INDIANAPOLIS — A Southern Indiana state legislator is "optimistic" his bill targeting the balance of power on redevelopment commissions will advance out of committee to the Indiana House of Representatives.
House Bill 1131 authored by Rep. Ed Clere, R-New Albany, takes one of the executive body's appointments to a redevelopment commission and gives it to a local school board, which would appoint one of its members. The other appointments will remain in control of the fiscal body.
The Government and Regulatory Reform Committee heard testimony Tuesday morning from nearly 20 people, mostly school representatives from around the state. The committee will vote on the bill in the next few weeks.
"The redevelopment portion of House Bill 1131 recognizes the vital role that schools play in economic development by giving local schools a seat at the table, specifically a voting members on a county or municipal redevelopment commission," Clere said during the hearing at the Statehouse. "Used judiciously, TIF can be an important economic development tool.
"In communities throughout Indiana, however, TIF is taking away from education and from the potential for education to be an economic development catalyst."
Clere said he hopes the bill will address the hit some schools feel by tax increment financing districts, the revenue of which is controlled by redevelopment commissions.
"No one is trying to undermine TIF or the role of municipal or county executives or councils," he said. "This seems to strike a balance by providing for schools to have a voice — and a vote— but not to take away control from municipal or county government."
As the law stands now, municipal and county executives can appoint one school representative to serve only as an adviser.
"My input has always been, why do we make them a nonvoting member?" said Rep. Tony Cook, R-Cicero, a co-author of the bill and committee member. "We want them at the table to represent some of the interests in the area that they know will be issues ..."
Tax increment financing, or TIF, is the main source of funding for redevelopment commissions and is typically used to repay debt on large infrastructure projects. TIF dollars are generated from districts established by commissions often in areas lacking commercial development.
It's a tool that 79 of Indiana's 92 counties traditionally use to incentivize private development and spur growth.
But some critics say TIFs divert too much tax money away from other public entities, namely school corporations.
When municipalities establish a TIF district, property values within the district are frozen at the current amounts. Tax revenue from the base value is distributed to local units. All tax revenue above the base created by new development is funneled to redevelopment commissions.
In 2012, total increased assessed value of TIF districts across the state was more than $14 billion.
A study released last year by Ball State University's Center for Business and Economic Research estimates $320 million in tax revenue is diverted away from local governments in Indiana each year.
Specifically, school corporations may miss out on as much as $131 million per year, the study calculates. That averages $68,150 per school, and is equivalent to 2,400 public school teachers or the operation of 900 buses a year.
"Overall, if we had some of these things worked out, [TIF] can be a positive aspect for schools if schools, town, counties work together to build the best environment they can have and complement each other," Cook said. "That's why I think it's vital to have some equal partnership in it."
Those who spoke in support of the bill Tuesday lauded the positive impacts of TIFs, but agreed schools and redevelopment commissions need to partner to benefit one another.
"Although there's so many schools that are interested in this [bill], the vast majority of the schools are not opposed to TIF. They are not opposed to it," said Bill Wilson, immediate past president of the Indiana School Boards Association and president of the Clarksville Community Schools board. "It's just they want to be a partner and have a vote in it."
Wilson believes there are instances of TIF money misuse, calling revenues a "slush fund" for municipal and county executives.
Avon Community School Board member Anne Engelhardt, also the appointed nonvoting member to the town's redevelopment commission, said the two entities have successfully worked together. The commission funded security cameras and equipment for schools.
But the corporation has also felt a squeeze on its budget in recent years, she said. While it has grown by 931 students, Avon Community School Corp. is down 27 teachers, six administrators and 10 maintenance workers in an effort to "be very efficient with our tax money," according to Engelhardt.
"I look at being able to vote [on redevelopment commissions] as a shared responsibility to bring economic development," Engelhardt said.
Three people testified against the bill, all on behalf of statewide organizations.
It's the stance of Accelerate Indiana Municipalities, formerly known as the Indiana Association of Cities and Towns, that the current board makeup is appropriate.
"We oppose a school board member having the ability to be the deciding vote on a redevelopment commission because the mayor, in the case of a city, or the council in the case of a town, is the one who is most accountable for economic decisions in that jurisdiction," said Rhonda Cook, deputy director and chief federal and state policy officer of AIM.
While many school board appointees to redevelopment commissions testified at the Statehouse, Cook said AIM hears too often from its members that other appointees don't even attend commission meetings.
She also pointed out the need for commissioners to understand the complexities of TIFs.
"Just as the primary focus of a school board member should be on the complex school funding formula ... so should the focus of an RDC member be on TIF and economic development matters," Cook said.