Why is the City using TIF to support a private development at 126th Street and Gray Road?
The use of Tax Increment Financing, or TIF, is a economic development tool provided by the State of Indiana that can be employed to benefit a city in a variety of ways.
Here in Carmel, primarily in our central corridor, TIF is used to build density that takes previously barren or “under-performing land” and turns it into land that produces tax revenues and grows our tax base, while creating a cultural center that lures residents, jobs, and tourists.
“Carmel saw this as an opportunity to use the increase in taxes the plaza was going to pay as a result of the site update and building upgrades to fund some of those upgrades.”
This approach toward density does not fit in more suburban east and west sides of the city, but that does not mean it cannot be used at all. From O’Malia’s to Marsh, the Brookshire Village Shoppes has provided a neighborhood grocery store for many of our east Carmel residents for a long time. For the past few years, the Mayor and his staff has worked alongside the City Council to try to lure a grocery store to this location. But the grocery business is tough and despite the demographics of this area, few grocers were interested in going into an aged strip center when there are options of “shiny new” construction north of 146th street.
After years of trying, a developer finally showed interest to lure a grocery to Brookshire Village Shoppes. But there was a need to do a complete remodel and modernizing of the building – both interior and exterior – and to the parking lot, in order to bring the plaza into the feel of a modern day shopping destination.
Carmel saw this as an opportunity to use the increase in taxes the plaza was going to pay as a result of the site update and building upgrades to fund some of those upgrades. This is not spending taxpayer dollars in the classical sense of the word. Instead, it captures future tax dollars (which otherwise would not exist) in order to help make this project happen.
Here is the icing on the cake. The developer will be on the hook for these future taxes and the only one “at risk” on this project, not local taxpayers.
Was this a wise decision? For the hundreds of residents who have reached out to the City and to City Councilors, asking for us to help bring back a neighborhood grocery store, the answer would be yes.
But if you’re only concerned about financing and debt, then perhaps you can look at this another way.
If not for the use of this TIF incentive, the plaza would continue to be a 1960s plaza with a huge vacant anchor store. It would continue to see tenants flee and in the end, the once revenue producing piece of land would be relegated to something very empty, non-revenue producing and potentially an eyesore on the east side.
The City Council often must make tough decisions on a project-by-project basis about whether TIF makes sense. Here, instead of using TIF to build a mixed-use, 4 story project (like we see all across the central corridor), we are using this tool in such a way that will result in a neighborhood grocery and a resurgent neighborhood center filled with local businesses.
TIF is not right for every project, but in this case, it is the right step to take for the east side and for the city as a whole.
Authored by Laura Campbell, Sue Finkam, Kevin Rider, Jeff Worrell, Tim Hannon, Bruce Kimball, Miles Nelson and Adam Aasen.