Common Council Meeting 06/17/2019

City-NEws-e1455073509249The Charlestown Common Council met for a regularly scheduled meeting on Monday, June 17, 2019 at 6:30 PM. Following is a summary of the meeting with full audio (11:40) at the end. 

  1. Call to Order/Pledge of Allegiance led by Gracie and Sophia Adams, varsity cheerleaders at CHS
  2. Invocation led by Neyland McClellan from the North Charlestown Church of God
  3. Determination of a Quorum and Roll Call: Members present were Ted Little, Brian Hester, Tina Barnes, and JT Cox. Member Mike Vaughn was absent. Also in attendance were Mayor Bob Hall, Clerk Treasurer Donna Coomer, and city attorney Michael Gillenwater
  4. Approval of Agenda
    • Motion to approve made by Brian Hester
    • Seconded by Ted Little
    • No Discussion
    • Unanimous approval
  5. Approval of prior meeting’s minutes, current claims, and payroll allowance docket from 06/02/2019 to 06/16/2019 combined into one motion for approval
    • Motion to approve made by Ted Little
    • Seconded by Brian Hester
    • No Discussion
    • Unanimous Approval
  6. Ordinances and Resolutions
    • Resolution 2019-R-7 “A Resolution of the City of Charlestown, Indiana Authorizing the Issuance of Bond Anticipation Notes and Bonds of the Charlestown Redevelopment District for the Purpose of Providing of Funds to be Applied to pay for Certain Redevelopment Projects, Incidental Expenses in Connection Therewith and Otherwise on Account of the Issuance of the BANs and Bonds
      • Motion to approve made by Ted Little
      • Seconded by JT Cox
      • During discussion Mayor Hall said that the resolution has been approved by the Redevelopment Commission and is scheduled for a public hearing (June 27).
      • Members voting in favor are: Ted Little, Brian Hester, and JT Cox. Council member Tina Barnes voted no.
      • Mayor Hall said that the due diligence is being performed and they anticipate breaking ground in August/September. He said Alan Muncy of ARC has purchased the building next to City Hall to use as his leasing office for the Renaissance Project.
  7. Mayor Hall Update:
    • Mayor Hall mentioned that Founders Day is this weekend. Pat Glotzbach will be the grand marshal. Donna Coomer announced that Betty Buckner was named Founders Day Volunteer of the Year. 
    • Mayor Hall said that this morning the Board of Public Works announced the approval of another park. This one will be in the Saddleback neighborhood. The lot in Woodford Farms will be purchased for $10,000 and a park will be built there as well.
    • Mayor Hall updated the council on the police station progress. They began moving furniture in today and will finish electrical by mid-July.
    • Mayor Hall announced that the paving construction meeting occurred this morning. Indiana American Water had representatives at the meeting to coordinate some repairs to valves during the paving project.
  8. Council Member Brian Hester asked if they could incorporate accessible equipment into the parks for people who have disabilities.
    • Mayor Hall said that Eric Vaughn is looking into the situation. He said that the equipment is expensive, but that doesn’t mean we won’t do it. He said the options are to add one piece of equipment to existing parks or to build a single park that is fully accommodating.
    • Brian Hester said he understands that an “special needs” park requires special equipment.
    • Mayor Hall said he thinks it is a good thing and that he doesn’t have a “special needs kid” and doesn’t know if there is one in the area or not. Brian Hester said there are several. Mayor Hall said he’s not sure if there are any in Charlestown.
  9. Adjournment
    • Motion to adjourn made by JT Cox
    • Seconded by Ted Little
    • Unanimous approval

Audio available here:

Redevelopment Commission Meeting 06/13/2019

City-NEws-e1455073509249The Charlestown Redevelopment Commission met for a regularly scheduled meeting on Thursday, June 13 at 9:00 AM. Following is a summary of the meeting with full audio available at the end:

*Meeting began late at 9:07.

