Two Columbus City Council members are hesitating over a plan to forgo $3 million in tax revenue that could possibly be used to fund necessary road improvements.
Council members Jim Lienhoop and Frank Jerome said they want more information before accepting Mayor Kristen Brown’s proposal to give up some revenue from one of the city’s tax-increment financing, or TIF, districts.
The mayor has proposed allowing the school corporation, the library and other government entities to collect property taxes on a combined $127 million in excess assessed property value in the city’s Central TIF District for one year.
In the Central TIF and the city’s other three TIF districts, property is taxed based on its assessed value, as in other areas. As new investment and improvements to property are made and projects completed in the city, the assessed value can increase and lead to more property tax revenue.
But in a TIF district, that additional revenue generated by excess, or incremental, assessed value goes only to a city’s redevelopment commission during the life of the TIF — usually a period of 20 to 25 years.
By allowing the other entities to collect taxes on more assessed value for one year, the mayor’s proposal would lower property tax rates in 2015.
Because the proposal would reduce rates, it would result in lower tax bills for some taxpayers in Bartholomew County, both inside and outside the city limits. Taxpayers in
Columbus Township would be most likely to benefit. But it would also lower the redevelopment commission’s projected TIF revenue in the Central TIF from $5.4 million to
$2.3 million next year.
Lienhoop said he wants to see information on delayed city capital projects before approving or denying the mayor’s proposal because he wants to make sure the city is caught up on those.
TIF funds are usually spent on redevelopment, infrastructure improvement and projects that benefit the community. Lienhoop said although he had no specific ones in mind, there might be some remaining city capital projects that the council could fund with monies from TIF revenue instead of pulling from the general fund.
However, the city should give up the TIF money if the Columbus Redevelopment Commission is not going to commit the funds to projects, he said.
The mayor’s proposal already has received the redevelopment commission’s approval, along with proposals for making no change to the projected revenue in the city’s other three TIF districts. Because revenue in the Central TIF is projected to be 237 percent of spending, the city council must vote on the mayor’s proposal, or else deny it or modify it as members see fit.
“I’d like to see the money returned to taxpayers,” Lienhoop said Tuesday night during a city council discussion
of the proposal. “But it doesn’t make much sense for us to do that while we forgo things we need.”
And Jerome said he is “a little nervous” about giving up the chance at that revenue when projects not included in the TIF budget still could come up and receive approval for TIF funding. Jerome cited the development of an industrial park at the site of the old Walesboro Airport, a $1.7 million expense this year that had not been included in the TIF budget because the project was not planned when the redevelopment commission developed its budget last year.
The project received TIF funds in 2014, but Jerome said if the redevelopment commission had decided to pass back the assessed value and received less TIF revenue this year, it might not have been able to fund that project fully.
Because the city is not far above the 200 percent threshold, it might be better to keep the money for when projects inevitably come up so the city can use some cash to pay for them, Jerome said.
But Andrew Lanam, a consultant with Reedy Financial Group and the city’s financial adviser for TIF, said there still will be around $7.2 million in cash reserves left in the Central TIF by the end of next year. He called that figure “a pretty good buffer.”
More extensive projects, such as the renovations of the Crump Theatre and the Mill Race Amphitheater, that could be considered to receive TIF funds before the end of 2015, are more likely to be funded through the city borrowing money because of their large price tags, Lanam said.
Brown said she didn’t include renovating the Crump or amphitheater or any other pending project in next year’s projected TIF fund spending because they hadn’t been approved by the redevelopment commission or the city council. But her proposal doesn’t mean that they won’t or can’t receive TIF funds, she said.
Overall, she said, the effect of the proposal is a loss in revenue, but it’s a loss that “goes straight back into the pockets of taxpayers.”