INDIANAPOLIS — A Northwest Indiana lawmaker believes a rarely used economic development tool could be the key to encouraging transit-oriented development along the existing and future route of the South Shore commuter rail line.
House Bill 1144, sponsored by state Rep. Hal Slager, R-Schererville, would create a Sales Tax Increment Financing, or STIF, district within a half-mile of the tracks of the current South Shore, running from Hammond to South Bend, as well as the planned West Lake extension from Hammond to Dyer.
Under the plan, the RDA would use that money to award matching grants for transit-oriented development projects to Northwest Indiana cities and towns that are spending local tax money or contributing a portion of their county income tax revenues to support South Shore improvements.
"The idea is to use the money for economic development within the corridor, or to service the corridor," Slager said.
Slager explained that at first there wouldn't be any money, but as the rail corridor develops over time, and businesses locate near stations and new residences, much more would be generated. The STIF would be in effect through 2046.
"By doing it this way, the state should make more money by (the corridor) developing sooner, and creating more sales taxes and income taxes from it," Slager said. "Then the communities benefit by increased local option income tax and property tax."
He also hopes his plan will encourage holdout localities, such as Griffith, St. John and Cedar Lake, to share a portion of their county income tax revenue with the RDA to help fund the local component needed to obtain federal dollars for the West Lake expansion.
"All of these communities could participate with some creative development," Slager said. "If you were to create in your downtown a parking facility with some stores where maybe a shuttle could pick people up and take them to the train — that qualifies as servicing the line."
Slager filed similar legislation in 2015 that did not advance out of the House Ways and Means Committee.
He's more optimistic this year, since new Republican Gov. Eric Holcomb has wholeheartedly endorsed South Shore double-tracking between Gary and Michigan City, and included $10 million in his proposed budget to help get that project started.
At the same time, Slager acknowledged that state leaders generally have been wary of authorizing STIFs because they divert to local needs a significant share of sales tax revenue that otherwise would go entirely to the state.
In 2006, Republican Gov. Mitch Daniels scuttled a plan to use a $40 million STIF to lure Cabela's outdoor store to Hammond.
Instead, the state kicked in $10 million for Little Calumet River flood control and highway improvements near the store site at Interstate 80-94 and Indianapolis Boulevard.
Former state Rep. Chet Dobis, D-Merrillville, in 2008 proposed using a STIF, instead of a county income tax, to fund the local share of a $1 billion South Shore expansion to Lowell and Valparaiso.
That plan fell apart when Republican lawmakers insisted Lake join every other Indiana county by imposing an income tax.
Lake County eventually enacted a 1.5 percent income tax in 2013.
State Rep. Tim Brown, R-Crawfordsville, chairman of the House Ways and Means Committee, said he's wary of Slager's idea to deploy a STIF, but nevertheless wants to find a way to encourage transit-oriented development along the old and new South Shore line.
Slager said that's not surprising: "The chairman is interested in doing something. I would anticipate, if it gets a hearing, that it would see some level of amendment. I just don't know what, yet."
Brown said he's been thinking about a transit improvement district, similar to the motorsports improvement district around the Indianapolis Motor Speedway, that would capture both sales and income tax growth at South Shore-adjacent properties and make it possible to borrow against anticipated revenues for immediate transit-oriented development projects.
But Brown cautioned that he hasn't yet figured out whether an existing agency could oversee such a district — since the South Shore spans four counties and the RDA only operates in Lake and Porter counties — or whether a new state board would need to be established.
Slager and Brown have roughly until late February to figure that out and win approval for their compromise plan by the Republican-controlled House.
Ultimately, any South Shore STIF or other transit-oriented development incentive strategy likely will be merged into House Bill 1001, the two-year state budget.