Yet Another Eco-Devo Scandal

December 19, 2018

by David Penticuff

It was a nice phrase used in William Makepeace Thackeray’s 19th century novel “Vanity Fair,” in which he wrote of a “perfect storm of sympathy.”

Pardon us if we rework the now well-worn expression. The confluence of power in my Indiana county of a former mayor and his brother, plus the county’s Economic Growth Council executive director and a cadre of lickspittles, selfish careerists, often weak-minded and corrupt cronies, mixed with the rise of Tax Increment Financing (TIF) to create a perfect storm of financial malfeasance that haunts us to this moment.

This past weekend, an ex-mayor’s brother, also the former project manager for our Old Y building and currently a defendant in a lawsuit that accuses him of fraud, spoke on the record by email through his attorney.

The project never came to be but was funded through TIF and it appears the only money spent came from bonds to be paid back by tax increment financing. It’s called “tax increment” because the incremental increase in taxes from an increase in the value of the properties in a TIF district are supposed to pay back the bonds. The base amount of taxes are supposed to continue to flow to local schools, city services and the other normal expenditures by local government.

This, at any rate, is how economic development folks explain TIF, which in its ideal state is supposed to supply essentially new tax dollars to feed economic growth. It is supposed to divert growing tax revenue to pay for more growth.

But it doesn’t work that way, especially in places like my county, where growth has been a true challenge.

Regardless, the email’s contention seems to be that things are working okay with his project, even as the building falls in to disrepair with an unpaid $142,000 property-tax bill and TIF bond debt, from a refinance of the original TIF bond that let his late boss, a developer, off the hook for paying back his public money.

“When the bonds were refinanced in 2011 with other bonds it is the accumulation of the taxes from the TIF district and the projects involved in the 2011 refinance that is repaying the bond,” he wrote in the email.

So, everything is cool. Well, no it’s not:

Clearly, this is an ongoing scandal, much of it spun by TIF, which lacks adequate safeguards in Indiana to prevent its abuse. Other Indiana cities also suffer.

Folks, there just is no free money — unless of course you are a college graduate wanting $5,000 from my county through its Growth Council. Grant for Grads makes a gift of $5,000 for the housing of college graduates if they agree to live in the county. It is not needs-tested. It doesn’t require the recipients to do anything but live in the county where they work, which we think most would do anyway.

We are not wealthy enough for such programs, especially if if everyone entitled takes advantage of it. But don’t look to our Growth Council for fiscal sobriety. Back in 2013, its director said he could not speak to the downside of TIF as he had never been a part of a TIF that didn’t work out well. That was two years after the TIF Old Y refinance and a year after the Gas City Redevelopment Commission approved a $1 million TIF loan for Echelon, the furniture maker that left our county without paying its workers. Its chief financial officer was sentenced to prison for bank fraud and wire fraud.

This week, despite all, the Growth Council was schedule to return to county council to ask for more money in the name of economic development. My newspaper is earnestly asking council members to finally just say “no.”

David Penticuff, an adjunct scholar of the Indiana Policy Review Foundation, is editor of the Marion Chronicle-Tribune, in which a version of this essay was published on Dec. 19, 2018.


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