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December 4, 2012

Cash on hand, but for how long?

Umbaugh presents financial status of Jeffersonville



A greater source of divisiveness between the city administration and the council is how and when to spend Tax Increment Finance dollars.

“We took a look at what are the estimated revenues in the TIF areas, how does that compare to the debt service that is currently outstanding, and also plugged into the model some projects that the administration kind of has an agenda of projects it’d like to do,” said Brian Colton, with Umbaugh and Associates.

The projects Colton referenced were offered by Mayor Mike Moore to use city TIF money to pay for several projects he has outlined as priorities, including dedicating $2.5 million for Veterans Parkway, $12 million for the Veterans Parkway and Holmans Lane project, $1.25 million for Falls Landing Park and $2.025 million for the Big Four Station project, among others.

Harmon said the TIF analysis was undertaken to help determine the reimbursement for funding a new police station, but also to determine the remaining capacity the city could pay, or bond, for out of the TIF districts.

“Even if we were to pay cash, we still have sufficient capacity if there were an emergency to arise, or if some large company came in that we didn’t foresee at this time that we would still be able to build roads or do development that they would expect us to partner in,” she said.

However, the project that offers the greatest disagreement between the mayor and the council is the 10th Street revitalization and widening project that totals $13.5 million.

Several council members in attendance at Wednesday’s meeting said the city should wait and apply for funding through the Indiana Department of Transportation instead of paying for the project out of TIF funds.

“[The] biggest project, which is 10th Street at $13.5 [million], we could wait for an 80 percent match,” said Councilman Dennis Julius.

And if the city were able to secure the 80 percent matching funds from the state to pay for the 10th Street project, the money could be used elsewhere.

“It frees it up for other projects,” he said. “It only makes sense. Our thing is it’s so huge, it would release so much capital from the city to go to other projects.”

“You could really cut that price and that project down considerably by doing your due diligence,” Smith said in agreement.

Smith said that by going through the state to secure funding, it could delay the project, but he said he was unsure how long of a delay it might create. He said he believed the project could still be completed in a three to five year window if the city were to wait for the matching money from the state.

But Moore tried to clear the way to use the funding immediately and asked if the projects could be pursued as planned.

“Does this look like a sound business plan here ... basically to do these projects with cash?” he asked Colton.

Colton said it could be done.

“That’s part of what we were asked to do,” he said. “Could we pay for the projects and still have room for the bonds? The answer, just looking on based on what we have today, yes. When I talk about you’ve got capacity for $17 million in the Falls Landing TIF area, if you do about half the project were talking about [you’ll have] $12 [million] or $11 million additional capacity beyond the police station bond.”

The use of TIF money has been muddied further by being part of a lawsuit the mayor has filed against the city council. Moore, in his suit, claimed that the council does not have statutory authority to approve TIF dollars.

According to the petition, “the redevelopment commission, as a separate taxing unit, has the sole and exclusive statutory authority to approve such expenditures,” and as a result asks for ordinance 2006-0R-6 that spells out who has control over TIF expenditures to be declared invalid.

City Council President Ed Zastawny responded in a letter sent to the News and Tribune last week. In it, he wrote, “The city council, which is the fiscal branch of government, has been reviewing and approving Redevelopment TIF claims since 2006 and this system has worked fine under the previous ... administrations. The council does ask questions and reviews claims, but to date, I am not aware that the council has declined any TIF claims during 2012 so the council is not even sure why this was brought up by the mayor.

“The real question is why the mayor does not want fiscal oversight and what the mayor plans to do with all the Redevelopment TIF dollars?”

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