Several academic studies of tax increment financing have put this economic revitalization tool into the headlines over the last few months. Scholars and public policy analysts have attempted to demonstrate the value, or lack thereof, of TIF in stimulating economic growth. And while this sort of statewide analysis and dialogue is important and appropriate, I want to bring this discussion to the local level with some basic information about how TIF works here.
As with most economic development tools available to the public sector, TIF is not inherently "bad" or "good"; its value is dependent upon how it’s used and the results it generates. I’m proud of how the city and our partners in Allen County use TIF to stimulate investment in our community, particularly in areas that are blighted and would not see growth without TIF. These investments have created and sustained jobs, improved roads, made busy intersections more safe, built trails and been a significant factor in making downtown a more vibrant and thriving place.
A quick explanation of TIF: It’s a tool provided to local governments by the Indiana General Assembly. TIF districts are set up by redevelopment commissions to assist in the development or redevelopment of a designated geographic area. The districts allow any additional property tax revenue generated by increases in assessed value within that area to be used to complete public projects within the area.
This method means that projects are completed with no increased taxes on the public and no other taxing unit, such as the schools or library, is harmed by having less revenue. TIF does not take revenue away from anyone’s budget or bank account. TIF also insulates property taxpayers across the city from paying for improvements that are needed to promote growth and investment in these districts that have experienced a decline; in other words, the funds spent in the TIF district come from that district.
In Fort Wayne, the Redevelopment Commission emphasizes the importance of responsible TIF management. The commission regularly evaluates each TIF area and determines when TIF investments are no longer needed to support the growth within the district. At that time, the commission votes to "turn off" collection of funds and eventually may rescind the district.
Additionally, the Fort Wayne Redevelopment Commission is careful to limit the use of TIF. A report by Fort Wayne’s own John Stafford – "The Fiscal Health of Indiana’s Larger Municipalities: City of Fort Wayne Municipal Profile," published by the Indiana Fiscal Policy Institute – indicates that just 4.1 percent of all assessed value in the Fort Wayne city limits is within a TIF district. Some of Indiana’s larger cities come close to 25 percent, and the average of the state’s 18 largest cities is 12 percent of assessed value within the limits of TIF districts. Clearly, Fort Wayne uses our tax increment financing tool conservatively.
The numbers show wise use of TIF in Fort Wayne, and the results also demonstrate that TIF is used to support quality growth and development. The use of tax increment funds was instrumental in the development of Parkview Field and Harrison Square, both of which have helped revitalize downtown and bring more private dollars to the heart of our community. Without TIF, the TinCaps would not have a home in downtown.
TIF was also instrumental in retaining several hundred high-paying BAE jobs in Fort Wayne by assisting in the construction of its new facility. As BAE looked to move, the company could have chosen a multitude of locations. The aviation electronics manufacturer, however, was persuaded to keep its good jobs in Fort Wayne in part because TIF funds assisted in the construction of BAE’s new facility on Airport Expressway.
Other examples of TIF-supported projects include the Ardmore Avenue construction, which makes travel to and from the airport easier and safer; the redevelopment of Southtown Centre; construction of the Coventry Lane Trail; and the redevelopment of the Seyfert’s plant site/construction of the new Costco and Kelley Automotive at I-69 and Lima Road.
Tax increment financing is one of several tools available to public officials to encourage growth and development. In Fort Wayne, we should be proud of how we use TIF wisely to fund public projects that support quality-of-life improvements and help increase assessed value throughout our city.