12/7/15 update: tif boundary adjustment PASSES
Last week, Proposal #325 ,which seeks to amend the boundaries of the Midtown TIF, was unanimously passed. The adjustments come in response to a policy change by the Indiana Department of Local Government and Finance (DLGF). (View the summary of boundary adjustments here) The policy change affected the way residential property was calculated inside of commercial TIF districts like the Midtown TIF. The policy change took effect in May of 2015 and caused $4.65 million in assessed value to be redirected from commercial to residential. If not addressed the impact of the policy change could render the TIF unable to support new projects and to meet its current debt obligations.
The Midtown Economic Council and the Department of Metropolitan Development have endorsed the boundary change. To learn more about the policy, its impact, and the proposed fix, review this Memo prepared by the Midtown Economic Council.
TAx Increment Financing District
In March of 2013, the City of Indianapolis approved the Midtown Tax Increment Finance District which was designed and sought by Midtown residents, business owners, and neighborhood leaders. The TIF is part of a proactive strategy to attract major new private investment in specific commercial areas as part of a larger effort to stem the tide of urban flight that has challenged our collective neighborhoods and our city in recent decades and to improve the quality of life for residents.
Stakeholders selected the areas or “nodes” strategically to deal with both the specific challenges unique to each node, but also to realize the economic potential of each node for the district and city at large. While there are baseline common elements of vacancy, blight, and under utilization, each selected node has unique market challenges and offers unique opportunities to meet the diverse needs of Midtown’s neighborhoods. These considerations led stakeholders to identify five nodes to receive “priority” status inside of the TIF district.
The goal is “catalytic” development of the variety that is most likely to spur additional private investment, increase residential density, and increase the concentration of mixed-use developments and bring vital services to adjacent neighborhoods. The term of the TIF, 25 years, meant that early investments must be carefully considered to ensure long term performance. To replicate successful development strategies elsewhere nodes were chosen to specifically encourage major private investment in areas adjacent to key public amenities like the Central Canal, Tarkington Park, the Monon Trail, and key commercial corridors like 38th Street and College Avenue. Areas like 30th and Central were chosen to encourage private investment to parallel existing publicly funded efforts to stabilize and grow housing options along with the provision of vital services and new amenities.
The prescribed solution for each node will vary in large part by the market conditions or obstacles present in each node and the respective aspirations stakeholder groups have for their respective node(s). The overall strategy will link the selected nodes and their respective neighborhoods through the TIF. This allows generated increment to be shared throughout the district between stronger markets and weaker markets. The arrangement encourages bold market solutions, those which could flourish if barriers to development could be overcome. TIF only captures increment or newly generated taxes from “new development” or “redevelopment” and not from the existing tax base. So projects which don’t generate tax income or which require subsidy greater than the increment they generate must be accompanied by projects which are net increment generators. Without projects that generate increment, the TIF is essentially useless as a tool because it would have no revenue to encourage development or the money would run out faster than generated. The value of the TIF is in its power to leverage market investment. Those investments and the revenue they generate are the key to increasing the tax base in the long run.
City-County Council Economic Development Committee Questions Regarding North Midtown Tax Allocation Area (NMTAA ) - December 2012
North Midtown TIF Report to City-County Council - October 2012
TIF Study Commission Recommendations Comments Regarding North Midtown Tax Allocation Area (NMTAA)