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Building blocks: Conservative approach paying off

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COLUMBUS and Carmel are similar in that arts districts are key to their downtown redevelopments, but Columbus officials are taking a conservative approach to spending property tax money to avoid a multimillion-dollar debt like Carmel is facing.

As a result, the coffers of the Columbus Redevelopment Commission — which is responsible for promoting and encouraging business growth — are in the black by more than $3 million.

That’s in stark contrast to spending by the Carmel Redevelopment Commission. In the affluent northern suburb of Indianapolis, where a $175 million performing arts complex opened in January 2011, Carmel’s mayor is asking the Carmel City Council for $183 million in bonds to help pay the commission’s $267 million in debt on revitalization projects.

Present and former commission members said it’s unlikely Carmel’s situation could happen in Columbus because of Mayor Kristen Brown’s efforts toward greater transparency of government, a spending safeguard and the commission’s cautious approach.

The difference between Columbus and Carmel is in their approaches to spending the property taxes captured in tax-increment financing districts, which are economic tools for redevelopment commissions.

Property within a designated area, or TIF district, is taxed based on its assessed value. New investment, completion of projects or improvements to property can lead to higher assessed values and more property tax revenue. It’s the amount of the increase that can be used for development in that TIF district instead of being given to other taxing units in the district, such as schools, libraries or townships.

A redevelopment commission can decide whether to give unused TIF money back to other taxing units. Columbus’ board chose not to this year.

The increased property tax revenue in TIF districts typically is used to pay the debt for improvements to or investments in the district. A willingness to use TIF revenue to pay for project debt is an incentive that can lure private investors to launch a development or expand an existing one. Benefits to the community can be more jobs, enhanced quality of life and a greater tax base.

For example, the Columbus Redevelopment Commission used TIF money to pay for the Jackson Street garage and plans to use it to relight the Second Street bridge.

Columbus has four TIF districts:

Downtown Columbus and the Walesboro Airport area.

Columbus Municipal Airport area.

Cummins’ Plant One.

Second Street garage and The Cole apartments.

Combined, the four districts started the year with more than $1.3 million. Through July 31, the value of TIF funds increased to more than $2.2 million. They are projected to net almost $3.6 million by the end of the year, which would leave a year-ending balance of almost $5 million.

The cost of relighting the Second Street bridge already is accounted for in the Central TIF budget.

“We’re solid,” said Mayor Kristen Brown, who also serves as president of the Columbus Redevelopment Commission. She explained that more than enough money is being received in property taxes in the TIF districts to cover the debt on the projects in those districts, which amounts to about $1 million this year.

She added that room exists to take on more debt but that having a healthy cushion is preferable. She added that it would be unwise to borrow as much as what is projected to be received in property taxes.

“I think (the TIFs are) doing fine,” said Frank Jerome, a member of the Columbus Redevelopment Commission and the Columbus City Council. “They’re not stressed at all. We have money in it.”

Columbus Redevelopment Commission Executive Director Heather Pope concurred with Jerome’s assessment.

“Based on the facts I’ve looked at, I think the TIFs are in great shape when you look at the projects and payments there,” she said.

Safeguards in place

Brown is in the process of closing a loophole in Columbus that is similar to what Carmel used to secure loans through a third party. She is trying to dissolve Columbus Downtown Inc., a private company created during then-Mayor Fred Armstrong’s administration to work on behalf of the redevelopment commission.

CDI acquired property and negotiated leases, as was intended, but details of these transactions were kept from the public’s view.

In 2009, a TIF district was created for The Cole apartment project as an incentive for the developer, Buckingham Companies. Also in 2009, CDI, acting on behalf of the redevelopment commission, agreed to a deal to pay Buckingham $300,000 for architectural fees. However, redevelopment minutes make no mention of approval of such amount, nor any mention of such an amount. Brown opposes this payment, which has not been made yet.

Closing down CDI will eliminate the possibility that it could create financial problems for Columbus like what has happened in Carmel, said Columbus City Council member Tim Shuffett, who served on the redevelopment commission from January until Sept. 17.

Redevelopment commission member Dave Wright said shifting CDI’s dealings to the public redevelopment commission is a good move.

“There’s no point of anything not being open without the public knowing about things, especially large sums of money,” Wright said.

Brown said holding more public meetings in the evening helps the public become more involved. Additionally, audio and visual improvements in the City Council chambers will help connect people to city government with live streaming on the Internet and meetings shown on a local cable channel starting later this year.

A city ordinance states that any expenditure of more than $500,000 by the Columbus Redevelopment Commission requires approval by the Columbus City Council.

Rick Sharp, president of the Carmel City Council, told The Republic that no such oversight or limits by the council over the Carmel Redevelopment Commission existed while the debt mounted.

On Monday, though, the Carmel City Council will vote on an ordinance that will change how the redevelopment commission operates. The change will make it more of a body that produces ideas for development. But it would be the City Council that would approve all spending for these ideas, Sharp said.

Wright and Brown said the $500,000 limit in Columbus seems like a good one, but Jerome believes it’s too lenient.

“I’d like to see that cut down quite a bit,” Jerome said.

Jerome said $100,000 would be a better amount and thinks city officials should consider such a lower threshold.

Wright said regular presentations this year of the TIF districts’ finances to the redevelopment commission by its financial adviser, Reedy Financial Group, ensures that commission members are aware of the financial health of the TIFs.

“It’s to make sure we have the right reporting and understanding of what is going on in each TIF district,” he said.

Conservative growth

Pope said there is no written strategic plan for growing or adding TIFs. But infrastructure resources within TIFs can lead to growth, she said.

For example, Browning Investments Inc. plans to build a $15 million plant for The Phoenix Group, a supply chain company, in the Woodside Northwest Park. That project will be part of the Central TIF, Pope said.

Shuffett described TIFs as “a balancing act,” because it’s important that projects increase the tax base enough to pay for the projects.

Jerome said the redevelopment commission is in no hurry to take on more projects and said he’d like to see the TIFs build their funds for a while. Having enough money to pay for all debt obligations for the upcoming year is a good goal for any year, he said.

Commission members mentioned fixing The Crump, building a new amphitheater at Mill Race Park, Columbus Arts District projects and relighting Second Street bridge as possible or suitable uses for TIF funds.

“We are looking for projects that are interesting to the entire community,” Brown said.

Road repairs are high on the commission members’ lists, too.

Next year, $1.2 million is earmarked for fixing roads in the Woodside Industrial Park, and $200,000 is planned for road fixes by the Columbus Municipal Airport, Brown said.

The mayor also has asked the Columbus-Bartholomew County Planning Department to start coming up with ideas for a State Street corridor revitalization plan. State Street isn’t in the Central TIF, but the TIF boundaries could be redrawn to include it so TIF money could fund the project.

Moving forward, Brown also said it’s important for the redevelopment commission to create a five-year capital plan, just like the City Council did.

“We need to make sure we’ve budgeted every year the proper amount of money to maintain (facilities and infrastructure),” she said.

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