Op-Ed: A TIF Scandal in Marion
by David Penticuff
Fifty years ago the great character actor Strother Martin uttered what could be the epitaph for the relationship of my city council and the city administration. It was in the movie “Cool Hand Luke.” Martin, who played a prison warden, knocked prisoner Paul Newman, wearing chains, down a tall hill after Newman’s character sassed him.
“What we’ve got here is failure to communicate,” Martin slowly delivered in a memorable southern drawl.
The line became a cultural catch phrase. Who is Paul Newman and who is Strother Martin in the scrap between my council and the administration is not clear. However, communication is failing as trust and respect between the two entities seem on the wane.
Specifically, the issue is about Tax Increment Financing (TIF), which paired vigorously with the love of money some time ago to become the twin roots of all municipal evil in our city. There is $142 million in TIF debt out there for my city. If it doesn’t feel like we have ever gotten the value of that kind of investment in our community, it doesn’t matter. We are still having to pay back the money that was too often ill spent.
When the Dollar General distribution center came to town along the Interstate, a $14.5-million TIF bond was made available to developers. The bond was to be paid off with the rise in property taxes within that TIF area. Unlike some other TIF districts in our city, property values actually did rise for Dollar General to create a revenue stream to pay off the debt. Boy did it. Leftover money in the TIF district has ranged well over $1 million annually.
Dollar General, city officials said, has been taking that extra money to pay off the TIF debt early, something the business is entitled to do. The administration contends that any money raised in the Dollar General TIF, including money above the amount needed to pay off the bond on time, must go to Dollar General, according to its bond agreement.
Two council members are not so sure and their doubts are reasonable, I think, given the history TIF practices here and in other communities.
Terre Haute, for instance, is now borrowing money from that city’s redevelopment commission, which oversees TIF revenue, (something our commission hasn’t done that much). The money is used to supplement its general fund.
“We’re using money collected through tax increment financing to pay day-to-day bills instead of what we’re supposed to be using it for,” a Terre Haute councilman told the newspaper there. “I realize the council has approved it, but now we’re faced with a situation where we’re being asked to obligate the funds further into the future.”
Next year’s financial plan for the Vigo County seat, prepared by consultants H.J. Umbaugh and Associates (same firm used in my city) calls for extending a $5-million loan of city redevelopment funds to Terre Haute and continued borrowing against future property tax receipts.
Muncie used TIF to buy body cameras for its police. Gas City bought exercise equipment with TIF money. We don’t like this but would it be beyond the pale for a city in financial trouble to pursue TIF money above what is absolutely needed paying off a bond?
TIF, of course, was sold under the false claim that it was free money because it would cause tax receipts to increase and that increase would would melt the debt away. That certainly would have been nice.
Of course, the city must abide by its bond agreement and if that if the agreement says Dollar General must get every dime above what’s needed to repay the bond, that is what my city must do. Case closed. But let’s get everyone convinced, including questioning representatives of the people.
The truth is some of our city council members, like council members in the recent past, have not commanded a lot of respect from local leaders. Condescension does little for trust. We will not stop reminding folks that it was many of the same leaders on the scene now who stood by or promoted the spending and TIF that has led us to this place.
Conversely, there is also a fear that council members are vying for political advantage with this issue. We expect this to be true, as it is generally what people who campaign for political office do.
Political motives and bad governing are not the same. The trick is to not let political motives obstruct the civic good.
David Penticuff is editor of the Marion Chronicle-Tribune. A version of his essay was published as an editorial in the Oct. 5 issue of the newspaper.