NEW PALESTINE — Officials with the Town of New Palestine are in the process of approving an increase to their Tax Increment Financing (TIF) area know as the “New Palestine Economic Development Area.” A TIF area subsidizes by refunding or diverting some taxes, or consumer-paid taxes, to pay for redevelopment in a TIF district.
While the measure passed two town commissions, as well as the New Palestine Town Council vote late last week, the declaratory amendment resolution must still come before the town’s Redevelopment Commission meets for a final vote since that board will govern the funds. During that vote, which is expected in the new year, officials say community residents will have an opportunity to voice their opinion about expanding the TIF area.
The TIF area was created by the town’s council in 2016 and expanded in 2019. The declaratory amendment resolution calls for another expansion to include property at the northeast corner of U.S. 52 and CR South 600W.
The expansion area would add land northeast of the current allocation area and would include the land where Needlers, Taco Bell, Fifth Third Bank and several undeveloped parcels are located. The land goes back to where the railroad tracks are located on the north and from 600W going to the creek just east of Needlers.
The expansion only calls for collecting increment taxes on new development going forward and not current tax dollars collected. Nor does the expansion call for any special bonding for business development.
Throughout the voting process, which included passage through the redevelopment and planning commissions as well as the town’s council, there was only one vote against the idea, which came from Planning Commission member Eric Kropp.
However, officials from the Community School Corporation of Southern Hancock County did express serious concerns about increasing the TIF area since the district relies heavily on tax dollars to pay for school funding.
Southern Hancock Superintendent Lisa Lantrip.
Superintendent Lisa Lantrip, who is a part of the Redevelopment Commission representing the school district but does not have a vote on the RDC, is concerned. She let town officials know the district’s issues at the meeting and via a letter prior to the meeting, which she sent to all voting commissions and the council.
In the letter, Lantrip expressed significant concerns regarding an expansion of the TIF area and stated further expansion of the current TIF may cause significant financial strain to the school district.
“Schools are funded in two main ways,” Lantrip said. “The main source of funding is from state tuition support, which comes from the number of students enrolled in our corporation; additionally, schools receive property tax dollars for operational expenses, which include running our school buses, utilities and maintenance expenses.”
Lantrip went on to say by increasing the size of the TIF limits how much the assessed value can increase and will limit the amount the district can levy due to property tax caps.
“TIF and TIF expansions put the school corporation in a challenging financial situation,” Lantrip said. “As operational costs increase over time due to inflation and or an economic downtown, our ability to appropriately fund programs may be limited.”
In the future, that could cause the district to reduce transportation services, including the creation of walking areas in the immediate vicinity of their schools. Eventually, the continuation of TIF expansion and the throttling of the area’s assessed value may require the district to be forced to run a referendum to pay increasing operational costs, she warned.
“Any time you TIF, we lose money as do other taxing entities,” Lantrip said.
Town officials noted any of the new taxes collected will go to the Redevelopment Commission and they will determine how the money is spent. Redevelopment Commission member and Council President Bill Niemier noted that officials envision using some of the money to create sidewalks around town leading to district schools and the desire to help school officials as much as they can.
Niemier told Lantrip that Southern Hancock district officials will continue to collect the tax base as they do now, but will however not be able to collect any taxes on improvements or parcel changes.
“Yes, we’ll get the money now, taxes at the current rate, but in five years when the taxes go up again, we don’t capture that,” Lantrip said.
Niemier said they plan to create focus groups to make sure those entities affected by the TIF area can have their voices heard with funds being allocated to those in need if the committees chooses to do so.
“I hope we create a sidewalk system so people can walk from one end of town to the other,” Niemier said. “That benefits everybody.”
Redevelopment Commission member Raven Smathers was cautious about supporting the TIF and noted TIF areas are often created to “spur” development and stated New Palestine doesn’t need any help with that.
“I’ll be honest, It feels like a money grab,” Smathers said.
The town’s financial advisor from O.W. Krohn and Associates noted the expansion of the TIF is designed to benefit public infrastructure — something they currently don’t have spare funds to do.