Hundreds of thousands in tax dollars are at stake in a rush to set aside money for widening roads, redeveloping buildings and adding bike paths to downtown Greenwood.
Both Greenwood and Clark-Pleasant schools want the tax dollars that will be collected from an $8.5 million expansion by measuring device manufacturer Endress + Hauser, as well as from a new building the company has constructed.
Under normal circumstances, both the city and the school should be able to collect property tax dollars from a business.
Greenwood, however, wants to include the business in its expanded tax-increment financing district.
In December when the mayor, city attorney, controller and Clark-Pleasant school officials met, the tax money from an $8.5 million expansion at Endress + Hauser was expected to go to all local governments, including the schools, the city, the library and the county.
Now, Greenwood wants to set aside all of the tax dollars from that expansion in a TIF district and use the money for projects including façade repairs for downtown buildings, widening sidewalks and fixing the stormwater drainage system to prevent flooding, in hopes of attracting new businesses to the area.
The business doesn’t have any say in the matter.
The deadline is soon approaching. If the city doesn’t approve doubling the size of its eastside tax-increment financing, or TIF, district by March 1, any property tax dollars collected from the Endress + Hauser projects won’t go into that fund and will instead be divided among all local governments, including the schools.
Once a property is assessed and added to the tax rolls, it can not later be taxed as a TIF district property. City council members gave a first approval to the expansion, with three members raising concerns about making a hasty decision, whether tax money should be used for redevelopment and whether it was fair to people living in the boundaries of the current eastside TIF to expand where their past taxes can be spent.
Clark-Pleasant Superintendent Patrick Spray is crying foul.
He was expecting part of that money to come to the school district, which is facing a shortfall of more than $3 million every year from property tax caps, to cover debt, buying new buses, transportation expenses and capital projects.
Taxes collected on a $10 million property would total $300,000, and that’s not a small amount of money, even if it’s divided between schools, the city, county, library and other tax-funded groups, Spray said.
He was told in December that the schools and other local governments would be getting a chunk of tax dollars Endress + Hauser will begin paying on the two buildings this year and in 2015. The projects are the company’s Flowtec manufacturing building expansion and new customer center.
Now, with more detailed maps, Greenwood Mayor Mark Myers said he has learned that his city employees have included the Endress + Hauser projects in the area where the city wants to capture all property taxes from new and expanded companies.
The city should get those tax dollars because it has given tax breaks and other incentives to the company as it has expanded over the years, Myers said.
If the city council and redevelopment commission approve the TIF district expansion, the city could spend property tax dollars on the downtown projects. The city also would be able to collect TIF money from new commercial development downtown. Creating a TIF district captures revenue as TIF funds the taxes on new development and growth in property values in a designated area. The captured money is intended to be spent on economic development projects in a designated geographic area.
The city redevelopment commission oversees spending of the TIF money.
If the plan commission and city council approve the TIF district expansion in time, the eastside TIF district would double to 4,000 acres in size. The district currently surrounds the Interstate 65 exits at Main Street and County Line Road and earns about $6 million annually. Expanding it would add to the district properties on Madison Avenue and Main Street between County Line Road and the city’s southern edge to bring the
city more money as more development happens.
The projects the city wants to fund within the expanded TIF district are sewer and drainage work, marketing the existing city hall building before city offices move to the former Presnell building in the spring and possibly some costs associated with taxiway repair work at the city airport.
A schedule for when all $22.2 million in projects should be finished hasn’t been set, and money collected in the new part of the TIF district will have to build up before some of the larger projects, such as widening sidewalks and streets, can be done, officials have said.
The city’s existing TIF district already should collect more than enough money for all of the redevelopment commission projects planned for downtown and elsewhere, so expanding the TIF district doesn’t appear to be necessary, Spray said.
“I think we need to take our time and truly understand the impacts,” he said.
Spray asked the city redevelopment commission in January to help the school district by paying part of the cost to lease buses, giving money directly to the district or by letting the schools and other governments start collecting property taxes on some of the development the TIF district has been capturing taxes from. The commission did not respond to Spray’s request.
The city council would be making an uneducated decision on whether to expand the district if it voted without seeing a study of the financial impact on the other local governments, council member Brent Corey said.
“I have heartburn voting for something we don’t have the financial impact for,” he said. “I am disappointed that we’re using such a fast approach.”
The city’s intent is to expand the TIF district by March 1 so taxes on the property value of Endress + Hauser’s two large building projects will go to the TIF district, community development services director Mark Richards said. The property value of the Flowtec expansion is
$8.5 million, and the customer center has not been assessed yet.
“The intent is to capture that prior to that going on the tax rolls,” Richards said.
March 1 is the date by which the county determines the buildings’ values for property taxes, and where the tax money goes, county appraiser Mike Watkins said. If the city expands the TIF to include the Endress + Hauser buildings after that date, the new facilities would not be considered new development for TIF collection purposes, and the district would not collect property taxes on them, he said.
TIF districts only collect taxes from new development, and if the city doesn’t expand its TIF district by March 1, any new taxes paid on those new buildings would go to schools, libraries and other property tax-funded governments, including the city, rather than all of the money going into Greenwood’s redevelopment fund.
Rushing to expand the TIF district by March 1 gives the appearance that the city is trying to take away tax money from the Clark-Pleasant schools, Corey said.
The city council on Monday gave initial approval to expanding the eastside TIF district with a 6-3 vote. Council members Corey, Bruce Armstrong and Ron Bates voted against it.
Armstrong’s concern is that the money currently collected from those businesses in the eastside TIF district could be spent in the expanded area if the district expands, he said. The businesses that already pay taxes into the TIF district should have the money spent where they are located instead of on projects in downtown Greenwood, he said.
“It’s taking a large fund and they’re making it easier to spend,” he said.
Bates said private companies and residents, not city government, should invest in building businesses locally. When city governments use TIF districts, they keep money from the schools and libraries, he said. He said he might have supported the expansion if it were smaller.
The city council and redevelopment commission both have to vote on expanding the district one more time for it to happen.
The existing TIF district currently surrounds the Interstate 65 exits at Main Street and County Line Road and earns about $6 million annually.
The expansion of the TIF district would also bring the TIF district closer to a future interstate exit at Worthsville Road, which is surrounded by 1,800 acres the city has approved annexing. The city wants to see high-end office space and homes developed in that area.