TIFs districts cost Porter County millions in assessed valuation, auditor says

Porter County Auditor Vicki Urbanik told the council Tuesday she had submitted the county's annual TIF neutralization study for the coming year to the Indiana Department of Local Government Finance, because the document is necessary for the county to certify its assessed valuation before it prepares next year's budget.

Once the study has been accepted by the state, it will be available online.

"I think we as a council have to understand what that does," said Councilman Dan Whitten, D-At large, sparking a sometimes heated discussion on the use of the districts. "We're losing hundreds of millions in assessed valuation due to TIFs." 

The county is losing $779 million in assessed valuation because of the TIF districts, Urbanik said. Her department is preparing the study for the state in-house for the second year in a row, saving the county $20,000.

The county lost $741 million in assessed valuation for this year because of TIF districts, she said Wednesday.

In the districts, tax revenue generated by new development is used to pay for infrastructure and other improvements within that district, rather than going back to schools, police, fire departments, libraries and other taxing units. The tax revenue from a new shopping center, for example, may be used to build roads for the center rather than going back to a city or township.

"I've called it a back-door tax for a long time," Whitten said. "We're losing future revenue and seeing tax rates either not going down or being driven up because of TIFs."

But Councilwoman Karen Conover, R-3rd, said since the districts capture new tax revenue, the county isn't losing that revenue, it's just not gaining it.

The lack of those funds drives tax rates up, Whitten said, and the TIF districts aren't being used as they should, to develop blighted areas.

"They are picking and choosing areas that they know are gong to develop," Whitten said, calling the districts "low-hanging fruit."

He noted ongoing efforts for a TIF district around Porter Regional Hospital at U.S. 6 and Indiana 49, which is already spurring development of health-related facilities, instead of along U.S. 6 in South Haven, which needs redevelopment.

According to Gateway, the online government access portal run by the state, Porter County had 15 TIF districts in 2015. Porter County does not have any districts of its own, and the Valparaiso City Council approved the brunt of those districts. More than $639 million in assessed valuation was lost to TIF districts that year, the most recent year with available online data.

This year, Valparaiso again has the largest share of TIF districts, with $317 million, including a portion of Washington Township within the city's boundaries. Portage has $273 million in the districts, and Chesterton has $118 million, according to Urbanik.

Councilman Jeff Larson, R-At large, argued that some areas wouldn't develop without the financial incentive.

"We know we would have lost some of the development," he said.

The county and other taxing units aren't losing tax revenue that's already rolling in from TIF districts, Larson said, but future revenue, and the county could lose potential development to places willing to offer TIF districts.

"We're in a bargaining war with other communities," Larson said. "We might lose something to other communities."

Though the county council has no say over TIF districts in other municipalities and any county TIF districts must be approved by commissioners, Whitten said he would be remiss not to address the matter.

Urbanik will provide the report to the council at a future meeting, as well as information on past years for comparison.

"There are developments happening in Porter County that are not in TIF areas. To say Porter County needs a ridiculous amount of TIFs, (it) shocks the conscience how much is in TIFs," Whitten said.