  1. Call to Order, Pledge of Allegiance 
  2. Determination of a Quorum and Roll Call: Members present were Pat Glotzbach, Ted Little, Eric Vaughn, and Mayor Bob Hall. George Roberts was absent. Also in attendance were Clerk Treasurer Donna Coomer and City Attorney Michael Gillenwater
  3. Approval of prior meeting’s minutes, current claims, and payroll allowance docket from 05/20/2019 to 06/09/2019 combined into one motion for approval.
    • Motion to approve made by Ted Little
    • Seconded by Eric Vaughn
    • No Discussion
    • Unanimous Approval
  4. Resolution 2019-R-5 – TIF Pledge Resolution
    • Paul Wheatley addressed the board to explain that this pledge allows the commission to take on debt of $950,000 promised to the Renaissance Project through a Bond Anticipation Note.
    • If the commission passes this today it will need to go before the City Council on Monday.
    • Anticipation is that construction will begin in late July or early August.
    • Mayor Bob Hall said that originally they talked about an $850,000 bond and that the city would waive fees to make up the additional commitment. As opposed to taking that path and removing fee revenue from other city departments they’ve decided to do a bond for the full amount.
    • Motion to approve made by Eric Vaughn
    • Seconded by Ted Little
    • No Discussion
    • Unanimous approval.
  5. Springville Manor
    • Mayor Hall said they’ve sold six houses that the commission released to the general public and Springville Manor, LLC has asked that they release six more houses.
    • Ted Little asked how many houses are open. Mayor Hall checked with Geneva Adams and she said she thinks there are about 7-8 available. Mayor Hall said he thinks there are 9-10 available. Ted Little said he thinks the commission is obligated to make decisions for their Partner (Springville Manor, LLC) while still holding vacancies for people who can take advantage of the opportunity.
    • Eric Vaughn asked how many should remain open in case people in Pleasant Ridge decide to take the option. Mayor Hall said if they release six they will still have four available.
    • Ted Little asked if this puts the city in a position to add more construction in the area. Mayor Bob Hall said they’re in the process of designing single family homes. Ted Little said that in doing this it seals the city’s agreement with Springville Manor, LLC to move forward and that since they’re a business they deserve to make a profit.
    • Pat Glotzbach said it’s a difficult situation because we don’t know what the market will be like in the next year.
    • Mayor Hall recommended that the commission keep four houses and release the others, which he thinks will be six.
    • Michael Gillenwater said they need a motion to release all but four homes in Springville Manor to the public sector.
      • Motion made by Ted Little
      • Seconded by Eric Vaughn
      • No additional discussion
      • Unanimous approval
  6. Ted Little asked for clarification about the timeline in the TIF resolution they passed earlier in the meeting.
    • Paul Wheatley said they will put this resolution before the City Council on Monday, June 17, then it will come back to the Redevelopment Commission for a public hearing on June 27th.
    • Mayor Hall said that ARC wants to do an event the Friday before Founders Day to put a larger rendering of the project on the site.
    • Alan Muncy has purchased the building next to City Hall as well and will use it as a leasing office for the Renaissance Project.
  7. Other announcements
    • Geneva Adams said that the Redevelopment Commission meeting planned for June 27th will need to be rescheduled due to scheduling conflicts for Paul Wheatley and Pat Glotzbach. Mayor Hall recommended that they change the time to 1:00 PM that same day. Mayor Hall said they will review the meeting schedule to consider a permanent adjustment.
    • Geneva Adams reminded Mayor Hall to do mortgage releases for two properties in Springville Manor. Mayor Hall proposed partial releases for the notes on Lots 20 and 29.
      • Motion to approve made by Pat Glotzbach
      • Seconded by Ted Little
      • No Additional Discussion
      • Unanimous approval
  8.  Adjournment
    • Motion to adjourn made by Eric Vaughn
    • Seconded by Ted Little
    • Unanimous approval

Audio available here: 19:18

Who is this TIF anyway?

image1-3

“How are we going to pay for it?” asks a concerned resident as visions of high property taxes dance through her head. “Don’t worry. The money won’t come from tax payers. We’re going to use TIF!” replies an optimistic growth proponent….

If you’ve been listening to city council meetings (or stalking people diligently on Facebook) these days you’ve probably seen the acronym “TIF” being used quite a lot around Charlestown. With recent expansions of the town’s Tax Increment Financing (TIF) districts in anticipation of growth inspired by the opening of the east end bridge and development in River Ridge, it is important that we all know how a TIF district impacts us.

If you already know what a TIF is then feel free to scroll past this next paragraph. But if you don’t, then read on…

When a community designates a TIF district they freeze the assessed value of all non-residential property in the area for a specific amount of time (20 years is a popular number). It’s that assessed value that that determines how much property tax a business pays. As new businesses enter the area more property taxes are collected, which are intended to be used to fund development within the district. In order to entice developers to take the risk in the first place, cities take on bond debt under the belief that,

as businesses come…

and money comes in…

they’ll be able to pay off the debt later.

TIF districts began in California in the 1950s as a way for cities to participate in urban renewal projects. They arrived in Indiana in the 1970s and were originally limited to areas defined as

“blighted.”

Since 2005, Indiana towns have been able to establish TIF districts more broadly anywhere they determine

“an area in need of redevelopment.”

These new standards have prompted several cases of TIF abuse as communities apply the financing strategy to otherwise healthy areas to make up for state enforced caps on yearly tax spending.

Here are some things to note about TIFs:

Pros:

  • TIFs create opportunity for cities to self-finance redevelopment
  • TIFs are highly flexible – they are not capped the way regular tax revenue is capped
  • TIFs shift the risk to bondholders

Cons:

  • TIFs freeze tax bases and overlook services needed to manage additional growth. If you build it…

and they come…your city and county governments,

schools, police and fire departments, libraries,

parks, township trustees, road crews,

and sanitation departments,

all have to continue to function without the additional property taxes generated in the TIF districts. To meet the needs of their growing communities, these entities are forced to cut services or raise taxes on all of us.

