Intro to Midtown TIF

By Thomas P. Healy

Establishment of the North Midtown Tax  Allocation Area (a.k.a. Midtown TIF) in March 2013 was both a culmination and a beginning. It marked the end of a lengthy lobbying effort spearheaded by Midtown Indianapolis, Inc. At the same time, it motivated neighborhoods to begin the task of turning development concepts and plans into projects.

Two TIF-funded projects are underway: Browning Investment Group’s mixed-use project in Broad Ripple and upgrades to Tarkington Park. A third is about to begin: the Canal Esplanade in the Village. The 29 @ Central residential project is working its way through the lengthy review process in hopes of becoming the first development seeking TIF assistance in 2016, it’s worth reviewing how and why the Midtown TIF came about.

BACKGROUND

Since 2006, volunteer community leaders in Midtown have invested substantial time, energy and financial resources in an unprecedented collaboration to address common interests and concerns.

Groups included Broad Ripple Village Association, Butler-Tarkington Neighborhood Association, Mapleton-Fall Creek Development Corporation, Meridian-Kessler Neighborhood Association and Midtown Indianapolis, Inc.

Working in coordination with Department of Metropolitan Development (DMD) professional planning staff, neighborhood allies conducted a thorough review of community assets, liabilities, strengths and opportunities.

Like much of Marion County, Midtown suffers from deteriorating infrastructure and housing that negatively affect the ability to attract investment.

Fewer new families are moving into Midtown. Smaller households and an increase in housing vacancies drive a projected population decline of almost 1,500 residents over the next five years.

Without a growing population it is difficult to support a mix of uses that not only provide services but also opportunities for work and enjoyment. Since property tax caps are reducing available resources for municipal government, community leaders felt an urgent need to identify ways to attract residents and to expand the value proposition of the district.

Rather than wait until Midtown declines too far for the marketplace to overcome and the ensuing spiral of decay and disinvestment becomes irreversible, community advocates agreed to collaborate on encouraging strategic investments.

This required a plan.

PLANNING FOR GROWTH

Fortunately, Midtown neighborhoods had undertaken inclusive public planning processes to influence development including Midtown FuturePlan, Envision Broad Ripple, Envision College Avenue and the Mid-North Quality of Life Plan.

These plans served as the impetus for DMD’s creation of the North Midtown Economic Development Area (EDA) Plan. The EDA plan focused on places of greatest need and opportunity within the district; approximately 1,504 acres out of Midtown’s 6,000 acres.

The EDA plan established both the rationale for promoting reinvestment in Midtown and outlined the basic tools to accomplish that goal.

Once adopted by the City-County Council and the Metropolitan Development Commission in 2011, the EDA plan served as the crucial first step in creating the North Midtown Tax Allocation Area ( a.k.a. the Midtown TIF District).

As part of its rationale for justifying the TIF proposal, DMD prepared calculations to assess the potential economic impact of the Midtown TIF. DMD estimated that long-term reinvestment in the EDA could add as much as $9,830,880 to the base assessed value if all the vacant land were developed at the county’s average assessed value. If the entire area were to increase in value equal to the Project Area average the estimate increased to $27,214,000.

A STUDIED RESPONSE

The City-County Council’s TIF Study Commission met frequently in 2012 to examine the effectiveness of this economic development tool in Marion County. The Midtown TIF benefitted from the process and incorporated several of the Commission’s recommendations by:

  • Establishing a 25 year limit
  • Focusing on a targeted and narrowly tailored geographic allocation area
  • Designing the allocation area to spark development in key historic transportation corridors

Additionally, each neighborhood identified “catalyst” sites as redevelopment priorities. Such community-driven recommendations differ from other TIF districts that historically consist of projects pitched by developers.

Midtown Indianapolis, Inc. estimated that if all catalyst sites in the plan were developed over the 25-year life of the TIF, it could add $80 million in assessed value. This revenue would be a boon to public safety, public schools, libraries and other entities receiving tax monies that currently operate under tight budgets.

After a series of public hearings before the Metropolitan Development Commission and the City-County Council during late 2012 and early 2013, the enacting legislation for the Midtown TIF passed with bipartisan support.

Perhaps the single most unique aspect of the Midtown TIF is the Midtown Economic Council (MEC). MEC members are appointed by each of the major neighborhoods as well as Midtown Indianapolis, Inc. MEC members will review proposals from neighborhoods and from the development community.

While the MEC’s role is advisory, the fact that it was established at the request of Midtown neighborhoods and was adopted by both the Council and the MDC is exceptionally important. This sets up a novel framework to encourage collaboration between public representatives and private developer/investors. And it provides development proposals with another level of neighborhood scrutiny to determine if it fits the comprehensive, inclusive vision for community enhancement.

A version of this article originally appeared in the December 2013 / January 2014 issue of the magazine.

RESOURCES

Download a copy of the City-County Council’s TIF Commission final report.

WHAT THE TIF?

TIF is an economic development tool that spurs private investment, grows the property tax base, stimulates job creation, increases income, redevelops deteriorating areas that builds on core strengths.

TIF-graphic
CLICK TO ENLARGE. Adapted from the Indianapolis Marion County TIF Study Commission Final Report June 2012
  • The Increment uses the projected increase in property taxes from new commercial developments as a revenue stream to assist qualifying projects. Existing property tax rates (the base) do not contribute to the increment.
  • TIF can be used for utility (sewer and water) improvements, land acquisition and site development, buildings and equipment.
  • TIF funds can be “pay-as-you-go” or finance the issuance of either long or short-term bonds.
  • Residential properties do not contribute to TIF. Neither do commercial properties outside of the defined TIF District.
  • Property taxes from existing commercial properties within the TIF District continue to flow into the base.
  • The 25 year sunset date is set once the first debt is incurred for a TIF project.

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