs, see that their concerns have been addressed, and recognize that the proposed solution is the most prudent approach, they’ll be far more likely to support it in the voting booth.

Carefully planned projects that meet current and anticipated needs are critical to the future economic health of Indiana communities. But local projects will succeed only when they are understood and championed by local people. In turn, that will happen only when school superintendents and other local officials embrace the importance of truly engaging the community and listening honestly and effectively.•

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Holifield is president of FAIR Inc. (FAIRIndiana.org), a not-for-profit organization dedicated to encouraging collaborative decisions about public facilities. He can be reached at jholifield@FAIRIndiana.org.

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  1. The $104K to CRC would go toward debts service on $486M of existing debt they already have from other things outside this project. Keystone buys the bonds for 3.8M from CRC, and CRC in turn pays for the parking and site work, and some time later CRC buys them back (with interest) from the projected annual property tax revenue from the entire TIF district (est. $415K / yr. from just this property, plus more from all the other property in the TIF district), which in theory would be about a 10-year term, give-or-take. CRC is basically betting on the future, that property values will increase, driving up the tax revenue to the limit of the annual increase cap on commercial property (I think that's 3%). It should be noted that Keystone can't print money (unlike the Federal Treasury) so commercial property tax can only come from consumers, in this case the apartment renters and consumers of the goods and services offered by the ground floor retailers, and employees in the form of lower non-mandatory compensation items, such as bonuses, benefits, 401K match, etc.

  2. $3B would hurt Lilly's bottom line if there were no insurance or Indemnity Agreement, but there is no way that large an award will be upheld on appeal. What's surprising is that the trial judge refused to reduce it. She must have thought there was evidence of a flagrant, unconscionable coverup and wanted to send a message.

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  5. http://www.abcactionnews.com/news/duke-energy-customers-angry-about-money-for-nothing

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