NEW ALBANY — The life of two tax-increment financing districts that encompass major development areas in New Albany and Clarksville would be extended by five years under a bill introduced by State Sen. Ron Grooms.
Clarksville’s TIF district, which envelops the former Colgate Plant site, and New Albany’s Charlestown Road TIF district, which includes the Purdue Research Park of Southeast Indiana campus, wouldn’t expire until 2038 under Senate Bill 360.
Grooms, R-Jeffersonville, said the legislation will allow Clarksville and New Albany more time to raise funds in the districts and finance bonds for infrastructure projects.
“The process of the bill does not create additional debt, nor does it raise taxes. It simply gives the life of the allocation area more time for more detailed planning and possible refinancing,” Grooms said.
He compared the extension to refinancing a home mortgage.
There are no bonds issued currently for either of the TIF districts. But officials with Clarksville and New Albany said Grooms’ bill is important to sparking economic growth in those areas.
“It’s of the utmost importance for us because the Purdue Research Facility out there is our key economic development area for high-tech entrepreneurial jobs,” said David Duggins, economic development and redevelopment director for New Albany. “We need to have every tool at our disposal to partner with the Purdue Research Foundation to grow that park.”
Both Clarksville and New Albany expanded the TIF districts named in the bill in 2008.
Clarksville Redevelopment Director Nick Lawrence said the extension would help the town spur activity at the old Colgate-Palmolive Co. plant area, which was vacated in 2007.
“Five more years will really reset the clock for us and kind of give us a little bit of a leg up on trying to accomplish some things down there,” Lawrence said. “This allows us to address that area and revitalize it and put some life back in a part of town that desperately needs it.”
The town hasn’t waited idly since 2008, as it has evaluated infrastructure needs in the TIF district, Lawrence continued. But the five-year extension provides better opportunities for financing and turning plans into projects, he added.
The bill is slated to receive a second vote today and a final ballot tomorrow in the Senate. If approved, the Indiana House will then consider the legislation possibly as early as next week.
The bill received a 13-0 vote of approval from the Senate Appropriations Committee last week.
Once a TIF district is declared, property taxes in the area are frozen. Municipalities may borrow money in the form of bonds to foot infrastructure projects in the TIF district in hopes of enticing businesses to the area.
As property values increase through the additions, the municipality gets to retain the property taxes that are in excess of the frozen rate that was established once the TIF district was declared.
The municipality then pays off the bonds with the increment in property taxes it collected.
Grooms — a former Jeffersonville City Councilman — said when TIF districts are expanded or their existence extended, some people worry about the ramifications it creates on the tax base.
“I know that’s always a point of concern, but in this situation, the redevelopment of the Colgate center is a very large, expensive, massive project, and this actually may be the difference in developing that area and not developing that area,” he said. “The hope of course is that, as the development occurs, over the long haul those bonds will be paid off and those revenues from those property taxes will benefit the entire community and not just the TIF district.”