By Don Steen ~ Staff Writer • [email protected]
Members of the Spencer County Regional Chamber of Commerce met at the St. Martin Parish Hall Thursday night for a “Talk of the Towns” event, with the primary focus being on economic redevelopment tools available to local communities. The keynote speaker that night was Tom Pitman of Barnes & Thornburg, who essentially “wrote the book” on tax-increment financing districts in Indiana and how they can be used to revitalize economically depressed areas.
Pitman, who jokingly self described himself as a “TIF evangelist”, allowed all chamber members and local officials to take home a copy of his “Handbook for Indiana Redevelopment Commission Members and their Attorneys”. He spared little time before getting into the weeds of the complicated legal mechanism.
A TIF District can be implemented by a town, city, or county to help entice new economic investment. Essentially, any new business development that would normally yield more property tax revenue for local government units would instead have those revenues directed to a redevelopment commission overseeing the district. These resources can then be reinvested in necessary infrastructure to serve the district or subsidize further economic activity.
Local governments are not losing anything they did not have before, but they do have to forgo the benefit of additional tax revenue within a TIF District for so long as it is active. That is, of course, assuming the redevelopment commission chooses not to capture the additional revenues and instead allow it to “pass through” to relevant taxing units such as towns, townships, school corporations, etc.
Pittman said a TIF District is particularly useful as an enticement mechanism for a local government without a surplus of funds to revamp infrastructure or entice businesses through other means. The knowledge that any property taxes generated through an enterprise will generally be redirected to roads, restoration of neighborhoods, and other services that will directly benefit companies in the district can be a potent lure.
However, TIF Districts are not without controversy. Pitman recounted the history of the TIF Districts in the United States, with the very first such district implemented in California during the middle of the last century. Today, tax-increment financing can be found in use almost everywhere in the United States, with the notable exception of its pioneer.
“California being the one that canceled it,” Pitman mused.
While it is easy to write off captured additional property tax revenue when there is little to go around, TIF Districts can be a point of friction once the money does start to flow. Local officials may disagree with the decisions of the redevelopment commissions in charge of a TIF District, asserting that the additional revenues generated by new development should go to the general coffers rather than reinvested solely within the district.
Pitman’s central point was this, local governments in Indiana often do not have many tools available for redevelopment. The state’s property tax caps impose strict limits on town, city, and county revenues. Local governments with blighted or underdeveloped properties often can’t put direct subsidies to encouraging private investment in those areas. A TIF District allows local leaders to entice new business development with the hope that tax revenues from those investments will in turn go toward further improvements within the district. Once the TIF District expires, usually in 25 years, that feedback loop of private and public investment would ideally benefit the wider community as well.
Read more on this story in this week’s issue of the Spencer County Leader!
Featured Image: Thomas A. Pitman and Kathy Reinke discuss matters to attendees of the Talk of the Towns event
Important Issues: Wayne Blake discussed important matters to the attendees at the Talk of the Towns event
Attendees of the Talk of the Towns event listen to what each speaker has to say
