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REVENUE generated from Columbus’ tax-increment financing district played a major role in the revitalization of the city’s downtown.
Had it not been for this enormous undertaking, it is highly unlikely that the city would have hosted the recent and highly successful Mill Race Marathon. It is also unlikely that Cummins Inc. would have gone through with a massive expansion of its downtown complex, which has brought more than 1,500 new jobs to the city.
While those developments point to the value of such investments, questions have been raised here and in other Hoosier cities as to how far this program can be used.
For instance, two Franklin developers plan to build 150 homes on that city’s east side and have floated the idea of using money from the city’s tax-increment financing district to help defray some of the estimated $6 million cost to prepare the land for new homes.
The homes would include 38 no-
maintenance, high-accessibility homes aimed at attracting retirees. Developers estimate the new neighborhood could generate as much as $500,000 in new tax revenue when fully built. The vacant land previously was owned by Franklin Community School Corp., and no taxes were being paid.
In order to be developed, the vacant field would need more than $2 million in infrastructure improvements, including roads, sewer and water lines, and electricity. Developers did not ask the redevelopment commission for a certain amount or indicate projects on which assistance might be sought but simply said they would like financial assistance from the city.
Tax-increment financing districts set aside some tax dollars collected on new businesses in a certain geographic area to be used for economic development.
No decision has been handed down on the Franklin project, but state Sen. Greg Walker, R-Columbus, has been vocal in debating the state’s tax-increment financing policies. He said governments should not be using TIF money to subsidize a project benefiting a single developer. Cities are in such tight competition for new developments that tax-increment financing funds are being used across the state in ways Walker said go against the intent lawmakers had when allowing communities to set up TIF districts.
In the Franklin case, if the city wants to use tax-increment financing funds, the money should either be spent to clean up a site that has major issues, such as environmental hazards preventing it from being used for new development, or for projects that would benefit multiple developers that could bring in new investment, Walker said. Local governments shouldn’t be using that money if the projects will help increase the profit margin of a single investor, he said.
“It’s tough to be the Lone Ranger and stand on principle. The developer will try to find a subsidy for his project and try to take it elsewhere, but let the investment stand on its own on its merit,” Walker said.
With the scope of projects being assisted with tax-increment financing district funds growing ever wider, the time has come for the Indiana General Assembly to take a serious look at the issue.
Walker has raised vital questions that need to be answered. In addition, communities across Indiana need clear guidance on what is and what is not appropriate use of TIF district funds. These are matters that are best handled by the General Assembly.
We encourage Walker to take the lead in this matter.
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