In an effort to bring economic development to southeast Kokomo, the city’s redevelopment commission Wednesday gave final approval to a recently proposed Tax Increment Finance district.
The TIF district – endorsed by the Common Council on Jan. 25 – will utilize tax revenue generated from two Fiat Chrysler Automobiles plants as funding for future economic development in the area.
Once recorded with the proper local and state agencies, the TIF will be in full effect, according to city attorney Beth Garrison. While the city will receive its first revenue this year, no plans have been finalized in relation to how the money will be spent, she added.
“What we want to do is generate more revenue to do more work in the district to attract more businesses to come to Kokomo and hopefully set up and bring jobs,” noted redevelopment commission vice president and Common Council member Mike Wyant.
While TIF districts have sometimes garnered controversy among schools, county officials and other governmental entities, Wyant said the TIF district was a necessary step for city officials.
“If you don’t put your foot forward, you never know what they could do,” he said. “So let’s put our foot forward and see how this works. And if it works, it is a big plus for Kokomo and this district.”
For funding, the TIF will target FCA as the designated taxpayer, specifically the Kokomo Transmission Plant and Kokomo Casting Plant, both of which will make up the TIF’s allocation area.
With the allocation area providing the economic development funding, the rest of the TIF, known as an economic revitalization area, will benefit.
In effect, any growth in assessed value, and subsequent tax revenue, developed in the allocation area after March 1, 2014, will be captured by the redevelopment commission and dispersed as economic development funding.
Much of the motivation for the TIF came in December 2014, when FCA announced plans to invest $266 million in new manufacturing equipment in Kokomo, which allows the company to expand production of its 8-speed transmissions at the two plants in the allocation area.
To assist the investment, the Kokomo Common Council unanimously approved a 10-year tax abatement on personal property taxes for the equipment, which is expected to be completed by February 2017, according to Garrison.
While Garrison acknowledged the tax abatement could limit the TIF's tax revenue, she said it is likely to still be valuable for the area.