City officials will discuss giving back $3 million in taxpayer money collected for economic development in order to comply with a new state law.
The law, which takes effect July 1, allows the Columbus City Council to consider giving back funds collected in tax-increment financing, or TIF, districts if the city’s redevelopment commission doesn’t spend at least half of that money each year.
When a business locates or expands in a TIF district, the additional property taxes collected from the growth are set aside. Cities then can use those funds for infrastructure and economic development projects.
But while that provides incentive for city officials to promote growth, it also funnels those additional tax dollars away from schools, libraries and other public entities.
Columbus has four TIF districts:
Central TIF, which comprises the downtown area.
Airport TIF, made up of the Columbus Municipal Airport.
Cummins TIF, located at Cummins Plant 1.
South Commons TIF district, which is now The Cole apartments.
According to documents provided by Mayor Kristen Brown and the city’s financial adviser, revenue from those four districts totaled $5.8 million in 2013. After spending $2.6 million to pay back debt and to fund projects and studies, the
city had a little more than $8.5 million left in cash.
The largest portion of that total came from the central TIF, which had $5.9 million in cash remaining at the end of last year. The central district also had the highest revenues this year, and projections by Reedy Financial Group determined that those revenues would be 237 percent of spending next year.
That means that under the new law, the redevelopment commission must propose a way to modify the way taxes in the central TIF are distributed, subject to city council approval.
Brown, who also heads the redevelopment commission, said she is recommending that the city pass back more than half of the area’s assessed tax value to Columbus Township, Bartholomew County, the Bartholomew County Public Library, Bartholomew
Consolidated School Corp. and the solid waste management districts, all of which also collect taxes in the area.
That would reduce the city’s projected TIF revenue from $5.4 million to $2.3 million, which is equivalent to 102 percent of the $2.2 million in projected spending.
Brown said the reduction in cash flow wouldn’t put funding for potential projects, such as the renovation of the Crump Theatre and the Mill Race Amphitheater, at risk.
But Brown said because those projects haven’t been given the green light yet, she decided not to include them in the projected TIF fund spending for 2015. She said that is because she decided to interpret the law conservatively — for purposes of revenue and spending projections, any expenditures must be for approved projects.
That means the city may be more likely to have to borrow to pay for projects it is exploring if it approves using TIF money to fund all or part of their costs, the mayor said.
Before the plan can go into effect, it first must be approved by the redevelopment commission and the city council. The commission will vote on the proposal at 6 p.m. today before passing it on for the council to discuss Tuesday night.