On the web
The city has put up on its website “TIF Questions and Answers,” which is a transcript from a question-and-answer session with the redevelopment commission on the city’s website, www.jasperindiana.gov, in its “Document Center” under the “Online Services” tab.
The City of Jasper is looking to establish a tax-increment financing district in the city, and the possible move brings an abundance of questions.
An Indiana University professor says TIF districts can be good or bad, depending on how they are managed and if those in making the decisions can be trusted. In Huntingburg, the town clerk-treasurer says TIF areas formed in 1990 have benefitted the city.
Jasper is considering a TIF district that would run on the east side of the city and move west and south to straddle south U.S. 231 and includes northeast side to 36th Street, the core downtown area and land on the south side of the city on both sides of U.S. 231 to the city’s southern boundary.
The Jasper Redevelopment Commission approved in November a declaratory resolution to create a district, thus starting the process to establish the district. Various officials and residents have since questioned the need for the proposed district, how the funding would be used and who would make those decisions, and the TIF’s impact on other taxing entities that would receive revenue from the new developments if the district is not established.
“The idea behind a TIF is to collect new revenue in a particular area that you want to redevelop, and use the money to improve that area,” said Frank Nierzwicki, a professor at IU's School of Public and Environmental Affairs. “If you have area that’s blighted and needs redevelopment, establishing a TIF district for that area could help encourage new development. The tax revenue from that (new) development would be used for improvements in the TIF or on (improvements) that benefit the TIF district.”
Nierzwicki said the TIF process was structured by the state Legislature to ensure other taxing entities do not lose substantial revenue with the establishment of a district.
“If there is any growth in the area, (affected taxing entities) will lose that growth of tax revenue. But they would receive the benefit of additional assessed valuation that could come in that district from increases in market values,” he said. “If you make improvements in the district, you make that area more valuable, and that affects market values.”
The county assessor’s office adjusts assessed values based on market values annually.
“TIFs can be good for the city or it could be bad. It depends on how they are managed,” Nierzwicki said. “You have a redevelopment commission, and that is made up of local people. If you trust the local people to make good decisions, it can be a positive for the community.”
The redevelopment commission has authority and can use the money for “pay as you go” projects that are consistent with the city’s economic development plan would be eligible. For larger projects where bonding would be the preferred method of funding, the commission would be required to work with the city council for approval. In those instances, the redevelopment commission would begin that process, but the council would also have to approve it.
Huntingburg has had TIF districts since 1990 and they have benefitted the community overall, Clerk-Treasurer Tom Dippel said. Huntingburg has five TIF districts — four in the industrial northwest quadrant of the city and one that encompasses OFS Brands’ corporate office on the city’s east side.
The county has a TIF district that adjoins one of the city’s districts at County Road 400W.
Over the years, money captured in the TIF has been used to construct and resurface streets, install and improve utility lines, upgrade the city’s warning sirens and improve department buildings such as moving the street department out of a flood plain.
Future projects that will use TIF funding include expanding the police station and the 11th Street fire station and the 10 percent the city needs to contribute to the $8.6 million cost for the Indiana Department of Transportation to install a railroad overpass along Styline Drive west of U.S. 231 and north of State Road 64.
This year, the city’s TIF districts captured almost $1.4 million, which came in two installments.
Of the $61,450,320 in total assessed valuation currently in those TIF areas, the TIF captures $47,511,482. If the TIF districts weren’t in place but the new developments did happen, the city would’ve received about $535,900 for its budget, the Southwest Dubois School District about $217,600 and the county about $159,400 from the additional $47,511,482 of assessed valuation.
“But that is assuming the new development was there,” Dippel said. “If the improvements hadn’t been made in the districts, there is no guarantee those new developments (and the new assessed valuation they bring) would be there. And if they weren’t there, no one would get any of that (new revenue).”
If the entities’ budgets increase, the tax rate would increase; that’s normal no matter if new developments exist.
Randall Pollard, assistant professor of business law and taxation at Indiana University’s Kelley School of Business, said that in theory, the TIF district should not impact the current tax revenue entities receive. If an entity’s budget increases, the amount of assessed valuation that had been used prior to the TIF district being established stays the same. That would cause an increase in the property tax rate, but the entity’s budget that was approved by the state would be funded, he said.
“For a TIF, what the city will do is take the (new) increment — the property taxes above the current level — and use that to finance improvements to infrastructure or finance debt from that area.”
Pollard referred to the level where the assessed valuation is frozen for generating tax revenue for all taxing entities as the baseline assessed valuation.
The length of the TIF could be dependent on the length of debt payments, he said.
“TIF financing can be used to pay bond debt for a project done in the TIF district. It could help fund a school project, if that (project) benefits the district. Bonds tend to be 20 or 30 years long. With the promise of new business, the city can predict how much they will get from that TIF to cover those bonds.”
But, the district must have a guarantee that the new development will be done in the district first.
“If you don’t get money over that baseline, you don’t have anything to put in the TIF,” he said.
On Wednesday night, the Jasper Common Council will consider approving the establishment of a TIF district in the city. That meeting will begin at 7 p.m. in the council chambers on the second floor of Jasper City Hall, 610 Main St.
If the council does approve, the Jasper Redevelopment Commission will hold a public hearing and consider a confirmatory resolution to establish the district at its January meeting. The meeting, which is usually in the morning, will likely be moved to the evening to allow more input at the public meeting, Jasper Mayor Terry Seitz has said.
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