NEW ALBANY — While some city leaders touted the health of New Albany's tax-increment financing districts Tuesday, State Rep. Ed Clere warned spending TIF dollars on projects such as an aquatic center could leave taxpayers "swimming in debt."
New Albany Redevelopment Commission members received an update on TIF districts during a meeting, as the funding mechanism has been used to foot major projects in the city including a $19.6 million bond to construct River Run Family Waterpark, Silver Street Park and for upgrades to Binford Park.
At the end of 2014, New Albany had about $18 million on hand in its seven TIF districts.
"Our TIF [districts] are far healthier now than they were 10 years ago," said Dan Coffey, a member of the redevelopment commission and a New Albany Councilman.
Once the city incorporates land into a TIF district, property taxes are frozen at the existing rate. From that point forward until the TIF district expires, which typically takes 15 to 20 years, any additional property taxes above the frozen rate are allotted to the city.
But in an interview with the News and Tribune Tuesday, Clere, R-New Albany, expressed concern about how TIF funds are being spent in New Albany.
TIF funds were initially meant to be used for basic infrastructure improvements, and Clere questioned whether building an aquatic center and a new park were wise choices.
"We have to be mindful of New Albany's future needs, and make sure that we have capacity to meet those future needs, especially when it comes to infrastructure which is directly related to economic development and job creation," he said.
Quality-of-life projects entice residents to stay in New Albany, and encourages people to move into the city, Mayor Jeff Gahan and administration officials have said concerning using TIF to build parks.
Funding is tight in other areas and TIF provides a mechanism that can be utilized to boost New Albany's economy without tapping into other financial avenues, redevelopment member and Floyd County Democratic Party chair Adam Dickey said.
Throughout the existence of TIF districts in New Albany, there have been numerous examples of business and residential projects that spawned because of improvements made through the funding tool, he continued.
"We're utilizing the TIF [districts] exactly as they were designed by the state statute," Dickey said.
But other taxing entities such as school systems and the county governments are denied their portion of incremental tax increases in an area after a TIF has been declared, Clere countered.
Floyd County has been dealing with a $1.2 million budget shortfall this year, and Clere said that while he has issues with how school's use some funding, he added there's a constant need for new buses and to cover transportation costs.
"I guess I question the wisdom of spending money on what ultimately has become a fairly controversial aquatic center when there are other basic needs that aren't being met," Clere said.
Taxpayers are ultimately covering the costs, and they may have different views on how best to spend TIF funds if projects such as the aquatic center were compared to other needs locally, he continued.
It would be better for county councils to cast the final votes on TIF spending since they represent more than just a municipality, Clere added.
But municipalities still control TIF funding, as projects typically require votes from the redevelopment commission and city council.
New Albany's TIF districts are generating enough funding to cover costs with enough money to foot future projects, city officials said.
Irving Joshua, president of the redevelopment commission, suggested the city improve its data collection so it can better prove the positive impact TIF projects have on the city and specific areas of New Albany.
But Clere cautioned while funds may be available now, the city is on the hook for sizable TIF payments over the next two decades.
"With respect to the future, I'm concerned the pool and the other spending may leave New Albany taxpayers swimming in debt," he said.