Due to miscalculations and failures to correct Tax Increment Financing (TIF) revenue payments, and in some cases, failure to send payments at all, the City of Marion is owes a substantial amount to General Motors, city officials say.
Already strapped for cash, the city is at least looking at six figure sum needed to be paid to one of the city’s most notable employers over past failure to properly calculate and handle TIF increment payments.
Since GM funded its own TIF by issuing itself the bond, according to Grant County Auditor Roger Bainbridge, GM, through a trustee, should be receiving the tax increment revenue so it can pay off its bond and use whatever is left to invest back in the TIF district.
Whatever amount of tax increment funds a certain TIF district accrued is calculated twice a year - once in the fall and once in the spring - then placed in the TIF Allocation Fund and then doled out accordingly, but Umbaugh’s analysis of the city’s finances, including the GM TIF, is revealing “red flags” in regards to how the tax increment payments were handled the past few years for the GM TIF.
In the fall of 2013 and in both the spring and fall of 2014, GM returned the tax increment payment the city had sent to GM’s trustee, citing the fact the corporation believed the amount to be too high, anticipating the city would make a correction and then send back the right amount. But that never happened, Marion City Controller Julie Flores said.
On top of that, no tax increment payments were ever made in 2015, Flores said. And the payment scheduled to be sent out this past spring of 2016 has also not been sent because the amount sent over to the city by the auditor’s office earlier this year was roughly double what Umbaugh calculated it should have been, Flores said.
Both Flores and Marion Mayor Jess Alumbaugh declined to say exactly how much money the city owes GM, explaining it only as a “bad number” for the city, but it’s at least in the six figure range and could possibly even be in the seven figure range given how high of a payment that was supposed to be sent this spring and the amount of times the city failed to correct and send back the increment revenue.
Bainbridge said the tax increment revenue amount for the GM TIF his office sent the city this past spring was between $600,000 and $700,000, meaning the actual payment should have been between $300,000 to $350,000 if Umbaugh’s calculation that this spring’s amount was roughly double what it should have been is correct.
This all raises questions as to why this mistake not only happened but continued to happen, where exactly the money supposed to be sent to GM has been spent and if any there are any similar problems in the city’s other TIFs, all of which don’t have concrete answers at this point, but the city is hoping to have some in the future.
“We’re paying Umbaugh for answers, and we want answers,” Flores said.
To find out how the bi-annual payment was miscalculated again in 2016, the city, Umbaugh, the auditor’s office and the software company Low and Associates are all currently working together in hopes to correct the issue.
“Somebody was not paying attention,” Flores said.
It’s still unclear how exactly the city plans to pay back the money owed to GM, but Flores said the city and GM have agreed on an amount and that the city will pay it back. She added she is expecting next year’s budget to account for paying back GM.
Through all this, Flores said GM is being “very patient” and understanding knowing the city’s less than ideal financial state.
“GM was very kind to tell us about the issue,” she said. “They’ve been a good community partner.”
A message left for Umbaugh seeking comment regarding their ongoing analysis was not returned.