  • TIFs assume that all monetary increases come from the redevelopment they inspire. They don’t take into account other market forces that increase property value.
  • TIF bonds are attached to higher interest rates than standard loans because their risk of repayment is based on the success of the development. So cities that take out bonds for TIF repayment end up paying more on that money later.

Now you might be asking…

Why does all this matter?!?

Redevelopment in Charlestown is being funded by TIF.

Springville Manor, Pleasant Ridge Redevelopment , and the proposed Sports Complex (courtesy of a public/private partnership with Klipsch-Card Athletics) would all be supported by TIFs.

Let’s look at the Sports Complex as an example. The facility built by Klipsch-Card in Noblesville has been used as an example of the company’s success. The city of Noblesville pays

$800,000 annually for 20 years (that’s $16 million)

in order to hold that facility.

  • $300,000 is paid to the facility from a TIF on the building itself
  • $300,000 is paid to the facility from user fees
  • $200,000 is paid to the facility from a TIF on businesses in a second TIF district

This is Klipsch-Card’s go-to sales model. In Bargersville, the group asked the city to pay $950,000 per year for 20 years ($19 million). Bargersville examined their budget, found the money lacking, and

decided to meet their needs rather than their wants,

 and rejected the proposal. 

We can also turn to Springville Manor. On Tuesday, September 5, the City Council of Charlestown adopted Ordinance 2017-OR-12 granting permission for the City to acquire bonds in the amount of $2.5 million for Springville Manor, LLC (see my blog from that day). Let me say, nobody wants to deny the elderly a place to live. That’s not the critique here. The rub is in how the process is happening.

Although Mayor Hall said the bond money is allocated for the homes at Springville Manor in the Council Meeting on 09/05/2017, the Ordinance suggests room for modification. The Ordinance mentions funding for an

“economic development facility”

without defining what an “economic development facility” is. It also mentions that repayment can happen from “certain other revenues of the city” without fully explaining what these revenues are.

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This is an expensive project. Look at the numbers in the amortization chart. In the end, the City will pay

$4,502,793.96

for that $2.5 million bond. We should not take such expenditures lightly when they are shrouded in speculation and uncertainty.

 

Are TIFs ever a good idea?

In order for a TIF to be successful, academic literature shows that it must…

  • be targeted and temporary
  • hold developers accountable for the money they receive
  • be fully transparent

Studies show that TIFs work quite well in industrial areas, among non-minority communities, and in their early years while the building boom is fresh. BUT…studies also show no evidence that TIFs bring higher employment.

Employment increases in a TIF district come at the cost of lower employment from outside the district because they don’t attract new people, they just shuffle the existing people around.

Also, they don’t always attract high-paying jobs that would improve average household income.

TIFs also shuffle the financial burden around. Because TIFs divert money from the City’s General Fund, they fail to decrease your tax burden.

closeupportraitwomanholdinggiftinonehandshutterstock_190779821Think of it like a gift. If five people are going to buy a gift for their boss that costs $100, then each one contributes $20 and all is fair. Now imagine that the company grows and there are 10 people who could contribute to the gift – except that they weren’t grandfathered in so they don’t.

You still have five people paying $20 when you could have 10 people paying $10 each instead!

Meanwhile…the cost of the gift rises a little each year…

TIFs take money away and enable the city to use it in potentially abusive ways

(more to come on that).

So…

  • If a city masks its use of TIF districts to fund projects
  • If a city lacks total transparency in planning and financing
  • If a city promises you that TIF redevelopment will bring jobs

You should think very carefully about what is happening.

When Bargersville’s town council turned down Klipsch-Card last year, the athletic management group moved on to other cities. Andy Card quipped,

“If you’re not interested, then others are.”

And he might be right…because now they’re knocking on Charlestown’s door. How will we answer?


Sources for this post:

Annie Goeller, “Sports complex owners asking for $950,000 a year from town,” in Daily Journal, September 9, 2016.

Baker & Daniels, LLP, “Tax Increment Financing in Indiana” (undated).

Charlestown City Ordinance 2017-OR-12

Chris Sikich, “$15 Million Sports Facility to be Built in Noblesville,” in IndyStar, November 29, 2016.

Martina Webster, personal communication from August 31, 2017.

Paul F. Byrne, “Determinants of Property Value Growth for Tax Increment Financing Districts,” in Economic Development Quarterly, vol 20.4, November 2006, pp 317-329.

Paul F. Byrne, “Does Tax Increment Financing Deliver on its Promise of Jobs? The Impact of Tax Increment Financing on Municipal Employment Growth,” in Economic Development Quarterly, vol 24.1, 2010, pp 13-32.

Rob Kerth and Phineas Baxandall, PhD, “Tax-Increment Financing: The Need for Increased Transparency and Accountability in Local Economic Development Subsidies,” U.S. PIRG Education Fund, Fall 2011.

Tom Heller, “Economic Development: Indiana’s Wobbly TIF Law,” in Indiana Policy Review, August 10, 2013: http://inpolicy.org/2013/08/2245/.