NEW ALBANY — With General Mills expected to close the Pillsbury plant in the next 18 months, New Albany officials are already discussing ways to lure another company to the site.
The property — located off Grant Line Road — doesn’t sit in a tax-increment financing district, but that doesn’t mean TIF can’t help improve infrastructure around the plant.
The Grant Line TIF district does touch areas adjoining the Pillsbury property, and that means the city could, for example, foot a project to improve access to the site via Green Valley Road utilizing TIF funds to make it more attractive to another company.
This was a discussion recently held by the New Albany Redevelopment Commission, which oversees the city’s seven TIF districts. Though only two of the five members of the board are elected — as a pair of New Albany City Council members sit on the body alongside three mayoral appointments — the commission holds the purse strings that fund some of the biggest projects in the city.
Mayor Jeff Gahan’s administration, with the backing of the redevelopment commission, is utilizing TIF districts to pay for an aquatic center and Silver Street Park.
Before Gahan, Mayor Doug England called on TIF to finance projects like the improvements to Daisy Lane, and even to subsidize sewer rates.
But does the commission have too much power considering it’s largely an appointed board?
“Are they doing things outside their boundaries? I don’t think so,” said Councilwoman Diane McCartin-Benedetti, who has served previously on the redevelopment commission.
“Should some of their powers and duties be looked at more and vetted more to the citizens? That’s a possibility.”
Most officials agree TIF funds are a valuable asset; however, how they should be used, and who should manage them are sometimes points of contention.
Dan Coffey and John Gonder are the council members serving on the commission. Coffey recently said the city would be severely hampered in terms of the projects it could afford to complete without TIF funding.
But state leaders have suggested curbing the lives of TIF districts and limiting bonding ability for TIF loans, and some researches have called for a review of the system in Indiana.
A CRITICAL EXAMINATION
A study released in January by the Ball State University Center for Business and Economic Research, or CBER, suggested TIF districts are “not an economic development tool, but a county budget management tool.”
The CBER examined the use of TIF statewide from 2003 to 2012.
TIF districts have higher tax rates than non-TIF areas and regularly have negative impacts on sales tax revenue and employment, the study found.
“The nature of these results implies that while the average TIF has no meaningful impact, there are undoubtedly some with positive and some with negative effects on their counties,” the researchers stated in the report.
The CBER called for the state legislature to review TIF districts and limit their use to counties that “exhibit at least minimally effective fiscal management.”
Municipalities lacking adequate Rainy Day funds and weighed down with unfunded pension liabilities should be precluded from using TIF, the CBER suggested in the study.
But administration officials believe New Albany’s in a strong financial position.
Without collecting another dollar, the city could pay its TIF obligations for the next seven years based on existing cash, said David Duggins, director of economic development and redevelopment for New Albany.
MANY DREAMS, FEW PROMISES
Improvements to Slate Run Road, sidewalks along Captain Frank Road and an extension of Graybrook Lane — several projects that have been priced and discussed by the city, but many have yet to garner contractual commitments.
New Albany had $18.1 million to begin the year in its TIF account, and is expected to take in another $5.1 million in 2015.
The annual TIF revenue exceeds New Albany’s yearly TIF debt by more than $3.1 million, according to figures provided by the city.
With seven districts in the city, some have questioned whether New Albany has too many TIF zones. Duggins said he’s comfortable with the city’s TIF boundaries.
“It allows us to capture the new tax increment in the areas to complete capital projects and provide maintenance to our infrastructure,” he said.
STRONG BOND RATING
Standard & Poor’s Rating Services raised the New Albany Redevelopment Authority’s long-term bond rating from A to A+ in December 2013, which was after the council and redevelopment commission signed off on a $19.6 million loan to build Silver Street Park, the outdoor aquatic center and upgrade Binford Park.
The rating is in effect for two years.
“The stable outlook reflects our view that the city will maintain its strong budgetary flexibility and very strong liquidity, and continue to benefit from its participation in the Louisville-Jefferson County Metropolitan Area economy,” said Standard & Poor’s credit analyst Anna Uboytseva after the rating increase.
TIF ON THE RISE
Statewide, the CBER study found the next assessed property values within TIF districts increased from about $10 billion in 2003 to more than $19 billion in 2012.
Aside from the Grant Line district, which is the oldest and set to expire in 2031, the bulk of the areas included in New Albany TIF districts are dedicated until 2038.
The Grant Line TIF was declared in 1989. The State Street TIF followed in 1993, and the Park East TIF was established in 1994.
The Loop Island district is New Albany’s most recent TIF zone, as it was established in 2008 when the city believed portions of the area would be developed for residential use.
Most of the city’s TIF districts were amended in 2008 and their lives extended until 2038. Whether New Albany will be allowed to extend the duration of its TIF districts again could be decided by the state.
“We are actively monitoring the legislature and the pending TIF legislation,” Duggins said. “After the session, we will discuss with the [redevelopment] members and proceed with the best course of action that shows good stewardship of the collections and allows us to continue to complete needed capital projects.”