STIF to fund South Shore expansion?

BY PATRICK GUINANE, Times of Northwest Indiana
pguinane@nwitimes.com

INDIANAPOLIS | A Northwest Indiana lawmaker plans to introduce legislation today that is expected to provide the $30 million a year needed to expand South Shore commuter rail service without requiring a new tax on region residents.

State Rep. Chet Dobis, D-Merrillville, said he will file the funding plan today, but he declined to discuss details of the long-awaiting proposal until after a morning meeting with Lake and Porter County legislators.

"I've been working on this pretty hard lately," Dobis said Wednesday. "It's something that we need to do."

Sources familiar with the legislation told The Times it proposes using sale tax increment, or STIF, financing to cover the $350 million local share of the $1 billion rail expansion plan. Under that scenario, $30 million a year in local sales tax collections would be diverted toward the project, which would extend South Shore rail lines south to Lowell and east to Valparaiso.

Supporters would need to convince state officials that the rail expansion will spur enough retail development to offset the potential $350 million hit to state coffers. Hammond officials sought to use $40 million in STIF financing to lure Cabela's two years ago, but Gov. Mitch Daniels' administration balked at putting that much state tax money on the line.

Thus far, the main hurdle to South Shore expansion has been getting region legislators to agree on a local funding source. Dobis pitched a $50 annual vehicle registration fee last year, and legislators also have discussed local fuel and income taxes.

But some region lawmakers remain wary of supporting any tax hike during a legislative session dominated by efforts to ease soaring property taxes. STIF financing could alleviate that concern but create a new hurdle: convincing the state to open its checkbook.

Federal dollars would cover half the South Shore expansion project and the Northwest Indiana Regional Development Authority would chip in $150 million, which leaves a $350 million shortfall. That local share would be financed over two to three decades at a cost of $30 million a year

Dobis plans to detail his funding plan today at a Statehouse news conference.

State Rep. Chet Dobis, D-Merrillville, will introduce legislation today that would provide the $30 million a year needed to extend South Shore commuter rail service to Lowell and Valparaiso. Dobis didn't disclose details on Wednesday. But sources told The Times the funding plan hinges on sale tax increment financing, which would allow the project to go forward without a new tax on region residents.